Utah League of Cities and Towns

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Congressman Jason Chaffetz (R)

Congressman Jason Chaffetz (R)



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How should Congress and the President address the “fiscal cliff?”

Chaffetz Response:

We are told the “balanced approach” to solving our fiscal crisis involves both raising revenue and cutting spending. I agree. But there are two ways to raise revenues. One is by raising taxes. The other is by growing the economy. Unfortunately, those two solutions are mutually exclusive. Many states have found that raising tax rates doesn’t actually result in long-term revenue increases, while a strong economy with low unemployment will always increase revenues.

We may not be able to stop President Obama from the economically destructive path he is determined to pursue. But I’m committed to doing whatever I can to mitigate the damage to our economy and overall fiscal health.

The President is committed to his belief that government grows jobs. He believes raising taxes will raise revenue and growing government will help the economy. My colleagues and I believe the private sector grows jobs and competitive tax rates and limited government attract economic growth. We prefer a pro-growth agenda that enables job creators to put people back to work. Taxing job creators will not grow the economy. It will, however, grow the government.

The president campaigned on raising taxes for high-income households to help solve the deficit problem. But in reality, he is insisting that Congress approve $200 billion in additional stimulus spending. Raising taxes so he can spend more money to grow government is not a balanced approach to deficit reduction.

Additionally, President Obama is requesting increased authority to raise the debt. Under his initial proposal, opponents of a debt limit increase would need a two-thirds majority in both chambers of Congress to override his request while current law simply requires opponents to reach 50% in one chamber of Congress to prevent an increase in the debt limit. While supporters of the president’s proposal argue that Republicans supported this approach previously, they neglect to mention that the previous agreement was coupled with over $1 trillion (including interest) in spending cuts over ten years.

As the President argues for a “balanced” approach to deficit reduction, his actual request is to increase taxes by $1.6 trillion, on top of the $1 trillion tax increase in the Affordable Care Act, while cutting spending by a meager $600 billion. Given that government data show spending, not revenue, is the primary driver of the deficit, this solution is no solution at all. Furthermore, in recent years, federal revenues as a percent of GDP have decreased mainly due to a reduction in employment, not due to a tax code that coddles the rich. The Congressional Budget Office projects that once employment recovers federal revenues will exceed their historical average of 18% even if ALL of the Bush tax cuts are extended.

The President argues that we should restore tax rates, at least for high-income households, to Clinton-era levels, but the president does not talk about reducing spending to levels achieved during the Clinton years while Republicans controlled Congress. CBO projects federal spending to reach 22.5% of GDP over the next ten years based on the president’s spending proposals. This is substantially higher than the 19.4% of GDP that was achieved during the Clinton years.

Some argue that we should accept higher tax burdens because the population is getting older, essentially dismissing the idea that government spending could somehow be slowed by reforming entitlement programs, but this is a foolish approach. CBO projects that, without entitlement reform, non-interest federal spending will exceed 26% of GDP by 2037, and increasing taxes on high-income households to make up for this increase is mathematically impossible.

If the president is looking for a long-term solution to America’s fiscal crisis, he needs acknowledge that entitlement reform and tax reform are necessary.

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