Budget/Taxes

Just as every family must set a budget to keep spending in check, so too must the federal government. As one of only two accountants in the United States Senate, I know how important it is to reduce the national debt by controlling spending. I use my positions as Chairman of the Budget Committee and a member of the Finance Committee to advance proposals that will put our fiscal house in order and balance the federal budget.

The truth is America’s budget process is broken, and this dysfunction is preventing Congress from tackling the pressing fiscal challenges facing our country. Fiscal reform is needed now if we hope to avoid disaster. One option is my Penny Plan. The Penny Plan, or One Cent Solution, would cut 1% from total federal spending until the annual budget is balanced. Afterwards it would cap spending at 18 percent of GDP. The plan doesn’t mandate any specific cuts. Instead of arbitrary cuts across the board, Congress could make targeted cuts and focus on the worst first. We’ve got to balance the budget – the sooner the better – and start paying down the debt.

What America also needs is a new budget process built to save, instead of spend. As Chairman of the Senate Budget Committee, I have been working with my colleagues to implement bipartisan solutions that would improve the way Congress considers budget legislation, update the antiquated accounting rules that affect the information Congress uses to make tax and spending decisions, and establish enforceable long-term fiscal targets. 

The last time Congress reformed the budget process was in 1974. Times have changed and the 40-year old process has only grown more dysfunctional and antiquated. In the last 15 fiscal years, Congress failed to pass a budget resolution more than half of the time.

Today, 70 percent of federal spending is essentially on auto-pay, year after year, without congressional review or approval. In 15 years, this runaway spending and interest will consume all of the taxes and revenues the federal government collects, crowding out spending on the functions we normally associate with good government, including national defense and border security.

The good news we are making bipartisan progress on steps Congress can take now to fix America’s broken budget process.

First, Congress can begin to regain control of the nation’s finances by making changes to the way it considers and reviews government spending. For example, Congress could set aside mandatory floor time to focus only on spending and budget legislation. This will keep Congress focused on providing government funding in a predictable, transparent manner, instead of putting off these tough decisions until the next manufactured crisis.

Second, we can update obsolete and antiquated accounting rules. The private sector applies modern advances in economics, accounting, and finance to accurately reflect a business’s financial condition and the potential impact of new policies. But the federal government’s budget rules haven't undergone comprehensive review since 1967, more than 50 years ago. Updating these rules would provide Congress with the honest, accurate information necessary to allocate taxpayer dollars responsibly.

Finally, Congress can get serious about addressing America’s mammoth national debt, which today totals more than $19 trillion and is expected to grow to over $29 trillion by 2026. Long-term, enforceable fiscal targets would concentrate Congress’ and the public’s attention on achieving a sustainable federal budget.

The time to act is now because we currently spend about $230 billion in interest on our debt every year, even with historically low interest rates. Interest on the debt could soon put America out of the business of protecting its citizens from foreign threats, educating our youth, and building national infrastructure like highways and roads. It’ is a bad position to be in and the way out is to stop demanding the government give every program, every group and every person more money. The government actually ran out of money $19 trillion ago.

We need to grow the economy, not the federal government. One of the ways we can grow the economy is by reforming our outdated tax code. We’ve got to lower tax rates and broaden the tax base and make the tax code simpler and fairer for all taxpayers. I support pro-growth economic plans that provide welcome relief to taxpayers in every tax bracket, including small business owners, married filers and individuals who have capital gains or dividend income. I support eliminating the death tax – permanently.

We also need to fix our outdated international tax system so that we don’t hamper our U.S. multinational companies from competing globally. And I’ve got an international tax reform bill that addresses those issues. But in addition to lowering the corporate tax rate, we’ve got to ensure we address the taxes paid by so-called “flow-through” businesses –the partnerships, S-corporations, and limited liability companies. Just fixing the corporate side doesn’t help the millions of businesses that are structured as flow-through entities. By reducing the federal tax burden on individuals and businesses, Wyoming citizens and employers will have more money to spend in their local economies and to invest in and create jobs. Americans, not the federal government, know best how to spend their hard-earned money.

I generally don’t like to do things “comprehensively.” We should do legislation in smaller parts so people can understand what’s in them and can vote for and against the things they support and don’t support. But given the interaction between the individual and corporate side of the tax code, we really need to look at them together and make sure changes we make in one area don’t make things worse in another area.

I have also introduced the Marketplace Fairness Act for several years, which would advance internet fairness by allowing local Main Street retailers to compete on a level playing field against out-of-state Internet retailers and give states the ability to enforce their own sales tax. It would also relieve consumers of the legal burden to report to state tax departments the sales taxes owed on online purchases. This bill does not create new taxes or increase existing taxes.