What’s the Obama administration’s budget strategy? Spend like there’s no tomorrow, drive deficits to record levels, heap huge tax increases on America’s most productive citizens and ignore the most urgent challenges facing the economy, including tax reform and entitlement programs. The much-ballyhooed goal of cutting the deficit in half over the course of four years has been wildly missed.
At a time when Americans desperately need stronger economic growth in order to create new jobs, this budget blueprint is sadly anti-growth and anti-jobs. It would dig deep into the pockets of many successful small businesses — making nowhere near $1 million — to help bear the brunt of a $1.5 trillion tax hike. Business owners who file their taxes as individuals would get swept up in the across-the-board rate hike that targets those with incomes of $200,000 or more.
Punishing success is exactly the wrong way to foster economic growth and job creation.
The budget also proposes raising taxes on investment, which would pile on the disincentives for businesses to expand and hire. Facing steeper taxes on capital gains and dividends, businesses will think twice about investing in enterprises that could spur growth and productivity.
To make matters worse, the budget levies anti-competitive taxes on American companies operating worldwide. It proposes punitive tax hikes on energy producers and financial institutions, which would only drive up energy costs and restrict capital access.
The U.S. Chamber of Commerce has long called for comprehensive tax reform, including lower rates for individuals and corporations and a broader tax base, because our current code is complex, punitive and holds back American competitiveness. This budget makes no attempt to restructure our tax system and only makes bad policies worse.
Comprehensive tax reform isn’t all that’s missing in the budget. Also glaringly absent is an acknowledgment that runaway entitlement spending will soon drive our nation over an economic cliff. We need to reform our entitlement programs so that they won’t bankrupt our country and so that we can maintain a social safety net for future generations.
The bottom line is that we can’t tax and spend our way to prosperity. The Obama administration did not cause all of our economic problems, nor did it invent fiscal irresponsibility. There is plenty of blame to go around. But it did have a unique opportunity with this budget to demonstrate courageous leadership by embracing bold economic reforms and fiscal restraint to generate growth and boost prosperity for all.
It’s disappointing that the administration chose not to do it.
— Tom Donohue is president and CEO of the U.S. Chamber of Commerce.