4 Economic Snafus That Sank Rick Perry

The Texas governor's economic ideas won feel-good points but alienated seniors and even business leaders.

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His candidacy briefly heartened conservatives. But from the day Rick Perry declared he was running for president last August, his momentum mostly decelerated.

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The Texas governor struggled in a series of debates and seemed tongue-tied when explaining his own positions. But he also endorsed some peculiar economic ideas that were off-putting to many voters. With the weak economy and fading prosperity the top issue on voters' minds, Republican front-runner Mitt Romney might be wise to learn from Perry's mistakes. Here are four of Perry's economic positions that are out of step with mainstream views:

Social Security is a "Ponzi scheme." Perry characterized the popular pension program for seniors this way early in his campaign, later using more judicious language to describe it. But Perry's hostility toward this safety-net program stuck, and he formally called for replacing Social Security at some point in the future with a revamped program that would give people the choice of investing their benefit payments in privatized accounts.

That's a traditional Republican position, and with Social Security in need of reforms to make it more affordable, limited privatization could in fact happen some day. But Perry's early attacks on Social Security made him an enemy of a program that many seniors rely on for their livelihood. As hard as Perry tried to prove otherwise, alienating a huge active voting bloc is still a poor campaign strategy.

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Regulations ought to be eviscerated. Business owners clearly want the government off their backs, and many Americans feel Washington's reach has grown too long. But Perry himself overreached in calling for the complete repeal of new rules governing banks and financial firms, and for gutting the agencies that oversee the safety of food and pharmaceuticals and the cleanliness of air and water.

Perry was trying to tap into falling confidence in government, but he failed to notice that Americans' faith in big companies is plunging too. His aggressive plan to deregulate finance, food, and environmental protection would merely give one out-of-favor group (government) less control, while giving another out-of-favor group (big business) more control. As for deregulating banks, Perry seems to have been particularly deaf to consumer sentiment, since trust in banks has fallen by more than trust in any other institution.

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The Federal Reserve is criminal. The Fed has become an easy target for people dissatisfied with Washington's handling of the economy, and with the complexity of finance in general. Perry tried to capitalize on that sentiment early in his campaign by declaring that Fed Chairman Ben Bernanke is "almost treasonous," on account of aggressive policies meant to drive down interest rates, weaken the dollar, and stimulate economic activity. As with his Ponzi-scheme remark, Perry later toned down his rhetoric, though he continued to complain about the Fed.

Libertarians may have applauded, but CEOs and business executives were horrified. Many of the people who run companies believe the Fed almost single-handedly prevented a depression. And with Congress tied in knots, they see the Fed as the only government body that's still able to do anything at all to boost the economy. Though the long-term consequences could still be problematic, most economists feel that Fed policies have stoked stock prices, made borrowing cheap, boosted American exports, and made the U.S. economy far more robust than Europe's. Perry may have won a few populist points with his Fed bashing, but business leaders largely dismissed him as an amateur.

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Corporations should pay lower taxes. Perry out-Romneyed Mitt Romney on this one, by arguing for cutting the corporate tax rate from 35 percent to 20 percent, compared to Romney's target of 25 percent. There may be a good case to make for lowering corporate taxes and making the United States a more appealing place to do business, but a lot of Americans remain unconvinced.

Again, Perry seemed to be parroting the views of a small coterie of pro-business acolytes, without stress-testing his idea against broader public opinion. If he had, he might have realized that middle-class Americans are tired of corporate giveaways and want to know what's in it for them. The trickle-down theory didn't seem to work with the 2008 and 2009 bank bailouts, so voters are rightly skeptical that lower corporate taxes will help create jobs or lift overall middle-class living standards.

Perry did come up with one idea late in his campaign that seemed to dovetail nicely with the mood of voters: reduce Congress to part-time work. It's an implausible idea—since Congress makes the laws and rules that govern itself—but given the legislative body's chronic gridlock and record-low approval ratings, voters probably don't mind. If Mitt Romney wants to adopt any of Perry's proposals, that may be the one.

Rick Newman is the author of Rebounders: How Winners Pivot From Setback To Success , to be published in May. Follow him on Twitter: @rickjnewman

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