The American Option: A Plan for Economic Recovery 

by Public Interest Institute Tuesday, March 17, 2009
MOUNT PLEASANT, IA – History has demonstrated that government-run solutions result in lengthening an economic crisis, and that cutting taxes is the best solution to economic crises. Presidents Warren Harding, Calvin Coolidge, John F. Kennedy, and Ronald Reagan all followed a policy of tax cuts in order to not only solve economic problems, but also create economic growth and expansion.

The best help that the federal government can provide during an economic crisis is to stimulate the private sector with tax cuts. The American Option, which is a free-market solution created by economic policy scholars at The Heritage Foundation, calls for making the 2001 and 2003 tax cuts permanent, reducing the corporate tax from 35 percent to 25 percent, reducing income tax rates, permanently maintaining the capital gains and dividend taxes at 15 percent, permanently extending the $1,000-per-child tax credit, and permanently repealing the marriage tax penalty.

In 2011, the 2001 and 2003 tax cuts, more popularly known as the Bush tax cuts, will expire. Allowing the Bush tax cuts to expire would only deepen the crisis and further damage business confidence. As Senator DeMint, the sponsor of The American Option, noted: “With the 2011 tax-bomb defused, our plan will cut income tax rates across the board compared to current law. The top marginal rate — the one paid by most of the small businesses that create new jobs — will fall from 35 percent to 25 percent…This is a matter of fairness. No American family should be forced to pay the federal government more than 25 percent of the fruits of their hard labor.”

Senator DeMint also noted that Heritage’s Center for Data Analysis “projects this plan [the American Option] would create nearly 500,000 jobs this year, 1.3 million next year, 7.5 million by 2013, and a total of nearly 18 million jobs over the next decade.”

“The economic stimulus package is just another government-run solution to a government-caused problem. The American Option provides a constitutional and free-market solution to the recession,” said John Hendrickson, a Research Analyst with Public Interest Institute in Mt. Pleasant, Iowa.


Public Interest Institute’s INSTITUTE BRIEF, “The American Option: A Plan for Economic Recovery,” is available at www.limitedgovernment.org.

For an interview or more information on this issue, contact John Hendrickson, Public Interest Institute Research Analyst, at public.interest.institute@limitedgovernment.org.

Public Interest Institute is a non-profit, non-partisan, public policy research organization located in Mount Pleasant, Iowa. The Institute promotes the importance of a free-enterprise economic system and limited government in society based upon individual freedom and liberty. Public Interest Institute believes that ideas have consequences, and involved individuals can make a difference. We challenge concerned citizens to become better informed about public policy issues.

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