The Great Tax Disconnection In Washington By Rep. Eric Cantor

Source: http://www.investors.com/NewsAndAnalysis/Article.aspx?id=530304

04/14/2010

It's April 15th, that dreaded day when it comes time to pay the tax man.

As nagging as the pinch may feel this year, the sad reality is that it's bound to grow far worse in the future — that is, of course, unless Washington moves to repair the deteriorating fiscal health of our country by reining in its out-of-control spending habits.

According to the nonpartisan Congressional Budget Office, debt held by the public under the Obama administration would grow from $5.8 trillion at the end of 2008 to a stratospheric $20.3 trillion in 2020, or from 40% of the economy to 90%, respectively.

Also, annual interest on the debt would more than quadruple over the next 10 years, rising from $187 billion last year to $916 billion in 2020. By 2018, interest will eat up $2 billion per day.

With our debt ballooning to unsustainable levels, it's time for Washington to stop pretending there won't be severe consequences for our expansion of government spending programs.

Such a weighty debt load over time makes huge, growth-killing tax increases inevitable. The majority party has already made clear that it will raise taxes on income, capital gains and dividends.

Democrats, including the president himself, refer to a portion of this as the expiration of the "Bush tax cuts."

Yet for years these have been the people's tax cuts, and erasing them is a tax increase by any definition. In other words, by year's end, Americans will face the "Obama tax increase."

As painful as next year's tax hike will be, it will provide only a small glimpse into the tax hikes Americans may face in the future.

But higher taxes aren't the only way our exploding debt will erode America's superpower status. Swelling red ink forces us into a state of dependency on countries like China whom we rely on to buy our debt.

It drives up the long-term risk of inflation and a weak dollar. It also means precious dollars for defense will be siphoned away for debt repayment.

That's why Federal Reserve Chairman Ben Bernanke and former CBO Director Steve Elmendorf both sent stern messages to our lawmakers last week that action must be taken to head off dire economic harm.

It would be nice for Congress to have an open and honest debate about how we can get our budgets under control.

The most obvious venue for that discussion would be the annual congressional budget process that sets the parameters for federal spending.

But after 16 months of record spending, the House majority is in no mood to remind voters about the damage we are doing to federal coffers. Speaker Nancy Pelosi is even threatening to take the unprecedented step of foregoing the production of a budget altogether.

So as Americans are dotting their i's and crossing their t's on their tax returns this month, Democrats in Washington say they are immune from such accountability.

In the rare instances when the administration and majority Democrats talk about spending restraint, they rarely follow through. Over two months ago, Republican Leader John Boehner and I communicated to President Obama that if he would send up the spending reductions he proposed under an expedited procedure allowed under the law, we would use our authority to force a debate and vote on those provisions. We have yet to hear back from the president.

Under one-party rule, Washington has dangerously lost its sense of equilibrium. This cavalier approach to debt is moving us toward an economic abyss, and more of the same will only push us over the edge.

There are no free lunches. If our government is going to continue to spend and inject itself into the private economy the way Europe does, we are also going to have European-style taxation, higher structural unemployment and slower growth.

But we need not go down this road to stagnation — and that's why the November election is so critical.

Republicans stand ready to restore balance to Washington by bringing responsible, adult leadership that focuses sharply on job creation and building economic opportunity. We will make the difficult spending decisions to put a lid on our deficits.

And rather than putting the squeeze on our nation's job creators and entrepreneurs, we will embark on a pro-growth strategy that puts the American entrepreneurial spirit back on display.

Today, taxpayers are reviewing their own balance sheets to ensure the financial security of those they are responsible for.

The American people should demand no less from their elected officials in Washington.

Rep. Cantor, who represents Virginia's 7th District, serves as House Republican whip.