Washington Needs to Get on Board and Tackle Deficit Spending by U.S. Senator Chuck Grassley

Taxpayers all across America can ring in the New Year with a sigh of relief. Thanks to a bipartisan agreement brokered between the White House and Republican congressional leaders, paychecks won’t automatically see higher federal tax withholdings starting January 1.

For the last two years, the 111th Congress took a wait-and-see approach about taxes, causing considerable uncertainty for businesses that make investment and hiring decisions in part based on their tax burden. Many employers stockpiled cash instead of spending money on equipment upgrades or expanding their workforces. This uncertainty did not do the economic recovery any good.

Thankfully, the results of the mid-term elections delivered a crystal clear message in November. Washington went overboard. The federal spending spree and bailout binge added an even greater burden to taxpayers already on the hook for a $13.8 trillion national debt. Interest payments alone are eating up a growing percentage of the annual federal budget, including 414 billion tax dollars in fiscal year 2010.

A myth long used by big spenders inside the Beltway to justify raising taxes may at long last be on the chopping block. Raising taxes will not slay the deficit dragon. It does not cure the deficit problem; it serves as an invitation for big spenders to spend even more. Keeping the lid on tax hikes will force lawmakers to trim spending or keep borrowing. From my senior position in the U.S. Senate, I champion ways to keep the lid on spending. In 2010, I voted to reduce federal spending by $278 billion. America simply can’t afford to keep borrowing more money.

Hopefully the bipartisan tax agreement signals a fresh start for the 112^th Congress and the White House to tackle the national debt. As the report by the National Commission on Fiscal Responsibility and Reform concluded:  There’s no easy way out. Shared sacrifice and tough choices must be made to get America’s fiscal house in order.

Right now, the first order of business is to get the American economy back on the right track. A healthy economy will create new jobs and get more people back to work. More people bringing home a paycheck means fewer families will rely on social services paid for by the government.

The tax relief signed into law is a good step in the right direction.  Here’s what it does:

• extends the lower marginal tax rates on wages and income;
• renews 51 tax incentives tailored to trigger economic growth and employment (including tax incentives for ethanol and biodiesel);
• exempts family estates up to $5 million from a 35 percent federal death tax;
• indexes alternative minimum tax for inflation;
• extends refundable tax credits, including child tax credit and college tuition deduction created in the 2001 legislation I authored as Chairman of the Finance Committee;
• spurs business investment by allowing a 100 percent tax deduction for equipment purchases in 2011; and,
• boosts take-home pay by approving a two-percentage payroll tax holiday for workers in 2011, on wages up to 106,800. (Multiply your annual income by .02 to see how much more you can save, spend or invest in 2011 thanks to this tax break.)

Now Washington needs to get on the same page and tackle the looming fiscal crisis. Punting the ball down the field for another two years is a reckless, unacceptable choice. The voting public gets it. Washington needs to get on board.

Tuesday, December 21, 2010

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