Weekly Columns

Fighting Wasteful Spending to Restore Economic Growth

f t # e
Washington, March 4, 2009 | comments
Whether you’re a Republican or Democrat, one would think there should be bipartisan consensus that we cannot tax and borrow our way back to a healthy economy. Unfortunately, that’s not so in Washington, D.C., and I’m working to change our direction.

Since I’ve arrived in Congress, well over $1 trillion of discretionary spending has been approved with too little debate about the consequence to our future generations. The amount of increased debt needed to pay for the spending in the last month alone is the same debt incurred over two centuries, between 1789 and 1978. This unprecedented amount of new debt is a tremendous burden that will be placed on our children and grandchildren.

Folks in Washington should be setting a positive example to the rest of the country by tightening our belts and reducing wasteful spending rather than using this economic crisis as a means to fund projects that could not get funding if they had to stand on their own merits. The President said in his address to Congress that he was ready “go line-by-line through the federal budget in order to eliminate wasteful and ineffective programs,” and I am ready to help him when he actually does this.

The Administration's new budget will place more unneeded stress on jobs all around the country – adding to the already tremendously high unemployment figures. This budget raises taxes on almost all Americans in the midst of a serious recession. Small businesses, family farms, middle class families, retirees, 401(k) owners and energy consumers will all be hit by President Obama's tax hikes.

The budget proposed by the Administration also targets small businesses – the engines of job creation in our country – for unwarranted tax increases by raising marginal income tax rates up to 39.6%. Small businesses employ about half of all private-sector workers and have created 70% of the new jobs in the U.S. in recent years. According to IRS data from 2006, 60% of net small business income was earned by individual taxpayers with at least $200,000 of income. Imposing higher taxes on hundreds of thousands of these “mom and pop” businesses is hardly the way to encourage job creation during these challenging economic times.

When we are trying to create jobs, why would we raise taxes on the small businesses which create 70% of new jobs each year? It just doesn’t make any sense.

Another concern I have regarding this budget is that it essentially discourages investment in our economy by raising the tax rate on capital gains and dividends by one-third. Once again, we are taxing the very thing we are trying to promote and encourage. To help steady our economy and calm the capital markets, we should be encouraging the long-term investments that lead to job creation by preserving lower tax rates on investment capital. These capital gains and dividend tax increases could also negatively affect many retirees affected by capital gains.

This budget proposes hundreds and hundreds of billions of dollars in new taxes at the worst possible time – while the economy is already weakened, unemployment is on the rise, and families are struggling to make ends meet. Even Christina Romer, the Chair of the President’s Council of Economic Advisors, has argued that “tax increases are highly contractionary.” The tax hikes included in this budget proposal will only prolong the recession.
f t # e