We hear a lot of talk from my Republican colleagues in the House about fighting the problem of our national debt. Unfortunately, we hear little about solutions. We cast vote after vote on paltry efforts to carve one and a half percent of spending out of a small corner of our budget -- and the majority is having fun settling old scores in the process.
That hasn't left the time or energy or imagination for going after the root problem -- the need for a fair and equitable revenue stream to knock out our national debt and grow the economy.
The Debt Free America Act, which I've introduced , provides the road map to our nation's future. It's a bold plan to eliminate the national debt within 10 years. That's right, 10 years! It will generate job growth and economic expansion. The plan has created discussion, and controversy, in the previous Congress. But it is time to be thinking -- and acting -- outside the box.
The path to a Debt Free America is simple and straightforward: Place a transaction tax of 1 percent - just a penny on the dollar -- on all retail and financial transactions, except for personal bank account transactions and those involving financial stocks. Create a dedicated revenue stream targeted to the national debt. The tax expires after 10 years.
President Obama has made it clear what's at stake, "Without action, the accumulated weight of that structural deficit, of ever-increasing debt, will hobble our economy, it will cloud our future, and it will saddle every child in America with an intolerable burden."
Secretary of State Hillary Clinton has raised the stakes to global terms: "Today, more than ever, our ability to exercise global leadership depends on building a strong foundation here at home. That's why rising debt and crumbling infrastructure pose very real long-term national security threats."
The interest payments alone on our national debt will reach $916 billion by 2020, according to the Congressional Budget Office. That is enough to crowd out domestic spending, federal investment in the private sector, and gobble up half of all tax revenues.
That is absurd!!
The answer? It's a broad-based, 1 percent tax on transactions that go through the Federal Reserve. The funds will generate sufficient revenue over the next decade to reduce the debt with minimal impact to the average taxpayer. Based on the latest data available from the Federal Reserve, the annual volume of transactions, excluding stock transactions, in the U.S. economy is valued at approximately $445 trillion.
The Debt Free America Act is equitable, providing a 1 percent personal income tax credit for families earning up to 250,000 a year (or individuals up to $125,000). Ultimately, it will provide even further relief from our confusing tax code which even the Internal Revenue Service recognizes needs an overhaul.
The Debt Free America Act provides the framework for fundamental reform of the federal system of taxation by eliminating -- once the debt is paid down -- the federal personal income tax and the Alternative Minimum Tax (AMT).
While so many voices in Congress are drowning each other out, the Debt Free America Act sends a clarion call, it is a clear, one-of-a-kind proposal. It is the only legislation before the Congress that would pay down the federal debt within a decade. Other proposals either take too long or don't go far enough to address the problem.
For example, the House Republicans "Roadmap for America's Future Act of 2010" would pay down the debt in 80 years according to Congressional Budget Office scoring. And the National Commission on Fiscal Responsibility and Reform, created from an executive order by President Obama, proposes to raise $1 trillion, in revenue by reducing or eliminating most tax expenditures, while imposing a 15 cent per gallon gasoline tax.
Here is a plan to take responsibility, and responsible action for our crushing national debt while offering the prospect of growth and greatness. We owe this to ourselves, our children, our grandchildren. We owe the next generations a Debt Free America.