Sarah Palin at STAFDA: 'Make Smart Policy, Stop Bad Policy'

There's a problem with the U.S. government. But there's a way to fix that problem if people stand up and act.

That's the message former Alaska Governor Sarah Palin presented as the keynote speaker at the Specialty Tool and Fasteners Distributors Association in Phoenix, AZ, on Monday.

"Mom and Pop shops just cannot compete when the government over-regulates them," Palin says. "The over-regulation leaves the ability to operate and prosper to big groups who can afford lobbyists. ... We're happy that McDonald's was able to get an exemption [to some policies] but what about us?"

Taking aim at several bills that have made their way through Congress or are still in process – including the national health care reform and cap and trade (which Palin referred to as "cap and tax") – Palin offered suggestions for pulling the U.S. fully out of the recession:

Repeal "Obamacare":  While no one understands everything in the bill yet, it's becoming clear that small businesses will bear the brunt of the legislation, Palin says. "We need real, patient-centered, free market reform," instead of "unfunded mandates" such as the national health care reform, she says.

Stop unnecessary spending to cut the deficit: "We have a spending problem," Palin asserts, referencing the current $1.3 trillion federal budget deficit. Palin suggests cutting non-essential spending and reforming entitlement programs such as Social Security. But, she cautions, "We have to reform them in a responsible compassionate way."

Taxes aren't the answer, she says. "Corporate America doesn't pay taxes; we the consumers do," she says. "We have to remind the government of that."

Instead, Palin suggests freezing discretionary spending at 2008 levels and moving forward with a zero-base budget.

Cancel federal programs and cut earmarks: "When I was the governor, I reduced earmarks by 85 percent," Palin says. "And we did just fine."

Canceling the remaining TARP and ARRA funds and putting that money towards the deficit would help move the country in the right direction, she says.

Make smart policy; stop bad policy: The "endless stream" of new legislation is only succeeding in the federal government "micro-managing the economy," Palin warns.

And the bad policies aren't coming only from Congress and the President, she says, taking aim at the recent proposal by the Federal Reserve Bank to inject money into the economy by buying treasury bonds. "Quantitative easing – this plan – is just printing money out of thin air," she says. "When Germany, a country that knows a thing or two about the dangers of inflation, warns us to think again, maybe we should think again."

The government itself won't fix the problems, Palin says. That's up to the people. And, she says, that's starting to happen, pointing to the results of last week's election. People are getting fed up with the direction of government.

"I don't have all the answers," Palin says. "But I want to demand the answers from those who do have the answers."