Why Vivek Ramaswamy thinks America can grow its way out of the Biden doldrums
Tiana Lowe Doescher
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Whatever you think of 2024 GOP presidential hopeful Vivek Ramaswamy’s policy prescriptions or brash campaign trail demeanor, he’s undoubtedly a successful entrepreneur.
The 38-year-old Harvard graduate made his first fortune before enrolling in Yale Law School. Ramaswamy’s biotech and other ventures have since netted him at least $600 million.
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All of this gives the Ohio-based businessman authority in touting economic plans that would reverse the stagnancy of President Joe Biden’s administration and would, in some way, stand in contrast to the undisputed leader of the 2024 Republican pack, former President Donald Trump.
Though he’s never been elected to public office, Ramaswamy has leapfrogged governors, senators, and even a former vice president to third-place standing in the Republican primary scrum, polls show. Ramaswamy argues America can grow its way out of the federal deficit explosion driving the worst inflationary crisis in 40 years.
He also wants to take aim at a bloated federal workforce and argues previous presidents, Democrats and Republicans, have wrongly adhered to decades-old civil service protections. Per Ramaswamy, the president, as head of the nation’s executive branch, can hire and fire federal employees at will.
That is a notion sure to be tested in court if Ramaswamy makes it to the White House, but he’s been specific about which federal agencies need more than haircuts when it comes to staffing. Ramaswamy wants to fire 75% of all federal employees, or about 1 million government workers. He would achieve this in part by eliminating federal departments and agencies such as the scandal-ridden FBI, the Education Department, and the Nuclear Regulatory Commission, converting a remainder of those institutions’ most crucial jobs to uncontroversial cornerstones such as the Commerce Department.
Spurring Growth
Ramaswamy’s detailed economic growth plans have a dual purpose beyond slicing into bureaucratic “deep state” rot and corruption. Ramaswamy argues an expansive federal government not only costs too much but also crowds out the private growth that has been key to U.S. prosperity for decades.
“I think that there are steps that we can more meaningfully take towards achieving economic growth,” Ramaswamy told me in July as his campaign was beginning to catch fire in Iowa, ahead of the Hawkeye State’s Jan. 15 caucuses, which start Republican nomination season voting.
“Like unlocking American energy, like no longer subsidizing people to stay at home and earn money by not working, like restoring dollar stability [through the Federal Reserve], like shutting down much of the regulatory state, like rescinding most federal regulations that fail the Supreme Court’s West Virginia v. EPA standard, or even the standard revised in this year’s Department of Education case about student loan forgiveness,” Ramaswamy said.
“I think that we can deliver economic growth in a way that actually grows our way out of most of our fiscal problems,” he added. “The reason why is, if you do the math on this, if we’re growing at over 3% GDP growth, we actually grow our way with a compounding effect out of most of our fiscal problems.”
Saving Social Insurance Programs From Themselves
Ramaswamy’s approach to entitlement reform comes the closest to Trump’s and veers further than traditional Republican orthodoxy espoused by former Vice President Mike Pence and others. Neither Ramaswamy nor Trump wants to touch Social Security, long deemed the third rail of politics over the political threat posed to those trying to rein in the social insurance program for people ages 65 and up.
Yet refusing to touch Social Security is tantamount to a 23% across-the-board benefit cut once the program reaches insolvency within the decade. This approach also ignores the looming explosion in projected entitlement growth thanks to an aging, sickening, and increasingly retiring population, which is responsible for the overwhelming majority of our future federal debt.
And when it comes to overcoming burgeoning federal debt through massive economic growth, Ramaswamy’s math does not entirely add up. According to the nonpartisan Congressional Budget Office’s projections for 2033, for every 1.2-point increase in annual GDP growth over 2%, the deficit would shrink by $51 billion. Ramaswamy’s vaunted goal of 4% economic growth, which still-developing economies such as Turkey’s struggle to achieve, would halve the projected federal deficit from $1.4 trillion to $700 billion. Yet under that scenario, labor productivity would have to at least double to stabilize our deficit projection to historic norms.
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There is one crucial difference between Ramaswamy and Trump in monetary policy. Trump veered from the precedent of the president taking a hands-off approach to the Fed. Ahead of Trump’s failed 2020 reelection bid, he repeatedly harangued the central bank to slash interest rates back to zero despite a bullish U.S. economy before the COVID-19 pandemic.
Ramaswamy, laudably, takes reforming the Fed back to its original design seriously. Ramaswamy and Pence are the only candidates in the race to advocate the abolition of the Fed’s dual mandate, which means replacing its obsession with maximizing employment with a sole diktat of restoring dollar stability. Under President Ramaswamy, the days of zero interest rate policy and rampant quantitative easing — or, as he referred to it to me, the Fed “throwing cocaine on the party” — would be over.