Speaking on the Senate floor Monday, Sen. Jon Kyl, R-Ariz., firmly and decisively took tax increases off the table in any debt limit negotiations. Instead, he wisely called for a separate discussion on fundamental, pro-growth tax reform.
This discussion should be about lowering tax rates and broadening the tax base in a way that is (at worst) tax-revenue neutral. Below are excerpts from his remarks:
Another question that has arisen is whether it would be helpful in this connection to raise taxes. I have said, and the Republican side has said, we will not do that as part of this exercise in extending the debt ceiling . . .
I want to distinguish the point of rebalancing our Tax Code to get a progrowth kind of Tax Code with the possibility of generating more revenue to deal with our debt situation. Those are two totally different situations . . .
We are going to have to act on the debt ceiling in the next couple of months or so. The question is, How should we deal with our ballooning deficits and debt in order to warrant increasing the debt ceiling above what it is today? The answer, of course, is to reduce spending, not raise revenues or increase taxes . . .
Washington has an over-spending problem, not an under-taxing problem . . . We have increased spending so much more than it has ever been in the past that we are getting very deep in debt.
To just give a comparison, spending is over 25 percent of GDP. That is the amount we are now spending at the federal government level. Our historic level is just above 20 percent of the GDP. That is an enormous increase in the amount of spending by this country . . .
The last time we had any kind of tax reduction was as a result of the 2001 and 2003 so-called Bush tax cuts. But we were generating a lot of revenue in this country before the recession. The recession caused us to generate less as families, as State and local governments, and as the federal government . . .
The problem is spending. Under the Obama budget, spending never gets below 23 percent of the gross domestic product. In the Ryan budget, it goes from the 25 percent that we are at today to below 20 percent. I think that after 10 years, in the Ryan budget passed by the House of Representatives, it is about 19.1 percent of the gross domestic product. That is a way to get spending down to historic levels.
Revenues will be back up to historic levels, and that is the way we have both a vibrant economy and we produce the revenues the Federal Government needs to operate without having to borrow 40 cents or 42 cents on every dollar as we have to do today.
Tax increases need to be off the table.
When we are talking about how to get the budget better balanced, how to reduce our deficits, we should not be looking at the revenue side or the taxing side; we should be looking at the spending side. On spending, we know the big money is in the entitlements, not the discretionary part of the budget.
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