Rand Paul traveled to Detroit Thursday to pitch his new idea to the city: a bailout with its own money.
Paul, a Republican Kentucky senator and likely 2016 presidential candidate, is unveiling his plan to lower tax rates in areas across the country with unemployment rates at least 1.5 times higher than the national average. Benefits to these "economic freedom zones" would include "child education tax credits" for parents that would increase school choice; suspending Environmental Protection Agency "non-attainment designations" that regulate industry emissions; and suspending Davis-Bacon wage requirements that privilege union shops in contract bids.
Paul said in a conference call with reporters Thursday morning that the bill he'll introduce in the Senate on Monday would seek to make economically depressed areas attractive to business and investors. The plan would lower corporate and personal income rates to 5 percent, eliminate capital gains taxes, lower the payroll tax, and lower the capital threshold for foreign investors to come into the country on an EB5 visa from $500,000 to $50,000.
"Where we truly think this is different than government stimulus, is that a government stimulus takes money from one area of the country, brings it to Washington, then somebody -- a central planner -- has to decide who to give it to. The problem is, central planners never are smart enough to know which entrepreneurs will succeed ... so they typically give it to the wrong people," Paul said. "In ours, basically the money will go back to people who the customers have already voted for, businesses that are making a profit, a welding business in Detroit that has 10 employees. They're the one that's going to get the taxes back."
Businesses that prove themselves successful, Paul said, will "be stimulating the economy by having more money. They can buy something with it, buy a piece of equipment, hire a new employee or even buy a boat."
Paul, who has a proven knack for using populist language to promote conservative ideas, consistently talked about his plan through the prism of bailouts, but contrasted it with those usually performed by government.
"I think it's also politically palatable, because I don't think there is going to be any kind of impetus or a movement to have a bailout from one part of the country to another," Paul said, indicting the usage of federal dollars taken from taxpayers across the country to help a specific region. "I think the idea of leaving money in Detroit that originates in Detroit could get legs with both parties."
Paul plans to open a Republican National Committee office in Detroit on Thursday and speak at a Detroit Economic Club luncheon Friday.
He said that his trip to Detroit, which is $18 billion in debt and this week was ruled eligible for bankruptcy by a federal judge, is part of an effort to expand the Republican Party's appeal to lower-income, minority and younger voters.
"Republicans as a party, myself included, need to do more in the cities. I think, instead of just saying, 'Hey, the free market lifts all boats,' we need to specifically come in with plans for areas," Paul said. "Detroit's got nearly 18 percent unemployment. We have counties in Kentucky that have almost 18 percent unemployment. We have places in our country that are really suffering. And I think we need something dramatic to be done. It can't be the same old prescription that we're trying to pass because that hasn't worked."
UPDATE: The Michigan Democratic Party responded to Paul's remarks in a statement:
"Sen. Paul was a vocal opponent of the auto rescue, which saved over a million jobs, and led the Republican effort to shut down the government, costing Michigan's economy hundreds of millions. His special interest tax handout plan is nothing new. Here in Michigan, Rick Snyder gave $1.8 billion to wealthy special interests, and paid for it with billions in devastating cuts to our local communities and public schools. It's time for our elected leaders to stop the tax giveaways, invest in communities and improve education."
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