Remarks by the Vice President to the Board of Directors of the U.S. Chamber of Commerce

Business Wire, June 11, 2008

WASHINGTON -- U.S. Chamber of Commerce

1:16 P.M. EDT

THE VICE PRESIDENT: Thank you. Thank you all very much. A welcome like that is almost enough to make me want to run for office again. [Laughter.] Almost. Almost. But it's a pleasure as always to have a chance to come visit the U.S. Chamber of Commerce. I appreciate the invitation to talk to this fine organization and the board members here today. Although many of you are from elsewhere, you've probably heard the saying about this city that: "If you want a friend in Washington, get a dog." Just to cover myself, I got two.

But I'm happy to relate that the saying isn't really true, that I do have friends in Washington, and among them is Tom Donohue. Presidents come and go - but not at the Chamber of Commerce. [Laughter.] Tom's been on the job for better than a decade, and he remains one of the most effective advocates for the free enterprise system in the entire country, and I'm proud to call him my friend.

I'm delighted to have the chance to say a few words today about the economy, especially to this audience. I'll be relatively brief so we'll have time for a few questions at the end.

For my part, I'm greatly interested in the economy - and that's not because in seven months I'll be out of work. It's because I believe that our country has greater wealth-creating potential than ever before, and that with the right policies, we can create jobs and prosperity for our people on an historic scale.

In the last seven years alone, despite unprecedented challenges to this country, we have added more than two trillion dollars to our Gross Domestic Product - an amount exceeding the entire economy of Canada. And even with the recent headwinds - rising prices for food and gas, turmoil in the credit markets, and a major correction in housing - this economy has continued to grow. The world is changing around us, and new and powerful economic players are stepping onto the global stage. Yet ours remains the largest, most vibrant, most flexible economy. To keep that edge, we've got three big economic decisions to make. We need to make them soon, and we need to get them right.

The first decision is on taxes. Earlier this year, with the economy needing a boost, President Bush asked the House and the Senate to pass an immediate stimulus package. They responded quickly and on a bipartisan basis - and now more than 150 billion in rebates and business incentives are going to the taxpayers and into the private economy.

Members of both parties agreed that swift tax relief would be a good thing, and they were right. It follows that the opposite action - a sudden, major tax increase - would be the wrong prescription for our economy. But that is precisely what is set to occur in the not-too-distant future. In six months we'll be to the beginning of 2009, and the year after that, the Bush tax cuts passed by Congress in our first term, will expire under the language of the law. Letting the tax cuts expire would hit Americans with a 280-billion-dollar per year tax increase.

The death tax, which Congress voted to eliminate, would return with maximum force, at a peak rate of more than 50 percent. The top tax rate on capital gains would go up by one-third. The top rate on dividends would more than double. For couples, the marriage penalty would reappear in its old discriminatory form. For parents, the thousand-dollar per child tax credit would be cut in half, down to 500 dollars. The tax rate for every single income tax bracket would be increased. On average, some 116 million Americans would see average tax increases of 1,800 dollars a year.

Most of us in our lifetimes have seen bad economic news, either in the headlines or in our personal circumstances. But not many of us have taken a hit like an overnight income tax rate increase of 50 percent. But that's what is coming for some of our fellow citizens - and they happen to be the ones at the bottom. If the Bush tax cuts are allowed to expire, Americans in the lowest tax bracket would take the biggest hit.

Understandably, politicians who promise to get rid of the Bush tax cuts don't want to get into these details. They also neglect to point out that ending the tax cuts would hike the total Federal tax burden to about 20 percent of our Gross Domestic Product - nearly the highest ever. That would be a staggering burden on the nation's households, and it would throw discredit on the lawmakers who permitted government greed to reach that level.

For the economy as a whole, ending the Bush tax cuts would put intense downward pressure on potential growth; restrict the amount of capital available for startups; and leave small firms with fewer resources to expand and hire new workers.

In fact, the tax increase doesn't even have to take hold to have a negative impact. As one of the biggest government money-grabs in American history seems to draw closer, even the expectation of it is going to have an effect. The longer Congress fails to act, the greater the uncertainty among entrepreneurs, investors, and venture capitalists. Ever more projects will go undone; ever more job-creating prospects will be postponed or shelved.