“I am unable to support it because at its core it calls for a massive tax increase on the American people without fundamentally addressing the largest, long-term driver of our nation’s debt crisis – rising health care costs.”
Washington, D.C. – Congressman Jeb Hensarling (TX-05), a member of the National Commission on Fiscal Responsibility and Reform and the second ranking Republican on the House Budget Committee, issued the following statement after declining to endorse the commission’s final proposal put forward by Co-Chairmen Erskine Bowles and Senator Alan Simpson:
“Commission Co-Chairmen Bowles and Simpson have put together a serious and provocative proposal. Their leadership is to be commended. Their proposal helps illustrate the magnitude of the crisis. Their proposal is worthy of congressional debate. Although I embrace key elements of their proposal, I regrettably cannot in good conscience endorse it.
“I am unable to support it because at its core it calls for a massive tax increase on the American people without fundamentally addressing the largest, long-term driver of our nation’s debt crisis – rising health care costs. You cannot change the ruinous spending path of our government if you leave the recently passed health care law virtually untouched and leave out fundamental reform of Medicare. It cannot be done. In fact, this proposal would actually double down on the recently enacted health care law and drive more Americans into government-run health care through repeal of the employee health care exclusion. The nation has a fiscal crisis because the government spends too much, not because the American people are under-taxed.
“It is neither desirable nor necessary to increase taxes to address the nation’s fiscal crisis. First, according to CBO, taxes as a percentage of GDP are already going up over the course of the next generation from the historic norm of approximately 18%, while spending is due to double from 20% to 40%. Secondly, the taxes necessary to close the fiscal gap would lower our standard of living and make us the most highly-taxed industrialized nation in the world. Finally, without effective spending limits, there is no guarantee increased taxes would simply not be used for even more spending.
“Again, further tax increases on the American people should be off the table. If put on the table, as they are in this plan, fundamental health care reform and a total spending cap must be put on the table as well. In this plan they are not. Using history as my guide, when tax increases have been called for in the past to be coupled with spending restraints, the tax increases usually materialize and the spending restraints do not. We should all remember that ultimately the cost of government is what it spends not what it taxes.
“I applaud the Co-Chairmen’s proposal for recognizing the need to fundamentally reform our nation’s tax system. The system we have today is simply too confusing, too complex, and is a drag on job creation and economic growth. In order to create jobs and continue to grow our economy in the 21st century, I believe we must move towards a simpler, flatter tax system that ensures we are competitive in the world. Economic growth is clearly part of the solution to our crisis. Getting rid of so-called ‘tax expenditures’ in order to lower marginal rates would undoubtedly bring about both economic growth and more tax revenues. However, despite lowering marginal tax rates and the corporate tax rate, this plan still results in a $2 trillion tax increase.
“I’m pleased the proposal includes discretionary spending caps. It should include mandatory spending caps as well. However, I am concerned about the firewall prescribing specified levels of discretionary spending reductions to both security and non-security spending. I believe the first responsibility of Congress is to provide for the defense of the American people, and we should spend every penny necessary to defend our nation. However, at the same time, like any other government agency, spending in the Department of Defense is not immune from waste, fraud, and abuse. I believe that we should scrutinize every penny of spending across the entire federal budget – including the Pentagon – to ensure that taxpayers money is not being wasted. However, I am concerned that arbitrary levels of cuts to defense spending could unnecessarily endanger our national security.
“With respect to Social Security, personally I believe in voluntary, personal carve-out accounts with a government guaranteed floor for those under 55 as contained in the Roadmap for American’s Future. I want to use the power of compound interest to grow our way out of this. That is not in this plan, but having said that and while I do not agree with lifting the earnings cap to increase the share of revenues collected by Social Security, I would be more than satisfied to at least save Social Security for the next couple of generations including the generation represented by my 8 year old daughter and my 7 year old son, and support the other proposals that are included in this plan.
“I came to the commission’s deliberations with an open mind, but not an empty mind. Along with others, I brought solutions. I advocated for the adoption of H.R. 4529, Paul Ryan’s Roadmap for America’s Future; H. J. Res. 79, a Spending Limit Amendment to the Constitution co-authored with Mike Pence of Indiana and John Campbell of California; and H.R. 3964, the Spending, Deficit, and Debt Control Act, which would impose binding caps on spending, establish biennial budgeting, and many other budget process reforms to ensure that the federal budget does not grow faster than the family’s budget ability to pay for it. Regrettably, very few of these ideas found their way into the final report.
“Despite being unable to support the commission’s final product, I want to again commend the work and dedication of Erskine Bowles and Senator Alan Simpson. I firmly believe that when we as a nation come together on a solution to our nation’s fiscal crisis, the work done by Erskine Bowles and Senator Simpson will have played a large role in getting us to that point.
“We are undoubtedly on the verge of being the first generation in America’s history to destroy the American dream. I do not believe the American dream is a shiny new Cadillac. I do not believe the American dream is home ownership. I believe the American dream is leaving your children with greater freedom, greater opportunity, and a higher standard of living than you enjoyed. Every generation in our country has always kept faith with the American dream. Unless we solve our fiscal crisis very soon we will not have kept that faith. We will not solve our fiscal crisis by doubling the tax burden on the next generation in order to balance the budget. We will not solve our fiscal crisis by monetizing our unconscionable debt. We can only solve our fiscal crisis by reforming current entitlement programs for future generations. Hopefully, the work of the commission will lay the foundation for the national “adult conversation” and Presidential leadership necessary to achieve that goal.