Congress should extend expiring tax cuts and find alternatives to automatic spending cuts scheduled to take effect in 2013, the U.S. Chamber of Commerce said in a letter to lawmakers.
The threat of inaction on the so-called fiscal cliff has already begun to slow consumer spending and business investment, the country’s largest business trade association said today.
“The threat of further harm to the American economy is real, and the American people and business community should not be forced to wait,” Bruce Josten, the chamber’s chief lobbyist, wrote in the letter. “The chamber believes Congress and the president should act now; the voters will act in November.”
If Congress doesn’t act, tax rates on income, capital gains, dividends and estates will increase Jan. 1. Automatic spending cuts targeting the Defense Department also will kick in.
In the letter, Josten called for extending all the expiring tax cuts. He didn’t give details on what kind of spending cuts should be made to replace the automatic cuts, known as sequestration.
The Congressional Budget Office said May 22 that inaction on the fiscal cliff would probably cause a recession in early 2013.
Over the long run, Josten wrote, Congress should overhaul the tax system and reduce “excessive spending,” particularly for entitlement programs.
The U.S. should “approach a balanced budget” within 10 years, he wrote.
The budget adopted by House Republicans, which Democrats criticize for cutting spending too deeply, includes a deficit of 1.2 percent of gross domestic product in 2022 and doesn’t balance the budget until 2040.