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Larry Kudlow: Romney’s Attack on Crony Capitalism

The Republican presidential candidate is saying all the right stuff — is anyone listening?

Let me build on Charles Krauthammer’s great Friday column, “The GOP’s Suicide March.” Krauthammer argues that just as President Barack Obama’s class-warfare, soak-the-rich mantra started lagging in the polls, some Republicans on the campaign trail started making the case that Mitt Romney’s Bain Capital was involved in nothing more than vulture capitalism, looting companies and destroying jobs. Keeping class envy alive.

I’m not going to name names, because everybody knows who these Republicans are. Instead, I want to go positive and commend Romney himself. Romney did his best in the second South Carolina debate to fight for free-market capitalism and Adam Smith, and against the spread of Obama-style crony capitalism and class envy.

During the Thursday night debate, Romney launched this:

“You’ve got to stop the spread of crony capitalism. (Obama) gives General Motors to the UAW. He takes $500 million and sticks it into Solyndra. He stacks the labor stooges on the NLRB so they can say no to Boeing and take care of their friends in the labor movement. ... He has to bow to the most extreme members of the environmental movement. He turns down the Keystone pipeline, which would bring energy and jobs to America.

“My view is capitalism works. Free enterprise works. ... There’s nothing wrong with profit, by the way. That profit went to pension funds, to charities. It went to a wide array of institutions. ... And by the way, as enterprises become more profitable, they can hire more people. I’m someone who believes in free enterprise. I think Adam Smith was right. And I’m gonna stand and defend capitalism across this country, throughout this campaign. I know we’re going to get hit hard from President Obama, but we’re gonna stuff it down his throat and point out that it is capitalism and freedom that makes America strong.”

Whoa. Tough stuff. The right stuff.

I watched this on DVR late at night. So just to be sure, I read the transcript the next morning. Still there. And let me say, this is exactly what the Republicans must say.

The issue of crony capitalism should be front and center in this campaign. President Obama defends his cronies instead of the so-called 99 percent. That’s his contradiction. Big Labor, Big Business and Big Green Energy are collections of cronies with big jobs, big salaries and big privileges. Nothing to do with the 99 percent.

But Romney can go even further to slam crony capitalism. This is where tax reform and deep spending cuts come in. A flattening of tax rates should be accompanied by the elimination of cronied tax deductions, exemptions and carve-outs. Even more, we should get rid of crony corporate welfare wherever it exists, including crony government subsidies to energy, exports and agriculture. Wherever it exists.

Let’s say you went to two tax brackets at 10 and 25 percent, as per Paul Ryan’s plan, or even the next step of a single-rate flat tax. Here, all the crony tax advantages should be wiped out. They won’t be necessary at lower rates, and their removal would end crony favoritism.

Finally, Romney can punctuate his crony-capitalism attack by telling folks he will overturn and upend the prevailing Washington, D.C., establishment.

Sadly, with the exception of Rick Santorum making the case for lower tax rates, Thursday night’s debate had virtually no discussion of tax reform. Newt Gingrich never even once mentioned his 15 percent flat-tax plan. Unfortunately, Gingrich still leaves most deductions and carve-outs in place, and that needs to be fixed.

That aside, Romney capped his strong performance with a Reaganesque summation. As he has in the past, he criticized Obama for trying to “transform” America from a merit society — an opportunity society where people are free to choose — to a European-style entitlement society. Romney said, “We need to restore the values that made America the hope of the Earth. ... (President Obama) has made it almost impossible for our private sector to reboot. ... I will defeat Barack Obama and keep America as it’s always been, the shining (city) on a hill.”

Strong stuff. Good stuff.

Is anyone listening?

Larry Kudlow National Review Online’s economics editor, is host of CNBC’s The Kudlow Report and author of the daily web blog Kudlow’s Money Politic$. Click here for more information, or click here to contact him.

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