Do CPAs Know Something You Don’t?

By Steve Barlotta, CPA

Last week the media focused on the Labor Department’s latest unemployment figures which showed that our country’s jobless rate fell from 7.9 percent to 7.7. percent. Though the unemployment report indicated tepid growth, most media outlets took this as a sign that our economy continues to head in the right direction.

However, the American Institute of Certified Public Accountants (AICPA) released a report that painted a much different picture about the future prospects of our economy. The AICPAs Economic Outlook Survey, which polls accounting executives and certified public accountants in U.S. companies, indicates that pessimism among these professionals has increased significantly over the past three quarters. In the latest survey every major measure of economic expectation fell, quarter over quarter and year over year.

A big reason for this sentiment is the negative climate coming from Washington. A majority of the respondents are doubtful that the political wrangling will yield any long-term solution on how to avoid the “fiscal cliff”. The fiscal cliff refers to a combination of substantial tax increases and spending cuts that will automatically kick in on January 1, 2013 if Congress fails to agree on a budget deal. Without a long-term solution to this problem they feel companies will not feel confident enough about investing in the economy and hiring employees. Also, many of the CPA executives favor a plan that would institute more spending cuts than revenue increases and realistically address our massive deficit and national debt.

It is this CPA’s humble opinion that the end game in all of this should be to get America’s middle-class workers up and running again. Are we really going to accomplish this when the debate in Washington is centered on how much we should raise taxes on “upper-income” Americans? With a national debt and a federal deficit exceeding $1 trillion and $16 trillion, respectively, don’t we think the discussion should go much deeper than increasing marginal tax rates? Do we realistically think this debt and deficit, which is choking our country, is going to vanish by just raising taxes on the “wealthy”?

I have yet to hear a rationale explanation on how raising taxes on America’s top 2 percent earners equates to long-term economic growth and, more importantly, sustained job growth for the middle-class.The only way to revitalize the middle class is through job growth, the only way we can accomplish this is by, you guessed it, growing our economy. The President and the Congress have a unique opportunity in the next week or two, once and for all, to put everything on the table and that includes entitlements and other areas of government spending. If we don’t control our national debt and deficit in a meaningful manner now, I believe the long-term prospects for economic growth and job creation is dismal.