The Battle over Debt and Deficit: It’s Time for Straight Talk
Innovation, infrastructure development and education can benefit greatly from or be harmed by government engagement – so Dow has no choice but to be engaged in the debate on the appropriate role of the federal government in the economy, if we are to address challenges raised by our commitment to the four megatrends of Energy, Health and Nutrition, Infrastructure and Transportation, and Consumerism.
On August 2, a major bill increasing the federal debt limit was enacted into law. This bill was designed to address the federal government’s growing deficit problem, with mandated reductions exceeding $2 trillion over the next 10 years. However, this bill is not expected to be the only effort by the federal government to reduce its large budget deficit. In April, both the Obama Administration and Congressional leaders indicated that about $4 trillion must be reduced in the budget over the next 10-12 years. Implementing this vision has been a challenge, as evidenced by the debt limit ceiling debate.
The Need for Collaboration
Based on a close review of all the pending deficit reduction proposals, Dow has formulated a position on the various ramifications that accompany this level of budget reduction. Dow firmly believes that the federal government must solve its deficit problem with dedication and collaboration from all government leaders, regardless of party, and with active contribution from the nation’s business community.
Difficult decisions will need to be made, necessitating engagement and support by the private sector, to ensure that the best priorities are chosen to achieve the strongest economic growth. Dow believes that continued government investments in technology, infrastructure and education fall squarely into the category. Additionally, Dow believes that this debate must focus on the benefits that a fundamental restructuring of our tax system would have on increasing the competitiveness of U.S. companies, freeing up cash for investment and job growth, and making the U.S. a more attractive location for foreign investment.
Core Elements
Dow believes the final deficit reduction agreement must include the following elements:
- Reduction of the level of expenditures in entitlement programs and discretionary accounts and restriction of the rate of growth in these programs going forward
- Enactment of comprehensive tax reform, including a lower corporate tax rate and a competitive territorial tax system
- Sustained federal support for technology, infrastructure and education to drive economic growth, enhance national security and maintain Dow’s role as a global leader
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