Getting a Handle on Budget Truths and Priorities

In what seems to be an admission that the Obama Administration often opts for symbols over substance, a recent editorial in The New York Times asserts that the White House’s latest budget submission is, “like all presidential budgets,” merely “a statement of values and priorities, a blueprint to turning ideas into policies, a map of where the President wants to lead the country.” Perhaps it’s the equivalent of saying – with many words – don’t take too seriously the dollar figures contained within. If only hard-working Americans could be completely reassured by the Times’ observation, especially as the President seeks to saddle them with crushing new commuter-and-consumption costs through a $10.25 per barrel tax on oil.

That’s why here in Virginia, citizens should strongly urge Senators Mark Warner and Tim Kaine to make sure such a proposal is not only dead on arrival in Congress, but buried for good.

President Obama’s current budget plan has been described as a “déjà vu document.” It is replete with rosy economic assumptions, contains only a few nods to fiscal discipline (such as agriculture subsidy reforms), and refloats a raft of punitive tax hikes. The $10.25 per barrel tax on crude oil, while new and different in its details, reflects an old line of thinking at the White House.

Having so often sought the credit – and the public’s gratitude – for low prices at the pump, the President paradoxically continues to pursue policies that assume everyday taxpayers ought to be shelling out more. What else would explain his interest in a new tax that could raise the cost of gasoline by 25 cents a gallon every time motorists fill up, on top of higher prices for the consumer products that rely on gas-fueled transportation to get to market.

Families and businesses in Virginia are benefitting today from affordable, abundant energy. Only one year ago the price per gallon was $2.17. Now Virginia is ranked 11th on the states with the lowest price per gallon of $1.54 and trending downward. And yet, as some energy investment analyst Steven Kopits observed in a column for CNBC, this move would result in a “simple tax increase to be borne disproportionately by lower to middle income consumers.”

And what is the ostensible objective of this unreasonable $32 billion per year tax? Again, if the budget can be believed, the tax would fund a “21st Century Clean Transportation System.” This would likely entail doubling down on inefficient mass transit schemes, subsidies for research that private industry can more effectively fund on its own, and more federal control over infrastructure that states and localities can better oversee.

The plan is neither affordable nor politically feasible. Despite the President’s constant claims that he yearns for bipartisan cooperation, this is not the vehicle for compromise; it is difficult to conceive of a Congressional majority voting to raise taxes on everyday Americans.

The trouble is, bad ideas such as these could gain traction in the future, and can serve as distraction from what needs to be done in the present. Sound policy now would prioritize existing taxes for fixing roads, encourage more competitive bidding for projects, cut red tape that drives up the cost of projects, and make future transportation networks more directly accountable to the users who fund them.

An equally urgent priority should be to move forward this year on designing a tax system that empowers rather than impedes our nation’s economy. America’s competitive standing on the world stage is currently jeopardized by our obscene, highest-in-the-industrialized-world corporate tax rate of over 39 percent. Considering the international trend of both lower rates and territorial tax collection – as opposed to the U.S. practice of worldwide taxation, where our businesses, operating overseas, get taxed twice – failure to reform the Tax Code in over 20 years seems beyond irresponsible.

Fortunately, the majority of presidential candidates and many Members of Congress have urged the U.S. government to bring our corporate rate in line with the OECD average of around 25 percent.

Virginia’s elected officials, including Senators Warner and Kaine can and should be a part of this solution, by committing to a comprehensive tax reform that features a fair, simple, and universally applied tax code, one that doesn’t pick winners and losers. The result will be a true triumph of substance over symbols, which will benefit all Americans.

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