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Economic recovery plan

Posted: October 30, 2008 6:53 p.m.
Updated: January 1, 2009 5:00 a.m.
 

Two days ago the Federal Reserve cut a key interest rate to one percent in an effort to stimulate the economy. The economy is on the mind of virtually every tax-paying worker, parent, and retiree. It is also the No. 1 issue for voters heading to the polls Nov. 4. And while cutting interest rates historically shores up investor enthusiasm, our country's economic health is sitting in an unusual position. What the country truly needs now is a strategic, common-sense plan to revive our economy, produce more American jobs and ultimately ensure long-term prosperity.

Democrats do not seem to agree. Even after Congress was forced to pass a $700 billion rescue bill, Democratic leaders are now threatening to add an additional $300 billion spending bill. They are characterizing it as a "stimulus bill," saying our economic system needs more spending. This of course comes at the same time that Congressional Democrats are pushing to cut defense spending by $150 billion. I just don't see the logic.

None of the options outlined by Speaker Nancy Pelosi will stabilize the economy, encourage our markets, help small businesses, or salvage individual savings and retirement accounts; but Republican Leader John Boehner has a five-step plan that I support to prompt economic growth and rapid recovery:

n Giving families tax relief: The Republican leader's plan will make the tax code fairer and friendlier for the middle class by doubling the child tax credit from $1,000 to $2,000 per child to put more money back in the pockets of working families.

n Keeping American jobs at home: The American corporate tax rate is the second highest in the industrialized world. This onerous 35 percent rate is passed on to consumers with higher prices for goods and services. The Republican plan immediately reduces the corporate tax rate to 25 percent to give American employers the incentive to keep good paying jobs in America and reduce prices for American consumers.

n Rebuilding 401(k)s and spurring investment through a zero capital gains tax: At a time of economic uncertainty, Congress should do everything in its power to encourage investment to help spur economic growth. To that end, the Republican plan immediately and completely suspends capital gains taxes for individuals and employers on newly acquired assets for the next two years. This will not only encourage investment, but it will boost the value of sagging 401(k) accounts on behalf of workers and retirees.

n Providing tax relief so American businesses create more jobs: The Republican leader's plan increases the Section 179 limits that allow small businesses to expense new equipment. The plan also extends bonus depreciation for an additional year and increases its value so that 75 percent of equipment costs can be deducted in the first year. The Boehner plan also provides net operating loss relief for all employers by allowing them to "carry-back" losses for three years (five years for small businesses). Such common sense actions would encourage all U.S. companies to make new capital investments and create good jobs for hard-working Americans.

n Creating jobs through an "all of the above" energy plan: While the ban on developing our nation's deepwater and shale oil and gas resources expired on Oct. 1, fulfilling the onerous requirements under existing law to explore these resources will take at least two years.

And lawsuits from anti-American energy extremists could delay development even longer. Congress should take steps necessary to allow Americans to begin exploring and producing new domestic energy in months, not years. Such a move should be the first step toward implementing the "all of the above" energy strategy House Republicans introduced last summer in the American Energy Act (H.R. 6566). The GOP plan would not only increase production of American energy, but also encourage the use of alternative and renewable fuels and promote more efficiency and conservation to reduce energy prices and create up to one million good-paying jobs.

This plan is built on strong principles and core conservative values. I am urging Speaker Pelosi to put partisan politics aside - despite the pending election - and embrace Boehner's plan. There are only so many cuts the Federal Reserve can make before Congress must act, and Speaker Pelosi, that time is now.
Howard P. McKeon is California's 25th District Republican congressman. His column represents his own views, not necessarily that of The Signal.

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