Republican presidential candidate Mitt Romney's tax proposals would not only tackle deficits without increasing taxes but would also stimulate economic growth, said William Isaac, former chairman of the Federal Deposit Insurance Corporation and currently a senior managing director of FTI Consulting.
Romney has proposed cutting taxes on all Americans by 20 percent while closing loopholes, especially those enjoyed by wealthier Americans.
President Barack Obama has proposed allowing Bush-era tax breaks to expire for wealthier Americans and has pushed through other laws such as the Patient Protection and Affordable Care Act, which carries tax hikes on investment income.
Tax hikes aren't needed at all, Isaac said, pointing out that tax cuts don't threaten economic growth if loopholes are plugged — they'll do the opposite.
"President Kennedy thought tax cuts were a way to get the economy moving. President Reagan thought tax cuts were a way to get the economy moving and in both ways it worked, and I believe it will work again. We do need to reduce tax rates," Isaac told Newsmax.TV in an exclusive interview.
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"We need to stimulate growth by tax cuts to make it revenue neutral. Mitt Romney is proposing to eliminate deductions for people who make a lot of money. I am one of them and I support that. I don't know why anybody would want to help me pay my mortgage interest," Isaac added.
"So we really need a fairer and simpler tax code."
President Obama took office pursuing healthcare and financial reforms that beefed up regulations, which in the end, failed to do what they aimed to do.
"His focus clearly should have been on the economy and nothing but the economy, and creating jobs, and instead he got off on the track of pursuing the healthcare legislation that added $1 trillion to our deficits and didn't solve healthcare problems and then his next act was to pursue the Dodd-Frank financial reform legislation, which didn't address the issues that lead to the crisis, and wouldn't have prevented it and won't prevent the next one," Isaac said.
"We wasted two years."
Supporters of the president argue the current administration inherited a troubled economy embroiled in a balance sheet recession cause by the housing collapse.
The housing boom originated in the 1990s, Isaac pointed out, when mortgage giants Fannie Mae and Freddie Mac began rolling out policies that would make housing more available to those who couldn't afford it.
Furthermore, the economic downturn wasn't the worst one ever inherited by an incoming president, Isaac added, and past examples show excessive regulations don't fuel recovery.
"The economy was in very bad shape when Ronald Reagan became president. The prime rate was 21.5 percent. We suffered through 3,000 bank and thrift failures. Somehow we came through it because we did a better job with crisis management," Isaac said.
"But the problems began to get out of hand in the 90s, got worse in the 2000s and it was Republicans and Democrats alike. Lots of blame to go around," Isaac added.
"We can't say George Bush caused his mess. He didn't. He had a hand in it. His SEC didn't do a very good job. His Secretary of the Treasury didn't do a good job of crisis management, but he didn't create the housing crisis — that was the Democrats in Congress."
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