Mr. Speaker, I oppose H.R. 2, the ``Jobs and Growth Reconciliation Tax Act of 2003'' as currently drafted. I applaud the President's leadership in trying to strengthen our economy. However, to accomplish this goal I believe that any…
Mr. Speaker, I oppose H.R. 2, the ``Jobs and Growth Reconciliation Tax Act of 2003'' as currently drafted. I applaud the President's leadership in trying to strengthen our economy. However, to accomplish this goal I believe that any legislation intended to help the economy must be targeted to help working Americans and business now, and not worsen our long-term budget situation. In its current from, this legislation does not meet these two important tests. The bill goes beyond what is needed to provide immediate tax to American workers and families and its overall cost could jeopardize our ability to get the budget back in balance as soon as possible.
Throughout my public service, I have been a strong supporter of balanced budgets. A balanced budget tells our citizens its government is managing their money well. That increases confidence and strengthens the economy. When I served as Governor of Delaware, we balanced our state budget every year and cut taxes three separate times for both individuals and businesses. When I came to Congress, one of my top priorities was to help balance the federal budget. I was proud to support the Balanced Budget Act of 1997 which helped lead to a balanced federal budget from 1998 to 2001, and included the largest tax relief since 1981. In 2001, when the federal government projected a $4 trillion surplus for the next ten years, I supported President Bush's $1.35 trillion of tax cut that delivered broad based income tax relief and marriage penalty relief to hundreds of thousands of Delawareans.
As a result of an economic downturn made worse by terrorist attacks on our nation, the federal budget is facing deficits for the foreseeable future. At the same time we have critical demands to fight the war on terrorism, rebuild Iraq, protect our nation at home, and pay for important programs like health and education. In particular, we are still trying to address the need for a Medicare prescription drugs plan and its significant costs. With these challenges we must review all spending and revenue changes carefully to ensure they are absolutely needed. We are rightly limiting new government spending in our budget, but we must also take a hard look at any cuts that are not narrowly targeted toward immediate economic stimulus or do not take into account the long term consequences of federal deficits.
Some have argued that we must have the largest tax cut possible, stating that it will pay for itself because stimulating the economy will produce new tax revenue for the federal government. I have listened to these arguments, but reports from independent sources like the Congressional Budget Office indicated that deficits will increase an additional $2.7 trillion by 2013 if the tax cut and spending initially proposed were enacted.
Others have argued that the deficit is still small as a percentage of Gross National Product, that it will not damage the economy, and that Congress should not be concerned about the impact this tax cut will have on the deficit. Again, I have listened to these arguments, but far more persuasive are the warnings by independent, conservative economists like Federal Reserve Chairman Alan Greenspan and the fiscal conservatives at the Concord Coalition who state that both large tax cuts and spending increases must be paid for or they will worsen the looming deficit problems our country will face when the baby boom generation retires and begins drawing down their Social Security and Medicare benefits.
Americans want prudent action, fairness and common sense from their government. In Delaware, the average hardworking person is not asking for the largest tax cut possible. They would support a reasonable plan to help boost the economy that does not put our economic future at risk. I have studied the tax relief proposals and it is clear that we could provide immediate tax relief to every working American, as well as help to businesses, especially small businesses within a package of $350 billion over ten years. That could include speeding up the reductions in all individual tax rates from the 2001 tax bill, increasing the tax credit for children to $1,000, eliminating the marriage penalty, and providing expensing and accelerated depreciation relief for businesses. Even the Wall Street Journal agrees
that speeding up the reduction in tax rates would have the most immediate stimulus on the economy by putting money in peoples' pockets and giving businesses relieve for their investment in equipment and other expenses.
Unfortunately, in the current bill, the most costly single provision remains the sharp reduction in the tax on dividends. In fact, the shape and long-term cost of the bill is distorted by the effort to maximize the reduction in dividend and capital gains taxes. The bill would phase-out much of the tax relief for families and individuals to pay for this section. The alternative is to extend those tax provisions later, but initial estimates indicate that would cost another $210 billion, which is $34 billion more than what President Bush requested in tax relief. If we are serious about keeping the deficit in check and giving straightforward tax relief, that is not the right decision. Although some reduction in dividend taxes is reasonable, we must acknowledge that we simply cannot afford steep reductions in taxes on dividends at this time. Further reductions in taxes on dividends should be addressed as part of a long-term tax reform effort when we are not facing the deficits that are a real threat to the federal budget and our economy.
Effective governing requires careful decisions and often painful compromises. There are those who honestly believe that tax relief is absolutely necessary at this time. There are others who urge caution to protect against deficits at a time when we face the dual challenges of a war on terrorism and the needs of an aging population. Enacting some tax relief to immediately strengthen the economy is a fair compromise, but this bill does not achieve that goal. It is possible that a more affordable tax relief bill will emerge from final negotiations with the Senate. I urge the leaders of both the House and the Senate to work toward a bill that provides immediate relief now to all working Americans. We need a bill that does not exacerbate long-term deficits or the need to address prescription drug relief, the war on terrorism, and Social Security. I think those goals can be accomplished in a $350 billion tax package or one slightly higher if Congress can come to agreement on closing abusive tax loopholes.
I must oppose this legislation and will continue to work toward a more fiscally responsible bill that helps all Americans without jeopardizing our budget and economic future.
Mr. Speaker, I oppose H.R. 2, the ``Jobs and Growth Reconciliation Tax Act of 2003'' as currently drafted. I applaud the President's leadership in trying to strengthen our economy. However, to accomplish this goal I believe that any legislation intended to help the economy must be targeted to help working Americans and businesses now, and not worsen our long-term budget situation. In its current form, this legislation does not meet these two important tests. The bill goes beyond what is needed to provide immediate tax relief to American workers and families and its overall cost could jeopardize our ability to get the budget back in balance as soon as possible.
Throughout my public service, I have been a strong supporter of balanced budgets. A balanced budget tells our citizens its government is managing their money well. That increases confidence and strengthens the economy. When I served as Governor of Delaware, we balanced our State budget every year and cut taxes three separate times for both individuals and businesses. When I came to Congress, one of my top priorities was to help balance the Federal budget. I was proud to support the Balanced Budget Act of 1997 which helped lead to a balanced Federal budget from 1998 to 2001, and included the largest tax relief since 1981. In 2001, when the Federal Government projected a $4 trillion surplus for the next 10 years, I supported President Bush's $1.35 trillion tax cut that delivered broad based income tax relief and marriage penalty relief to hundreds of thousands of Delawareans.
As a result of an economic downturn made worse by terrorist attacks on our Nation, the Federal budget is facing deficits for the foreseeable future. At the same time we have critical demands to fight the war on terrorism, rebuild Iraq, protect our Nation at home, and pay for important programs like health care and education. In particular, we are still trying to address the need for a Medicare prescription drug plan and its significant costs. With these challenges we must review all spending and revenue changes carefully to ensure they are absolutely needed. We are rightly limiting new Government spending in our budget, but we must also take a hard look at any tax cuts that are not narrowly targeted toward immediate economic stimulus or do not take into account the long term consequences of Federal deficits.
Some have argued that we must have the largest tax cut possible, stating that it will pay for itself because stimulating the economy will produce new tax revenue for the Federal Government. I have listened to these arguments, but reports from independent sources like the Congressional Budget Office indicate that deficits will increase an additional $2.7 trillion by 2013 if the tax cut and spending initially proposed were enacted.
Others have argued that the deficit is still small as a percentage of Gross National Product, that it will not damage the economy, and that Congress should not be concerned about the impact this tax cut will have on the deficit. Again, I have listened to these arguments, but far more persuasive are the warnings by independent, conservative economists like Federal Reserve Chairman Alan Greenspan and the fiscal conservatives at the Concord Coalition who state that both large tax cuts and spending increases must be paid for or they will worsen the looming deficit problems our country will face when the baby boom generation retires and begins drawing down their Social Security and Medicare benefits.
Americans want prudent action, fairness and common sense from their government. In Delaware, the average hardworking person is not asking for the largest tax cut possible. They would support a reasonable plan to help boost the economy that does not put our economic future at risk. I have studied the tax relief proposals and it is clear that we could provide immediate tax relief to every working American, as well as help to businesses, especially small businesses within a package of $350 billion over ten years. That could include speeding up the reductions in all individual tax rates from the 2001 tax bill, increasing the tax credit for children to $1,000, eliminating the marriage penalty, and providing expensing and accelerated depreciation relief for businesses. Even the Wall Street Journal agrees that speeding up the reduction in tax rates would have the most immediate stimulus on the economy by putting money in people's pockets and giving businesses relief for their investment in equipment and other expenses.
Unfortunately, in the current bill, the most costly single provision remains the sharp reduction in the tax on dividends. In fact, the shape and long-term cost of the bill is distorted by the effort to maximize the reduction in dividend and capital gains taxes. The bill would phase-out much of the tax relief for families and individuals to pay for this section. The alternative is to extend those tax provisions later, but initial estimates indicate that would cost another $210 billion, which is $34 billion more than what President Bush requested in tax relief. If we are serious about keeping the deficit in check and giving straight forward tax relief, that is not the right decision. Although some reduction in dividend taxes is reasonable, we must acknowledge that we simply cannot afford steep reductions in taxes on dividends at this time. Further reductions in taxes on dividends should be addressed as part of a long-term tax reform effort when we are not facing the deficits that are a real threat to the Federal budget and our economy.
Effective governing requires careful decisions and often painful compromises. There are those who honestly believe that tax relief is absolutely necessary at this time. There are others who urge caution to protect against deficits at a time when we face the dual challenges of a war on terrorism and the needs of an aging population. Enacting some tax relief to immediately strengthen the economy is a fair compromise, but this bill does not achieve that goal. It is possible that a more affordable tax relief bill will emerge from final negotiations with the Senate. I urge the leaders of both the House and the Senate to work toward a bill that provides immediate relief now to all working Americans. We need a bill that does not exacerbate long-term deficits or the need to address prescription drug relief, the
war on terrorism, and Social Security. I think those goals can be accomplished in a $350 billion tax package or one slightly higher if Congress can come to agreement on closing some abusive tax loopholes.
I must oppose this legislation and will continue to work toward a more fiscally responsible bill that helps all Americans without jeopardizing our budget and economic future.