The Big Deal
The first order of business for the lame-duck Congress is to prevent a fiscal calamity. The largest tax increase in history—$4.5 trillion—and $1.2 trillion in budget cuts that will slash defense spending and cost hundreds of thousands of jobs will be set in motion on January 1.
There is no quicker path back to recession and 9% unemployment than allowing these tax increases and spending cuts to take effect. Before midnight December 31, Congress and the president must do two things:
First, extend the 2001 and 2003 tax rates as well as expired and expiring business tax provisions and stop devastating meat-axe spending cuts in national defense from taking effect.
Second, agree on a firm timetable to address long-term issues that will put the country on a sustainable financial path, grow our economy, and boost our competitiveness. Lay the groundwork now for a Big Deal that reforms our tax system; reins in massive overspending, beginning with entitlements; and unleashes the development of our nation’s vast energy resources.
Social Security, Medicare, and Medicaid are unsustainable. We can gradually phase in reasonable changes while still maintaining our commitment to the sick and the elderly.
Our tax code is complex, anti-growth, and anti-savings. We need to broaden the base, lower rates, close loopholes, and simplify compliance for all business entities. We need to move to a territorial tax system so that American companies operating overseas aren’t taxed twice and lower our corporate tax rate, now one of the highest in the world. If we do these things, government will get more revenue, not less.
Finally, if we tap the vast energy resources currently under lock and key, we’ll create jobs, attract manufacturing, generate government revenue and cut the deficit, enhance our national security, and bolster our global competitiveness.
Despite our problems, we are one Big Deal away from leading the world to an era of renewed progress and prosperity.