Tax cuts proposed by President Barack Obama’s all-star deficit-cutting panel are in line with the ideas of President Ronald Reagan, says Sen. Judd Gregg, R-NH.
Under the 59-page plan, personal-and-corporate tax rates would fall across the board but $1 trillion in other tax breaks, including the mortgage-interest break, would disappear. The plan would cut the deficit by $3.8 trillion over 10 years.
A vote by the panel has been delayed while its members seek enough votes to call the report final and send it to Congress.
“Yes, it does raise taxes, but the way it raises taxes is in a very, I believe, Reaganesque way, in that it dramatically cuts rates and creates a tax law which is much more oriented toward capital formation and using money to create money rather than investing money to avoid taxes,” Sen. Gregg told CNBC.
The package would turn the tide against the debt in part by taking away significant tax breaks, Gregg admits, but “they aren’t tax increases, in my opinion.”
“When you take the rates down so your top rate is 21 percent, your middle rate is 15 percent, and your lowest rate is 8 percent, you eliminate the deductions and exemptions, you are creating I believe the level-type playing field in the tax policy where people will invest with the purposes of economic activity, and I think you are going to generate huge economic activity out of this,” he said.
“Yes, you are going to generate massive revenues, but it’s going to be because there is a lot more economic activity.”
Gregg warned that doing nothing would create conditions for an unavoidable “fiscal disaster.”
“At some point in the future, the market is going to lose confidence in the dollar, and we’re going to go to a sale of Treasurys and it’s not going to happen,” Gregg said.
“The date of that is unpredictable but the certainty of it is there if we continue to run up these massive deficits and debt. You cannot double the debt in five years, triple it in 10 years, and take us to GDP ratio to debt of over 100 percent and have a country that survives and is prosperous, economically.”
Gregg said it’s time to govern, and that American voters understand that, whether the Congress has the courage to act or not and whether the panel gets the number of votes it wants to sign off on its own report.
“If you don’t do it now, when are you going to do it, as Reagan said,” Gregg said.
Senate Minority Leader Mitch McConnell says that the GOP will block all legislation until a deal is made to extend the Bush-era tax cuts, reports MSNBC.
"Republicans have pleaded with Democrats to put aside their wish-list — to focus on the things Americans want us to focus on," McConnell said on the Senate floor.
"They've ignored us. The voters repudiated their agenda at the polls. They've ignored them."
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