The higher levels of capital, GDP, and income take time to develop [from the Romney approach]. It takes about 5 years to acquire all of the additional equipment made possible by the tax reductions and about 10 years for the additional structures to be completed. About two-thirds of the expansion of the capital stock occurs within 5 years. Job growth begins quite quickly, as people are put to work creating the additional machines and buildings. Job growth continues and is sustained as people are then put to work using the additional machinery and industrial and agricultural structures, and working and shopping in the additional commercial buildings.
The revenue recovery from the expansion takes time to develop. The greatest budget hit from the tax reductions occurs in the early years. A temporary injection of revenue or spending restraint should supplement the tax cuts. An obvious candidate would be one-time asset sales and elimination of recent increases in federal outlays for emergency “stimulus” that will not be needed as the economy picks up. Other budget changes that would enhance economic growth, as well as help fund the pro-growth tax reform, could include reductions in the least valuable federal spending programs, including numerous subsidies of uneconomical private industries.
The federal government possesses an enormous asset portfolio. It estimates that, at the end of fiscal year 2011, it held approximately $1,400 billion of equipment and structures, $300 billion of inventories, $940 billion of land, and $480 billion of mineral rights. The Federal Government owns approximately 28 percent of the land in the United States. Many of these assets are not needed for federal operations, and many are poorly managed. Selling a portion of the government's asset holdings would have the dual advantages of allowing the nation's resources to be used more efficiently and helping finance the temporarily high costs of tax reform in the early years before the positive growth effects kick in. The federal government could realize additional income, as well as reduce its yearly spending, by privatizing some of the enterprises it now owns and operates. Asset sales and privatization have been powerful financing tools for many foreign nations.