The Bridge is Out

How many “bridge out ahead” signs would you barrel through before you chose another route or hit the brakes?

In May, the Congressional Budget Office told us that a coming “fiscal cliff” could send the economy back into recession. What is the fiscal cliff? The increased tax rates and mandatory spending cuts that could take $500 billion out of the economy in 2013 alone. The CBO estimates that if Congress fails to act, the economy could shrink by 1.3 percent in the first half of the year.

Clearly, the signs are all over the place. If we keep barreling forward, we will run the United States off the cliff. However, reaching an agreement is not going to be easy.

Current federal government policies are unsustainable. The CBO maintains that rolling back spending cuts and tax increases will mean that the economy could grow by 4.4 percent next year. That would be good for jobs. However, they caution that these policies are leading us toward a much more dire fiscal collapse.

Simply extending everything for another year or two will make it even harder to pay down our debts. So what should we do?

I believe our first priority has to be getting the U.S. economy out of the ditch. Lasting tax reform has to be at the top of agenda.

In January, rates could climb for income, capital gains, dividends and estate taxes. That would hit every American and it would hit investors and small businesses the hardest. America’s job creators would see more of their business income go to the government and have less access to new capital.

Private sector jobs are created when individuals risk their own money either by starting a business or investing in a company either directly or by purchasing stock. When the government reduces the amount of capital in the economy, it’s harder for businesses to acquire the cash they need to grow and hire new employees.

Right now, many businesses are stockpiling cash in anticipation of higher taxes and more regulation. This is only prudent. Smart business owners plan for the future. If they can plan for the long-term, then they will have more confidence to spend this money.

I believe that we can keep tax rates low and stable if we eliminate the many special tax breaks and lobbyist loopholes that have built up in the tax code over the years. This year’s House Republican Budget calls for just such a plan.

President Obama wants to raise rates on individuals making over $200,000 and families making over $250,000. These might sound like “rich” Americans, but many are small business owners who file taxes at the individual rate. When we take more from them, we are taking money away from their business and from job growth. A half-dozen Democratic Senators disagree with the President, dooming his tax plan in that chamber.

The President wants to increase these taxes so that he can pay for another round of “stimulus” spending. Unfortunately, the President’s claims of job growth simply can’t be trusted. His economists estimated that unemployment would be around 6 percent right now because of the trillion-dollar stimulus. Instead, we are still at 8.2 percent unemployment with job growth that fails to even provide enough jobs for those entering the labor market.

The Department of Energy loan program that funded the defunct Solyndra is a classic example of how government “investment” fails to create lasting jobs. Right now, that program has spent $13,738,075 per permanent job. Taking money away from successful business owners and giving it to failing companies is no way to create jobs.

We need long-term policies that put our country back on the right track. In addition to tax reform, we have to strengthen and save entitlement programs. Medicare, Medicaid and Social Security are on track to eat up our entire federal budget in just a few short years. Right now, only House Republicans have put forward a plan to balance these programs and keep them running.

I fully recognize that compromise is going to be necessary to stop us from falling over the cliff. I don’t expect to get everything Republicans want, but I won’t support solutions that hurt job creators and the unemployed.