Economic Growth 101: Will Democratic Leaders Take Tax Hikes Off the Table?
Fed Chairman Bernanke: Tax Increases "Tend to be a Drag on the Consumer Spending and on the Economy"
Washington,
Jan 15, 2008 -
Middle-class families and small businesses are feeling squeezed by rising costs of living, with gas prices skyrocketing, costs of health care rising, and home mortgages becoming more volatile. In fact, a Labor Department report released this morning reported that wholesale inflation was up 6.3 percent last year, “reflecting a huge increase for the year in various types of energy costs ranging from gasoline to home heating oil.” And to make matters worse, Americans are facing a record-high tax burden as well, making it even more difficult for families and employers to make ends meet.
With the House returning to session today, these concerns sit atop the 2008 congressional agenda. But as the Majority begins planning an economic stimulus package, Americans are rightly growing concerned about the prospects for a tax hike to be included in the legislation or imposed later in the year by the Democratic Congress, which last year proposed a massive middle-class tax hike. That’s right: a tax hike. Amazingly enough, with middle-class families and small businesses feeling the budget crunch at home and in the office, Democratic leaders still have not taken tax hikes off the table. The Hill reports this morning:
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“A real fear for the business community is that Democrats will attach tax increases to offset the legislation’s price tag, which could reach as high as $100 billion. ‘Anything that has tax increases in it is not a stimulus,’ a tax expert at the National Association of Manufacturers (NAM), Dorothy Coleman, said.”
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The Majority has used its pay-as-you-go (PAYGO) rules as an excuse to justify their agenda of billions in new spending and an incredible $250 billion in tax hikes passed by the House last year alone. Will Democratic leaders use PAYGO as an excuse to raise taxes in their stimulus package too?
Such a tax hike would have a devastating impact on the economy and on consumers, according to Federal Reserve Board Chairman Ben Bernanke, who testified before Congress last fall that tax hikes “tend to be a drag on consumer spending and on the economy” and “would probably not be advisable.” Following Bernanke’s meeting yesterday to discuss the economy with House Speaker Nancy Pelosi (D-CA), House Republican Leader John Boehner (R-OH) echoed Bernanke’s concerns and called on Democratic leaders to abandon their plans to raise taxes in their stimulus package. Bloomberg reports this morning:
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“House Minority Leader John Boehner, an Ohio Republican, signaled Republican opposition of any efforts to offset stimulus legislation with any tax increases.
“Boehner released a statement saying, ‘I hope that today’s meeting between Speaker Pelosi and Chairman Bernanke is a sign that Democratic leaders are prepared to abandon their plans to raise taxes on middle-class families to bankroll their agenda of pork and bigger government.’”
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Throughout the 110th Congress, congressional Democrats have fought an undeclared War on American Jobs by advancing a harmful tax-and-spend, mandate-and-regulate agenda that puts politics before the country. In recent days, however, Speaker Pelosi and Senate Majority Leader Harry Reid (D-NV) have pledged bipartisan cooperation on an economic stimulus package – implying that they may be ready to retreat in the War on American Jobs. With that in mind, the next several days and weeks will be telling. Will they and other Democratic leaders agree to take tax hikes off the table? Or, will they spurn the opportunity to work with Republicans to reduce the tax burden on families and employers so they can more effectively deal with the rising costs of living?
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