The Joint Select Committee on Deficit Reduction — the so-called super committee — needs to act expeditiously to rein in spending, reduce the deficit and ultimately lower America’s level of debt.
Enhancing economic and job growth is a prerequisite for achieving these goals, but growth alone will not be enough. The only way to tame the deficit and put us on a path to long-term growth and job creation is through reforming entitlements and restructuring the U.S. tax code.
The biggest chunk of government spending by far is entitlements — Medicare, Medicaid and Social Security. We can’t curb spending or reduce the deficit without reforming these programs. Anyone in favor of the status quo is in favor of consigning these programs to bankruptcy — and the nation along with them.
The longer we wait to tackle entitlements, the tougher it’s going to be. Baby boomers will reach retirement age at a rate of 10,000 per day over the next 19 years. Bottom line: If we want to retain these programs for future generations, they must be reformed now.
The super committee should restructure the tax code to improve efficiency, transparency and simplicity to drive economic growth and job creation. Comprehensive tax reform should lower overall marginal tax rates, encourage saving and investment, foster global competitiveness, increase capital accumulation, attract foreign investment and drive job creation.
Tax reform should also increase government revenue by closing loopholes, broadening the tax base and reaping billions of dollars through activities such as expanded American energy production, which could generate hundreds of billions of dollars in government revenue through leases, royalties and stronger economic growth.
Standard & Poor’s recent decision to downgrade America’s credit rating is another powerful incentive for lawmakers to do the hard work necessary to get our fiscal house in order.
While the U.S. Chamber of Commerce supported the agreement to lift the debt ceiling as an important first step, let’s not forget that the deal only slows the increase in the rate of spending. Even with successful implementation of the compromise plan, our public debt would continue to rise, reaching $16 trillion at the end of 10 years. Instead of adding $10 trillion in debt over the next decade, we will add $7 trillion to $8 trillion. That’s not good enough.
We will never tackle debts and deficits, jump-start this recovery, reduce uncertainty and create millions of jobs until we overhaul our tax code and reform runaway entitlement programs that threaten to push us into insolvency.
We can’t kick the can down the road any longer. The time to act is now.
— Tom Donohue is president and CEO of the U.S. Chamber of Commerce.