It has often been said that budgets are a statement of priorities. If that's the case, President Obama has taken his eyes off of the nation's top priority: economic recovery. Instead of proposing measures that would spur economic growth, the president's budget would dramatically increase the size and scope of the federal government, increasing the cumulative federal deficit by nearly $9.3 trillion over the next 10 years. By 2019, the level of debt held by the public would reach an astronomical 82% of GDP.
To help pay for this spending, the president would raise taxes on business by $353 billion and on high-income households, which include many small business owners, by $955 billion over the next 10 years. The budget also includes the auction of carbon emissions credits, which amounts to a $646 billion stealth tax. Taken together, these tax increases would discourage saving and investment and slow job growth at a time when the economy is mired in the steepest downturn since the Great Depression. Moreover, the budget would create a tax code that is so skewed that virtually half the taxpayers in the country would be excluded from paying federal income tax and thus have no interest in the way government is run.
If that's not bad enough, some members of Congress have begun to talk about using a process known as budget reconciliation to enact sweeping changes to our health care sector. This would allow 51 senators to radically alter 16% of our economy with only limited debate. Reform is desperately needed to address the rising cost of care, uneven quality, and the problem of the uninsured, but the White House budget only includes a $634 billion place holder and no additional details. What is needed is an open and honest debate.
In general, President Obama's budget proposal focuses on important long-run issues while losing sight of the immediate concerns presented by the severe weakness in the economy. The spending proposals are broad but in many cases undefined, unfunded, or underfunded. The tax provisions are simply the wrong medicine at the wrong time to cure an ailing economy.
That's why the U.S. Chamber is urging Congress to reject the president's budget proposal and craft a budget that will, first and foremost, get the U.S. economy out of its current malaise and back on track for future growth. Congress should address the longer-term issues raised by the president only after the economy is growing again.
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