"Congress Must Work To Get Our Nation's Fiscal House In Order"
As Congress returns from the August recess, there is a warning that is loud and clear, and that we ignore at our own peril. Our national debt recently topped $16 trillion dollars, and it threatens our future prosperity. With each American's share of the debt totaling more than $50,000, it is imperative that we act to get our nation's fiscal house in order and avoid the economic calamity that is spreading through Europe.
Reducing spending is essential, but Congress must do so in a responsible, thoughtful manner. Early this year, the Congressional Budget Office estimated that automatic spending cuts and tax hikes that are scheduled to take effect in January could cause the economy to contract by about three per cent in the first half of 2013, leading to the loss of one million to two million jobs. Recently, the CBO offered the even more dire warning that failure to act could push the unemployment rate back over nine percent and plunge our nation into another recession.
This combination of automatic spending cuts and huge tax increases is referred to as the "fiscal cliff," and we are speeding toward it in a car without brakes.
The failure of the so-called "Supercommittee" to forge a deficit-reduction deal last fall set the stage for these automatic, indiscriminate budget cuts next year, called "sequestration." If not repealed by Congress and the President, these cuts will begin in January and will have devastating consequences for our national security and our economy.
Defense spending accounts for about 20 percent of the federal budget, but would take nearly half of the cuts under sequestration. Sequestration would cause great harm to America's safety in a dangerous world by, for example, potentially shrinking our Naval fleet to an unprecedented low level. The Pentagon could be forced to cut an additional 100,000 Army soldiers and another 18,000 Marines, more than double the cuts already planned for each service over the next five years.
Just as devastating would be the effect of sequestration on our economy. The defense industry directly employs some 8,500 hard-working, highly skilled men and women here in Maine with an annual payroll topping $550 million. Imagine what these deep cuts would do to families and communities throughout our state.
Our nation's top military and civilian defense leaders have consistently warned of the dangers of these cuts. Secretary of Defense Leon Panetta has described sequestration as "devastating" and testified that it would "inflict severe damage to our national defense for generations."
Other vital programs would be affected too, such as education funding, transportation, and biomedical research. These automatic cuts would apply equally and indiscriminately to good programs and ones that should be cut. These mindless, meat-axe cuts must be averted. Congress and the White House must address this threat rationally and without political rhetoric.
Beyond that immediate threat, our nation's tax code needs to be overhauled, from top to bottom. The goal of reform should be a simpler, fairer, pro-growth tax system to encourage economic growth.
Our corporate tax system is a serious drag on our ability to compete. Since Japan r reduced its rates in April, America has the dubious distinction of having the highest corporate tax rate in the world.
We must bring pro-growth reform to both our individual and corporate tax systems. The only way to accomplish this goal is to work together in a bipartisan fashion.
The clock is ticking. Congress must act in a responsible way. The uncertainty and discord of inaction threaten to hurt the financial markets and further hobble the American economy's recovery. Working together, members of both parties need to set our country on the path to long-term fiscal stability and reaffirm that Congress can and will respond to the very real problems we face.
