Budget and Fiscal Responsibilty
The budget resolution we have passed during this session in the Senate ignores the dire fiscal situation facing our country. Americans everywhere continue to experience a slow economic recovery, magnified by the continued tax-and-spend policies coming out of Washington. By introducing a budget, the Senate had an opportunity to control spending and put the nation on a responsible financial course.
Americans are frustrated, and I share that frustration. Businesses, families and even the State of Idaho balance their budgets. The federal government should do the same. This proposed budget did not even come close. Congress cannot continue to kick the can down the road - time is running out. Washington must stop growing the size of government and start putting policies in place that encourage job growth and economic sustainability.
Many of us in the Senate are working to find agreement to permanently reduce spending, reform our entitlements to make sure they are available for future generations and reform our outdated tax code to make it more fair and to encourage economic activity. Over the past few months, I have worked with a bipartisan group of Senators known as the Gang of Six to find solutions to the debt crisis facing our nation. As outlined below, we finally have a comprehensive plan to tackle the rising debt and deficit and fundamentally reform a burdensome, uncompetitive tax code. I welcome all Idahoans to review the below points as they seek more information on my approach to the nation’s fiscal future.
- I support the Gang of Six efforts and co-sponsored the Cut, Cap and Balance bill in the Senate.
- Both approaches are needed. The Cut, Cap and Balance legislation would have created a needed Constitutional amendment to balance the budget; the Gang of Six plan contains the needed tax reforms like the ones President Reagan used to get the economy moving again.
- I am very disappointed the Senate rejected the Cut, Cap and Balance proposal. Nothing could bring more certainty to our nation’s fiscal condition than a balanced budget.
- The Gang of Six plan has wide bipartisan support and the effort came out of the former National Commission on Fiscal Responsibility and Reform, chaired by Alan Simpson and Erskine Bowles.
- The Gang of Six plan substantially cuts taxes two ways: It lowers all three income tax brackets, lowers the corporate tax rate, and ends the Alternative Minimum Tax, which, if Congress does not take action, is currently projected to hit half of all American families by 2035.
- Taxes are lowered substantially for all income and corporate tax brackets.
- The Gang of Six plan calls for savings of nearly $4 trillion over ten years by mandating Senate committees to report legislation that reflects those cuts.
- Spending caps are enforced and protected in three ways.
- First, caps are put in place, thereby, severely restricting abuses of emergency spending designations.
- Second, should Congress consider emergency spending above the caps, a 60-vote threshold must be met.
- Third, at the end of the fiscal year, any increases above the caps would be nullified unless a 67-vote threshold is met.
- Even after Congress enacts the necessary spending cuts and reforms, until our economy is growing at a robust pace, and unemployed Americans are back to work, our fiscal problems will remain.
- Tax reform is unique to the Gang of Six plan. The Gang of Six plan cuts taxes and reforms the tax code to make it flatter, fairer and more competitive for business.
- Lowers top income rate to as low as 23%, which would be the lowest in nearly 100 years (1916).
- Consolidates and lowers all income tax rates to the ranges of 8-12%, 14-22% and 23-29%. The final rates within those ranges will be determined by Congress as part of the tax reform process.
- The Alternative Minimum Tax (AMT), encroaching on the middle class, is eliminated.
- Corporate tax rate reduced from 35% to as low as 23%, ending the U.S. reign as having the world’s second highest business tax consequently making American business more competitive on the world market.
- Ends some tax loopholes but keeps popular deductions like the home mortgage deduction.
- Establishes spending caps and directs agencies and Congressional committees to reduce spending.
- Ties some benefit increases to the cost of inflation while maintaining safety net programs.
- Immediately cuts deficits by $500 billion.
- Reduces spending on unsustainable health care entitlements by $500 billion to begin to address the looming insolvency which will begin to occur in less than 10 years, absent significant action by Congress.
- Puts spending cuts and tax reform on a fast-track in Congress and has bipartisan support, thereby increasing the chances the reforms will be approved in a timely fashion.
- Tax reform has worked before: in the 1980s tax reforms encouraged investment in the U.S. economy, people invested and the economy grew by 3 to 4%.
- Just a one-percent increase in the economy now will generate trillions to reduce the debt.
- Medicare and Social Security payments are linked to the true cost of inflation.
- Fixes the flawed physician payment formula under Medicare.
- Repeals the unsustainable entitlement program known as the CLASS Act included in the health reform law.
Senator Mike Crapo, an original member of the bi-partisan "Gang of Six" joined "Markets Now" on Fox Business at the top of their 2:00pm hour. The senator discussed the looming fiscal cliff and the consequences the country will face if Congress does not act.