Economy & Budget

GOP: Keep Bush Tax Cuts to Create Jobs

Republican leaders are beginning to stitch together their midterm election campaign agenda to increase economic growth and jobs at a time when a near majority of voters say they trust the GOP more than the Democrats to handle the economy.

With the Gallup Poll reporting this month that 66% of voters say the economy is getting worse, and the Economic Confidence Index falling to minus 34, “the lowest weekly average since last July,” support for the Democrats’ and Barack Obama’s failed economic stimulus has collapsed. 

A recent Rasmussen Poll of 1,000 likely voters showed that they trust Republicans more by 48% to 39% on the economy, “an issue that has consistently been the most important among voters for several years,” the polling group said.

GOP leaders now think the country is ready to swing their way in November on a popular growth agenda based on keeping tax rates low, cutting government spending, and market-based incentives to help businesses increase reinvestment and sharply boost the pace of new job creation.

Up until now, Republican leaders have largely talked about their agenda in generalities of reducing spending to shrink the deficit and the national debt, easing the tax burden on American workers and businesses. But as the midterm fall election draws closer, many of the GOP’s leaders are speaking out with more specificity about the kind of proposals they want their party to run on as they launch a series of grassroots hearings with voters around the country and seek out recommendations from the business community.

Jobs and the economy will be a centerpiece of the agenda when the Republicans roll it out in September, a senior House Republican strategist told HUMAN EVENTS last week. “Job creation has been the No.1 issue at our members’ town hall meetings,” he said.

In a statement to HUMAN EVENTS, Rep. Tom Price of Georgia, who chairs the influential 115-member conservative House Republican Study Committee, laid out the GOP’s campaign attack strategy for the fall elections.

“The White House and its congressional Democrat allies have relentlessly pursued an agenda that continues to create tremendous uncertainty in our economy. They have targeted American job-creators with new taxes and mandates that are hostile to current and future growth,” Price said.

“Republicans are determined to help more Americans get back to work and develop policies that will support a healthy environment for small businesses. That means defending American families and entrepreneurs against future tax increases set to occur at the beginning of next year or as part of a Democrat national energy tax scheme as well as supporting pro-growth tax policies that reduce the tax burden for families, small businesses, and investors so they can grow the economy and create jobs,” he said.

The GOP agenda will be the byproduct of a nationwide series of voter forums as part of the House Republicans’ Americans Speaking Out Initiative to formulate their campaign proposals. At the same time, GOP leaders were holding meetings with the nation’s largest business groups in the Capitol to add their ideas to the list of tax-cut incentives and other proposals to get the anemic economy moving again.

“Job creation is issue number one, two and three,” Brendan Buck, chief spokesman for agenda planning group, told HUMAN EVENTS. “This has been clear for 18 months, yet the agenda pursued by Democrats looks nothing like the agenda the American people are looking for. You can bet that the Republican agenda will focus on the top priorities of the public and that means putting people back to work.”

At the heart of the GOP’s agenda, say House insiders, will be retaining the two top marginal income tax-rate reductions enacted in 2001 and accelerated in 2002 under President George W. Bush that cut the top two rates from 39.6% and 36% to 35% and 33% respectively.

Obama and the Democrats plan to let these and other tax cuts expire at the end of this year, reverting to their previously higher rate, while adding new taxes on small businesses, effectively pushing the top rate to 44.6%. That would plunge the economy into a double-dip recession, says economist Kevin Hassett at the American Enterprise Institute.

“The phase-out of itemized deductions will lift that, effectively, to 40.8%. In 2013, the 3.8% Obama healthcare tax on investment income will kick in, making the top rate 44.6%,” he writes on the Bloomberg financial news web site.

But there is pressure from within the Republican House caucus from the 115-member conservative Republican Study Committee, as well as from the GOP’s political base, to propose deeper tax cuts to accelerate economic growth.

The RSC last year supported an additional across-the-board 5% tax cut, as well as lowering the top corporate tax rate from 35% to 25%, and repealing the alternative minimum tax.

More recently, GOP Representatives Jim Jordan of Ohio and Jason Chaffetz of Utah, on behalf of the RSC, introduced H.R. 5029, the Economic Freedom Act, which called for ending the TARP bank bailout program, and repealing Obama’s remaining stimulus spending binge.  Among its other provisions:

• Cutting the payroll tax in half for 2010, putting immediate cash into worker paychecks.

• Cutting the individual and corporate capital gains tax to spur new capital investment in the economy.

• Lowering the corporate tax rate to 12.5%, eliminating the death tax and providing business depreciation-expensing tax breaks to spur long-term reinvestment.

But other insiders within the GOP leadership hierarchy caution that the strongest position in the coming November election may be just holding the line on any new taxes, and drawing a sharp line of demarcation with the Democrats’ plans to raise taxes sharply, despite the economy’s persistent weakness and a near 10% national unemployment rate.

“A lot of talk generally among the GOP is focused on providing some certainty for job creators,” said a top Republican aide in the party’s leadership. “The healthcare bill and its damage to small and large employers, the financial regulatory reform bill and its threat of politicizing our economy and mandating in law a permanent bailout mentality, along with questions of when a national energy tax might come down the pike—all those items are creating an atmosphere of uncertainty for employers who are then hesitant to hire.”

“So, a lot of our focus is on saying we should stop threatening new tax hikes on companies. We see a big portion of the lack of job creation as a direct result of the uncertainty Democrats have provided in their agenda, and in order to get job creators back in action, we need to eliminate that uncertainty,” he told HUMAN EVENTS.

House Republican Whip Eric Cantor of Virginia further reinforced this approach in a recent speech to the Heritage Foundation, adding more evidence that GOP leaders do not believe that this is the right time to further push the tax-cut envelope until they have won back a majority in Congress again.

“While there is a philosophical difference between the two parties when it comes to taxes, we believe we should find common ground on the premise that the government should at a minimum never raise taxes during periods of high unemployment,” Cantor said.

“While Republicans will continue to fight both new initiatives that are premised on tax increases and automatic tax increases that are imbedded in current law, we urge a partisan commitment to blocking such tax increases at least until unemployment is below 5% again,” he said.


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