ACCF Statement on State of the Union
Following President Obama’s first State of the Union address, American Council for Capital Formation Senior Vice President and Chief Economist Dr. Margo Thorning issued the following statement:
“The president outlined some proposals in his State of the Union that could be helpful in expanding the nation’s energy supply and helping to pull the economy out of its slump, including domestic oil and gas development and expansion of nuclear power and his proposed freeze on some of the domestic spending in the budget starting in 2011.
“However, some of the president’s proposals could curb much needed job growth and discourage new investment. His support for the Waxman-Markey climate bill passed in the House is misguided. Numerous independent studies and even the Congressional Budget Office concludes Waxman Markey will slow job growth in its October 2009 report on the legislation.
“U.S. energy needs simply cannot be met thorough alternative or renewable energy sources alone. Renewable energy tends to be more expensive than conventional energy and substituting more expensive energy for cheaper energy will raise energy costs, hurt competitiveness and further slow economic recovery. Renewables should certainly be actively pursued as an additional energy source but they already receive the lion’s share of Federal budget energy expenditures.
“Higher taxes on U.S. multinationals will hurt their ability to penetrate foreign markets and slow their sales growth abroad. Many U.S. retirees depend on dividends and capital gains from U.S. firms that are successful in foreign markets. Studies show that U.S. firms which invest abroad, also increase their investment in the U.S. and that as their foreign sales increase so do exports from the U.S. parent companies.
Higher taxes on domestic oil and gas firms will reduce their ability to develop reserves and increase production and will increase our reliance on foreign energy supply.
“Finally, higher taxes on capital gains and dividends will raise the cost of capital for new investment—a critical component for businesses to help spur innovation and economic growth.”