Revving the Economic Engine
As we enter the New Year, American families are finding themselves increasingly anxious about the economy. While we are still in a period of economic growth, that growth has become sluggish. There are fewer jobs being created and an increasing number of middle-class families are seeing their health care, energy and housing prices increase dramatically. As the cost of living continues to rise, the American people are seeking some reassurance that their elected officials are working together to do something about it.
Last week the President asked the Congress to send him an economic stimulus package that will help prevent market adjustments from undermining the health of the broader economy. And I was pleased to see the leadership of both parties in Congress express a desire to work together to come up with a common sense approach to jump-start the economy and head off a recession.
As Congress approaches this critical issue there are a few broad principles that should guide the discussion. First and most importantly it should be built on broad-based tax relief that will directly boost economic growth. Second, it should be temporary and should take effect immediately so it can begin to impact the economy this year. Last, it must not include tax increases on any sector of the economy. Tax increases in the face of a sluggish economy are a sure recipe for recession and Congress needs to reject such an approach. It is demonstrably true that the government cannot tax its way into economic recovery or wastefully spend its way into job creation.
More specifically, I hope that any stimulus package Congress considers will target both business investments through tax incentives as well as consumer spending through direct tax relief. We need to give businesses incentive to expand and hire more workers and encourage consumers to continue buying products.
It is important to recognize that these are just short term, temporary approaches to try and stimulate the economy. But we also need to look at the long term and take the necessary steps to ensure our country's strong economic future. The single most important thing Congress could do to achieve this goal is to make the tax relief of 2001 and 2003 permanent. If these tax cuts are allowed to expire every taxpayer in America is going to face a significant tax hike. For example, a single mom with two kids and a $30,000 annual salary will face a 67% tax increase. A retired couple making $40,000 in income would see their taxes increase by 156%. And small businesses would face a tax hike of approximately 20%. It would be devastating and irresponsible to increase taxes to this degree during a time when the economy is slowing down. It is imperative that Congress take steps to make the tax relief permanent.
Now is the time for both sides of the aisle to come together to devise a solution that will best secure America's economic future. Taxpayers deserve a swift response from America's leaders and a common sense approach that will get us back on track. It's time to rev up America's economic engine and drive the country straight out of this slump.