Blog: Schakowsky: Extreme Fail on the Economy

Statement

The Wall Street Journal reports today that my opponent, Jan Schakowsky, is predicting the doom of the president's debt commission. She blames Republicans for resisting tax increases, and for insisting on reforms to Social Security and Medicare. She doesn't get it! She doesn't get that we have a spending problem, not a revenue problem, and that you don't raise taxes on a struggling economy with near-10 percent unemployment.

The Pioneer Press has run a very interesting Q&A comparison of my position and my opponent's position on key economic issues. The answers provide all that you need to know about the difference between the two candidates, and the choice voters face:

Q: Is there a role for the federal government in determining what kind of economy we should have?

Schakowsky: Only the federal government can spur sufficient demand to end a recession; the Recovery Act stopped the current recession from becoming another Great Depression. The Wall Street reform law set rules to prevent the recklessness that cost 8 million jobs and created the Consumer Financial Protection Agency to prevent a recurrence. And the federal government also supports essential parts of our economy including public schools, fire and police protection, defense, Social Security and Medicare.

Pollak: We have a free market, capitalist economy. The federal government's role is to enforce the law, uphold contracts, and help those in dire need. Under both Bush and Obama, we have seen the federal government expand its control of our economy. That is bad for jobs, bad for opportunity, and bad for freedom. The last thing we need are politicians who live on taxpayers' money telling us what to buy, where to work and whom to hire.

Q: Is there a limit to what the federal government can do to regulate the financial sector?

Schakowsky: The current recession, with millions of people out of work and trillions of dollars lost from consumers' savings and retirement accounts, was caused by rampant speculation and risky investments that nearly brought down our entire economy. Strong oversight is needed, which is why I voted for the new Wall Street Reform and Consumer Protection Act, which will improve regulation of the financial industry, end dangerous lending, stop "too big to fail," and enhance consumer protections.

Pollak: Congress failed to regulate Fannie Mae and Freddie Mac, which were at the heart of the financial crisis that led to our economic problems today. The new financial regulations passed by Congress also left out Fannie and Freddie. There are a lot of unnecessary regulations, yet too little regulation where it is needed most. We should measure each new regulatory law in terms of jobs created or destroyed before Congress votes on it.

Q: What should the federal government do to get people back to work?

Schakowsky: Small businesses are the key to a growing economy, which is why Congress just passed a critical lending bill which will provide $30 billion of credit to small business owners. We also have to continue to help those who are still looking for work. Extending unemployment benefits is the moral thing to do, and it is smart economically. Every dollar of unemployment insurance benefits generates $1.61 in economic activity, in turn creating more jobs.

Pollak: Put job creation above all other priorities! Pass a 10% investment tax credit to reward businesses for investing in new capital and creating new jobs. Cut U.S. business taxes, which are among the highest in the world. Get rid of wasteful spending, which is hurting economic confidence. Repeal destructive regulations like §9006 of the new health law, which requires businesses to file a 1099 with the IRS for each purchase over $600.

Q: Should the Bush federal tax cuts be renewed when they expire at the end of this year?

Schakowsky: I support continuing the tax cuts for middle-class Americans. I support ending the tax cuts for income over $200,000 for individuals and $250,000 for couples. Economists say that extending tax cuts for the wealthy is one of the least effective ways to spur economic growth because rich people are more likely to save additional income rather than spend it. In addition, extending current tax rates for income over those amounts would add $700 billion to the deficit over the next 10 years.

Pollak: Yes. I agree with Peter Orszag, President Obama's former budget director, who says we should keep income tax rates where they are. We can't raise taxes during a recession--not even for top earners, who account for 48% of all small business income. In addition, Congress has already passed new Medicare tax hikes and capital gains tax hikes, which will push marginal tax rates above Clinton levels. That's the wrong thing to do.

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