linearity purify: Obama's Growth-Busting Budget - Larry Kudlow

Sunday, April 14, 2013

Obama's Growth-Busting Budget - Larry Kudlow - Townhall Finance ...

No matter how you slice the Obama budget pie, the inescapable fact is that the president wants to get rid of the roughly $1 trillion budget-cutting sequester and substitute in a $1 trillion-plus tax hike. In other words, more spending, more taxing. Growth-busting. The GOP should just say no.
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And let me provide some counsel to my Republican friends in Washington, in particular in the House. Balanced budgets don?t create growth. This mantra is wrong. It?s growth that creates balanced budgets.
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Cut spending? That?s a pro-growth measure. Lower tax rates? Another pro-growth measure. The combination of limited government and true tax reform will balance the budget soon enough, ?with government coming in at a smaller share of GDP while sufficient investment and work incentives get growth moving towards the 4 or 5 percent range.
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That kind of growth would make up for the lost ground of the past 15 years. And if you add in deregulation and a sound King Dollar, you?d have a growth budget that would propel America back into prosperity.
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Indeed, with some tweaking of eligibility requirements, a true economic-growth budget would lower food-stamp enrollment, unemployment compensation, disability benefits, and other forms of welfare-dependency spending that plague the country. Medicare is a more complex issue, but Social Security would be solved by a long-run growth spurt.
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Of course, this is not what President Obama is aiming for. He wants more than $500 billion in tax revenue from a 28 percent income-tax deduction limit. But this is not tax reform, since there are no offsetting reductions in marginal tax rates. He also wants a $50 billion Buffett rule that would jack up taxes on capital gains and dividends. He would slap energy companies with a $100 billion tax hike, at least. Offshore corporate income would see a $150 billion tax increase. And banks and financial institutions would get slammed with $100 billion in new taxes.
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And there?s no serious corporate tax reform in this budget. Even with some temporary tax-credit offsets, some have suggested that there might be room for a 1 percentage point business tax cut, from 35 percent to 34 percent. That?s pathetic. Instead, the most powerful growth measure would have small-business, sub-chapter-S-type firms pay the same 25 percent tax rate as large C-corp companies might. This would be a huge growth booster, and it would attract investment from all over the world.
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Then there?s the budget?s incredible and arbitrary limi