Two-Point Plan for Action on Jobs and Spending
In households and communities across the country, Americans are talking about the economy and calling for action to restore lost jobs. Job seekers, business owners and working families all agree: there is no bigger challenge facing America today than achieving sustainable economic recovery and promoting job creation.
Since the stimulus was signed into law last year, California alone has lost over 500,000 jobs while the August unemployment report put the national jobless rate at 9.6 percent, an increase from the previous month. Meanwhile, the unemployment rate in San Diego County went from 10.5 in June to 10.8 in July. These indicators, in addition to sliding home sales and construction, underscore the fact that the current economic agenda is failing to produce the level of recovery needed to get the job market and economy back on track.
There are two major hindrances to job creation: excessive government spending and growing uncertainty due to existing and proposed policies, including a looming tax increase on small business. House Republicans are offering another alternative, once again focusing on federal spending and tax relief for small business -- the growth engine of the American economy.
First, Congress must take action to cut non-security related government spending back to Fiscal Year 2008 levels, before the bailouts, government takeovers and stimulus spending. This would save American taxpayers $100 billion in the first year alone. Worth noting, this proposal would exempt all defense, military construction, veteran affairs and homeland security priorities, keeping funding levels consistent with the President's Fiscal Year 2011 budget request.
Second, Congress must move to enact a two-year freeze on all current tax rates to stop job-killing tax hikes on families and small business. This would help ease the uncertainty employers and entrepreneurs continue facing in today's economy. Soon, an unprecedented $3.8 trillion tax increase will go into effect, impacting every American who pays income taxes. Here's a snapshot of what to expect:
* Marginal tax rates will climb from 10, 15, 25, 28, 33 and 35 percent to 15, 28, 31, 36 and 39.6 percent. The Joint Committee on Taxation (JCT) estimates that 88 million taxpayers will pay an average of $503 in higher taxes next year as a result of eliminating the 10 percent bracket alone;
* The marriage penalty will be reinstated. The standard deduction for a married couple will be $1,850 less than twice the standard deduction for singles and the last dollar of income taxed at 15 percent for married couples will be $11,500 less than twice the amount for singles. The JCT estimates that 35 million married couples will face an average of $595 in higher taxes in 2011 as a result of the marriage penalty;
* The child tax credit will be cut in half, from $1,000 per child to $500 per child. The JCT estimates that 31 million families will pay an average of $1,033 in higher taxes next year as a result of this change;
* The top tax rates on long-term capital gains and dividends will increase from 15 percent to 20 percent and 15 percent to 39.6 percent respectively.
Even the President's former Budget Director Peter Orszag endorsed keeping current tax rates in place, writing in the New York Times that "no one wants to make an already stagnating jobs market worse over the next year or two, which is exactly what would happen if the cuts expire as planned." Read it here.
Allowing some of the tax increases to take effect while excluding others won't work either. The nonpartisan JCT estimates that the tax increase supported by the Obama Administration will raise taxes on 50 percent of small business income. That's a dangerous proposition, especially at a time when unemployment has stagnated at or above 9.5 percent for 12 consecutive months.
Over the August work period, I toured over a dozen San Diego area businesses and talked with owners and employees about their experiences, as well as any ideas to help move the economy forward. The message has been consistent: there is far too much uncertainty. They recognize that conditions will eventually improve, but only when confidence is restored. That makes it all the more important that we follow a responsible path forward that keeps taxes low for businesses and families, and works to rebuild the basic foundation of the American economy.
More Reasons for Conventional Military Capability
Click here to read my recent commentary on the importance of conventional military capability, featured in Human Events.
WSJ: Health Care Premiums Set to Rise
The Wall Street Journal reports today that health insurance companies intend to increase health care premiums by up to 20 percent next year, in order to comply with federal mandates created under new health care law. Two of the largest providers, BlueCross BlueShield and Aetna, are anticipating as much as a nine percent increase next year. Read the WSJ report here.
Another point worth noting: According to the nonpartisan Congressional Budget Office, which did in fact predict an increase in premiums under the new law, the House Republican health care plan would reduce health insurance premiums by up to 10 percent without increasing taxes or impacting Medicare beneficiary services.