2012 Presidential White Paper #9 July 21, 2011

Former New Mexico Governor Gary Johnson INTRODUCTION Gary Johnson was elected Governor of New Mexico in 1994, and served from 1995 to 2003. Since Johnson has never served in Congress, he does not have a rating by the Club for Growth. However, the Cato Institute, a free market think tank, produces a biennial scorecard on the nations governors based on their tax and spending policies and actions. Over his eight years as Governor, Gary Johnsons scores were: 2002 B 2000 B 1998 B 1996 B

TAXES The Club for Growth is committed to lower taxes especially lower tax rates across the board. Lower taxes on work, savings, and investments lead to greater levels of these activities, thus encouraging greater economic growth. Overall, Governor Johnson has an excellent record on taxes and consistently pushed for tax cuts despite having to deal with the liberal New Mexico Legislature. Late in his second term, the Cato Institute found that Johnson was one of four governors proposing or enacting the largest income tax rate cuts during their tenures.1 In his first term, Governor Johnson proposed reducing the top rate of the state personal income tax from 8.5% to 8%, along with other tax cuts, but was rebuffed by the Legislature.2 He signed a repeal of a 1993 6-cent-a-gallon tax hike.3 In 1997, Governor Johnson again proposed to cut
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Cato Institute, A Fiscal Policy Report Card on Americas Governors: 2002 Cato Institute, A Fiscal Policy Report Card on Americas Governors: 1996 3 Santa Fe New Mexican, 3/10/95

the top rate, this time to 8.3%. The legislature proposed to cut it to 8.2%, but offset some of the revenue losses from this and other tax cuts with a cigarette tax increase. According to Cato, Johnson signed the income tax cut, and vetoed the cigarette tax hike.4 Unlike some of the other Republican candidates for President this year and in past election cycles, Gary Johnson never raised the cigarette tax. While the tax on cigarettes has little relevance to economic growth, the fact that he held the line on such taxes demonstrates how strongly he opposes tax hikes. In 1999, he vetoed a 12-cent-a-pack cigarette tax hike not because he liked smoking, he says, but because he opposes all tax hikes.5 New Mexicos cigarette tax rate stayed the same from 1995 to 2003.6 In 2001, Governor Johnson vetoed a bill to cut the top income tax rate from 8.2% to 7.7% because it also lowered the dollar amount that the top rate kicked in.7 His proposal would have cut the income tax by $72 million while the legislature wanted just a $32 million cut and a $30.5 million one-time rebate. Johnson later said he regretted vetoing the legislatures version.8 Over the course of his two terms, Governor Johnson cut the state income tax, the gasoline tax, the state capital gains tax, and the unemployment tax.9 As a candidate for President, Governor Johnson has indicated his support for a flat tax.10 He also supports eliminating the corporate income tax.11 He called the 2010 deal to temporarily extend the Bush tax cuts for two years not a good one because it didnt make them permanent.12

SPENDING The Club for Growth is committed to reducing government spending. Less spending enhances economic growth by enabling lower taxes and diminishing the governments economically inefficient allocation of resources. Governor Johnson was one of the most anti-spending governors in New Mexico history. Governor Johnson set a state record for vetoes as Governor, earning the title Governor No after 742 total vetoes of bills over two terms.13 In an interview with John Stossel on Fox News,
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Cato Institute, A Fiscal Policy Report Card on Americas Governors: 1998, page 57. Cato Institute, A Fiscal Policy Report Card on Americas Governors: 2000 6 Campaign for Tobacco-Free Kids, Tobacco Tax Increases Are A Reliable Source of Substantial New Sate Revenue, 12/19/08 7 New Mexico Senate Executive Message No. 44, 4/5/01 8 Associated Press, 3/4/02 9 Cato Institute, A Fiscal Policy Report Card on Americas Governors: 2002 10 ABC News The Note, 2/9/10 11 GaryJohnson2012.com 12 Daily Caller, 12/14/10 13 Las Cruces Sun-News, 4/3/11

Governor Johnson bragged that one of his veto messages was Im vetoing this piece of legislation because its just way too long and we dont understand what it says.14 Governor Johsnon looked for private alternatives to the infrastructure spending that too often busts state budgets. For example, Highway 44 between Albuquerque and Farmington was designed, financed, built, and guaranteed by a private company.15 In 2000, he refused to sign a budget and forced a special session with the legislature over funding priorities, a battle which ended with Johnson signing a $3.5 billion dollar budget but vetoing several small spending priorities such as $5 million on expanded Medicaid.16 He threatened to shut down state government when the legislature fought him and even threatened to let prisoners out of jail if the state couldnt afford to house them.17 On federal issues, Governor Johnson says he would have opposed TARP. Government should not have been involved in thisWhy should Goldman and AIG be saved but not Lehman?18 He also wants to eliminate government subsidies for Fannie Mae and Freddie Mac.19 He says he would have voted against the stimulus.20 He has said that he would cut the federal budget by 43%, Start out with the big four Medicaid, Medicare, Social Security and defense, Johnson said in New Hampshire in early 2011.21

ENTITLEMENT REFORM Americas major middle-class entitlement programs are already insolvent. The Club for Growth supports entitlement reforms that enable personal ownership of retirement and health care programs, benefit from market returns, and diminish dependency on government. Governor Johnson has an excellent record of holding down the exploding growth of entitlement programs that now cripple state budgets. As Governor, Johnson presided over the beginning of managed care for Medicaid recipients in New Mexico and pushed for speedy implementation.22 The managed care program (known as Salud!) replaces fee-for service and covers approximately two-thirds of available services under Medicaid.23 Salud! has generally been
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Fox News, http://www.youtube.com/watch?v=Hx-i_UUg8K8 Reason Magazine, January 2001 16 Associated Press, 4/13/00 17 Stateline, 3/14/00 18 Republican Liberty Caucus interview, 1/19/10, http://www.rlc.org/2010/01/19/interview-with-governor-garyearl-johnson/ 19 GaryJohnson2012.com 20 Reason Magazine, April 2010 21 Concord Monitor, 1/13/11 22 Health Policy for Low-Income People in New Mexico, The Urban Institute, November 1998 23 Concise Guide to New Mexico Medicaid, New Mexico Hospital Association, November 2008

described as operating with significant savings to both the State and Federal governments, when compared to fee-for-service.24 In 2000, Governor Johnson proposed to re-impose a gross income cap on welfare recipients.25 In 2002, Johnson proposed limiting eligibility for Medicaid from 235% of the federal poverty level down to 200% for families with children 5 and under and 100% for ages 6-18. He also let his states S-CHIP program expire after vetoing an attempt to make it permanent.26 Governor Johnsons website lists some major entitlement reform proposals, including:27 Block grant Medicare and Medicaid funds to the states, allowing them to innovate, find efficiencies and provide better service at lower cost. Repeal ObamaCare, as well as the failed Medicare prescription drug benefit. Fix Social Security by changing the escalator from being based on wage growth to inflation. Governor Johnson has also said that he would be open to personal accounts for Social Security,28 as well as means testing the program.29

REGULATION Excessive government regulation stymies individual and business innovation necessary for strong economic expansion. The Club for Growth supports less and more sensible government regulation as a critical step toward increasing freedom and growth in the marketplace. In 1999, Johnson vetoed a bill which would have raised the minimum wage from $4.25 per hour to $5.65.30 He also signed a law deregulating New Mexicos electricity market that allowed residential, small-business customers and schools to start shopping for their electricity supplier.31 Hes argued that when a Democrat negotiates with labor unions through collective bargaining its a giveaway instead of a negotiation.32 He says he doesnt believe in cap-andtrade legislation, saying that I do not believe that taxing carbon emissions is the way to go

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New Mexico Medical Review Association, Independent Assessment of New Mexicos Medicaid Managed Care Program - Salud!, 7/10/09 25 Associated Press, 1/3/00 26 Associated Press, 3/6/02 27 GaryJohnson2012.com 28 Natioanl Review, 4/27/11 29 Washington Independent, 2/10/11 30 SB497, 1999 31 Sante Fe New Mexican, 4/9/99 32 NewMexicoWatchdog.org, http://newmexico.watchdog.org/6171/gary-johnson-on-wisconsin-budget-battletoo-often-negotiations-are-a-giveaway/

forward.33 Governor Johnson also opposes so-called Net Neutrality regulations that would lead to a larger government role in the use of Internet bandwidth.34

FREE TRADE Free trade is a vital policy necessary for maximizing economic growth. In recent decades, Americas commitment to expanding trade has resulted in lower costs for consumers, job growth, and higher levels of productivity and innovation. On trade, Johnson generally supports NAFTA and other free-trade agreements,35 In a June 9 segment on John Stossels program on Fox Business, Johnson debated Obama impersonator Reggie Brown and said he wanted no tariffs, no restrictions on trade. 36 He did sound a little squishy on trade in a March 2011 interview when he said that So much of the legislation that we pass isnt really free market at all. Its touted as free market, when the reality ends up to be very corporate. The reality ends up to be corporatismI was always looking at business legislation from the standpoint of having it affect everyone equally as opposed to big business being further advantagedso many of these treaties, NAFTA being onethe criticism of NAFTA should be rooted in the fact that big business became even bigger business.37

SCHOOL CHOICE The Club for Growth supports broad school choice, including charter schools and voucher programs that create a competitive education market including public, private, religious, and non-religious schools. More competition in education will lead to higher quality and lower costs. Governor Johnson has a consistent record of support for school choice and vouchers. Governor Johnson proposed giving every student in the entire state of New Mexico vouchers worth $3,500.38 He once compared the program to child-care vouchers, saying For those mothers who are on welfare, we give them what in essence is a voucher which allows them to choose where to send their children to child care, and in many cases that child care is religious. That's a state-funded program. We don't call it a voucher but it might just as well be called a voucher.39

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Our America Initiative, 11/28/09, http://www.youtube.com/watch?v=kWOWKfO_VpU&feature=player_embedded 34 GaryJohnson2012.com 35 Daily Caller, 2/11/10 36 Fox Business Channel, Stossel, 6/9/11, http://www.foxbusiness.com/onair/stossel/index.html#/v/991311850001/gary-johnson-takes-on--obama-in-debate/?playlist_id=87530 http://www.youtube.com/watch?v=Gx6uUB0TcHc&feature=player_embedded#at=1528 37 YouTube, http://www.youtube.com/watch?v=Gx6uUB0TcHc&feature=player_embedded#at=1528 38 Reason Magazine, January 2001 39 Heartland Institute, 10/1/00

He supports eliminating the Department of Education and wants universal school choice.40

TORT REFORM The American economy suffers from excessive litigation which increases the cost of doing business and slows economic growth. The Club for Growth supports major reforms to our tort system to restore a more just and less costly balance in tort litigation. Governor Johnson formed a task force aimed at limiting punitive damage awards in 1996.41 He also supported the Private Securities Litigation Reform Act that toughened liability standards for securities litigation.42

POLITICAL FREE SPEECH Maximizing prosperity requires sound government policies. When government strays from these policies, citizens must be free to exercise their constitutional rights to petition and criticize those policies and the politicians responsible for them. In a January 2001 interview with Playboy Magazine, Governor Johnson stated that he opposed campaign contribution limits. The problem isn't large contributions. The problem is that we don't know who contributed. In New Mexico, there's no limit on what I can receive from anyone, but I have to disclose it all--with the exception of soft money, said Johnson. If you limit contributions from an individual to, say, $1000, then I think just the opposite occurs. Then you have politicians beholden to way too many people.43 In 2010, Johnson said he favored unlimited contributions by corporations as well.44

POLITICAL ACTIVITY & ENDORSEMENTS Robust political activity is essential to producing a federal government that is more respectful of free markets and produces more pro-economic growth policies. The Club for Growths PAC has been active in some of the more central battles within the Republican Party nominating process in recent years, supporting pro-growth candidates over pro-government ones. Govenror Johnson has a very limited endorsement history. He endorsed Ron Paul for President on January 21st, 2008.45 He endorsed Steve Forbes for President in 2000.46
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GaryJohnson2012.com Sante Fe New Mexican, 7/4/96 42 Congressional Record, Page S. 17970, 1995 43 Playboy Magazine, January 2001 44 YouTube, http://www.youtube.com/watch?v=pHdDaDvqQcU&feature=related 45 Ron Paul 2008 Press Release, 1/21/08

SUMMATION

As John Stossel noted in a recent column, Gary Johnson was missing from last week's Republican presidential debate, and that's too bad. He's an announced candidate who was a two-term governor of New Mexico, and he makes a case for strongly limited government.47 Until or unless Johnson rises in the polls, people may not hear Johnsons views in future Republican primary debates either. With few exceptions, Governor Johnsons tenure as New Mexicos Governor and his public record since that time has revealed a generally pro-growth attitude. We are slightly concerned that, like fellow libertarian Congressman Ron Paul, that he may harbor anti-free trade sentiments. Governor Johnson deserves special praise for his consistent use of his veto-pen as Governor. We believe that Governor Johnson would most likely be a pro-growth President if elected.

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Dallas Morning News, 8/29/99 Human Events, 6/22/11