In the end, it is businesses - driven to innovate, invest and grow – that will regenerate the millions of sustainable jobs we so desperately need. The stimulus must take bold steps to encourage work, investment and business expansion, something that government spending too often fails to provide.
These are some of the remedies the House GOP proposed to President Obama on Friday:
• Small businesses, entrepreneurs and the self-employed employ about half of all Americans, yet they can be subject to tax rates that siphon away one-third of their income. We support allowing small businesses to reduce their tax liability by a minimum of 10 percent. This will immediately free up funds for small businesses to retain and hire new employees.
• Rather than a one-time tax break, we also want tax cuts for families that pack lasting punch. We propose to cut the lower marginal income tax rates, providing all taxpaying families with a minimum increase in income of approximately $500 per year.
• For the unemployed, we want to dispense with the taxes the federal government levies on unemployment benefits. Individuals between jobs should be able to focus on providing for their families.
• Also critical will be addressing the housing crisis. The real-estate market is paralyzed as potential buyers wait on the sidelines for prices to find their bottom. In order to encourage responsible buyers to enter the market and stabilize prices, we propose a home-buyer’s credit for those buyers who can make a minimum down-payment. As home prices stabilize, complex securities tied to mortgages can also finally find a level that clears the market.
Finally, we must ensure that vast government spending doesn’t lead to rampant inflation in the future. At $825 billion, this Democrat stimulus proposal causes us great concern. While the Fed remains rightfully concentrated on fighting deflation, uncontrolled spending and borrowing will most ultimately lead to inflation if the spigot is not turned off in time. That could trigger a flight of foreign capital and a steep drop in the purchasing power of the dollar for the American consumer. As interests rates rise to keep foreigners financing our debt, the pain dealt to businesses and families alike promises to be sharp.
Alexander Hamilton expressed his views at a critical juncture for our young nation. Over two centuries later, at another critical time for America, his words still resonate.