Donnelly, Chocola on Spending

The South Bend Tribune is running a series of issue-based articles to help voters decide between Chocola and Donnelly. In today's, "candidates share ideas on reining in debt, corralling spending."

Q: Do you regard reduction of the national debt as necessary to the financial health of the nation? If so, what steps should the government take to reduce the debt? If not, why not?

Chocola: Yes, reducing the debt is a very important thing to do and is something I've focused on. The two ways to get a deficit are to spend too much or tax too little. I don't think the people in the 2nd District feel like they are taxed too little, but I do think that we spend too much. We need to prioritize our spending better.

One of the tools to pay down the national debt that I have worked on is the Family Budget Protection Act, which gets to the root of the problem. I am a co-sponsor of the Balanced Budget Amendment. I have also introduced the Truth in Accounting Act, which requires government to state its unfunded liabilities. In order to solve problems, you have to define problems. We need more accountability and transparency in these matters.

Donnelly: Reduction of the debt is critical to the financial security of this nation and it is also critical to the national security of this nation. Much of the debt we run up each year is bought up by China, which does not have our best interests at heart. China is an adversary and it is extraordinarily dangerous for us to be financing our debt this way. It's dangerous for us to put our future in the hands of foreign countries. That's not the American way. We need to reduce the debt, have a balanced budget and go back to the times of surplus that we had in the late 1990s.

Q: How long will it take to erase an $8.5 trillion debt, and is that even a realistic possibility?

Donnelly: It is a realistic possibility with the right policies. In 2000, it was projected we would run a $5 trillion surplus over the next 10 years. The goal was that by 2010 we would have been at about a zero balance. Instead, we have run trillions of dollars in debt. My best estimate is that it will take well over a decade to try and repair this.

Chocola: I think it has to be realistic. It's up to future congresses. How long it takes depends on policies that Congress enacts. This is not just on the spending side, it's also on the

revenue side. One way to erase the debt is to have pro-growth tax policy like the 2003 tax relief bills that I voted for.

Since then, we've created 5.7 million new jobs, and unemployment is now at 4.7 percent. It was over 6 percent, I think, when the tax relief bills were passed. We've had something like 18 quarters in a row of GDP growth. Federal tax receipts went up 15 percent last year, the largest increase in over 20 years. They're up almost 12 percent this year. The combination of budget process reform, better spending decisions and pro-growth tax policy, that's how we're going to get rid of the deficit. You can't answer the question of when until you know what those policies are.

Q: Do you support making permanent the tax cuts previously enacted by Congress? Why or why not?

Chocola: Yes, I do, because they have clearly served as a foundation for economic growth. If you drew a graph from the day that the 2003 tax relief bills became law, job creation has gone straight up, federal revenues have gone straight up and economic growth has gone straight up.

Economic statistics don't help the person without a job, but a growing economy does.

That pro-growth tax policy has helped serve as an economic stimulant. And anyone who does not support it supports a tax increase. If you aren't willing to keep the rates where they are, they will go up.

Donnelly: I support making all the tax cuts permanent immediately, except for the top 1 percent of wage earners. For the top 1 percent, I support those tax cuts as well, as long as the budget is balanced. Until that time, we can't afford to lose that revenue stream. It's politically popular and easier to push through that tax cut as well, but my job as congressman would not be to do what's politically popular, but to do what's right for the people of our district.

Q: Is it possible for the federal government to end deficit spending and balance its budget each year?

Donnelly: It is absolutely possible. What has been forgotten in so many of the claims we hear today is that the Republicans have been in charge of the White House, the Senate and the U.S. House the last six years and we have seen the biggest deficits in history and the biggest spending sprees in history.

My Republican friends and independent friends know as well as I do that no responsibility was shown over those years. We need pay-as-you-go policies and independent representatives in Washington to keep the lobbyists out of the room and to keep spending in line.

Chocola: Yes, it's possible. The balanced budget amendment I co-sponsored would create a constitutional amendment that would require a balanced budget each year. It does have exceptions, such as in times of war. It wasn't that long ago that we did have a balanced budget, so it can happen. Before 9/11, there were two or three years when there was actually a surplus. When I ran in 2000, there was a surplus.

Q: Do you support changes in the U.S. tax code to simplify or replace the income tax? If so, what is your approach?

Chocola: I do support fundamental tax reform. I think it should result in a fair and flatter tax code. There's lots of good ideas that deserve debate. The two big ones are a national sales tax and a flat tax. The bottom line is it should be a simpler and flatter approach.

I support fundamental tax reform based on three principles. It should be pro-growth, it should be simpler, and it should be fair. The ideas deserve a debate to get the best result.

Donnelly: I support simplification of our tax system as long as it does not disproportionately fall on middle-class families. I also want to make sure in the process we protect important deductions, such as the mortgage deduction, which is a cornerstone of our communities. It encourages home ownership and it encourages so many of the things that make America better.

I think that a sales tax is regressive and disproportionately hurts middle-class and working families. My goal would be to take the present tax code and work on making it much simpler.

Q: What is the best way to reduce the nation's trade imbalance with China, Japan and other countries?

Donnelly: Fair trade laws. Right now, we're running over a $200 billion trade deficit with China. That's just for a year. China undervalues their currency, has no environmental standards for their companies, steals intellectual property, pays extraordinarily low wages and subsidizes companies throughout their country.

All of this is done through most-favored-nation status in the World Trade Organization. Right now, in Congress, there is talk about imposing a tariff of up to 27 percent on Chinese products simply to try and reduce the currency manipulation. I would support revoking China's most-favored-nation trading status until they get serious about playing fair.

Chocola: When you have a pro-growth, fairer and simpler tax code, you make U.S. companies more competitive. We should have a tax policy that results in companies wanting to locate here and grow here.

Ireland revamped its tax code, and their manufacturing base has grown dramatically. We live in a global marketplace where competitiveness equals jobs. As companies are examining where they want to locate around the world, we can't put U.S. companies at a disadvantage from a tax policy standpoint. Right now we have the highest corporate tax rate in the industrial world, so we are putting U.S. companies automatically at a disadvantage.