Opinion: Obama Needs to Change Course on Jobs

(Dec. 2) - President Obama is holding a jobs summit to address the crisis of nearly 16 million Americans without work, the highest unemployment rate in more than 26 years. And while he's invited more than 130 CEOs, academics, journalists and union leaders to share their views on the economy at the White House, at the end of the day the only opinion that will matter will be Obama's.

So the big question for the country is whether Obama will change course on the economy after the summit. Will he embrace a different set of job-creation policies than the failed government spending approach to economic recovery tried by both Obama and George W. Bush, which has increased our national debt by $2.9 trillion in less than two years?

Change? That's the only question that matters.

It might be a surprise to this White House team, but you don't have to be a celebrity CEO or hold a Ph.D. in economics to know how to create jobs. The many small-business owners who are members of American Solutions and who actually create jobs have given input and widespread support to the following three-step job-creation plan for the economy.

1. Reduce Spending and Replace Bad Government with Limited, Effective Government to Achieve a Balanced Budget

When Newt Gingrich was speaker of the House, federal spending rose by an average of 2.9 percent per year, the lowest increase since the 1920s. We need to apply the same principles that worked from 1995 to 1998 to create jobs and four straight balanced budgets: smaller government, less spending, lower interest rates and less debt. We also need, where necessary, to replace bad government with limited, effective government, like we did in the 1990s when we replaced a destructive welfare system.

2. Enact Five Key Tax Reforms to Reward Job Creation, Entrepreneurship, Savings and Investment

• Immediate Payroll Tax Relief. Enact an immediate, two-year, 50 percent reduction of the payroll tax, which would boost the take-home pay of every worker and dramatically free up cash for every employer to hire and invest. This tax relief could be paid for with unspent TARP and stimulus money.

• Incentives for Small-Business Investment. Allow small businesses to expense 100 percent of new equipment purchases each year to help them invest in new, more productive technologies.

• Zero Taxes on Capital Gains. Match the Chinese capital gains rate of zero. Former Fed Chairman Alan Greenspan testified in the 1990s that this was the best rate for economic growth.

• Reduced Tax Rate for Business. America has the second highest business tax rate in the world. We should match the Irish business tax rate of 12.5 percent. Combined with a zero capital gains tax rate, America would become the most desirable country in the world in which to invest and start a business.

• Elimination of the Death Tax. Inheritance is the most powerful accumulator of capital. Studies show that eliminating the death tax would create hundreds of thousands of new jobs.

3. Implement an American Energy Plan to Create American Jobs and Keep American Money at Home

Developing more domestic energy while protecting the environment would mean millions of new American jobs and billions in new federal tax dollars, largely without the need for any new federal spending. Unfortunately, the federal government maintains an effective embargo on new domestic oil, natural gas and oil shale development, and hasn't done enough to expand our nuclear power generation. A recovering economy depends on affordable domestic energy supplies.

After today, we can continue down the road of a failing economic policy of government stimulus, or we can change course and implement policies that have historically been successful in creating American jobs and prosperity.
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Newt Gingrich is general chairman of American Solutions for Winning the Future. Dan Varroney is chief operating officer. On Thursday in Jackson, Miss., American Solutions is holding a REAL Jobs Summit, which can be viewed live online.