Government Policies Hinder Business Growth
As in the medical profession, when it comes to the federal government’s job-creation efforts, the first principle ought to be "Do no harm."
As businesses and workers struggle in these hard times, the last thing Senate leader Harry Reid and House speaker Nancy Pelosi should be doing is discouraging job creation and economic growth; yet that is exactly what they are doing.
For the last nine months, Washington politicians have remained singularly focused on pushing a monstrous health care bill through Congress that promises to levy massive new taxes on employment itself. This will undoubtedly cost jobs.
At the same time, Congressional Democrats have introduced a cap-and-trade proposal that would hit all producers and consumers of energy with higher energy costs — a de facto tax.
In an industrial state like Pennsylvania, the cap-and-trade tax would hit our industries especially hard, costing us thousands more jobs.
Finally, the one-party-controlled government in Washington continues to spend tax dollars at a pace that outstrips every other Congress since the birth of our nation.
The 2009 deficit clocked in at an unprecedented $1.4 trillion, and the 2010 deficit is projected to surpass that. It is a staggering amount of debt that will have to be repaid one day either by printing more dollars or levying catastrophically large tax increases on workers and businesses.
The former will devalue our currency and savings, punishing the country with painful inflation. The latter will cause our economy to languish under the burden of excessive job-killing taxes.
Instead of encouraging jobs, the specter of unaffordable new regulations, huge new tax increases, and a ballooning debt makes business owners and investors extremely reluctant to expand their business, take on additional workers or start new ventures.
In these tough, uncertain times, Congress should be making it easier for businesses to hire more employees and expand their businesses, not punishing them when they do.
With that principle in mind, there are several things we can do to help Pennsylvania’s struggling businesses and workers.
First, Congress should rescind the unspent money from the so-called stimulus bill and the Wall Street bailout program and use that money to cut the payroll tax for employees and employers.
This will mean an automatic increase in take-home pay for each worker and will immediately lower the cost for businesses to hire new workers.
Next, we must define a binding exit strategy for the serial bailouts that have been authorized during the last year and a half.
These bailouts were started under a Republican administration but were continued and expanded under the current Democratic administration. They were a bad idea when President Bush initiated them, and they are a bad idea now.
Third, Congress should scrap our ridiculously complicated, unfair, and inefficient tax code and replace it with a fairer and simpler tax code that will lead to a huge surge in economic growth. But until there is that kind of strong political will to stand up to the special interests that support the status quo, we can at least implement the following two important tax reforms:
Congress should cut the tax on capital gains to encourage businesses to grow. President Clinton clearly recognized the value of this tax cut when he signed it into law in 1997.
President Obama has proposed a small scale version of the same. But our economy does not need a baby-step when it comes to spurring investment; it needs a real jolt.
Finally, Congress can encourage businesses to expand by allowing companies to expense capital purchases equipment.
This will provide an automatic incentive to reinvest profits into expansion, which will yield more hiring. Ultimately, new jobs will occur because of the hard work and entrepreneurial spirit of the American people, not because of government activity.
There are many sectors and industries in Pennsylvania that are poised for growth if we let them. These include medical devices, high-tech, natural gas production, specialty manufacturers and agriculture, just to name a few.
But government must make sure it doesn’t stand in the way, which is what it is doing today. The most important thing it can do is remove barriers to economic growth and allow the American people to do what we do best.
PAT TOOMEY is a Republican candidate for the U.S. Senate from Pennsylvania.