Southern Wisconsin's families continue working hard to make ends meet in an uncertain economy. The unemployment rate in Wisconsin remains high at 7.1 percent while the national unemployment rate is 9.4 percent. In some areas of Wisconsin's First Congressional District, the unemployment rate hovers at above 12 percent. While the nation's economy struggles, however, the Federal government workforce has expanded by 15 percent since 2007. Since 2009, with the support of the President, the Congress has enacted $2.1 trillion in new government spending for the next 10 years, as well as $670 billion in new tax increases. I voted against these tax increases and spending increases.
The mounting economic hardships throughout Southern Wisconsin -- from mass layoffs to growing insecurity -- have been downright gut-wrenching. Families are finding it more difficult to make ends meet while they watch their savings evaporate. As Congress takes action to help spur economic recovery, it must adhere to the principle of first and foremost -- do no harm. To this end, any "stimulus' package Congress considers should be focused on protecting the taxpayer and avoid prolonging our decline by simply throwing borrowed money at the problem.
Economic growth comes when American families and small businesses work, save, and invest. Congress needs to prioritize legislation that encourages this behavior by keeping taxes low, controlling government spending, and addressing the severe problems ahead if we do not reform our entitlement programs. Left unchanged, these programs will continue to take up a larger portion of our budget each year, crowd out other government spending, and hurt our economy. As Chairman of the House Budget Committee, I take seriously my responsibility to help improve accountability, monitor federal spending, and prevent government waste and abuse, while putting forward long-term solutions to our entitlement crisis.
Looming Tax Increases
Recently, the Obama Administration and Congressional leaders tentatively agreed on a bipartisan "framework" to address the looming expiration of the 2001 and 2003 tax relief measures, the recent expiration of federal Unemployment Insurance benefits, and a host of other tax issues. The Senate recently passed the bipartisan framework as H.R. 4853, the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, by a vote of 81-19. On December 17, 2010, H.R. 4853 passed the House of Representatives by a vote of 277-148 with my support.
The legislation includes:
* An extension of income tax rates for all Americans at current levels through December 31, 2012
* A 13-month extension of federal Unemployment Insurance benefits
* Two years of estate tax relief at levels of 35% with a $5 million exemption
* An extension of capital gains and dividends tax rates at their current levels
* A two-year "patch" of the Alternative Minimum Tax (AMT) to ensure that no additional taxpayers face an unintended tax hike
* An extension of a variety of other provisions, including the Child Tax Credit, "Marriage Penalty" relief, and the Earned Income Tax Credit (EITC)
Most importantly, I am encouraged that the package prevents across-the-board tax hikes from hitting American families and job creators for two years, and I will continue to fight to make the 2001 and 2003 tax relief measures permanent. Until a permanent extension can be enacted, I believe the two-year extension in H.R. 4853 is critical to prevent further damage to our fragile economy.
The Challenges Ahead for the Economy
Our country is at an economic crossroads. On the fiscal side, government is spending record-amounts of taxpayer money, producing large deficits, and adding our national debt. The Treasury is issuing record amounts of debt -- over $2 trillion this year alone. At the same time, the Federal Reserve has injected an enormous amount of monetary stimulus into the economy, and has resorted to longer-term Treasury bonds to keep borrowing rates low. This blurring of the lines between our fiscal and monetary policy gives the dangerous impression that the U.S. could one day begin to meet its fiscal obligations by simply printing money. In the meantime, small businesses, whose expansions should be driving our economic recovery, have accounted for nearly half of the 7 million jobs lost during this recession and continue to find accessing credit difficult. This is one of the key reasons why job losses have been so severe.
I am also concerned that as the economy recovers, another economic challenge looks increasingly likely to rear its ugly head -- the threat of inflation. Rising prices chip away at the value of workers' wages and savings, impacting seniors living on fixed incomes particularly hard.
Challenges Ahead in the Manufacturing Sector
In this difficult economic climate, many manufacturing plants in Southern Wisconsin have closed or experienced mass layoffs. This has been a painful blow to our communities because manufacturing jobs are the bedrock of Southern Wisconsin's economy and the bedrock of our nation's economy. Worse yet, it is becoming increasingly clear that some of our trading partners, specifically China, are engaging in unfair trading practices. From enacting market access barriers to holding the value of their currency at artificially low levels, some of our trading partners' trade policies have real and detrimental effects on American jobs. I fully support efforts by the Administration to hold our trading partners accountable in international forums like the World Trade Organization, and I applaud the President's newly-announced National Export Initiative, which seeks to double U.S. exports and add as many as 2 million related jobs.
But there are other ways to help encourage companies to invest in manufacturing, right here in the U.S. Based on the input I hear from manufacturers throughout Southeastern Wisconsin, I introduced legislation that would help address the specific challenges highlighted by the interaction between globalization and our nation's outdated tax policies.
The U.S. currently has the second highest corporate tax rate in the world, a policy that raises the prices of American goods abroad and encourages employers to move jobs overseas. My "Roadmap for America's Future" (www.americanroadmap.org) would level the playing field for American-made goods and services in the international marketplace.
The Roadmap helps level the playing field by reducing the handicap imposed on American producers by our tax code. By eliminating the dual-taxation of American-made exports, while placing an equal tax on foreign imports, my plan makes American goods more competitive overseas. For example, right now, Racine's Case New Holland tractors are at a competitive disadvantage against their Japanese competitor, Komatsu, because of the current U.S. tax code. When the Komatsu leaves Japan, Japan lifts its tax on the tractor, and it arrives in the U.S. tax free. But when a Case tractor rolls off the assembly line in Racine for export to Japan, the U.S. first taxes it here and then it is taxed again in Japan. This punitive tax policy prices many American-made goods out of their overseas markets, killing American jobs and putting American companies at a competitive disadvantage in the 21st century global economy. My Roadmap proposal would end these backwards tax policies and put American workers in the position to thrive, instead of struggling to survive, in this period of economic uncertainty.