Lew argues tax increases in budget promote economic growth

Senate Republicans questioned the level of the Obama administration’s tax hikes proposed in its fiscal 2015 budget, arguing that they could sap energy from economic growth. 

Sen. Rob Portman (R-Ohio) expressed concern that the “steep tax increases” on investment income could weigh down economic growth and negate the benefit of $71 billion in additional revenue.

{mosads}But Treasury Secretary Jack Lew told the Senate Finance Committee on Wednesday that the budget is growth-focused and targeted at areas that can bear more of the burden.

“We think that the tax proposals in this budget put burdens where they can be borne in a way that’s consistent with economic growth and invest in the things we need to do as a country to make sure the engine of economic growth picks up speed,” he said. 

He told the panel that raising the minimum wage and expanding the Earned Income Tax Credit (EITC) to workers such as lower-income college students would provide an economic boost.

He called the “EITC “the most powerful engine to get people out of poverty and get them to work. 

“We need to focus on growth in this country and we’ve had no lack of income at the high end over these years when we’ve seen a leveling off and shrinking of income in the middle and entry level of the workforce,” Lew said.

He suggested that the Obama administration and lawmakers need to be honest about what is going to create a “fair and balanced fiscal system” amid the need to also meet deficit targets.

He suggested that the budget proposals have to be looked at as how they work as a whole that will “change the direction of middle-class income in this country and I think our budget does that.”

“We’re going to have to focus on the areas that are really critical to growth,” he said.

Lew heads to the House Ways and Means Committee to make his case on Thursday for President Obama’s $3.9 trillion budget.

White House Budget Director Sylvia Burwell also was on Capitol Hill on Wednesday defending the blueprint, which isn’t expected to gain approval from lawmakers but does detail the White House’s top priorities.

A budget deal in December set the discretionary top-line spending number at $1.014 trillion and appropriations committees already are working on the 12 spending bills, which are due by Oct. 1.