Issue Position: The Budget

Issue Position

There are many pressing issues facing our federal government, and there are a large number of important bills that should be debated. But Congress's first job should be passing a balanced budget.

Congress must put aside the petty sniping and short-term thinking that have prevented it from tackling America's fiscal challenges. We are on a path to national bankruptcy. We must find the courage to change that direction. The Innis Agenda for Balancing the Budget relies on ideas from across the political spectrum to balance the budget, remove barriers to entrepreneurship, and encourage economic growth. Through free market reforms and fiscal restraint, we can restore economic opportunity for all Americans.

Budget
Budget process reform

The Congressional budget process is 40 years old, and it's completely broken. The budget itself is a non-binding resolution, and there are no consequences for the President, the House, or the Senate failing to do their part. Adopting a Joint Budget Resolution, with the force of law, would require Congress and the President to agree to binding spending levels early in the budget process, clearing the way for reasonable consideration of Appropriations.

Enforce real spending caps

Because Congress hasn't been able to adopt budgets on time, there is no limit to what it spends. The only thing that has ever imposed spending discipline on Congress is a binding budget cap, with across the board cuts when it's not met. Specific spending caps like Gramm-Rudman or those proposed by the Pew-Peterson Commission would force Congress to live within the means of American taxpayers.

Take spending off auto-pilot

Each year, so-called mandatory spending increases take place without Congress lifting a finger. For example, automatic increases to mandatory spending threaten to take over the entire federal budget within the next two decades. Congress should take these spending increases off auto-pilot, and require a vote to increase spending on any and all federal programs.

End Corporate Welfare

We can no longer afford to hand out subsidies to private businesses. The federal government should not pick winners and losers in the marketplace by handing out tax dollars or special treatment to favored firms, at the expense of their current and potential competitors. The best way for government to support business is to get out of its way; not by propping up politically connected corporations.

Biennial budgeting

New Hampshire's citizen legislature manages to write a two-year budget for the state, along with 20 other states. By passing a two-year budget every other year, Congress can remove the temptation to spend more money in an election year, and devote more time to oversight.

Vote on spending cuts

Congress avoids responsibility by avoiding votes on spending cuts. The Senate won't even consider Republican budget proposals, and the House routinely keeps Democratic amendments from coming to the floor. The Mercatus Center has proposed a model based on the BRAC process that would focus on outdated and inefficient federal programs, and force Congress to take up or down votes on specific spending cuts. It is time to hold Congress accountable.

Pay the debt first

During every debt limit showdown, the President and Congress threaten the nation with default on the nation's debt. Such brinksmanship does nothing to address our long-term fiscal challenges, and in fact forces Congress to adopt short-term stopgap measures to avoid default. But even when we reach the debt ceiling, incoming federal revenues are more than enough to pay the interest on the national debt. Congress should direct the Secretary of the Treasury to pay the debt first, removing the threat of default and allowing us to address the consequences of the $17 trillion national debt.

Reform the Tax Code
Fairer, flatter tax code

Congress last simplified the federal tax code in 1986, lowering rates by removing loopholes and deductions. Since then, we've had nearly 30 years of new loopholes written back into the law. We can broaden the tax base and remove special interest deductions without increasing the nation's tax burden. Senator Mike Lee is working on such a plan, and it should be considered alongside other fundamental tax reform proposals.

End "temporary" tax gimmicks

One of the many ways that Congress has complicated the tax code has been by passing temporary tax provisions that everyone knows will eventually be extended. This is partly because the Budget Reconciliation process only allows changes to stay in place for ten years, but many popular tax breaks are temporary in order to mask their long-term costs. While lobbyists appreciate the opportunity to endlessly push for their favored tax breaks, businesses are denied the tax certainty they need to make long term investment decisions. The tax code should be made permanent, allowing Congress to debate changes to the tax code without arbitrary deadlines.

International Tax Reform

Our current tax code punishes U.S. businesses that want to reinvest profits from overseas operations in the United States. By attempting to collect taxes on business conducted overseas, the federal government encourages companies to grow and invest offshore, rather than domestically. Senator Max Baucus and Rep. Dave Camp have been working on an international tax reform bill that would apply taxes to business activities conducted in the U.S. or foreign subsidiaries selling to American clients, but allow other profits to be repatriated without double taxation. This will encourage more business investment and economic growth in the US.

Corporate Tax Reform

The U.S. Corporate tax rate of 35% is among the least competitive in the world, yet the complex maze of tax regulation lets some corporations avoid tax liability entirely. By reducing deductions like the Section 199 domestic production deduction that favor some companies over others, we can reduce the overall corporate tax rate, and make America more competitive for businesses of all kinds.

Balancing the federal budget should be Congress's first responsibility. Only by standing up for fiscal responsibility can our federal government begin to rebuild the trust of the American people.

A balanced budget and fundamentally fairer tax code will also spur economic growth, making them the necessary first steps for any jobs plans. The Innis Agenda for Balancing the Budget will work in tandem with the upcoming Innis Agenda for Jobs and Economy, as well as the Innis Agenda for Health Care, published last month, and the Innis Agendas for Education and Energy, coming later this year.

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