Tag: democratic leaders

Bright Spots in Fiscal Commission Report

President Obama’s Fiscal Commission has produced a serious and sobering analysis of the government’s budget mess, and it provides some of the needed solutions. Three of the report’s main themes are on target: the need to make government leaner, the need to cut business taxes to generate economic growth, and the need to impose tighter budget rules to discipline spending.

The report rejects the view of many Democratic leaders that the welfare state built over the last 80 years must be defended against any and all budget cuts. “Every aspect of the discretionary budget must be scrutinized, no agency can be off limits, and no program that spends too much or achieves too little can be spared. The federal government can and must adapt to the 21st century by transforming itself into a leaner and more efficient operation.” How lean the government should be, and how many agencies to eliminate, will be the central fiscal debate in coming years. Downsizing government is the order of the day.

The report recognizes the need to spur economic growth, particularly by cutting the corporate tax rate. “The corporate income tax, meanwhile, hurts America’s ability to compete… statutory rates in the U.S. are significantly higher than the average for industrialized countries … and our method of taxing foreign income is outside the norm…. the current system puts U.S. corporations at a competitive disadvantage against their foreign competitors.” The report recommends cutting the 35 percent federal corporate tax rate to 28 percent or less to respond to the Global Tax Revolution and to “make America the best place to start a business and create jobs.”

Finally, the report suggests that Congress impose new procedures to enforce budget restraint. However, the rules suggested by the commission are complex and not tight enough. It would be simpler and more powerful to impose a cap on overall federal spending. For example, a law could require that the government’s overall budget not grow faster than general inflation each year else the president would sequester spending across-the-board. Such a cap would be easy for the public to understand and enforce.

In sum, the report provides a useful menu of reform options that incoming members of a more conservative Congress can pursue next year. We need bigger spending cuts than the commission has laid out—as I’ve outlined in this balanced-budget plan—but the commission deserves credit for spurring a national discussion on how to downsize the federal government.

The Long Road to Copenhagen

There are two different stories coming from the same political party on global warming, leading to only one conclusion: President Obama is about to (or has) ordered the Environmental Protection Agency (EPA) to mandate some type of cap on U.S. carbon dioxide emissions.

Harry Reid and other democratic leaders in the Senate have clearly indicated that cap-and-trade legislation will be put off at least, until what they call “spring”, which is long after the upcoming UN climate conference in Copenhagen next month. At the same time, President Obama has said that the U.S., along with China, will announce some type of emissions cap in Copenhagen. Obviously this cannot refer to legislation that has yet to be voted on in the Senate.

President Obama keeps using the language “operationally significant” when referring to what the U.S. will agree to in Copenhagen. The only way that he can get around the Senate and still have a credible position in Copenhagen is for the EPA to announce specific regulations for carbon dioxide emissions between now and the conclusion of the Copenhagen meeting in mid-December.