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By Congressman Randy Forbes, Feb 7, 2008 -

“Get an instant energy boost!”
“Restore, revive, and invigorate your life.”
“Get a jumpstart to your morning with this energy bar.”
“Provides instant stabilization to your well-being.”

These slogans from popular energy bars give consumers appealing guarantees – the snacks will provide the boost of energy consumers need to make it through their morning, to last through their afternoon meetings, to stay awake on their late night drive, or give them a boost any time they need a quick mental stimulation. Of course, most of us realize that these energy snacks are really just a temporary fix - a quick boost of energy - to a much larger problem of weariness. We know that energy bars can get us through a few hours, but we won’t really solve our exhaustion or sluggish mentality without getting the proper amount of rest, nutrition, and exercise.

Last week, Congress voted on an economic stimulus plan with the stated purpose being to reinvigorate our sluggish economy, much like the energy bar’s promise to reinvigorate our sluggish minds. Consider these quotes from politicians in Washington about the economic stimulus package:

“It will help boost the country’s slowing economy.”
“We need this package to rejuvenate the foundering economy.”
“This agreement is a practical step to boost the economy.”
“It will provide relief to jump-start the economy.”

Ironically, we are trying to solve our economic challenges with the economic equivalent of an energy bar, and it only inflates Americans’ expectations of our economy and delays dealing with a long-term problem.

At a minimum, Americans are watching to see that the money they have invested in their homes, retirement, and savings is as valuable as they had planned. They are wondering what to expect financially 10 years from now when their child is leaving for college and they are facing the tuition bill. Americans are seeking the security of knowing that they can afford their next gas bill and mortgage payment. College students are watching to see whether they will enter a welcoming job market when they graduate. On a global scale, America is watching to see how we will compete with countries like China, India, and Japan, whose savings rates are higher than ours and their financial systems are becoming more advanced. Americans are seeking confidence and stability in our economic policies.

Unfortunately, Americans have experienced a lot of unrest in these areas because of recent economic troubles. Even more unfortunate is that as a response, Washington is throwing temporary tax rebates and some modest business incentives at them, instead of adopting a fundamental change of course.

Ultimately, the stimulus package passed by the House last week will create even more economic strain on our future, at the expense of today. The federal government cannot just wish new purchasing power into existence. Since the money used for the economic stimulus was not offset by equal spending cuts, it must be borrowed, and that means that we will increase our deficit. The temporary “pump” into our economy carries a whopping price tag of $146 billion. $31 billion of that amount will provide “rebates” to individuals who paid no income taxes in 2007. As a basis of comparison, that $31 billion is more than the annual cost of funding the entire National Institutes of Health, whose dedication to disease and medical research saves thousands of lives every year.

Real economic growth comes from generating income and wealth for American families, and income and wealth come from increasing commerce and growing jobs. Unfortunately, the stimulus package provides no incentive to work or to save more. In fact, it discourages the ability to save by expanding the federal role in housing, making it easier for some people to get mortgages that they otherwise cannot afford, a problem that economists say has been a primary source of our current economic troubles. There were some positive business incentives included in the stimulus that I do support because they would create jobs and strengthen the economy. However, the cost of these business provisions accounts for $45 billion – and we ought to come to these economic solutions without putting $146 billion on the taxpayer’s credit card.

In a rush to put together a quick fix for the economy, the opportunity to focus on real economic growth is being disregarded. The American people want and deserve fundamental change, and instead they’re getting a temporary boost that comes conveniently during an election year. Instead of a temporary political stimulus, we must focus on the following solutions that will lead us to long-term economic stabilization.

A Plan for Fundamental Economic Change

Reduce Tax Burden on Families

Restoring predictability in our economy means that we need to seek permanent tax reform that will put more money in the wallets of hardworking Americans on a regular basis.

• Make tax relief permanent for middle-class married couples, parents and workers.
• Offset payroll taxes so Americans increase their regular take-home pay. Increase the tax allowance for children to help working families and single-parent homes make ends meet.
• Repeal the death tax and capital gains tax to encourage long-term investments.
• Provide more predictability with our tax laws, and avoid the stop-and-start tax policy that has been so prevalent in recent years.

Encourage Savings

While the economy was growing in the 1990s, household savings fell dramatically. According to a report by the Congressional Research Service, since that point household savings has steadily declined and the proportion of income that households have set aside has been near or below zero. The U.S. savings rate is now the lowest it has ever been.

• Encourage savings and investing by reducing the capital gains tax.
• Promote financial literacy education to our young generation.
• Protect the value of the dollar so that Americans will feel confident in investing and saving their money.

Reform Spending

Washington cannot call on Americans to save more without getting its own spending under control. We have a duty to be good stewards of taxpayers’ dollars, and we must reform our spending.

• Increase transparency in government spending, so Americans know how their money is being used. Real accountability in Washington will help control deficit spending.
• Eliminate unneeded and wasteful programs.
• Adopt real earmark reform.

Reject Overregulation and Job-Killing Small Business Taxes

We need to put business back in the hands of America’s entrepreneurs.

• Reduce unnecessary regulations on businesses so we can increase our global competitiveness.
• Cut small business income taxes to encourage the creation of more jobs.
• Reduce the cost of health insurance to individuals and employers by creating more options, like health savings accounts and associated health plans.
• Allow for faster expensing of all new business equipment to encourage productivity and job growth.
• Allow for accelerated depreciation to encourage investment.

 
Fundamental economic change is possible, and permanent changes are necessary if we want a growing, competitive, and healthy economy. We should not accept a temporary fix at the expense of permanent change. To follow my actions on this issue in Congress, I encourage you to visit http://forbes.house.gov/issues/taxes.htm.