As I write to you, Congress is contemplating spending over $800 billion dollars in a bill aimed at reviving the economy. Unfortunately, this massive spending bill will do little to stimulate economic growth, and will simply serve to put future generations of Americans in greater debt. If deficit spending could expand the economy, U.S. financial markets would be booming in the wake of the $1.2 Trillion record deficit that Nancy Pelosi and Harry Reid have racked up since October of 2008.
The total cost of this one piece of legislation is almost as much as the annual discretionary budget for the entire federal government. President Reagan said the best way to understand a trillion dollars is to imagine a crisp, new stack of $1000 bills. If you had a stack 4 inches high, you’d be a millionaire. A trillion-dollar stack of $1000 bills would measure just over 63 miles high.
President Obama has said that his proposed stimulus legislation will create or save three million jobs. This means that this legislation will spend about $275,000 to create each job. The average household income in the U.S. is $50,000 a year. If you do the math, the proposal would cost each and every household $6,700 additional debt, paid for by our children and grandchildren.
This proposed spending package comes at a perilous time in our nation’s history. While the public continues to climb past $10.6 trillion, this is not nearly an accurate picture of the nation’s current and future liabilities. When Congress effectively nationalized Fannie and Freddie, the government assumed the companies’ $5 Trillion in mortgage debt. And of course, sitting on top of all these obligations lays the approximately $50 Trillion in unfunded liabilities of the nation’s entitlement programs.
As an alternative to this “borrowing and spending” plan, I introduced legislation which would provide tax relief to American businesses, entrepreneurs, and families, while refraining from starting a multi-trillion dollar debt-financed spending spree. The Economic Recovery and Middle-Class Tax Relief Act would give the country needed short-term stimulus, while also encouraging long-term economic growth. This legislation focuses on growth-oriented, permanent incentives for economic activity across all sectors, and includes provisions such as reducing the corporate income tax rate to 25 percent, repealing the Alternative Minimum Tax for individuals, indexing capital gains for inflation, and a 5 percent across-the-board reduction to individual income tax rates. The stimulus package also includes spending cuts, and extends the current two-year Net Operating Loss (NOL) carryback period to seven years.
History has shown that the most effective way to reinvigorate the economy and spur economic growth is to ensure that job creators face a lower tax and regulatory burden. If Congressional leaders adopt a stimulus package based on these or similar principles, instead of adopting a package of increased spending, then we will hopefully create real economic stimulus for America.
Member of Congress