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A Growth Agenda for the GOP

July 06, 2010

During the last week, President Barack Obama doubled down on a losing political bet, further cementing the Democratic Party's reputation as the champion of bigger deficits, higher spending and more government. He did so just as the public is crying out for lower deficits, less spending and less government.

In his Saturday radio address, Mr. Obama attacked Republican opposition to additional stimulus spending, saying they "just don't get it." Maybe they do get it. The first, $862 billion stimulus bill of 17 months ago has after all failed to work the president's promised magic.

Last Thursday House Speaker Nancy Pelosi joined the president in his bad bet by offering up the economic gem that extension of unemployment benefits "creates jobs faster than almost any other initiative you can name." Really? Faster than, say, cutting personal income tax cuts or slashing the corporate tax rate?

Rank-and-file congressional Democrats do not seem eager to follow Mr. Obama and Mrs. Pelosi down this road. For example, the House barely passed its $127 billion "Stimulus II" spending bill in late May by a vote of 215 to 204, with 34 Democrats joining all but one Republican in voting no. At least 20 of those Democrats come from districts at risk this fall. Democrats who represent swing districts are increasingly wary of supporting higher spending, taxes and deficits, or ceding greater power to the federal government. These issues are driving independents and other swing voters into the GOP column.

To maximize their gains, Republicans must go beyond promising to slash Democratic spending and reverse the Obama agenda (as important as these are). They also need to offer a competing agenda for increasing jobs and prosperity, and outline the concrete steps they will take to get back on the track for economic growth.

Republicans have a receptive audience: Americans overwhelmingly believe prosperity comes from entrepreneurs and free enterprise, not government. Republicans must emphasize that they stand for small and medium-size business—and stand foursquare against crony capitalists who seek advantage by partnering with big government.

A GOP growth agenda would keep intact the 2001 and 2003 tax cuts. Tax reform and simplification—including the flat tax and cutting the corporate tax rate—can also be winning issues if advocated by Republican candidates with authenticity and passion.

Laying out a positive agenda also requires GOP candidates to connect the dots between public policies and real-world consequences. So Republicans must make a compelling case that allowing the tax cuts to expire will result in history's largest tax increase—killing jobs, punishing hard work and enterprise, damaging growth, wounding small business, and postponing the moment government finally restrains spending.

They need to explain that raising taxes on dividends and on capital gains would lower economic growth for years to come. Retirements would be less secure, capital more expensive for every enterprise from manufacturing to commercial real estate, and investment in American jobs and companies less attractive.

A jobs, growth and prosperity agenda is a natural complement to austerity policies. It offers hope as well as sacrifice. And growing the economy makes reducing deficits more manageable.

The GOP must also be a critic of obstacles placed by foreign governments on the sale of American goods and services. We are 5% of the world's population—we cannot remain prosperous by simply doing our own laundry. The countries with which the U.S. has trade deals represent 4% of the world's population, but 38% of our exports. Even Mr. Obama pays lip service to increasing U.S. exports.

The GOP should also pledge to oppose power grabs by unions, especially those dominated by government workers. Voters increasingly understand labor bosses make American enterprise less competitive. Democratic Sen. Tom Harkin's threat to pass "card check" in a lame-duck session must be taken seriously.

Some will argue this set of issues isn't entirely new. But efficacy matters more than novelty. And in today's environment, tested and timeless ideas look attractive compared to the radical transformation Mr. Obama is imposing on America.

Rarely has a political party faced a more receptive public. Mr. Obama's brand of liberalism has given Republicans the opportunity to make a confident and bold case for conservatism. They need only to make it.

This article originally appeared on WSJ.com on Wednesday, July 7, 2010.

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