On November 23, the Joint Select Committee on Deficit Reduction – also known as the “Super Committee” — will issue its recommendations on how to deal with our nation’s economic problems. As the Committee members work on a plan, I have two recommendations for its members: focus on job creation and develop a balanced approach that will result in real deficit reduction.
President Obama has proposed a jobs initiative that I believe is the right approach. He has focused on rebuilding our nation’s infrastructure — schools, roads, and water and energy infrastructure – as a way to create hundreds of thousands of well-paying jobs.
The president’s proposal has gotten high marks. Economist Mark Zandi, who was Senator John McCain’s economic advisor during his 2008 presidential campaign, pointed out that the president’s proposal would increase our gross domestic product by 2 percent and create 1.9 million additional jobs. The president’s proposal also is completely paid for and would not add to the budget deficit.
By putting people back to work, we can restore our nation’s fiscal health. Working Americans are less reliant on governmental services, they purchase more – which helps spur the economy — and they pay taxes. The bottom line: More people working will help bring our budget into balance.
We also need to turn our attention to reducing our budget deficits. I believe we can achieve the President’s Debt Commission’s recommendations of reducing the deficit over the next 10 years by about $4 trillion. In August, in conjunction with raising the debt ceiling, we trimmed $1 trillion; we now need another $3 trillion in deficit reduction.
The key to deficit reduction is starting with a realistic baseline to determine revenues. The Alan Simpson-Erskine Bowles Debt Commission and the Senate’s Gang of Six used a realistic baseline that assumes that some of the expiring tax provisions will be extended — but not all of them. Both also assumed that we need additional revenues to tackle our budget problems.
We need about $1.2 trillion in revenues in a $4 trillion deficit reduction package. Despite partisan demands that the Super Committee avoid any tax increases, the reality is we need additional revenue to bring our budget into balance. We could accomplish this goal if we eliminate the hundreds of loopholes in the tax code that benefit special interest corporations and if we ensure that everyone pays their fair share. We cannot let the burden of deficit reduction fall only on middle-class families.
The Super Committee can help achieve fairness by looking at the growth of income inequality in United States over the last 30 years. According to the non-partisan Congressional Budget Office (CBO), the number of American millionaires grew by almost 7 percent. The same study indicated that the top 1 percent’s share of national income more than doubled between 1979 and 2007, and their real after-tax income soared 275 percent. The CBO analysis also showed that while the wealthy have gotten richer, middle-class families’ incomes failed to keep up.
Deficit reduction will not be easy, but I believe Americans understand the seriousness of the situation and they want members of Congress to come together for the good of our nation.