By U.S. Sen. Susan Collins
(R-Maine)
More than eight million Americans have lost their jobs since the “Great Recession” began in 2008. Unemployment remains unacceptably high – increasing to 9.6 percent just last month. What little job growth we have seen has been disappointingly weak.
The fiscal policies that the Administration and Congress undertake must acknowledge this reality, get the economy moving again, and put Americans back to work.
Key to accomplishing these goals is an extension of the tax relief that is scheduled to expire at the end of this year. If we do not act, Americans will face one of the largest tax increases in U.S. history. If these tax relief provisions are not extended, the average middle-income family in Maine will see their taxes increase by about $2,900 next year.
This is no time to raise taxes; indeed, many economists agree it would be the worst time to increase the tax burden on America’s families and small businesses. As Peter Orszag, President Obama’s former budget director, recently pointed out, the failure to extend existing tax relief would “make an already stagnating job market worse.” Mr. Orszag also said “higher taxes now would crimp consumer spending, further depressing the already inadequate demand for what firms are capable of producing at full tilt.” I hope the President will heed the advice of his former budget director and abandon his plan to raise taxes at this critical time.
This Administration’s policies have failed to stimulate private sector investment, which is the key to creating permanent jobs. In fact, many of the fiscal, economic and budget policies pursued by the Administration have made matters worse. The budget put forth by the President, which I opposed, would double the public debt in five years and triple it in 10.
The President’s new health care law, which I opposed, is already causing health insurance premiums to increase for many employers and employees, and the uncertainty over tax policies is hindering job creation.
It’s clear the President needs to work with Congress to set a new course.
During a recent hearing of the Senate Homeland Security and Governmental Affairs Committee, I questioned the nominee to become the President’s new budget director, Jacob Lew. If confirmed, Mr. Lew would lead the Office of Management and Budget which will continue to be the lead player as the Administration formulates new policies to deal with grim economic realities and unsustainable budgets. It is clear that the American taxpayer is weary of the current path.
Everywhere I travel in Maine, whether I’m talking to a machine-shop owner, a trucking company operator, a small residential contractor, or other employers, I hear the same refrain: Given the tax and economic policies coming out of Washington, we don’t dare create any jobs, buy new equipment, or take any risks to grow our businesses.
I fear we could be seeing merely a preview of what is to come. Without bold, urgent action, we are heading toward a future of financial stagnation, bogged down by costly entitlements, slow job creation, and sluggish economic growth.
The cost of entitlement programs continues to escalate. Like a perfect storm, rising entitlement costs soon will collide head-on with the cresting waves of retiring Baby Boomers. The result will put even more pressure on already strained Social Security and Medicare expenditures.
We simply must rein in our spending and get our financial house in order. The clock is ticking. America’s runaway debt – more than $13 trillion and growing – poses a grave threat to our nation’s future prosperity. I recently met with Alan Simpson and Erskine Bowles, co-chairmen of the bipartisan National Commission on Fiscal Responsibility and Reform, and relayed my strong concerns about our nation’s long-term fiscal imbalance and our soaring debt. We discussed the Commission’s intention to put forth a plan to achieve a balanced budget by 2015.
While entitlement programs and interest on the national debt comprise 62 percent of the budget, tackling “discretionary” spending is also critical. I have advocated a bipartisan proposal to limit federal discretionary spending for Fiscal Year 2011. This proposal would essentially freeze discretionary spending at last year’s levels. This would be a significant step in the right direction and would save $296 billion over the next decade.
We all cherish the American Dream, where each succeeding generation is more prosperous than the last. And we have benefitted from its fulfillment. But the debt monster we have created could impose a nightmarish scenario for our children and grandchildren.
We are in the midst of an economic storm; we have tough choices to make. We must reassess our national priorities and set a new course marked by fiscal responsibility. That is the only way to get our nation, and its future, back on track.
