Thune asks Obama on budget: At what point do more taxes harm the economy?

Thune complained that leaked information on Obama’s 2014 budget says the president is calling for more tax increases in order to reduce the deficit.

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“What we’re hearing is that it’s going to consist of a huge new tax increases,” Thune said. “When the word came out that the president’s budget was going to include another trillion dollars in taxes, you have to ask, at what point does this start doing serious harm to the economy?”

Thune said that government policies are creating a “tremendous cloud of uncertainty” negatively affecting the economy. He suggested that simplifying the tax code and reducing tax rates would “unleash a period of economic growth.” Republicans argue that increasing tax revenue takes money out of the economy, slowing growth.

“It seems unusual, ironic really, that after the president gets $1.6 trillion in new taxes, that he would submit a budget that would ask for even more tax increases,” Thune said referring to the repeal of some Bush-era tax rates and tax mandates from the president’s healthcare law.

Obama’s budget, which is being released two months late, is rumored to include a chained consumer price index to reduce entitlement spending, but Thune said that was a “small change in terms of what the dimensions of the problems are.” 

Thune said that because entitlements such as Medicare, Medicaid and Social Security are the largest federal expenses, more reform is needed to ensure that the programs survive for future generations. The House Republican budget would turn Medicare into a voucher system in order to reduce federal costs, but Democrats say that would be the final nail in the coffin of the Medicare program.

Both the House and Senate have passed their own budgets, but because they are so different, it is unclear if differences could be resolved in a conference committee between the two chambers.