Japan has announced that it will cut its corporate tax rate by five percentage points. Japan and the United States had been the global laggards on corporate tax reform, so this leaves America with the highest corporate rate among the 34 wealthy nations of the Organization for Economic Cooperation and Development.
President Obama’s Fiscal Commission has produced a serious and sobering analysis of the government’s budget mess, and it provides some of the needed solutions. Three of the report’s main themes are on target: the need to make government leaner, the need to cut business taxes to generate economic growth, and the need to impose tighter budget rules to discipline spending.
The Obama administration is supporting a two-year freeze on federal pay. I haven’t seen the details yet, but this appears to be a good start at getting excessive government pay under control.
The Obama fiscal commission’s draft report suggested that federal spending be reduced from 25.1% of GDP today to 22% by 2020, and lower after that. That’s a reasonable goal for a centrist kind of commission, but let’s remember that spending was just 18.2% in President Clinton’s last two fiscal years, 2000 and 2001.
The co-chairs of President Obama’s National Commission on Fiscal Responsibility and Reform released a draft report yesterday on how to reduce federal budget deficits.
In a story titled, “Federal government upping pay, seniority to lure skilled workers from private sector,” the Washington Business Journal notes:
A Washington Post editorial today discusses the National Academy of Sciences “Fiscal Future” study. The NAS report modeled four possible tax and spending paths for the nation over the next 70 years. I was one of the NAS report’s co-authors.
The other day I mentioned that numerous groups have released spending cut proposals that will be useful for the GOP in figuring out where to cut spending. Another source for the new House Republican majority to utilize is a plan that was released in May by their own members in the conservative House Republican Study Committee.
In coming months, new Republican members of Congress will be looking for ways to cut the budget deficit and also to increase economic growth. One way to do both is to privatize government assets, such as the U.S. Postal Service, Amtrak, and the air traffic control system.
Congratulations to the wave of Republicans who successfully ran on promises to tackle rising government debt and cut the hugely bloated federal budget. On the campaign trail, most candidates were not very specific about how they would cut the budget, but when they come to Washington they will be looking for good reform targets.