Joe Pitts, August 7, 2009

Early this week Dr. Larry Summers, President Obama’s Director of the National Economic Council, hinted that the administration could consider broader tax increases to pay for its legislative priorities. When questioned about whether a middle class tax hike may be in order, Summers responded that, "It is never a good idea to rule things out, no matter what."

When Treasury Secretary Timothy Geithner was asked a similar question his response was, "We have to bring these deficits down very dramatically."

President Obama’s Press Secretary, Robert Gibbs, tried to back off these comments and reiterate the President’s "official" position. Summers and Geithner, however, are taking a hard look at nation’s balance sheet and seeing that the long term outlook is not as rosy as the President’s talking points.

I agree with Sec. Geithner about bringing down the deficit but it is evident that President Obama and Congressional Democrats will not be able to accomplish both deficit reduction and increased spending without increasing the tax burden.

President Obama has stated that no one making under $250,000 will see their taxes increase. Individuals making above this amount account for only 3 percent of all taxpayers but already pay almost 50 percent of all federal income taxes.

The Congressional Budget Office estimates that in just President Obama’s first term the deficit will increase by $4.9 trillion. According to economist Dr. Richard Rahn, should the top one percent of wage earners pay 100 percent of their income to the government next year, tax revenue would only increase by $1.5 trillion.

The earlier Congressional Budget Office numbers also may not reflect rapidly decreasing tax revenues. This week the Office of Management and Budget predicted that revenues are on pace to drop 18 percent this year.

Neither Democratic leadership nor President Obama cast doubt on these projections but they are taking few steps to control spending. In the spring President Obama challenged his cabinet secretaries to find areas to cut spending. Just last week the administration released details on $102 million in reduced spending across all departments.

Many of the measures taken were common sense decisions that shouldn’t have required a presidential directive. The Department of Justice will save costs on printing by using both sides of a sheet of paper. The Forest Service will hold off on painting new vehicles green. The Treasury Department will eliminate unused telephone lines. FEMA is going to reuse trailers instead of simply discarding them.

In this time of recession, families and small businesses are making difficult cuts. These cuts made by the federal government are painless and should have been implemented long ago.

Perhaps even worse, these cuts do nothing to reduce deficit spending because Congress is set to increase spending across all departments. The House appropriations bills considered this year would increase spending by 7.6 percent--that’s $75 billion in new spending. Some departments of the federal government have seen their budgets increased by 50 percent just in the last two years.

Also, these appropriations bills don’t account for increased spending in government programs such as Medicare, Medicaid, and Social Security. The federal government needs to do much more than figuring out that paper has two sides for printing.

The current versions of healthcare reform would add possibly hundreds of billions in new deficit spending and lasting obligations that could cost even more in the coming decades. Americans are greatly concerned about adding to our debt.

A Quinnipiac University poll released this week shows that 72 percent of voters think that President Obama’s healthcare plan will add to the deficit. This same poll shows that 57 percent of voters do not want a plan that will significantly increase the national debt.

Americans want reform but they also want it without extraordinary fiscal obligations for the next generation. Washington needs an intense focus on controlling spending and ensuring that taxes do not harm economic growth. This will mean hard choices--choices that the current leadership in the White House or Congress does not seem to have the will to make.

Congressman Joe Pitts, a Republican, represents Pennsylvania's 16th Congressional District, which includes Lancaster County and parts of Chester County and Berks County.