The $85 billion of automatic federal budget cuts that took effect a few weeks ago occupied a good portion of the discussion at last week’s Grand Valley Metro Council meeting, which had Michigan’s 2nd District Congressman Bill Huizenga as its guest.
Grand Rapids Mayor George Heartwell told Huizenga that the sequester, the common name of the cuts, will cost the city $1 million in grants from the U.S. Department of Housing and Urban Development, and federal workers who live in the city will soon experience pay reductions from mandatory furlough days and won’t be spending as much locally as a result.
“Can you give us some comfort that sanity will rule?” the mayor asked the congressman.
Huizenga really couldn’t do that because he has gone on record as being comfortable with the amount of spending the sequester is stopping. But he did say, “This is an extremely inefficient way of doing what we’re doing.”
Huizenga did talk about the spending reductions he and others in Congress are going through. He said he has been operating his office on a budget 11.6 percent smaller than when Peter Hoekstra held the post, and the sequester is cutting his budget by another 8 percent. He added that the choice was to have the sequester take its toll or not make any cuts at all.
“That’s a bad choice versus a really bad choice,” he said.
Most economists have said the sequester will eliminate 750,000 jobs over the coming months and slow the economy’s growth by at least one-half percent this year. But Huizenga said the $85 billion in cuts pales in comparison to the $1 trillion deficit estimated for the fiscal year, so he sees the spending reduction as actually coming from the growth in spending.
Hastings City Manager Brenda McNabb-Strange told Huizenga some chief executives are being paid with stock options and are being taxed at the lower capital-gains level rather than at the higher earned-income rate, and she felt changes in the federal tax system were needed to level the “paying” field.
Also, Ottawa County Administrator Al Vanderberg said he heard that a possible change in the system would eliminate the tax-free municipal bonds that municipalities sell to fund infrastructure projects.
“One person’s loophole is another person’s vital tax credit. I’m a flat tax guy,” said Huizenga.
He said some loopholes will be limited or eliminated, but he didn’t elaborate on which ones. “We can’t just ‘close loopholes’ selectively. We have to do an overall reform,” he said.
Huizenga, a Republican who represents a district that runs north from Kentwood to Ludington, supports reforming the federal tax code.
“The last time we had any major tax reform was in 1986,” he said, referring to the Gramm-Rudman-Hollings Act, otherwise known as the Balanced Budget and Emergency Deficit Control Act.
Although Huizenga didn’t offer specifics on what changes to the code he prefers, he did point to fellow Michigan 4th District Congressman Dave Camp, also a Republican, as someone who has worked on the reform issue long and hard, and deferred to him as an expert.
GVMC Executive Director John Weiss said 126 individuals reserved a seat at the organization’s quarterly luncheon to hear Huizenga speak — double the long-standing average of attendees.
“The question in my mind is, what is going to come in the long term? We’re focused on the short term,” said Huizenga of the current deficit and debt conversation. “We’re not going to turn this ship around overnight.”