Budget details meaningless without growth • USA Today
IWV's @TheHRH & @wpascoe in @USAToday: Budget details meaningless without growth #FiscalCliff #tcot #tlot
As "fiscal cliff" talks exit the public posturing stage and real private discussions begin, this would be a good time to take a step back and look at the whole fiscal forest, instead of the trees.
The biggest problem we've had in our economy for the last several years is a lack of job growth. We officially came out of the recession more than three years ago, but our economy is still not growing fast enough to create enough jobs for everyone who wants to work. We've got 23 million Americans who can't find the work they want, and that is the real current tragedy here. Let's not lose sight of that.
So when elected officials in Washington talk about restructuring our nation's fiscal spending and tax policies, their first – and, by far, most important – goal should be genuine economic growth.
The difference between an economy growing at 4 percent per year instead of 2 percent per year is another 9 million people working. That's 9 million more families where those who have a job once again can know the family's needs can be met, and he or she is contributing. That makes for happier families, with less stress. And that's all too often overlooked in this debate.
From a straight fiscal standpoint, 4 percent growth instead of 2 percent growth means an extra $500 billion per year in taxes generated by all that additional economic activity. That becomes $5 trillion over ten years, and that's 20 percent more in debt reduction than what the president says he wants.
?Moreover, 9 million more families with a principal breadwinner working means 9 million fewer families drawing unemployment insurance and other social welfare benefits. That's worth tens of billions in reduced spending.
Now, show us an economist who thinks moving another $1.6 trillion out of the private economy and into the hands of government bureaucrats will double our growth rate from 2 percent to 4 percent and we'll show you an economist who's just taken advantage of new laws legalizing marijuana in Colorado.
History shows that government can be good at redistributing wealth. It also shows, however, that government is no good at all when it comes to creating wealth. And creating wealth is the necessary precursor to creating jobs.
Consequently, if the president and congressional Democrats actually cared about growth, they wouldn't be talking about raising taxes on job creators and small businesses, but would be talking about lowering them, to encourage economic growth and put more people back to work. As an ancillary benefit, the government would get more revenue.
And the focus should be as well on reforming unsustainable entitlements and cutting government spending to abet that growth. Already this administration has us operating at record levels for a peacetime economy – over 25% as a percentage of GDP, which President Obama now wants to take even higher. Without real reform, spending cuts and growth – all far more important than increases in marginal tax rates – we are looking at a formula for economic collapse and unfulfilled promises on which millions of Americans depend.
Heather R. Higgins is president of Independent Women's Voice. William Pascoe III is a consultant to IWV.