Thursday, November 29, 2012
McCarthy: The fiscal cliff must be avoided but a deal must deal with our mounting national debt and the tax burden carried by small businesses
The weekly note on BakersfieldObserved from House Majority Whip Kevin McCarthy (R-Bakersfield) returns. This week he talks about the negotiations to avoid the fiscal cliff. In his words:
"The discussion this week centers on actions to avert the fiscal cliff. This week, I organized a meeting with National Commission on Fiscal Responsibility and Reform Co-Chair Erskine Bowles and business leaders across the country to put solutions on the table. It is critical that we find ways to revitalize our economy and address our rising national debt.
"We need to take actions that encourage economic growth in America. We need to simplify the lives of our small business owners and entrepreneurs and let them innovate and create. We need to look at policies that spur investment that expands our economy. By taking actions that lead to more hiring and economic growth, the result would be more Americans working.
"Many local small businesses file as S-corporations where business losses and profits are taxable directly to the individual owner. A study by Ernst and Young shows that our economy has about 900,000 business owners that would be harmed if tax rates go up, resulting in an estimated 710,000 fewer jobs. All the while, our economy as a whole is burdened with one of the highest business tax rates in the developed world. A pro-growth tax reform strategy combined with spending cuts is vital not only to control our debt and deficits, but to spur our economy.
"On top of tax reform, it is critical that we outline the spending cuts and reforms to our entitlement programs that will preserve these programs and reduce our debt. The President cannot ignore the major drivers of our debt and as Americans, we must tackle these challenges. Editorials by the Washington Post and The USA Today outline that we cannot truly address our fiscal health without real presidential leadership on reforming our entitlement programs. If we don’t address these issues, our entitlement programs have the potential to consume every dollar in the federal budget.
"In past blogs, I have said many times that we need to address our unsustainable national debt. A recent study by Stanford economist Michael Boskin quantifies and shows the negative effects of debt on our nation’s future economic prosperity. Higher debt results in interest payments that could go to other investments; more borrowing hampers private sector investment, and creates more uncertainty. Washington cannot continue to burden our economy with one of the highest business tax rates, additional regulations, and policies that hinder investment and expansion. Let’s agree to a framework that reforms our tax code to spur the economy and finds additional spending cuts to address our deficit.
"On a personal note, good luck to our local high school teams playing for the CIF Central Section Championships. I remember these days when I was at BHS and I know it’s an especially exciting time for our high school seniors at Garces, Ridgeview, Wasco, and Bakersfield Christian.