Tax Cuts Miss Mark

An open letter by Congressman Dutch Ruppersberger:

When President Bush was elected, the nation enjoyed a budget surplus of $200 billion. The government had money to properly fund programs such as education, health care and prescription drugs for seniors. Now, our economy is in a vastly different place.

We live with a stagnant economy and increasing unemployment. The number of unemployed Americans has grown from 5.9 million in May 2001 to 8.5 million in April this year. Two years after Mr. Bush implemented a tax cut touted to stimulate the economy, we are moving in the wrong direction.

Since 2001, our nation's budget has gone from a $200 billion surplus to a projected deficit of more than $400 billion. Now, with a fiscal policy that only escalates a cycle of deficit spending, we must borrow to pay the country's bills.

Many Republicans argue that the deficit is a result of the war on terrorism and the war in Iraq. I support Mr. Bush's response to those attacks and his efforts to keep our nation safe. I do not, however, believe that those efforts are the sole source of our fiscal crisis. Even if we remove the $80 billion cost of the war from this deficit, the country is still $320 billion in the red. In terms of current dollars, this is the largest deficit in American history.

The issue of our economy and how it relates to this enormous deficit is not about being a Democrat or a Republican. It is about priorities and tough choices in creating a sound, workable fiscal policy. Doing this requires discussing alternatives and compromising on the best solution.

As county executive, I worked for eight years to keep Baltimore County's operating budget in the black. It should be the goal of the federal government to do the same.

If ultimately enacted, the House bill is a $550 billion tax cut based largely on dividend and capital gains tax cuts that will not provide real tax relief for American families. I question whether the legislation is worth the gamble of the billions of dollars in borrowing, revenue reduction and deficit spending. The last two years are proof enough that these types of tax cuts do not create jobs or grow the economy.

I believe America needs a tax proposal that jump-starts our economy using targeted tax cuts benefiting all Americans, and I am not alone. In recent testimony before a House committee, Federal Reserve Chairman Alan Greenspan agreed: "I would be strongly supportive of certain types of tax cuts. If, however, in the process you get significant increases in deficits, which induce a rise in long-term interest rates, you will be significantly undercutting benefits. ... It is very important for us to maintain the degree of fiscal restraint over the years ahead, because it is only under those conditions that I think we can ... significantly assist in acceleration of economic growth."

Jobs are the gasoline that runs the nation's economic engine. Targeted tax cuts should motivate small businesses and larger companies alike to reinvest profits in their businesses. This is what provides real job growth.

Democrats have a plan that triples the investment expense rate, encouraging small business reinvestment, and creates a one-year 50 percent bonus depreciation provision for larger businesses. But a good economic stimulus proposal does more than create jobs. This plan also includes immediate tax breaks that help families by permanently increasing the child tax credit and eliminating the marriage penalty.

More important, this proposal provides $44 billion in assistance to state and local governments to help with current budget shortfalls.

I never thought that I would be on the floor of Congress listening to Democrats tell their Republican colleagues to be more fiscally responsible. While in the past Democrats have been called the "tax and spend" party, today it seems that Republicans have become the party that borrows and spends.

American families understand that they cannot use one credit card to pay off another. Our government needs to learn the same.

Dutch Ruppersberger

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