“Whoever the next president is, there are some things we have to do as a country,” Sen. Johnny Isakson, R-Georgia, told the Statesboro Herald when he sat down for an interview last week.
A year and a half ago, Isakson forecast five priorities for after Republicans secured a Senate majority. Several have been achieved to some extent. But his priorities for 2017 and beyond – rewriting chunks of the tax code, destroying the Islamic State terrorist group and controlling Social Security and Medicare spending to reduce the nation’s debt – seem a taller order.
Isakson was not up for re-election when he made those forecasts in an interview in October 2014, but was pulling for a fellow Republican, David Perdue, to be elected as Georgia’s junior senator, and for their party to gain a majority in the Senate. He got both wishes. But now Isakson, 71, Appropriations Committee member and Veterans Affairs Committee chairman, is campaigning for a third six-year term.
“I don’t like all the crazy stuff that goes on, but the country is too important and the decisions we have to make are too critical not to participate,” he said. “So, the gamesmanship goes on every day. That’s going to happen one way or another, whoever’s in charge. I want to make sure we get something done for the people of this state.”
Isakson has two Republican challengers – Mary Kay Bacallao and Derrik Grayson – on the May 24 primary ballot. Democrats Jim Barksdale, Cheryl Copeland and John F Coyne III are competing to face one of them in November.
Isakson’s 2014 predictions were for the first 150 days of a new Republican-controlled Congress. Not all were done within 150 days, but in his estimation, most have been accomplished.
First, he had said, Congress should fix the Sustainable Growth Rate formula, or SGR, used to determine how doctors are paid by Medicare.
“We fixed the SGR. …,” Isakson said Tuesday. “It had been continued for 19 years, it had been a political football, back and forth. We fixed it permanently.”
Previously, Congress approved small adjustments annually under the old formula. The new formula “is kind of a mandatory funding formula, not a political one anymore,” so doctors know what to expect, he said.
Second, Isakson said in 2014 that Congress should work out a plan, including spending cuts, for raising the debt ceiling, then $17 trillion, without a government shutdown. As his third and fourth predictions, Senate Republicans hoped to pass annual budgets for the first time in years and to return to passing traditional appropriations bills in the 12 subcommittee categories.
The Senate is adopting appropriations bills, he said, and passed a two-year budget last year.
Debt still climbing
However, after the debt ceiling was raised and both chambers ended up approving an omnibus spending bill in December, the national debt is now $19 trillion.
In reference to spending controls, Isakson referred to the older “sequester” arrangement that requires automatic across-the-board cuts unless Congress makes targeted reductions.
“We thought that was poison pill that would make us do our work, but we didn’t do our work,” he said. “We’re now finally doing our work a year and a half later by appropriating and setting the priorities, on the floor of the Senate and the House. So we had a little fall back, but we caught back up. We’re moving in the right direction.”
Fifth, the Highway Trust Fund was running out of money in 2014.
“The Highway Trust Fund had gone 13 years without a long-term extension,” Isakson said last week. “We got a long-term extension of the Highway Trust Fund.”
As a result, Georgia’s fiscal year 2017 state budget includes $1.6 billion, about half of it federal money, to be spent on the interstate highway system and bridge reconstruction in the state, he noted.
2017 and beyond
Isakson didn’t make predictions Tuesday about the presidential race, but said his forecast would be for after the election.
”Whoever the next president is, there are some things we have to do as a country,” he said. “One is the tax code. There are only three countries left in the world that don’t have a territorial tax code, meaning that you pay taxes where the money is earned, you don’t double-tax. We double-tax.”
Countries with an exclusively territorial income tax system do not tax their citizens or domestic corporations on income earned in other countries. The United States does. Isakson used the example of Coca-Cola being taxed both in India and the United States on beverages sold in India, and said such double-taxation should be eliminated by shifting to a territorial system.
Members of Isakson’s staff in a follow-up email actually listed five countries – Chile, Ireland, Israel, South Korea and Mexico – besides the United States as still operating “under a worldwide tax system.” The email also stated that the United States had by far the highest tax rates of those six, and also that every country in the G7 group of advanced economies, except the United States, has a territorial tax system.
The U.S. tax system needs to be made fairer not just for publicly traded corporations, but for the proprietorships and privately held corporations that actually employ more Georgians, Isakson said. In Georgia, he said, a small Subchapter S corporation or sole proprietorship that made more than $450,000 in profit last year would pay combined federal and state taxes of 43.6 percent.
“That’s confiscatory at worst, and horrible at best, so we need to get those rates down, and you do it very simply by buying down the rates, by doing away with gimmicky deductions,” Isakson said.
Congress, Isakson said, needs to do “a serious housecleaning” of tax credits and other forms of tax incentives that have accumulated over the years but no longer serve a purpose.
While listing it second, Isakson called destroying the Islamic State group, which he referred to as ISIL, as priority “1-A.”
“President Obama has had a game of containment with ISIL,” Isakson said. “He’s done a pretty good job of containing them, but containing evil doesn’t do anything to stop it, and during that period of time they’ve grown stronger, they’ve raised more assets and they’re becoming a stronger foe for us to fight.”
Nations in the Middle East and North Africa are ready to go to war, and the United States is the leader they need for a new “coalition of the willing” to defeat ISIL, Isakson said. He maintains that air power alone is not sufficient, and so would commit some U.S. troops.
“I don’t think we have any alternative,” Isakson said. “I don’t think it needs to be 130,000 troops in a surge, like we did in Iraq. … But I think it does take the deployment of special forces on the ground.”
Social Security & Medicare
The United States still must deal with the federal debt, Isakson said, and noted its size in proportion to the gross domestic product.
“We’re now 100 percent leveraged as a country,” he said. “Our GDP is $19 trillion, our debt is $19 trillion, and the only way we really get our arms around our debt is to reform Social Security and Medicare and entitlement programs.”
Isakson credits the late President Ronald Reagan, a Republican, and then-House Speaker Tip O’Neill, a Democrat, with working together to save Social Security in 1983. The program was then projected to go broke this year, 2016.
Under the 1983 law, the full retirement age rose, by steps, from 65 to 66 for people born in 1943-1954, and it is rising further, to 67, for those born in 1960 and later.
“We’re going to have to do the same thing again, and my grandchildren – God bless all nine of them – they’re going to have to be eligible … at age 68 or 69 or 70,” Isakson said.
The ceiling of income subject to the Social Security tax may also have to be increased, he said.
Isakson said Medicare and other programs will also “require some tough love,” because entitlements make up more than half of annual federal spending.
“Medicare is going to have to be means-tested,” Isakson said. “Is it fair for my Medicare premium to be the same as somebody who is in poverty? I don’t think so. … Maybe I’ll pay more for my premium than I would have if I were poor, but that’s the right way to do it.”
Herald reporter Al Hackle may be reached at (912) 489-9458.