Today's jobs report reveals that far too many people remain out of work. That is why all of our efforts are centered around jobs – starting with cutting spending and federal regulations – to grow the economy so that people can get back to work. There is no doubt that the joint effort to prevent taxes from being raised on families, small businesses and investors helped to restore a sense of certainty to the private sector, but far more needs to be done.
Economy & Budget
America's corporate tax rate undermines our country's competitiveness, hurts consumers, jeopardizes jobs and weakens the confidence of shareholders and investors.
Recognizing this disadvantage, President Obama has singled out our corporate taxes - the highest in the developed world at around a blended 40 percent - as a bipartisan opportunity for us to stop encouraging the exportation of businesses and jobs and allow our companies to do what America has always done best - compete.
Next week, I'll introduce "The American Competitiveness Act," which follows up on calls from the President and members of both parties to cut the corporate tax rate. Under this legislation, the federal corporate tax rate will be lowered from 35 percent to 25 percent over two years-and kept at 25 percent permanently. Ideally, the phase-in period gives us time to simplify our tax code because government shouldn't pick winners and losers.
In his State of the Union address, President Obama went into innovation overdrive, touting research and development as a key to speeding America’s recovery from recession, strengthening its manufacturing base, and “winning the future” for the U.S. economy.
His administration has further emphasized that these goals require improving the nation’s intellectual property protection system not only at home, but abroad – hence the White House’s focus on securing new "promises" from China at the recent Washington summit to crack down on its systemic infringements.
Yet the President’s new innovation-centered plans will flop, and the economy will weaken further, if he supports an ill-advised patent reform bill about to be marked up Thursday in the Senate Judiciary Committee. This legislation, the Patent Reform Act of 2011, will actually undermine the nation’s technological progress and growth by promoting intellectual property theft, not protection.
The conventional wisdom about the radical budget plan of House Budget Committee Chairman Paul Ryan (R-WI) is that, while one might disagree with some of its specifics, he deserves credit for making the tough choices needed to address the nation’s long-term deficits.
The conventional wisdom is false.
In reality, the Ryan plan fails to achieve its advertised goal of fiscal responsibility — despite massive program cuts that include eliminating traditional Medicare and partially privatizing Social Security — because of the enormous tax cuts it would bestow on the nation’s wealthiest households. Federal debt under the plan would rise over the next several decades to unsustainable levels far in excess of the size of the nation’s economy.
Last week, the Congressional Budget Office issued a report showing that our deficit for this fiscal year will be $1.5 trillion dollars. Our gross debt will equal 100 percent of GDP. Annual interest payments on our debt will rise to $750 billion by the end of this decade — meaning that a one-year interest payment will cost nearly as much as twenty years’ worth of highway construction. The total amount of interest we expect to pay between now and then is $5.4 trillion dollars — enough money to fund our entire government for 18 months.
The situation is so serious that former Federal Reserve Chairman Alan Greenspan warned that we may face a bond market crisis in the next two or three years.
Sen. Jeff Bingaman (D-N.M.) gave these remarks Monday at the New Democratic Network and National Energy Policy Institute.
At the beginning of this new Congress, it is already becoming clear that energy policy will have a major place on this Congress’ agenda.
Part of that is because the President made clear last week in his State of the Union speech he will give energy a major priority in his administration.
In part, it is because our energy security is dependent on overseas supplies and global stability. The events that we have seen unfold in North Africa and the Middle East are stark reminders that the world is an unpredictable place. Whenever geopolitical events potentially affect our access to affordable energy supplies, it is a spur to consider energy policies that might reduce those geopolitical risks.
President Obama’s recent executive order requiring every federal agency to conduct a systematic review of existing regulations offers the perfect opportunity to reform our telecommunication rules in ways that energize and expand our nation’s small business sector.
Consider that America’s small businesses inject almost a trillion dollars into the economy each year. They have created more than 93 percent of all new jobs over the last 20 years, and employ more than half of the U.S. private sector workforce. They also employ 41 percent of the nation’s high-tech workers who generate about 13 times more patents per employee than workers at larger firms. This critical sector of the market deserves the best and most robust communications technology available.
Reminding us of earlier eras when threats from Japan and Russia forced us to raise our innovation game, President Obama eloquently articulated the imperative for our country to once again meet the challenge of international competition by rededicating ourselves to innovation in his recent State of the Union address.
But innovation has changed greatly since decades past. Winning the innovation game today means that no company, no matter how big or how successful, can do it all on their own. Companies that used to rely primarily upon their own internal resources for R&D today must innovate in a more open manner – integrating their internal ideas with the external ideas of many other companies, universities and startups to create new solutions, new systems and new possibilities that no one company could do on its own.
Unemployment continues to plague our economy. In spite of constant claims that we have just turned the corner into recovery, the jobs reports remain grim with no real signs of improvement.
While Keynesian economists and big government apologists scratch their heads about persistent unemployment in spite of unprecedented government “investment” in the economy, free market economists understand the problem perfectly well.
In short, they understand that we are looking to the Federal Reserve to solve an unemployment crisis that the Fed itself largely created.
Along come White House chief economist Austan Goolsbee and Treasury Secretary Geithner crying “catastrophe” in an effort to pressure Congress to raise the nation’s debt ceiling. But the real debt ceiling catastrophe lies not in the predictable fear-mongering of a profligate Administration trying to get its way, but in the fact that the United States is already in the position of having to raise a $14.3 trillion debt limit that is almost as large as America’s GDP. And the other related debt ceiling crisis is making sure that the Republican Party can fulfill its election mandate of bringing the federal spending binge to an end without a suicidal 1990s-style government shutdown that could guarantee a fiscally ruinous Obama re-election in 2012. Both political and fiscal prudence should rule the day if we are to avoid the real debt ceiling catastrophe.
No congressional act comes closer to the old saw of “closing the barn door after the horse is gone” than a vote to increase the federal debt ceiling. Excessive spending and debt creation have already occurred—including more than $5 trillion of new debt under Nancy Pelosi. The debt limit vote is simply the acknowledgement of that reality in a country where every individual owns $45,000 of debt. It is a yea vote no one likes to make lest they be deemed an accessory to a fiscal crime.