Obamanomics lacks pro-growth policies

About this time last year, President Barack Obama and Democrats in Congress promised that if we passed a trillion-dollar “stimulus” bill — and grew big government even more —  jobs would be created “immediately” and unemployment would remain below 8 percent. Instead the American people received a bill for $1.2 trillion, 3 million more jobs have been lost and the unemployment rate continues to hover near 10 percent. Americans are still asking, “Where are the jobs?”

To create jobs, Congress first must pass pro-growth economic policies that will put the capital back in capitalism and encourage sustained job creation and economic growth.  A good place to start would be to replace our current corporate tax structure. The U.S. taxes corporations at the second-highest level in the world, trailing only Japan, which discourages investment here at home and makes the United States less competitive in a global economy.  I am an original co-sponsor of Rep. Paul Ryan’s (R-Wis.) Roadmap for America’s Future Act (H.R. 4529), in which the corporate tax system is reformed by replacing the double-digit corporate income tax with a single-digit business consumption tax — which will encourage investment in the United States, creating jobs and boosting our competitiveness.

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Other pro-growth policies contained in the Roadmap include a full repeal of the Alternative Minimum Tax, the capital gains tax and the dividend tax. Americans are also given a choice between the current income tax system with its complexity of deductions and schedules or a highly simplified, two-tier flat-tax structure that would fit on a postcard. 

The Roadmap proposal and others like it recognize fundamental economic truths: 1) hiring a government worker is not economic growth, and 2) the less money businesses are forced to send to Washington, the more capital they will have to maintain or create jobs on Main Street.

This is an economy that by any historical standard should be recovering; it is an economy that wants to recover and it is an economy that will eventually recover. Given the looming storm clouds of Obamanomics, however, it is an economy that is struggling to recover. Instead of signaling a change in the weather, I’m afraid the president’s new debt, deficit and spending policies, coupled with the threatened takeover of our healthcare system, a threatened energy tax and the threatened makeover of our financial system, signal that the storm clouds of Obamanomics are here to stay. 

Spending at the president’s level means that the 10-year budget will triple the national debt and keep government spending on a path that equals as much as 25 percent of the entire U.S. economy.  Deficits never fall below $700 billion and never dip below 3.6 percent of GDP.  Debt held by the public triples over 10 years and exceeds 60 percent of GDP as a share of the economy this year — surpassing last year’s 50-year high. Debt continues to rise to consume 77.2 percent of our economy by the end of the budget window.  As Congressional Budget Office Director Doug Elmendorf has said, “U.S. fiscal policy is on an unsustainable path to an extent that cannot be solved by minor tinkering.”

During February, I discussed the economy with businessmen and -women, from small-business owners on Main Street to CEOs of Fortune 500 companies. They told me there is great fear of tax increases and inflation that businesses see as a result of Obamanomics. Stop and think about it.

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According to the Congressional Budget Office taxes would have to double just to pay for what we are on track to spend under current law. Former Comptroller General David Walker has said that to grow our way out of our fiscal problems would take double-digit economic growth every year for the next 75 years.

This fear is weighing heavily on their business decisions, including hiring decisions. It is little wonder that job growth is lagging and that private capital and entrepreneurs are sitting on the sidelines. Who would take the risk to start or expand a business in this climate? 
To ensure that the coming recovery is as robust as possible and returns America to prosperity, Congress needs only to pass proven pro-growth economic policies and present a credible plan to get our nation’s fiscal house in order. If President Obama and Congressional Democrats will do just that, they will find Republicans ready and willing partners.     

Hensarling is the vice ranking member of the House Budget Committee and the top Republican on the House Financial Services Subcommittee on Financial Institutions and Consumer Credit.