U.S. Chamber of Commerce President Thomas Donahoe urged Congress to pass a temporary extension of the 2001 and 2003 tax cuts, saying it would boost investor, business and consumer confidence and spur economic growth. In an open letter to President Obama and Congress on July 15, the business chamber warned that existing tax and regulatory policy is “eroding our competitive position globally, as other nations take steps to cut taxes, reduce regulations and restrain the appetites of government.” R. Bruce Josten, executive vice president for government affairs, said the U.S. Chamber did not offer a specific timetable for ending the tax cuts, but suggested a temporary extension remain in effect until the job market rebounds.
White House Press Secretary Robert Gibbs, in response to the letter, noted there were 25 different tax cuts in the American Recovery and Reinvestment Act of 2009 (P.L. 111-5) and that the U.S. Chamber’s concerns do not reflect what is occurring in the business world. The business group held a jobs summit on July 15 that included a panel discussion by the president’s bipartisan fiscal commission co-chairman Alan Simpson and Erskine Bowles.
Simpson and Bowles demurred from taking any position on the U.S. Chamber’s call for a short-term, tax-cut extension or other tax reductions, such as lowering U.S. corporate tax rates. They advised that the commission will not make any decisions prior to making its recommendations in December 2010.
Pointing to the major differences in views within the 18-member panel, both Simpson and Bowles cautioned there is only a slim chance that the requisite number of commission members, 14 out of 18, will vote in favor of the final recommendations. “The odds for success are minimal,” Simpson said.
Even if the fiscal commission approves the recommendations, both the Senate and House must cast an up-or-down vote to adopt the panel’s plan. The House would only vote if the Senate approves the commission proposals. If approved by both chambers, Bowles said he would like to see the commission recommendations take effect in the beginning of 2012.
Speaking for himself, Bowles said he favored lowering tax rates on investment, capital formation and corporations and partially offsetting the cost with some form of consumption tax. As a general goal, Bowles said tax revenue and spending each should be capped at 21 percent of gross domestic product in order to achieve a balanced budget in the long term.
By Paula Cruickshank, CCH News Staff