NCPA - National Center for Policy Analysis


December 20, 2006

A preview of the Democrats' economic policies holds little hope, says Pete du Pont, a former governor of Delaware and chairman of the National Center for Policy Analysis.

Consider how the incoming Democratic Congress will handle taxes:

  • If the Democrats do nothing on tax reform -- which is likely -- the tax rates on lower-income individuals will rise to 15 percent from 10 percent and on higher incomes to 39.6 percent from 35 percent.
  • The Alternative Minimum Tax is in need of reform before it soaks middle class taxpayers with a heavy tax burden; what taxes the new Congress will raise to solve this dilemma is unclear, but either AMT or other taxes will have to rise.
  • Democrats will likely raise Social Security taxes and reduce benefits since they are opposed to personal accounts; the forthcoming plan will likely raise the cap on earnings subject to Social Security taxes, especially for the most productive wage earners.

But the problems won't end with taxes, says du Pont.  Holding spending down, working toward energy independence and free trade will also prove difficult:

  • Despite promises to hold spending flat for the remainder of the current fiscal year, Democratic Congresses have historically outspent Republican ones, and it will surely happen again.
  • Democrats will allow no more offshore drilling to help achieve energy independence; will repeal oil drilling tax deductions and institute another windfall profits tax on oil companies, which will only increase oil imports.
  • Additionally, no more nuclear power plants will be allowed -- though we already have 104 operating successfully -- because Democrats believe they need more regulation and are too risky.
  • They will almost certainly abandon free trade principles and return to protectionism despite the fact that trade has not cost jobs and offers a wider variety of products to choose from at lower prices.

Source: Pete du Pont, "Watch Your Wallet,", December 20, 2006.

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