Speaking to local business leaders Wednesday in Santa Barbara, Sen. Dianne Feinstein, D-Calif., advocated for tax reform and entitlement-program cuts to expedite the U.S. economic recovery.
“On the Republican side, they don’t want any more taxes. On the Democratic side, they don’t want any cuts to entitlement programs,” Feinstein told about 100 guests at the Santa Barbara Region Chamber of Commerce luncheon. “Well, if you look at these charts, they essentially tell the story — you essentially have to do both, you can’t solve it any other way.”
Feinstein, a Democrat who is seeking re-election this year, discussed the $11 trillion national debt, nuclear waste control, immigration and foreign affairs.
The charts she mentioned were projected federal spending for 2012 and how that compares with the budget picture 11 years ago. According to the Congressional Budget Office, the government will spend $2.27 trillion on entitlements (Social Security, Medicare, Medicaid and veterans benefits), $680 billion on defense, $628 billion on GDP and $224 billion on national debt interest.
From 2001 to 2012, the U.S. population increased 9.8 percent, defense and war spending increased 64 percent, and entitlement spending jumped 30 percent, while domestic spending decreased 0.5 percent and tax revenues dropped 13 percent.
“The government needs to come up with constructive solutions,” Feinstein said.
She offered the Simpson-Bowles proposal as an example of some measures that may work, including taking the six tax brackets and combining them into three, and cutting home-mortgage exemptions except for first-home buyers.
“If you close off most deductions and exemptions and some prudent entitlement reform, you can begin to means test it,” Feinstein said. “The great society programs are all based on everybody gets, even if you don’t need. My own view is they need to be turned more into insurance programs.”
Feistein said her “Patent Box” provision would drive businesses to manufacture domestically rather than overseas. She said the provision would tax corporate profits from the sale of patented, domestically manufactured products at a reduced 15 percent tax rate, as opposed to the full 35 percent corporate rate. Santa Barbara County’s high-tech companies would benefit, she added.
Feistein also supported the Troubled Asset Relief Program as a successful initiative, which she said will be all paid back and the government might profit from the TARP funds.
But Santa Barbara has been a bright spot in the economic downturn, Feinstein said.
Many locals are beginning to see the light at the end of the tunnel, according to Janet Garufis, Montecito Bank & Trust president and CEO and chamber board president.
“Great change like this creates great opportunity. There are new ideas, new ways of thinking about how to get things done and how to improve,” she said. “It’s time in Santa Barbara for innovation and collaboration. The established businesses, start-ups and nonprofits that are working together to improve our economic vitality bring energy to the community.”