Republicans have, for months, been laying out various demands that they want in exchange for voting to raise the nation’s debt ceiling, even though failure to do so would have widespread and disastrous consequences. Treasury Secretary Tim Geithner estimates that the country will reach its legal borrowing limit around May 16.
Calling it a “leverage moment,” some of the demands Republicans have cited are a balanced budget amendment to the Constitution and various versions of spending caps or cuts. Today on ABC’s This Week, Rep. Allen West (R-FL) added one more demand to the list — cutting the corporate tax rate in half:
AMANPOUR: Congressman West, do you believe it when the Secretary of the Treasury, the Chairman of the Fed, say that the stakes [regarding the debt ceiling] are this high?
WEST: Well, one of the things, having served 22 years in the United States military, I don’t believe in leadership by fear and intimidation. I think that leaders have to come up with viable solutions. I agree with one of the things [Rep.] Joe Walsh just brought up, we need to have a balanced budget amendment…But I think also, now is a great time, when we can cut our corporate business tax rate in half. Bring it from 35 percent to 20 to 22 percent because there’s a lot of capital just sitting out there that we could use to invest in long-term sustainable job growth…This is not about a debt ceiling being raised, this really comes down to a debt suggestion.
At the moment, corporations are making record profits and sitting on nearly $2 trillion in cash reserves. At the same time, corporate tax revenues are at historical lows and many corporations — including GE and Boeing — pay no federal corporate income tax at all. According to the Office of Management and Budget, “corporate tax receipts will account for just 7.2% of federal revenues in 2010, with large corporations contributing less than one-sixth as much as small business and individual taxpayers to the Federal Treasury.” In comparison, fifty years ago corporate tax receipts were 23 percent of federal revenue.
But West would take the credit-worthiness of the entire country hostage to drive already low corporate tax revenue even lower, making the U.S. deficit worse, not better. Several key members of the House Republican leadership — including Speaker John Boehner (R-OH) and House Budget Committee Chairman Paul Ryan (R-WI) — have already admitted that the debt ceiling needs to be raised, so, as Matt Yglesias put it, “when one side favors raising the debt ceiling and the other side also favors raising the debt ceiling, the most reasonable compromise is to raise the debt ceiling.”