Texas Gov. Rick Perry unveiled a "Cut, Balance and Grow" economic plan on Tuesday to slash federal spending, curb regulations and implement an optional 20 percent flat tax.
Calling for a balanced budget by 2020, the GOP presidential candidate would cap federal spending at 18 percent of GDP and reduce discretionary nondefense outlays by $100 billion in the first year.
The plan also bans congressional earmarks, ends baseline budgeting, curbs federal salaries and institutes "pay-go," requiring that any funding for new programs be offset by cuts elsewhere.
"And there will be no more bailouts," said Perry spokesman Sean Davis.
On personal income taxes, Perry proposes an optional flat tax of 20 percent. Alternatively, filers could opt to remain in the current tax system. Either way, deductions for mortgage interest and charitable contributions will remain in place.
Taxes on Social Security benefits would be eliminated, as would the inheritance tax.
Corporations also would get a 20 percent rate, a reduction from the current effective rate of 28 percent. This, along with 100 percent of expensing for investments, would make the U.S. rate competitive with other major economies.
Taking a page from Michele Bachmann's economic plan, Perry would allow overseas corporate capital to come back to the United States at a reduced rate of 5.25 percent.
"This shows that America is open for business," Davis said.
Perry, who has referred to Social Security as a "Ponzi scheme," wants to offer market-based options to younger Americans while ensuring that the trust fund cannot be raided by Congress for general spending. Benefits to "current and near-term retirees" would remain unchanged, Davis said.
On Medicare, Perry proposes an "open national debate" for reform. As with Social Security, Perry would gradually increase age-eligibility requirements and bring "market power" to the health-care program. He cited Rep. Paul Ryan and Sens. Jim DeMint, Joe Lieberman and Tom Coburn as key participants in any reform effort.
Tackling regulatory reform, Perry calls for a moratorium on all pending federal rules and a "full bottom-up audit" on all regulations implemented since 2009.
Perry proposes that all new rules will "sunset" automatically, and he wants to set up a searchable database of all regulations.
Finally, the Texan targeted three federal laws for immediate repeal: Obamacare and the financial regulations encompassed by Sarbanes-Oxley and Dodd-Frank.
Perry's plan plies a course between Herman Cain's "9-9-9" tax program, which includes a 9 percent national sales tax, and Mitt Romney's 59-point economic plan, which would lower rates on corporations and on savings and investment income for middle-class Americans.
Romney has previously dismissed flat-tax proposals as a boon for "fat cats."
Perry brushed off Romney's barb, telling CNBC, "I don't care about that." Alluding to the multimillionaire Romney, Perry said the former Massachusetts governor "ought to look in the mirror."
In many respects, Perry's proposals are closest to Bachmann's "American Jobs, Right Now" plan which, in addition to giving tax breaks to repatriated corporate assets, reduces government worker salaries, eliminates the inheritance tax and rolls back federal regulations.
Former presidential candidate Steve Forbes, who proposed a 17 percent flat tax in 1988, hailed Perry's proposal as "bold."
The Texas governor was scheduled to personally unveil the package later Tuesday in South Carolina, a key early primary state where he is amassing strong support.
Contact Kenric Ward at kward@sunshinestatenews.com or (772) 801-5341.