Economy & Budget

Memo to Super Committee: Tax China not Americans

President Obama has made his recommendations for reducing the federal deficit.  The main points call for raising taxes on the highest incomes and cutting Medicare pay-outs.  Republicans have already said the so-called Fair Share tax is a non-starter and few give it any chance of being adopted by the congressional super committee tasked with cutting the deficit. 

But there is another approach, one that doesn’t require deep cuts to popular programs or raising taxes on Americans.

The key point to remember – and seems to have been forgotten in Washington – is that cutting the deficit and putting Americans back to work are linked.

Americans who aren’t working aren’t paying taxes.  Instead, they’re collecting unemployment.  Lower tax receipts and higher costs assistance programs add to the deficit.


Continue America's no-cost sweet success story

The sign of any successful policy is one under which all parties affected by it are able to succeed and thrive. It is how Congress attempts to structure all pieces of legislation. Although as a former House Member, I can attest that this goal is often unrealized as unforeseen factors come into play and unintended consequences crop up.  

That has not been the case with America’s sugar policy. 

Since the 2008 Farm Bill, you would be hard pressed to find anyone struggling with the outcome. First, taxpayers have succeeded.  Sugar policy operates at no cost to taxpayers—an anomaly in today’s budget atmosphere. And according to projections by the U.S. Department of Agriculture, it will continue to cost $0 through at least 2021.  

The family farms and small businesses that comprise the U.S. sugar industry have likewise succeeded. After years of plant closures caused by stagnant, low sugar prices—nearly 40 plants have closed since 1994—sugar producers have rebounded. In fact, after losing more than 100,000 sugar-related jobs since 1994, a new study by LMC International shows the industry holding steady with 142,000 good-paying U.S. jobs and $20 billion in economic activity. 


The defense industry should seize the opportunity

After a decade-long streak of rising revenue, corporate profits and stock prices, the U.S. defense industry is now at a crossroads as significant as that faced at the end of the Cold War.

More than earnings are on the line, because since Sept. 11 the industry has been so interwoven into the American national security apparatus, so corporate changes have national-level implications.

It’s a time of change. New blockbuster weapons programs are history. Wartime spending is tapering off as tens of thousands of U.S. forces come home from the Mideast and Central Asia. Even once de rigueur air show appearances in Paris and London by top defense executives are now viewed as an unnecessary luxury. Meanwhile, the politics of defense spending is changing. Military hardware initiatives, long tied to jobs and political donations from companies, are under assault from Democratic and Republicans alike as irate taxpayers seek to claw back control over the federal budget.

At this crossroads, which road should policymakers, the Defense Department and defense executives take?


Super Committee: Keep us safe with strong global leadership

There is no greater privilege than serving your country, and we both proudly wore our uniforms for four decades. In our combined 80 years of service, we worked to keep this nation safe and secure. Today we recognize our nation is in a different kind of danger with a massive debt and tough budget choices will have to be made.  One thing we cannot afford to shortchange, however, is our national security.

That’s why last week we wrote to congressional leaders urging them to protect the critical 1 percent of our federal budget that funds our international affairs programs. This investment is the backbone of America’s leadership in the world, supporting all of our development and diplomacy work around the globe.  Programs funded by the International Affairs Budget are cost effective solutions to stabilize dangerous regions, prevent conflicts before they start, and support the extraordinary efforts of our troops in the field.

With the global challenges we face today, not adequately funding our international affairs programs is a shortsighted choice that will only cost us more in the long run.  By spending a little now, we can prevent spending our greatest treasure, the lives of our brave men and women in uniform.


DOJ closes door on AT&T/T-Mobile merger

Our economy was built on a legacy of hard work, entrepreneurship and competition. Protecting that legacy, especially during times of economic hardship, must continue to be a priority. In reaffirming its commitment to ensuring competition, innovation and jobs in the wireless industry, the Department of Justice recently sued to thwart efforts by AT&T to takeover T-Mobile.

Media alerts notwithstanding, the Justice Department’s decision should come as no surprise. From an antitrust perspective, AT&T’s bid for T-Mobile was a nonstarter. DOJ carried out a  thorough examination of the merger and concluded what we have been saying from day one: the elimination of T-Mobile as a national competitor and an industry maverick would likely lead to higher prices, lower quality service, and reduced innovation.

As alleged in the complaint, the proposed merger would reduce the number of significant competitors from four to three nationally and substantially increasing concentration in a multitude of already highly concentrated local markets. The merger raises a significant
risk that the wireless market will revert to a duopoly, and the Justice Department correctly concluded the deal would “eliminate a company that has been a disruptive force through low pricing and innovation by competing aggressively in the mobile wireless telecommunications services marketplace.”


Health care mandates stand in way of Obama's Jobs Bill

The federal health care law will soon impose mandates on thousands of franchise small businesses across the country that could result in the loss of millions of jobs.  At the same time, the President is out stumping for a legislative package to create jobs – particularly by small businesses.  Whatever one’s view of the President’s jobs package, it has no hope of being successful unless these mandates go.

A new report prepared by Hudson Institute for the International Franchise Association shows mandates within the health care law endangers the jobs of 3.2 million full-time employees at tens of thousands of franchise businesses. These mandates will force franchise small business owners to choose between reducing the number of full-time employees or down-sizing their businesses or both - none of which is a prescription for economic recovery.


A rising tide of renters

How much value do we place as a society on our ability to house the poor? You have to wonder after suggestions arose during the latest budget compromise about cutting the Low-Income Housing Tax Credit (LIHTC), the only major national program remaining that funds affordable rental development.
In fact, there couldn’t be a worse time to eliminate this meaningful, jobs-creating support. Nearly 100 million Americans pay rent these days, and all signs point to that figure growing in the months and years ahead. People are losing their homes in record numbers, and many that have been foreclosed on have yet to move into rental housing. Analysts expect renters to account for 36 percent of U.S. households by 2015, up from 32.8 percent in 2004, and every percentage-point increase amounts to about 1.3 million more households joining the renting ranks.
Here’s the problem: If current trends hold up, their rental options will dry up fast. Construction starts for multifamily residences are lagging behind demand – at a significant rate. The multifamily market will add an estimated 133,000 new residences this year, well short of the 250,000 to 300,000 needed to keep supply and demand in balance.
With multifamily developers so focused on high-end condos, low-income communities are feeling the shortage the most.


When a tax cut isn't a tax cut

Consider two different U.S. tax worlds:

Today, the U.S. government gets virtually all of its revenue from an income tax, which many Americans believe is unfair, incomprehensive, and an impediment to economic growth. Virtually every American is calling for some kind of reform. 

Tomorrow, the U.S. government gets its revenue from a consumption tax.  Familiar examples are a European Value Added Tax (VAT) or a U.S. retail sales tax.  Implicit are measures to prevent the tax from becoming too regressive and a “money machine.” 

Tomorrow, a zero capital gains tax is not considered a “loophole” or the “poster child” of an inequitable tax system but rather a predicate for entrepreneurship and investment. 

Tomorrow, Americans will invest their hard earned income into IRAs and 40lks without a second thought about tax penalties or repercussions.  It rewards Mr. Thrift rather than Mr. Spendthrift.   Today, they are considered “special tax breaks” or “tax expenditures.”

Tomorrow, a business can expense or immediately deduct the cost of new equipment from its tax bill and be competitive.  Today, it is considered a corporate break.

Is tomorrow’s dream “voodoo” tax policy?  Definitely not.  The U.S. is one of a few global players that relies almost entirely on an income tax for its revenue.  In our current tax system, exempting saving and investment is a tax loophole or tax expenditure rather than a necessity for economic growth. This must change. The time is ripe to do so.


E-Verify best jobs bill

Last week, President Obama gave yet another job creation speech that was aimed at protecting one job—his own.  Two months after President Obama took office, the number of unemployed Americans eclipsed 13 million for the first time in history.  Now, two years after he took office, nearly 14 million Americans are unemployed and another nine million can’t find full-time work.  President Obama has a right to be concerned about his job.

But if President Obama is indeed focused on putting 23 million unemployed or underemployed Americans back to work, there is one element that is missing from his jobs plan: a federal E-Verify requirement.   This is one of the best options available to put unemployed Americans back to work.

E-Verify is a web-based program that quickly identifies individuals working illegally in the United States and protects jobs for legal workers by checking the Social Security numbers of new hires. We could open up millions of jobs for unemployed Americans by requiring all U.S. employers to use E-Verify. 

The “E” in E-Verify could just as well stand for “easy” and “effective.”  It takes only one to two minutes to use per new hire and immediately confirms 99.5 percent of work-eligible employees.  Even though E-Verify is not mandatory, many businesses voluntarily use the program.  Nearly 290,000 American employers use E-Verify and an average of 1,300 new businesses sign up each week. 


Seaports: A key to economic recovery

President Obama’s recent speech outlining his plan for the American Jobs Act focused on several tactics that he believes will put people back to work and get our economy back on track.  However, as the U.S. continues to confront the need for both economic austerity and job creation for the 9.1 percent of unemployed Americans, one of the nation’s oldest and largest economic drivers – seaports – continues to be overlooked.
By increasing our investment in America’s seaports, we can create high-paying, sustainable jobs that will put Americans back to work. Just last year, U.S. exports supported an estimated 9.2 million jobs. This means that for every $1 billion of exported goods,more than 5,000 jobs are supported.
Responsible for handling more than 99 percent of our country’s overseas cargo, seaports are America’s gateway to international trade and economic prosperity. However, many land and water connections are outdated and insufficient, thereby impacting the ports’ ability to move cargo into and out of the U.S. efficiently.