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Reform key to budget

December 14, 2012

Republican U.S. Sen. Rob Portman

A U.S. congressman from Ohio continues to hammer that tax reform, entitlement reform and regulatory reform need to be part of the budget discussion to avoid this and future fiscal cliffs.

Republican U.S. Sen. Rob Portman, who vowed to stay in Washington, D.C. through the holidays to work on a budget deal, says it important Congress “stay here and get its work done with the president in resolving this issue” because the alternative will weaken an already weak economic recovery.

“One thing is we need to get this fiscal cliff resolved and at the same time I have been pushing hard for us to have tax reform and entitlement reform as part of this discussion,” Portman said Thursday during a media teleconference. “I think we miss a huge opportunity if we don’t because I don’t see another way for us to truly get the economy moving as it should.

“This is an opportunity to address the underlying problem which is spending and also the root cause of our weak economic growth,” he said. “One of those ways to address the economic problem is through tax reform because it will give the economy a shot in the arm and the government additional revenues.”

He wants a 6-month moratorium so Congress can work and pass legislation on income tax, entitlement and regulatory reforms.

He shared that talks between the Republican leaders and President Barack Obama continue on the a budget deal, but he is not encouraged by what he hears from the White House administration. He said the president’s proposal does not have any significant spending reductions and Portman said his staff believes the White House plan calls for $17 in tax increases for every $1 in spending cuts. This is similar to a proposal he made in February, which was unacceptable.

This proposal does not even meet the Bowles-Simpson model, a proposal to balance the budget, which calls for $3 in spending reductions for every $1 in tax increases.

Portman hopes the White House proposal is just a negotiating tactic because House Speaker John Boehner proposed significant revenue increases on the table as they work to avoid the fiscal cliff that would increase taxes by $500 billion and make arbitrary, across-the-board discretionary spending cuts, including defense, by $110 billion.

In an editorial for the Wall Street Journal, Portman explained part of his income tax reform proposal. He invited Obama to join Congress in “in pursuing individual and corporate tax reform, including eliminating outdated preferences that often benefit the well-connected” instead of merely piling higher tax rates on top of our inefficient tax code.” Portman said a “simpler, fairer tax code for everyone will also increase productivity, thus creating badly needed jobs and economic opportunity.”

Portman did not lay out a plan for reforming Medicare, Medicaid and Social Security, but he said Congress and the president need to work on reforming the three entitlement programs because the American people cannot sustain the programs with the funding sources and levels established today.

“The programs are simply not sustainable over time — that is not a philosophical statement, it is not an idealogical statement, it is a statement of fact,” Portman said. “In negotiations there is give and take and taxes will be a part of it, but it doesn’t come close to solving the problem.”

He said all the revenue raised from the top end, including all the tax increases over the next 10 years would still fall short since these entitlement programs will grow at a rate 27 greater than amount derived through increased taxes.

“At some point you literally cannot catch up to it with taxes because you cannot raise taxes above 100 percent,” Portman said. “I realize that does not happen in the next 10 years but it happens in the coming decades. You simply cannot solve the problem by raising taxes, you have to deal with the underlying problem that these programs are unsustainable. Unfortunately the president does not want to talk about it.”

There are ways to reform these programs and make them work better, Portman claimed. He cited surveys which says Americans support increasing the eligibility age for Social Security to help deal with the fiscal crisis and a majority also supports spending cuts to specific programs as well as spending cuts across the board.

As part of a three-tier plan to spur economic growth, Congress also needs to work with the president on regulatory reform — but first they need to know where the country stands.

Portman, who served as the former Director of the Office of Management and Budget (OMB), this week sent a letter to the president asking why his administration has failed to publish its spring 2012 and fall 2012 regulatory agendas identifying regulations under development, as required by law and executive order.

“President Obama promised the most transparent administration in history, but he has failed to comply with the basic duty to publish plans for new regulations, as required by federal law,” Portman said in a news release. “The administration first skipped the required spring regulatory plans without any explanation and has also now missed the deadline for the fall agenda. This troubling pattern calls into question whether the administration has abandoned this important tradition of openness in government.”

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