Fiscal Cliff
On January 1, 2013, the United States Senate passed an agreement to avoid the so-called “fiscal cliff” scenario by a vote of 89-8. The agreement includes $620 billion in staggering tax hikes but only $14 billion in spending cuts—though some of these meager cuts remain unspecified. This equates to a 44:1 ratio of tax hikes to spending cuts. The Congressional Budget Office (CBO) estimates that the package actually contains $330 billion in new spending, which derives from extending unemployment benefits and enacting new refundable tax credits.
Further, only $2 billion of the aforementioned spending cuts are scheduled to take effect in 2013. Overall, CBO estimates that the package deepens the deficit by $4 trillion over the next decade.
I voted against and do not support this agreement. Our economy needs spending restraint by the federal government and fundamental tax reform that eliminates corporate welfare and lowers individuals' rates. Instead, this package raises taxes, increases spending, and will lead to more borrowing. This deal is certainly no cure-all; rather, it falls far short of the measures necessary to promote job creation, economic growth, and fiscal stability.
Jobs, Taxes, & Spending
Jobs
The federal government does not create sustainable job growth; the private sector does. Rather, the government’s proper role is to create the conditions necessary for private sector job growth.
The Obama administration’s initiatives have not produced private sector job growth. However, they have generated massive amounts of red tape, bureaucracy, and uncertainty for American businesses. Worse yet, President Obama has spent trillions of taxpayer dollars and borrowed trillions more from other countries to finance his failed, anti-growth policies.
Instead, the federal government must pursue pro-growth policies. Comprehensive tax reform will provide individuals and businesses simplicity and certainty that will encourage economic growth. Fundamental spending reform will help keep government in check and out of the way of job creation.
Taxes
Our tax code is nearly impossible to decipher by an untrained eye. It is loaded with loopholes inserted by powerful special interests over the years. Moreover, nearly half of all Americans pay no income taxes while the top five percent of taxpayers account for nearly sixty percent of all personal income tax collections. We must change this dysfunctional tax regime.
I have long been a sponsor of legislation to simplify and flatten our entire tax code. By closing loopholes we would allow every American company to compete on a level playing field. More important, we could lower the amount of income tax deducted from every taxpayer’s paycheck.
I opposed the so-called debt ceiling compromise on August 2, 2011, in part because it contains the potential for future tax increases to cover over-spending. Aside from the disastrous economic effects, we simply could never tax the American people enough to close the deficit. We also know from our history that tax increases lead to more government spending, not fiscal balance. This is the wrong course. We need comprehensive tax reform that paves the way for job creation, not piecemeal tax hikes that exacerbate our economic difficulties.
Spending
The federal government’s debt currently exceeds $16 trillion, which is now greater than the size of the entire U.S. economy.
Over-spending has accelerated at a reckless pace under the Obama Administration. In fact, the average deficit under the Obama Administration thus far is $1.378 trillion – a 450% increase over the average deficit under the Bush Administration.
Following President Obama’s vision for the country, interest payments on the debt alone are projected to reach $1 trillion in a decade. Should we remain on our current path, America’s creditors will demand increasingly higher interest rates and potentially stop purchasing our debt altogether. Our current path is clearly unsustainable.
Until the federal government is required to spend only the amount of money that it takes in, U.S. debt will continue to spiral out of control. This is why Congress since 1987, I have introduced a Constitutional amendment requiring Congress to balance our nation’s budget.
President Obama is the first American president to preside over a downgrade of our AAA credit rating. Only through meaningful spending cuts and a Balanced Budget Amendment to the U.S. Constitution will we regain the fiscal credibility we maintained for so long.
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