House Conservatives’ New Emphasis on Economic Growth
The Enterprise Blog,
Jan 6, 2012 -
You can’t turn around these days without bumping into public resentment against Congress. The legislative branch’s approval rating is at an all-time low at 11 percent. Voter displeasure is not unfounded. Facing a divided government and vastly disparate visions for the country, Congress last year put on elaborate displays of dysfunctional behavior. The brinkmanship in August over the debt limit, the failure of the Super Committee, and the payroll tax debate are all recent examples. Recognizing the serious fiscal problems in our country, voters want lawmakers who will pursue and achieve meaningful reforms.
House conservatives, known collectively as the Republican Study Committee (RSC), are working to fill that void. “Cut, Cap, and Balance”—their bumper-sticker slogan from the debt limit debate—has evolved.
The original slogan embodied the Tea Party movement’s exacerbation with the size of the federal government. The goal was to cut the current federal budget substantially, impose enforceable limits (“caps”) on the allowable increase in spending in future years, and pass a Constitutional amendment mandating a balanced budget. Individually and collectively, these three pursuits seek to achieve a more limited government and fiscal balance.
While still committed to spending cuts, House conservatives have now also coalesced around a series of specific legislative proposals, big and small, intended to create economic growth. These proposals are encapsulated in the Jobs Through Growth Act (H.R. 3400).
Among other reforms, the RSC’s legislation would reduce the corporate tax rate to 25 percent, adopt a territorial tax system to make multinational corporations more competitive, and support the elimination of ineffective tax credits and deductions. The bill would repeal the estate tax and the Alternative Minimum Tax. It also includes a series of reforms to promote domestic energy production, as well as incorporating the REINS Act, which requires Congress to approve any major, costly regulatory reform proposed by the president.
The new emphasis on economic growth is not an abandonment of the commitment to a balanced budget. Faster economic growth means smaller fiscal deficits. The Office of Management and Budget estimates that a 1 percent boost in GDP for one year reduces the 10-year deficit by about $750 billion.
While the tax cuts alone would certainly and significantly increase the deficit, if they are pursued in conjunction with sufficient spending cuts and entitlement reforms, faster long-run growth can be achieved.
Online: The Enterprise Blog