House Budget Chairman Paul Ryan was back on the offensive Wednesday, using a policy breakfast hosted by The Hill to attack President Obama’s calls for a payroll tax holiday and an extension of research tax credits to try and jolt the economy.
“Temporary tax rebates don’t work to create economic growth—permanent tax changes do,” Ryan said. He likened the concept of a payroll tax holiday for companies and employees to a “sugar high.”
“Businesses make decisions on certainty, their effective tax rate and on margin—not based on some temporary booster shot,” he added.
While emphasizing the importance of tax reform to economic growth, he did not offer specifics on what reform should look like. He did say, however, raising taxes won’t help the government tackle its debt problem, but rather, stifle business investment and pillage the economy.
“Tax revenues grow at the rate of GDP, but our spending on health care costs and entitlements grows a lot faster,” he said. “Even if you think we should be raising taxes, you’ll never catch up. You’ll always be chasing higher spending with higher taxes.”
Ryan’s deficit-reduction plan, unveiled in April, retains the Bush-era tax cuts for the next decade and cuts the top individual and corporate tax rates from 35 to 25 percent. The plan also brings in additional revenue by cutting discretionary spending and overhauling Medicare and Medicaid.
Former three-term New York Governor George E. Pataki, also speaking at the breakfast, referred to the Obama administration’s reaction to Republican proposals as “patently offensive.” “This administration is actively attacking those who have the political courage to propose serious plans to deal with (the debt),” Pataki said. “When the president’s own commission put together $4 trillion in deficit reduction measures, this president simply ignored it and proposed his own budget that basically threw it in the garbage.”
Though Ryan doesn’t exactly see eye-to-eye with the president, he had less dismissive things to say of the bipartisan “Gang of Seven” task force being led by Vice President Joe Biden. "What the Biden talks offer is the one train left that's going to leave the station on the debt," Ryan said.
The task force has met in three closed-door meetings this week aiming to strike an agreement that would cut billions from federal spending in exchange for a rise to the debt ceiling. Treasury says Congress must move to raise the debt ceiling by August 2nd or risk a technical default on its worldwide debt obligations.
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