Camp Opening Statement: Hearing on FY2013 Budget with Treasury Secretary Timothy Geithner
Good Morning. I want to thank everyone for being here this morning, especially our honored guest, Treasury Secretary Timothy Geithner. Before we get started with our discussion of the Fiscal Year 2013 Budget, I’d like to take a moment to recognize Reginald B. Greene, or as he has been known to all of us who enter this room, Reggie.
Today marks Reggie’s 30th year with this Committee. In those thirty years, Reggie has guided many Members, myself included, in the ways of this Committee. His subtle manner but strong direction has kept this committee running like a finely tuned machine. Reggie’s professionalism and demeanor have been a hallmark of his service and he is appreciated by all who serve on this Committee. So Reggie, thank you for your continued dedication to this Committee, the House, and the Nation.
Again, welcome Secretary Geithner, it is good to see you and to have you here before the Committee. I look forward to your testimony today.
Since our first hearing of the 112th Congress, the Ways and Means Committee has spent countless hours focused on comprehensive tax reform that will strengthen our economy and get Americans working again. I am proud of the progress that we have made so far but realize there is still much more work to be done.
In our hearings focused on tax reform, there has been one common theme from our witnesses: enthusiastic support for making the tax code simpler and fairer so that we can transform the tax code from one that hinders, to one that helps spur a climate for job creation and economic growth.
Unfortunately, much of what we heard from the President in his State of the Union address and what we see here in the budget points to just the opposite. Instead of focusing on tax reform that can create jobs, the budget is replete with proposals that will take more money away from employers, investors and savers. All told, there are nearly $2 trillion in tax increases, many of which have appeared year in and year out, despite the bipartisan and bicameral rejection of those policies.
Those tax increases include pushing the top tax rates close to 45 percent. I understand the President’s claim that everyone must pay their fair share, but what I don’t understand is how raising taxes on investors and small businesses accomplishes that objective; and, I certainly don’t understand how that is supposed to help get Americans back to work.
Mr. Secretary, you know the facts: the bottom half of earners in this country pay no federal income taxes. Meanwhile, the top 10 percent of earners pay 70 percent of all federal income taxes, which includes many small businesses that are critical to job creation. And, now you want people to pay more – taking as much as 45 percent of everything they earn? It seems to me that in America, no matter how much money you make, the federal government should not be able to take nearly half of your income, especially not on top of all the other local, state and gas taxes you pay.
I would also note that this budget more than triples the tax on dividends. This massive increase in the top tax rate on dividends marks a significant departure from prior budgets, when the President had proposed to raise the dividend rate “only” to 20 percent. It is also worth noting that because dividends are paid out of income that has already been taxed at the corporate level and then are taxed again in the shareholder’s hands, this proposal would push the total federal tax rate on dividends to 64%.
Equally telling are the policies absent from this budget. For the last several years, Mr. Secretary, you have appeared before this committee and we have discussed in private the possibility of some sort of comprehensive tax reform – coming out of the Treasury Department. But as someone joked to me the other day, it looks like we will see a unicorn before we see this Administration put out a comprehensive tax reform plan.
I understand it is an election year, and playing Washington’s age-old game of promising favors to specific industries and special interest groups is a tried and true plan. But, Mr. Secretary, in less than two months, the United States will have the highest corporate tax rate in the industrialized world, at 39.1 percent. This dubious distinction makes it that much more challenging to attract businesses to hire and invest here at home where we need jobs.
Simply put, this budget, coupled with the inaction of this Administration on tax reform, has left U.S. companies and their workers at a competitive disadvantage in the global marketplace. It is an advertising campaign that says to job creators “Don’t invest in the United States, invest somewhere else.”
Clearly, there is much work to be done on the tax reform front, but we must also focus some time during today’s discussion on our debt and deficit. The Fiscal Year 2013 Budget is the highest budget deficit ever proposed and fails to deliver on the President’s promise to cut the deficit in half by the end of his first term.
We have had countless commissions, committees and panels tasked with finding solutions. I have served on some of those. Independent economists have found that debt loads greater than 90 percent of GDP could result in the loss of up to 1 million jobs.
Mr. Secretary, we aren’t at 90 percent, our debt is now 102 percent of GDP and this budget proposes to keep the national debt at a level that exceeds the size of the entire U.S. economy every single year into the future. A budget that drives debt and deficits even higher will only weaken our economy and further put at risk the 13 million Americans who are currently out of work.