Letter Regarding Reducing the Deficit, Entitlement Reform, and Tax Code Restructure
TO THE MEMBERS OF THE JOINT SELECT COMMITTEE ON DEFICIT REDUCTION:
The U.S. Chamber of Commerce, the world’s largest business federation representing the interests of more than three million businesses and organizations of every size, sector, and region, strongly urges you and your colleagues on the Joint Select Committee on Deficit Reduction to act expeditiously to rein in spending, reduce the deficit, and stabilize and ultimately lower America’s level of debt. We believe that enhancing economic and job growth is a prerequisite for achieving these goals, but growth alone will not be enough. Congress must reform entitlement programs and fundamentally restructure the U.S. tax code to bring revenue and spending back into alignment.
The recently passed “Budget Control Act of 2011” designated $917 billion in spending cuts and empowered the 12 member Joint Select Committee on Deficit Reduction to formulate a plan to reduce the aggregate deficit over the next decade by $1.5 trillion more and present this plan to Congress for an expedited up or down vote. Failure to present and pass such legislation would lead to a broad based sequestration of $1.2 trillion.
While this magnitude of deficit reduction is a step in the right direction, it would fall far short of fixing the deficit and debt problem America currently faces; it would not stabilize the debt to GDP ratio and would not put this ratio on a downward trajectory; and it would fall far short of achieving a balanced budget. It alone would likely not prevent future downgrades to the debt rating of the United States. Even with successful implementation, the amount of publicly held debt outstanding by the United States would rise to $16 trillion at the end of 10 years.
The Chamber urges you and your colleagues on the Joint Select Committee to make every effort to fundamentally address these issues by engaging in a true reform of entitlement programs and a complete restructuring of the U.S. tax code.
The Joint Select Committee must fundamentally address entitlements. Entitlement spending is out of control, on autopilot, and leading America toward fiscal disaster. Moreover, Congress cannot fix the root cause of the problem without addressing the entitlement programs of Medicare, Medicaid, and Social Security.
America’s demographics are overtaking these programs’ financing mechanisms; taken together entitlements are the source of the rising debt. The retirement of the baby boomer will see 10,000 individuals reaching retirement age each day for the next 19 years. Entitlements must be reformed for future generations. Congress must bend the curve of entitlements downward through sensible reform. Containing entitlement costs is key to long-term fiscal sustainability of the nation.
The Chamber also strongly believes the Joint Select Committee should restructure the tax code to improve efficiency, transparency, and simplicity to drive economic growth and job creation. The Chamber urges you to consider how the current tax laws act as an impediment to worldwide competitiveness, a deterrent to saving and investment, and an obstacle to innovation and entrepreneurship. Accordingly, the Chamber believes that the current code needs a comprehensive reform to lower overall marginal tax rates, to encourage saving and investment, to foster global competitiveness, increase capital accumulation, attract foreign investment, and drive job creation. Further, changes to the tax code should not single out specific industries or individuals for punishment, and should allow the marketplace, and not the tax system, to allocate resources. Finally, comprehensive tax reform should include realistic transition rules to provide adequate time for implementation and help minimize economic dislocations individuals and businesses may encounter in transitioning to the new tax system.
Clearly, there is a great deal of hard work ahead to restore the U.S. economy and put the nation’s finances on a sounder footing. The bipartisan agreement of the “Balanced Budget Control Act” lays a path for accomplishing those goals for the American people.
Congress, once again, has an opportunity to put the country on the right fiscal road – a road to balance and sustainability. The Chamber strongly urges you and your colleagues on the Joint Select Committee on Deficit Reduction to seize this chance. Failure will result in higher deficits, more debt, more downgrades, less growth, and fewer jobs. We are committed to work with the Members of this Committee and the Congress to make the most of this opportunity.
R. Bruce Josten