Taxmageddon: Fixing What They Started
The August jobs report is a vivid reminder that the economy today is simply not conducive to job creation. The outlook is grim, and it is bound to get worse if Congress does not act fast to prevent the coming Taxmageddon. The Congressional Budget Office (CBO) has confirmed that the impending tax hike will drag our country back into a recession. In addition, automatic sequestration cuts are due to begin in January.
If Americans aren’t excited about the picture painted by the August jobs report, the mood in Congress is just as vapid. Outside extending government funding and the 1996 welfare reform law for six months, not much remains on the congressional agenda before the elections.
In fact, Members of Congress are not optimistic about the prospect of getting much accomplished even after the election. House Speaker John Boehner (R-OH) doubts that action will be taken to avert sequestration and prevent the massive tax hike. Yesterday, he expressed a sense of accomplishment on the part of the House to address these two issues, but he was disappointed with both the Senate and President Obama, who have done nothing. CQ reports (sub. req’d):
“The dour outlook came as Moody’s Investors Service warned it will downgrade the top, triple-A credit rating the government holds if negotiations later this year do not produce a plan to stabilize and reduce the national debt in relation to the size of the economy.”
It may be easier for member of Congress to beat around the bush and put off compromise, but delaying action will not be easier on the economy. The short-term plans that some in Congress have developed are largely symbolic. Enacting policies that allow for business success and job creation is an obligation for those in Congress and should not be delayed.
The Heritage Foundation explains why lower tax rates and reliable information regarding taxes are absolutely essential to the health of business, and consequently to job creation:
“Businesses, investors, and entrepreneurs have no idea what their tax rates will be in a few months. Without this vital information, they cannot determine the profitability of investments that they could be making right now. And without knowing how profitable their actions could be, they cannot make the investments that could create jobs the economy so desperately needs. Those jobs will remain on hold until Congress stops Taxmageddon. Worse, if Taxmageddon occurs, they will never materialize.
The list of prominent economists, market shapers, and well-respected foundations and institutions calling on Congress to stop Taxmageddon to avoid an economic catastrophe and relieve the economy of the uncertainty plaguing it now is long and growing. It is long past time for Congress to listen to them.”
Although we do not see the government as capable of creating economic growth, it certainly has the responsibility to untangle the job-killing web it has created. They can and should implement policies that are favorable to entrepreneurs and job creation.
It’s up to them to make good decisions and work hard on behalf of Americans. And it’s up to us to make sure they do. The economy cannot afford a major blunder in Congress, and that is what inaction would be.