In his State of the Union speech, the President promised that the Administration would begin leading the way toward restoring fiscal discipline and reducing the size of the mounting and unsustainable debt we are accumulating. But unfortunately when he released his first budget earlier this month, the $3.83 trillion price tag did not deliver on that pledge. Instead, his budget includes massive deficit spending and substantial tax increases, which will only make it even more difficult for businesses, large and small, to create the jobs that will fuel our economic recovery.
The fiscal situation in Washington is untenable. More than 40 percent of the President’s proposed budget is deficit spending and at that rate the debt will double in just five years. The Democratic-led Congress just voted to raise our national debt ceiling by nearly $2 trillion to $14 trillion! With a significant portion of our national debt already owned by foreign nations, including China and the wealthy Arab oil states, the President’s proposal simply adds still more debt to the American people’s tab. More debt, more spending, and more taxes make this budget a true jobs killer.
Although this is the President’s first official full-year budget, for the past year, his administration has already been on a record-breaking spending spree. In less than one year, the Administration has promoted such programs as the $787 billion stimulus fund and the $2 trillion health care reform bill (and with a Democratic-controlled House and Senate this plan could reemerge), all off-line spending measures adding to our national debt.
His proposed budget for the next fiscal year is more of the same. While the President has called for a freeze in discretionary spending the reality is that in his first year of office he has already pushed through an 80 percent increase in these areas!
And how does the President plan to pay for all this spending? Through massive tax increases on working Americans! His plan includes raising taxes by $2 trillion over the next 10 years. His intent is to allow the Bush tax cuts to expire for those in the top brackets and also to raise the top two income brackets for individuals from 33 and 35 percent currently, to 36 and 39.6 percent respectively. The proposal would also limit their tax deductions for charitable donations, mortgage interest, and state and local taxes. These tax hikes will hurt American families and businesses, stifling job creation and economic recovery.
In addition, many Texas interests and industries will be particularly affected. The Obama Administration targets the domestic oil and gas industry by proposing the elimination of tax benefits that currently support the production of our domestic resources. Not only will this hurt the Texas economy and job market, but by discouraging domestic oil and gas exploration and production, we will make ourselves more dependent on foreign energy. These rescissions are in addition to the call for implementing a job killing cap and trade system, which is estimated to not only drive up energy costs but also lead to 400,000 Texans losing their jobs by 2030.
The President’s budget is fiscally irresponsible. The record-setting debt makes us more beholden to foreign interests. The increased taxes make our economic recovery more difficult. In this environment, where the only certainty seems to be that the Administration and the Democratic Congress will spend, tax and regulate more, businesses large and small will be reluctant to hire new employees and make new investments. At this critical time, we need bold leadership and significant belt-tightening. The Obama budget delivers neither.
Kay Bailey Hutchison is the senior U.S. Senator from Texas and is the Ranking Member of the Senate Committee on Commerce, Science, and Transportation.