Labor Day has come and gone, which can mean only one thing in Washington: Congress is back in town. So far, though, this legislative session’s record of success is less than stellar. In order to flex some political muscle before facing voters this November, Congress will have to use the next few weeks to “bulk up” on legislative accomplishments.
So, here are my recommendations: Congressional leadership should champion three critical and yet unresolved economic issues, turning them into achievements and thereby boosting the country toward greater prosperity and giving the voters what they deserve. This is a rare instance where good policy can make good politics.
First, the House and Senate should cement the Bush tax cuts. Doing so would prevent the massive tax hikes scheduled to occur when many of the cuts expire. For instance, on New Year’s Day 2011, income tax rates will jump nearly 5 percent in some brackets — a considerable increase — if Congress doesn’t act immediately to make the cuts permanent.
Not making the cuts permanent would be equal to reversing them, which would prove economically disastrous. The administration’s 2001 and 2003 tax-relief packages invested an estimated $1.1 trillion back into the private sector, spurring productivity growth that is higher than the average of the previous three decades. You can add to this the White House numbers showing this year’s federal revenue to be $60 billion higher than expected. Clearly, Americans respond overwhelmingly to a business-friendly, lower-tax environment.
The second agenda item is for the Senate to kill the estate tax, also known as the “death tax.” There needs to be a straight up-and-down vote on whether this tax should be completely, immediately, and permanently repealed. Without the cover of a cloture vote, we’ll see how the Mark Pryors, Maria Cantwells, and Lincoln Chafees of the world really feel about taking the savings of Americans when they die.
The death tax is wrong both in principle and practice. A majority of Americans agree that leaving well-deserved earnings to loved ones is a right, not a privilege. And for good reason: A congressional Joint Economic Committee study finds that the tax “exerts a negative effect on the economy by generating extremely high compliance costs, introducing economic inefficiencies, and reducing the stock of capital … by approximately $847 billion.” Repeal would spur economic growth, thus increasing tax revenue. It’s a win-win-win, for the upper, middle, and lower classes.
Third, our legislators must end their errant earmarking, the process by which they stick into bills bits of pork-barrel funds for the sake of their individual districts. Just think of the $315 million “bridge to nowhere” in Alaska.
No party owns this issue, and each is guilty of marking as many ears as possible. Earmarking now accounts for $9.6 billion in congressional spending. And it’s all done surreptitiously, behind the backs of voters—and sometimes even committee members while the bills are being written.
This also means that our lawmakers don’t vote for bills on the merits alone. Some bills carry very expensive baggage — like one this past April, when Republican Sen. Tom Coburn of Oklahoma successfully extracted a subsidy of $15 million dollars for a seafood promotion program from a bill that was meant to fund the Iraq War and hurricane relief.
The best way to cut the deficit and restore economic sanity to this credit-card Congress is simply to stop the excess spending. But comprehensive earmark reform, along with other budget remedies — such as effectively defining lobbying rules, giving the president line-item veto authority, and enforcing spending measures — would go a long way toward shutting the wasteful-money faucet in Washington.
This agenda, though not groundbreaking, can turn politicians into legislators. A July 2006 Pew Research Center poll details voter frustration with Congress: 45 percent felt it has produced “less than usual.” Voters stand ready to reward — which is to say, re-elect — those who respect their wishes to tax and spend less. But out-of-control lobbying and an out-of-touch inside-the-Beltway culture begs the question, Will Congress give the people what they want? We’ll know in the next month.
– Mallory Factor is the chairman of the Free Enterprise Fund, based in Washington, D.C.