Instead of debating whose taxes should go up, we should be talking about how to keep everyone’s tax rates as low as possible. And we should be talking about the major steps needed to removes obstacles to our long-term economic health and competitiveness, not just small change to avert an immediate crisis.
We must focus on four areas that are central to the long-term challenges we face: reducing the amount our government spends to more reasonable levels, reforming entitlements to keep those important programs healthy for future generations, reforming the tax code to make it an efficient engine for economic growth, and unleashing America’s energy potential.
It is very clear that the federal government spends too much. Annual spending has grown from $3 trillion to $3.8 trillion over just the past four years, or 18% beyond inflation. Looked at another way, federal spending grew over this period from 21% of gross domestic product to 24%; annual deficits grew from 3% of GDP to 8%; and our national debt has grown by more than $5 trillion.
No nation can compete globally with such levels of spending and debt. American businesses and families have done what they always do in lean economic times: cut back and prioritize their spending. It is time for the federal government—and many state governments—to do the same. We must get federal spending back down to around 18% to 20% of GDP and can do so by getting our priorities straight.