House Republicans unveiled their budget plan Tuesday, calling for a balanced budget within 10 years and relying on major tax reform and a full repeal of Obamacare to do it.
“The economy is going to grow faster than federal spending, and it will get us to a balanced budget,” said Rep. Tom Rice, R-S.C., a member of the House Budget Committee and chairman of the House Small Business Subcommittee on Economic Growth, Tax and Capital Access.
The first key to the House GOP plan making ends meet in a decade is for Congress to approve sweeping tax reform.
“Our budget assumes that there will be tax reform,” Rice told WND. “We sit here and handicap our companies with the highest corporate tax rate in the world and with among the highest regulatory burdens in the world.”
Rice pointed out that the House Ways & Means Committee is in charge of tax policy and not the members of the budget panel, but he said the budget numbers were based on a few assumptions about what reform would include.
“We’re all looking for a flatter tax system with lower rates and less exclusions. And that would be on the individual and the corporate tax side,” Rice said.
Clarity in the code is another priority. Rice said more than 75 percent of businesses do not pay the corporate tax rate because they are not corporations and pay at the individual rate, which has jumped from 35 percent to as high as 44 percent for some business owners since the fiscal cliff deal at the start of the year.
The congressman also said this process shouldn’t be about either cutting taxes or raising taxes, the latter of which Senate Democrats are reportedly proposing.
“We’re not proposing cutting taxes overall or raising taxes. What we’re talking about is changing the rate. So what we have to look at is what exemptions we’re going to remove and see how much rate lowering that will buy us,” Rice explained.
The House Republican budget also assumes a full repeal of Obamacare, a move that seems all but impossible to achieve legislatively over the next four years. Rice admits it will be tough and that the budget won’t be balanced in a decade without eliminating the costs associated with Obamacare.
“If we don’t get them, obviously the budget won’t balance in 10 years. What I would say to the Senate Democrats, and the president particularly, is if you don’t like the proposal we’ve made, let’s see your proposal. I think everybody wants to see the country on a sound financial path,” Rice said. “We’ve put forward our proposal. We don’t think we can afford Obamacare. Even if we didn’t repeal it at this point, we think it’s going to implode on itself.”
Senate Democrats are putting together a budget proposal that is not yet complete. Leaked bits of the plan suggest it will call for $1 trillion in new taxes and will not balance down the line. Nonetheless, Rice is optimistic the two sides can get something done, noting that President Obama and congressional Republicans see tax reform as an urgent, major priority.
“If we can focus on the areas we agree and work on those and then try to find some kind of common ground on the areas where we don’t, let’s make some progress,” Rice said. “I’ve had countless people tell me, ‘Gosh, you’re going to Washington at a tough time.’ Shoot, I think this is the best time. Washington has kicked the can down the road so many times, I think pretty much everybody realizes it can’t be kicked a whole lot more. So I’m very, very optimistic that we will have some positive reform coming out of Washington this year.”
The House GOP budget slows the rate of spending increases over the next decade from five percent to 3.4 percent. Even if the tax reform and Obamacare repeal were to happen, economic growth needs to be robust to balance the books by 2023. Rice said a lack of certainty is the biggest hurdle to that growth taking off.
“They want a clear path first and foremost. They want to know what the rules are. We keep kicking the can down the road. We keep doing all these temporary measures. Nobody can rely on what the rules are going to be to make investment decisions. That’s from big company to small, and I promise you that hurts hiring and that hurts job growth. So we need to come up with a long-term plan and stop these short-term Band-Aids,” said Rice, who also blasted the regulatory red tape facing business owners.
“Seems to me we’re doing everything we can to hold up progress, where it takes five to 10 years to get a permit to build a road or it takes 10 years to get approval to build a power plant. We’re our own worst enemy,” he said. “We hold up progress here while other countries are passing us by.”