At its core, the final budget blueprint released today by the Obama administration represents just another “tax and spend” plan that would increase federal spending while imposing a wide range of tax increases on businesses, making it harder for manufacturers to create jobs and compete in the global economy and do nothing to stimulate much-needed economic growth.
The NAM is a strong and vocal advocate for a comprehensive overhaul of our tax system. Although the president acknowledges the need to lower corporate tax rates and strengthen the R&D credit, many of the so-called “reforms” he included in the budget plan—which included a punitive “minimum tax” on overseas earnings, higher tax rates on capital gains and dividends and the imposition of a confiscatory estate tax on small businesses—totally miss the mark.
Similarly, the president’s proposal to “fix” the so-called “Cadillac” tax on employee benefits set to hit in 2020 is a nonstarter for manufacturers. The tax would slow private-sector health care innovation and erode the value of employer-sponsored health plans. Manufacturers firmly believe that the only acceptable “fix” for this 40-percent excise tax is full and permanent repeal.
While the administration’s plan did not call for additional premiums to be paid by single-employer-defined benefit pension plan sponsors to the Pension Benefit Guaranty Corporation (PBGC), manufacturers are concerned with the proposed $15 billion increase in multiemployer premiums.
On a positive note, manufacturers recognize that government spending in certain areas is necessary and indeed critical to our nation’s economic and national security. Thus, the NAM appreciates the president’s focus on cybersecurity and the need to address the serious threats facing our critical infrastructure, as discussed by my colleague Brian Raymond.
The NAM also supports improvements to our nation’s crumbling infrastructure and fought hard for the $305 billion long-term highway reauthorization signed into law this past December. Unfortunately, the president’s proposed $10 per barrel fee on oil to fund what the administration describes as “a more sustainable transportation system” is not the type of infrastructure proposal we need. In effect, the fee is a $319 billion tax on the energy industry that, along with more than $40 billion additional energy tax increases in the budget, will translate into higher energy costs for manufacturers and other energy consumers.
The president also would cut back on some other infrastructure funds. For example, the proposed 22 percent cut in the Army Corps of Engineers’ budget would impact project construction and maintenance of the Inland Waterways System and dredging and maintenance of U.S. ports, which many manufacturers rely on for shipping goods and supplies.
Manufacturers also are concerned with the president’s proposal to force pharmaceutical manufacturers to publicly reveal costs associated with research and development, product discounts and other proprietary information. This concept works against any effort designed to attract and retain investment as well as protect intellectual property. It is a misguided approach and will sap innovation. No manufacturer should have to provide unprecedented views of proprietary operations of its most sensitive information.
When taken as a whole, the president’s budget will make it tougher for manufacturers and other businesses in the United States to grow and prosper, creating the jobs and making the investments that are so critical to our economy. Nonetheless, there are policy choices that can and will generate the economic growth we need. Late last month, the NAM unveiled Competing to Win, a policy roadmap that outlines the priorities of manufacturers in the United States, a strategy that would strengthen our industry and open new doors of opportunity for all Americans, a goal that we all can share.