Congress Owes a Better Budget on Tax Day
Today isn’t just tax day — it’s also the deadline for Congress’ annual budget. Perhaps it’s just as well lawmakers missed this deadline.
As families are dealing with higher prices for gasoline, food and energy, the last thing they need from Washington is a plan to increase their tax burden. Unfortunately, tax increases are just what the Democratic Congress has in mind.
During these times of economic uncertainty, the House and Senate produced budgets that include the largest tax hike in history by denying the benefits of President Bush’s tax relief to millions of Americans.
If the tax relief is not extended, it would result in an average tax increase of $1,800 per year for 116 million taxpayers. The child tax credit of $1,000 would be cut in half, the marriage penalty would be reimposed and the death tax resurrected. A middle-class family of four with two children earning $60,000 would face a tax increase of nearly $2,000 — a 70 percent increase in their taxes. In addition, if alternative minimum tax relief is not extended for this year, 26 million more taxpayers would be hit with an average AMT tax increase of $2,200.
As our economy is trying to gain momentum, we should be providing Americans with certainty that the current lower tax rates will be maintained, helping to generate new jobs and stimulate investment. In a time of economic and financial market uncertainty, Congress should not be making things worse by allowing automatic tax increases, including increases in capital gains and dividend tax rates that adversely affect markets. Congress is choosing to slap hard-working people and small businesses with higher taxes in order to go on a spending binge.
The president put forward a budget that gets to balance without raising taxes and holds spending in check. The higher spending in the Democrats’ budget only drives the deficit higher and expands government. The House adds almost $26 billion and the Senate adds more than $22 billion to the president’s reasonable and responsible levels for next year’s appropriations bills alone, and more than $200 billion over five years. Government expansion is not the answer to our economic challenges.
But wait, there’s more.
The House and Senate resolutions fail to address the uncontrollable growth in entitlement programs such as Medicare, Medicaid and Social Security. They stand by and do nothing, leaving the nation on track for a fiscal train wreck. Automatic spending represents two-thirds of our budget. Within 35 years, without a growing tax burden, automatic spending will absorb every penny of tax revenue, depleting the funds available for the federal government’s basic constitutional responsibilities — including our national defense.
In contrast to the failure of Congress to address these long-run challenges, the president’s budget puts a down payment on reform with proposals that reduce Medicare’s $36 trillion unfunded obligation by nearly 30 percent, crack down on inappropriate spending in Medicaid and promote ownership and wealth accumulation in Social Security. We owe it to our children and grandchildren to address these problems now instead of putting off a long-term fix.
As if this weren’t already a bad enough deal for taxpayers, the Democratic Congress preserves the status quo on earmarks. GOP Members proposed amendments to advance earmark reform that were met with rejection. The president made clear that he will veto any appropriations bill that does not reduce the number and cost of earmarks by half from last year’s level. It’s time for Democrats in Congress to work with Republicans toward ending wasteful, excessive pork-barrel spending.
The president is taking steps to address our economy. Earlier this year he proposed an economic growth package and worked with Congress to quickly enact a stimulus bill with tax rebates and business investment incentives. We will soon begin to see the results of that bipartisan effort. Businesses are already able to take advantage of tax breaks for increasing investment. In May, taxpayers will begin receiving tax rebate payments. For example, a middle-income family of four will receive a tax rebate of up to $1,800.
The president put forward a sound budget. He knows that another dose of tax-and-spend is the wrong prescription for America. That’s why he has pledged to veto bills that exceed his reasonable and responsible spending levels as well as any bill that raises taxes on American families and businesses. Congress now needs to step up to the plate.
Jim Nussle is director of the Office of Management and Budget.