The Democratic operative, James Carville, coined one of the most legendary campaign catchphrases, “it’s the economy, stupid.” Close to two decades later with our federal deficits this year and last, the highest on record since World War II, that phrase should be changed to, “it’s the spending, stupid.”
On January 1st, every American will see their income taxes go up unless Congress acts. The White House and its Capitol Hill allies, who’ve irresponsibly refused to take action, say we can’t afford to stop the tax hikes on the top two tax rates. They make it sound like taxes are why our deficits are so high. But anyone who believes we don’t tax enough, well then I’ve got ocean front property in Nevada to sell you. The reality is that the driver of our deficits is runaway federal spending.
When Democrats took over Congress, our national debt stood at 36 percent of our Gross Domestic Product (GDP); today it’s roughly 61 percent. Over the same time period, federal spending has gone from 19 percent to almost 25 percent of GDP.
More and more spending has to be funded by more debt or higher taxes. And that’s the real reason the White House wants to raise taxes, because as President Obama declared, “there are a lot of better ways I’d spend that $700 billion,” from pushing through a tax hike of that magnitude. The Democrats are experts on spending.
But these levels of spending are unsustainable and will kill economic growth. The only people who don’t think that this kind of spending is harmful seem to be those who believe that government, and not hard-working Americans, should be in the economic driver’s seat. In fact, former Obama Administration Budget Chief Peter Orszag said that the “new normal” for federal spending is 25 percent. I completely disagree.
Last year, I introduced legislation capping federal spending as a percentage of GDP at roughly 20 percent. This would force the White House and Congress to make the tough decisions to get our fiscal house in order.
Regrettably, the White House and its liberal allies aren’t interested in containing spending. In the final hours before the Senate adjourned, the other side of the aisle blocked a common-sense amendment to reduce spending by 5 percent. Now, clearly more has to be done than that, but it was a start and the majority refused to support even that modest effort.
The left views higher taxes as a means of funding an ever-expanding government, intruding more and more into people’s lives. What they fail to understand is that keeping taxes low empowers the American people to invest their own money how they want - leading to more investment, more jobs and robust economic growth.