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Washington Update: Runaway Spending
From the Desk of Rob Wittman
When Democrats decided to push through their “COVID” relief package earlier this year without any outreach to or support of Republicans, we warned them about the cost of risking our fiscal stability and making it harder for our economy to recover from COVID. Moreover, economists across the political spectrum warned President Biden about the very real threat that inflation caused by his reckless spending presented to our economic recovery. Specifically, Treasury Secretary Janet Yellen admitted fears of inflation on CNN’s “State of the Union”: “[Inflation is] a risk that we have to consider [with the COVID package].”
What we are seeing today is exactly what many of us warned would happen as a direct result of President Biden and Speaker Pelosi’s out of control spending. Gas prices are now at their highest in seven years, food prices increased last month, and home prices, including the price of lumber, are rising. In fact, this week, we learned that the Consumer Price Index rose by nearly 1 percent last month, marking the fastest increase of inflation since 2008, and the monthly gain in core inflation is now the largest since 1981.
Without addressing this economic crisis, Americans will have to spend a whole lot more to get “back to normal.” But instead of following the track record that created the strongest economy and lowest unemployment rate in generations prior to the pandemic, the President has proposed more than $6,000,000,000,000 in new spending and wants to raise taxes that will destroy jobs, further undermine economic growth, and force the middle class to foot the bill.
To pay for these extravagant policies, President Biden has proposed raising the corporate tax rate from 21% to 28%. Despite what some claim, these tax increases will affect working-class Americans, as the costs of this tax hike will be passed on to consumers as a higher price on the goods and services these corporations provide. By raising taxes, companies will also lay off workers and reduce wages to accommodate revenue loss, with low-skilled, young, and female employees bearing a larger share of the tax burden. That means higher taxes on U.S. businesses translates into fewer jobs and lower wages for American workers. In fact, the data shows that for lower income households, families bear a larger tax burden on average from corporate income taxes than from individual income taxes.
Raising the corporate tax will result in higher prices for the American people and shrinking profits for small businesses, and will also weaken America’s competitiveness around the world. Since 2017, nine countries have lowered their corporate tax rate to compete with the U.S. President Biden’s business tax changes would make American one of the costliest places to do business. This new U.S. corporate tax rate would be higher than in Communist China. His policies would serve to stifle domestic innovation and job growth, bolstering our global competitors. This tax hike would cause the transfer of jobs and manufacturing to Communist China. In addition, the National Association of Manufacturers said President’ Biden’s proposal would kill over a million American jobs. It would reduce GDP by hundreds of billions of dollars over the next decade, decrease capital investment, and lower wages and compensation in the long run.
We need to return to sound economic principles. We should be limiting the involvement of the federal government in people’s lives, not expanding it. We must rein in runaway spending. We have to clearly define future priorities that are fiscally responsible, and prevent future tax hikes. For if we do not we will stunt the United States’ economic recovery as we recover from the COVID-19 pandemic.
Instead, we must push for an agenda that is pro-worker, pro-family, pro-growth, and, most of all, pro-American.