The economic platform of Sen. Rand Paul (R-Kentucky) is chock full of his libertarian convictions, with top billing for tax cuts, a deep reduction in federal spending, and a balanced budget.
But the staunch proponent of small government has had to curtail some of his rhetoric as he tries to reach a more mainstream audience in his 2016 bid for the Republican presidential nomination.
Here’s a look of Paul’s stances on taxes, federal spending cuts, social security, regulation of the federal reserve, energy and economic freedom zones.
Like many GOP contenders in the 2016 race, Paul wants a flat tax, which he has advocated for in federal budget proposals in 2012, 2013 and 2014.
When Paul first launched his presidential campaign last month, his website featured a detailed proposal, “The Fair and Flat Tax,” also known as the “EZ Tax.” This detailed plan was taken down on April 8, the day after Paul’s campaign kickoff, and replaced with a more version of the plan that lacked specifics days later, according to the Washington Post.
The initial proposal, that was stored in Google’s cache and closely mirrors what the senator has previously discussed, shows Paul’s vision for a single, flat tax rate of 17%. He has claimed this would yield a $US700 billion loss in tax revenue each year.
Paul advocates taxation on an individual for wages, salaries and pension payments. However, investment income including capital gains, dividends, and interest would be tax free for an individual. Those taxes would be levied on the business level.
Paul’s plan would allow low and middle income workers to receive an exemption from the Social Security payroll tax.
His plan would also eliminate the estate tax and the alternative minimum tax, which both target high income earners.
Paul’s proposal for multi-billion dollar tax cuts is coupled with drastic decreases in federal spending.
In past budget proposals that he presented to the Senate, Paul called for cutting the president’s cabinet by a quarter through the elimination of the U.S. Departments of Education, Commerce, Housing, and Urban Development and Energy.
He did provide contingency plans for key programs overseen by these departments – Paul would transfer nuclear energy programs to the Defence Departments and maintain the Pell Grant program, currently under the auspices of the Department of Education.
This May, Paul took aim at the Department of Energy in his “Waste in U.S. Government” report and noted the department spent $US13,000 for treadmills in February.
“Why does the Department of Energy need the Cadillac of treadmills?” Paul asked.
Those treadmills were ostensibly used to qualify federal nuclear materials couriers who have a running requirement.
Paul has taken similar pot shots at the Department of Commerce.
“I don’t think anybody’d notice it. I think no one would notice it was gone,” Paul said of the agency in remarks this March at Bowie State University.
Paul also advocates for cuts in entitlement programs like welfare, food stamps, Medicaid and child nutrition.
However, when it comes to defence spending, Paul has changed his tune. He previously proposed cuts in military spending but this March, in the lead up to his 2016 announcement, Paul proposed a $US190 billion influx (a 16% increase) to the Pentagon’s budget over the next two years.
Paul has called for the partial privatization of Social Security, a program he previously referred to as “a Ponzi scheme.”
He proposes the gradual increase of the retirement age for Social Security recipients and promotes means testing benefits to reduce payouts to high income retirees.
Paul is also an advocate of reforming the Social Security disability trust fund, which is set to run out of money in 2016.
In January, Paul complained that “over half of the people on disability are either anxious or their back hurts,” according to a recording by American Bridge, a liberal tracking group.
Paul later clarified that “there are people who are truly disabled, so the program should first of all prioritise those who are truly disabled.”
Sen. Paul has followed in the footsteps of his father, former Rep. Ron Paul (R-Texas), in claiming the Federal Reserve System wields too much autonomy.
Unlike other government agencies, the Fed is subject to only a limited auditing process. The Government Accountability Office (GAO) is restricted from a comprehensive examination of the central bank for fear a review would jeopardize the independence of the institution.
But Paul wants more than just a review of the Fed’s numbers and wants GAO commentary on the institution’s processes and activity.
“The Fed’s currently operates under a cloak of secrecy and it has gone on for too long,” Paul said in January.
During his career in the House of Representatives, the elder Paul introduced The Federal Reserve Transparency Act of 2009 that called for a comprehensive audit of the Federal Reserve System.
When Rand Paul entered the Senate, he reintroduced his father’s bill as the Federal Reserve Transparency Act of 2013, dubbed the “Audit the Fed” bill to push for Congressional oversight of the Fed.
With Republican control of the House and Senate, Paul’s measure is likely to gain traction and he included his “Audit the Fed” effort as part of his presidential campaign platform.
Fed Chair Janet Yellen has blasted Sen. Paul’s crusade to regulate the Fed.
“Audit the Fed is a bill that would politicize monetary policy and it would bring short-term political pressures to bear on the Fed,” she said in February.
An advocate of the Keystone XL Pipeline, the Kentucky Senator has called for bolstering the oil and gas industry.
“You have to be thinking about where is the job creation right now, it’s in the oil and gas industry,” Paul said on CNN in 2014 after President Obama’s State of the Union address, which included a proposal for a “smarter tax” on fossil-fuel industries in favour of support for the renewable energy sector.
Paul, who hails from a state that serves as one of the nation’s top coal producers, has also accused Obama of launching a “war on coal” by new coal reduction measures in the administration’s climate change agenda.
In spite of this, in 2008, before his Senate career, Paul actually called coal “very dirty” and “one of the least favourable forms of energy.”
When he ran to represent Kentucky in the Senate in 2010, Paul touted the state’s coal production and urged a decrease in Washington interference in the industry and increased prominence of the state and local government in regulation.
Paul’s staff has denied he flip flopped on coal.
“Sen. Paul is and always has been a proponent of energy freedom, and that includes the use of coal, which is an abundant, affordable and reliable Kentucky resource. He has sponsored or co-sponsored at least 25 bills to save and protect coal jobs in Kentucky,” Paul adviser Doug Stafford told the Washington Examiner.
ECONOMIC FREEDOM ZONES
To combat poverty in distressed economies, like Detroit, Michigan, Sen. Paul presented a plan in 2013 for “Economic Freedom Zones,” areas of reduced taxes. This proposal was a reaction to President Obama’s plan for federal funding to boost economic revitalization in “promise zones,” or cities hard hit by the economic recession.
Paul’s plan offers widespread reduction in taxes to attract business capital and new residents to these areas.
Economic Freedom Zones are defined as bankrupt municipalities plagued by high unemployment and high poverty.
Taxes for individuals living in these zones would be reduced to a single, flat rate of 5%. The corporate income tax would similarly be lowered to a single, flat rate of 5%. The payroll tax would also be reduced by 2% for the employer and employee.
Capital gains tax would also be suspended and any charitable donations made by residents in the zone would be eligible as tax credits not merely tax deductions.
Paul’s plan would also reduce the regulatory burdens on businesses in the area, fast track visas for qualified immigrants wishing to start business in the zone and free up Title I funds from the Department of Education to flow to private schools, so students in distressed public schools could seek better educational opportunities at private institutions.