COLUMBIA, S.C. (WACH, AP) -- Republican presidential hopeful Rick Perry proposed dramatic tax and spending changes Tuesday, saying he would let Americans choose between a 20 percent flat tax and the current system, allow private Social Security accounts and slash government spending and regulation.
Perry, seeking to regain the momentum he enjoyed in late August, said his plan would significantly spur economic growth. But analysts from the left and right said he would need draconian federal budget cuts to avoid massive deficits.
South Carolina is a critical state for Perry. The first-in-the-south primary state is key to his path to the GOP nomination, though Perry has fallen in the polls here and nationally.
A CBS/New York Times poll released Tuesday showed Perry has fallen to fifth place behind frontrunner Herman Cain, Mitt Romney, Newt Gingrich and Ron Paul. Perry checked in with six percent of the vote, a seventeen point drop since mid-September. The Texas governor is trailed only by Michelle Bachmann, Rick Santorum, and Jon Huntsman.
In a pitch to conservatives Tuesday, the Texas governor said his "Cut, Balance and Grow" plan was bolder than what his Republican rivals or President Barack Obama would do. His proposal calls for gradually increasing eligibility ages for Social Security and Medicare and for amending the Constitution to require balanced budgets.
"America is under a crushing burden of debt, and the president simply offers larger deficits and the politics of class division," Perry said while campaigning in South Carolina, whose primary will follow early voting in Iowa and New Hampshire. "Others simply offer microwaved plans with warmed-over reforms based on current ingredients."
After weeks of calling Social Security a "Ponzi scheme," Perry proposed major changes to the program's funding and payouts. Benefits would not change for current and soon-to-be retirees. Eventually, however, the eligibility age would rise, and wealthier people would see reduced benefits.
The heart of Perry's plan would reduce or eliminate an array of taxes. He would end taxes on Social Security benefits, estates, dividends and capital gains, which would most help upper-income people. He would lower the corporate income tax rate as well as the personal income tax rate for those who choose his 20 percent flat rate.
The top marginal tax rate on individual income is now 35 percent. It was 70 percent in the 1970s.
Perry's plan would let people exempt $12,500 of their income, plus $12,500 for each dependent, from taxation. He would keep popular deductions, such as those for mortgage interest, state taxes and charity gifts, for families making less than $500,000 a year.
Herman Cain was the first presidential candidate to propose a flat tax this year. He called for a 9 percent income tax rate -- and no deductions for most people -- along with a 9 percent sales tax.
Perry spent Tuesday morning touring a plant in Gray Court, before unveiling his "Cut, Balance and Grow" plan. During an afternoon visit to Columbia, Perry continued to push his plan and picked up an endorsement from South Carolina House Speaker Bobby Harrell.
"I truly believe that America's best days are still ahead of us," said the Charleston Republican Harrell. "But, we need a leader who will steer us back to prosperity."
Supporters of the Perry plan say it will generate jobs and improve the economy by increasing workers' take-home wages. Critics argue the proposal will benefit high income families and hurt the middle class.
Detractors weren't hard to find on Tuesday, just hundreds of feet from where Perry was meeting with the media. Occupy Columbia demonstrators, who have been rallying outside the State House for almost two weeks, were ready to share their opinion.
"I feel like if you get a normal person, working a normal job, doing normal things, it's going to affect us more than anyone else," said Occupy Columbia demonstrator Sarah Parker.
Perry pitched the opposite while pushing the simplicity of his rebooted tax proposal. Perry claimed taxpayers could file their returns on the postcard he waved in front of the television cameras at his stops in Columbia and Gray Court.
"Taxes will be cut across all income groups," Perry said. "The net benefit will be more money in Americans' pockets, with greater investment in the private economy instead of the federal government."
Perry acknowledged that many of his proposals, including the private Social Security accounts, are controversial.
Currently, Social Security payroll taxes paid by workers go directly to today's retirees, with any surplus used for other government programs. Perry said private investment accounts would generate more money for future retirees.
President Obama's campaign spokesman Ben LaBolt said Perry's economic plan "would shift a greater share of taxes away from large corporations and the wealthiest onto the backs of the middle class." Some analysts, however, said middle class taxes might be unchanged because the flat tax would be optional.
Rick Perry wasn't the only politician talking economics in South Carolina on Tuesday. Rick Santorum attended a fundraiser at the Spice of Life restaurant in Spartanburg where he talked about his own tax proposal.
"We put a plan together that simplifies the code, doesn't have folks at the lower and middle spectrum paying more taxes," said Santorum. "Every body's going to pay less in taxes but you're going to make more income. So ultimately I guess you're going to pay more, but it's okay cause you're making more money."
Santorum is one of just three candidates currently trailing Perry in the latest poll.
Perry's policy speech Tuesday sets him to the right of chief rival Mitt Romney, who wants to make less sweeping changes to the tax code. Perry plans to air TV ads in Iowa and has hired a roster of experienced national campaign operatives to help him. Perry's chief adviser on the economic plan is former presidential candidate Steve Forbes, who proposed a 17 percent flat tax when he ran for president in 1996.
Romney released a 59-point jobs plan in early September. Romney would lower rates on corporations and on savings and investment income for middle-class Americans.
Do you think Perry's proposal will improve his standing in the polls ahead of January's first-in-the-South primary?
(The Associated Press contributed to this report.)