Congressman McClintock participated in a Financial Services Committee hearing held to examine "Unsustainable Federal Spending and the Debt Limit." The Congressman is the author of H.R. 692, the Default Prevention Act. The Congressman's default prevention legislation passed the House of Representatives on October 21, 2015. In the remarks delivered at the Financial Services hearing the Congressman discussed debt and the nation's credit:
Unsustainable Federal Spending and the Debt Limit
February 2, 2016
Our government’s good credit is vital to everything we do.
There are two ways to wreck that credit: by borrowing too much or by failing to pay it back on time and in full.
Congress alone has the constitutional power to tax, to borrow and to spend. We regulate our borrowing through the debt limit. When we need to increase it, we have a duty to review and revise the policies that are driving it.
The United States now staggers under $19 trillion of debt, nearly half of it run up in the last eight years. The interest on that debt is the fastest growing component of the federal budget – within five years it will consume more than we now spend for defense. That’s why we dare not increase the debt without also correcting what’s causing it. But that can often lead to temporary impasses.
When that happens, it is vital that credit markets maintain supreme confidence in the security of their loans. Otherwise, the interest rates that lenders charge us would quickly rise to account for the increased risk and our precarious budget situation could rapidly spin out of control.
The organic law that established the Treasury Department in 1789 specifically says, “It shall be the duty of the Secretary of the Treasury to digest and prepare plans for the improvement and management of the revenue, and for the support of public credit.” “ MANAGE the revenue and support the public credit.” The GAO clearly spelled out what that means in answering the Senate Finance Committee in 1985: “Treasury is free to liquidate obligations in any order it finds will best serve the interests of the United States.” The Constitution commands that “the public debt is not to be questioned,” and this is the practical mechanism for it. Most state constitutions provide that first call on any revenues is to maintain and protect their sovereign credit.
That brings us to the fine point of the matter. In recent years, the Treasury Department has denied that it has either the ability or the authority to do so.
We now know from documents recently uncovered by this committee that this was a deliberate and calculated lie told to increase political pressure on Congress. We also now know the Treasury department actually was preparing contingency plans to prioritize debt at the same time the Treasury secretary was publicly denying he could. These documents also reveal that Federal Reserve officials were incredulous and appalled that the administration would make such statements because they ran a severe risk of panicking credit markets.
In 2011, I first introduced legislation to place an affirmative duty on the Treasury Department to provide first claim on any revenues for debt service. Ironically, the same Treasury Secretary who claimed he lacked legal authority opposed this bill that explicitly gave him that legal authority. In response to his untruthful claim it was not possible, we amended the bill in 2013 simply to allow the Treasury Secretary to borrow above the debt limit to guarantee that the debt would be paid in full and on time, without having to prioritize. It passed the House in 2013 and again last year.
Opponents argued that this put creditors like China ahead of paying troops in the field. Actually, most of our debt is to Americans, and without our credit we can’t pay our troops or anybody else. By protecting our credit first, we actually support and maintain our ability to pay for all of our other obligations.
The President said this is tantamount to a family saying it would make its house payment but not its car payment. Both are bad. But let’s continue the analogy. If the family is living on its credit cards as we are, it had better make the minimum payment on its credit card first, or it won’t be able to pay the rest of its bills.
And when that family has to increase its credit limit because it’s spending above its means, it had better have a serious conversation about what’s driving its debt and what to do about it.
Principled disputes over HOW the debt limit is addressed are going to happen from time to time. Just a few years ago, then-Senator Barack Obama vigorously opposed an increase in the debt limit sought by the Bush administration.
When these controversies erupt – as they inevitably do in a free society – it is imperative that credit markets are supremely confident that their loans to the United States are secure.
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This Ain’t Working
Veto Override on Obamacare Repeal
February 2, 2016
The Congressional Budget Office just announced that for the first time in our history, federal healthcare payments now exceed Social Security benefits. Not coincidentally, it also warned that our deficit is again ballooning out of control.
Obamacare forced millions of Americans who had low-cost catastrophic coverage and basic employee plans into Medicaid, the dysfunctional poverty program. The result is skyrocketing costs for a program in which surgical patients are 13 percent more likely to die than those with no insurance at all, according to a recent University of Virginia study.
Mr. Obama promised if we liked our plans or our doctors we could keep them and that Obamacare would save an average family $2,500 a year. In fact, millions lost their doctors and their plans while premiums have INCREASED an average of more than $3,500 per family.
This ain’t working. It’s time to move on to something that does.
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Congressman McClintock was the guest speaker at the Auburn Chamber of Commerce's Installation and Awards Dinner on January 15, 2016. The Congressman delivered the following remarks on the intersection of free markets, commerce and industry:
Auburn Chamber of Commerce
January 15, 2016
Lincoln told of being absolutely terrified by a meteor shower when he was a small boy. It was so intense it looked like the heavens were falling. His kindly step-mother took him outside and pointed out all the stars that were still solidly fixed in the firmament and told him to keep his gaze on them and all would be well.
In difficult times like these, that’s still good advice. So I want to take a few minutes just to marvel at the natural miracles that each of you perform every day by engaging in commerce and industry through free markets and the free exchange of goods. Transient governmental policies can make a mess of it – and they have – but it’s important to keep our eyes fixed on the steady laws of nature that produce the prosperity and happiness of any human society.
And perhaps a good place to start is the mystery of human language, because it so clearly illustrates what Adam Smith described as the invisible hand of markets. It really is an amazing thing, human language. Think about how miraculous it is that hundreds of millions of human beings often separated throughout the world and throughout history have somehow managed to agree on how to combine sounds to form hundreds of thousands of words in scores of languages that can then be linked together in an order that expresses not only everything in the physical world, but the most esoteric and theoretical concepts the mind can imagine.
Did you notice that all this happened without a government Department of Language? It happened without a Language Court to prosecute and punish bad syntax. There are no language police prowling conversations for infractions of grammar.
It was through the untold cooperative, voluntary transactions made between people day by day, that we human beings created this remarkable achievement that makes it possible for each of us to exchange experience and ideas and to profit from the wisdom of others.
Don’t free markets work exactly the same way?
Milton Friedman used to ponder the miracle of a simple pencil. He pointed out that this very simple implement only existed because of the cooperation of hundreds of people who had never met each other and most of whom didn’t even know they were making a pencil. The miner in Pennsylvania digging for graphite that a worker in Tennessee would turn into the pencil core; the farmer in Brazil growing rubber trees that would eventually become the eraser through the work of still others; the lumber jack in Oregon cutting down trees that a millworker in California would turn into pulp, and that another worker would form around the core; the steel plant in Ohio smelting the ore that would become part of the brass ring that holds the eraser; and many others who transported these products across oceans and continents all to come together for a ten cent pencil he held in his hand.
And then think about those ten cents. Why just a dime? Who came up with that price?
That by itself is a miracle that you perform every day. You agree on prices for everything you do that encapsulates an incredible wealth of information which in turn makes it possible for every consumer and worker to make rational choices about where to put his time and money. Without a single government study or report, without a “Federal Commission on Pencils” setting prices and quotas, that simple 10-cent price computes everything from the effect of the drought in Oregon on timber yields, the cost of diesel fuel to haul it to the pulp mill, and then across the country for manufacture; political instability in Brazil and its effect on labor to tap the rubber; not to mention the corresponding cost of alternative products and what the guy down the street is charging.
Because you do that in every transaction, you give me as a customer the accurate information that I need to make rational selections as I go through the day. But those decisions can only be rational if the information in the price is accurate. It is guaranteed to be accurate as long as every participant in that market is free to decide for themselves at what price it is in their interest to sell and at what price it is in their interest to buy – from the lead miner to the clerk behind the counter.
Here’s another miracle that you perform every day. You determine how the resources of the world will be put to their highest and best use for the prosperity and advancement of all mankind. The price you set not only allows every consumer to make rational decision about the allocation of his own resources, it also empowers them to direct the allocation of society’s resources toward its greatest needs. If society needs more pencils, you begin to raise the price of pencils. As the price rises, more people devote more time and energy to producing more pencils and to look at more efficient ways to make pencils or to make something even better. If society needs fewer pencils, the price begins to fall, and people who had been making pencils begin making other things instead.
And in each transaction -- in this case the pencil seller and the pencil buyer -- both benefit.
Is the pencil buyer a dime poorer from that exchange because he now has one less dime to spend? On the contrary, he has something more valuable to him than his dime – he has this miracle of a pencil. If it wasn’t of greater value to him than his dime, he would have bought something else or not bought anything.
Is the pencil seller now poorer for having relinquished his pencil? Of course not – he has something of greater value to him than his pencil – he now has that dime. That’s the miracle of commerce -- both parties go away richer for it – both sides go away with something of greater value than they had before.
And that’s what I marvel most of all about what you do: that profit you manage to make, after you’ve paid all your taxes and fees and met all the requirements that government has heaped upon you. That evil, greedy profit you made today by selling me that 10-cent pencil. What does that profit do?
That dime put food on the table and a roof over the heads not only for you and your employees, but for all of those hundreds of people whose work and vision and enterprise brought that pencil into being and placed it in my hand.
And that, ladies and gentlemen, is what you do every day. You not only make yourselves more prosperous – you make every client, every employee, and every customer that comes into your shop or your business better off and more prosperous at the same time. You constantly assure that the most important needs of our society are being met and you constantly and efficiently and accurately adjust the allocation of resources to meet those needs. By competing with others, every day you assure that every consumer can have the widest selection of goods and services to meet his needs at the lowest possible price. That is an awe-inspiring thing and we shouldn’t get so consumed by the daily grind that we don’t celebrate and appreciate what the free exchange of goods and labor makes possible or what we owe to those who engage in it day in and day out.
We used to praise and esteem and encourage free enterprise and industry and commerce. We used to devote a lot of attention teaching our children and our fellow citizens the miracles that free markets perform every day. We used to honor those who risked their time and money to create businesses. We used to recognize that profit is not waste and it is not greed; that on the contrary, profit is that essential thing that creates jobs and opportunities for millions of people every day; that spurs innovation and research and advancement; that drives and fuels a growing economy that promises that our children will be better off than ourselves.
I think it’s a universal truth that the freer the society, the more prosperous it is; and the less free, the less prosperous. Alexis de Tocqueville noted that difference in 1836 when he traveled down the Ohio River. He observed that the Ohio divided the same fertile valley; the same equitable climate, and the same bountiful resources. The only difference was that on the right bank was the free state of Ohio and on the left bank was the slave state of Kentucky.
“Thus,” he wrote, “the traveler … may be said to sail between liberty and servitude, and a transient inspection of surrounding objects will convince him which of the two is more favorable to humanity.
“Upon the left bank of the stream the population is sparse; from time to time one descries a troop of slaves loitering in the half-deserted fields; the primeval forest reappears at every turn; society seems to be asleep, man to be idle, and nature alone offers a scene of activity and life.
“From the right bank, on the contrary, a confused hum is heard, which proclaims afar the presence of industry; the fields are covered with abundant harvest; the elegance of the dwellings announces the taste and activity of the laborers; and man appears to be in the enjoyment of that wealth and contentment which is the reward of labor.”
When I first read this, it occurred to me that the same division can start to be discerned in our own time. Up the road from here is the community of Lake Tahoe. A few years ago, when I visited with a group from their Chamber of Commerce I asked what it was like to conduct business in a community divided between two states. A businessman immediately replied, “It’s really very simple. On the Nevada side, they ask, ‘How can we help you,’ and on the California side they ask, “How can we stop you.”
One of the ski resorts literally straddles the state line. It is quite conspicuous in this respect. The ski lifts and buildings are concentrated on the Nevada side of their property. When I asked about this, one of its executives explained, “It's so much easier to get permits in Nevada.”
A Chinese businessman put it this way as we discussed the economic expansion going on in China and the stagnation of the American economy. He said, “You Americans have an export-import problem.” I said, “What do you mean?” “Well, for years you have been exporting capitalism and importing socialism.”
The prosperity of a society depends upon its commerce, and its commerce depends upon its freedom: the freedom of individuals to make their own choices in pursuing their own happiness. Governments cannot create wealth but they can create the conditions that support free markets: representations made in the marketplace must be true; contracts must be enforceable; property rights must be secure; the currency must be reliable and stable. But free societies – truly free societies -- recognize that once government has secured the conditions that make commerce possible, it then leaves to each of us -- as buyers and sellers, as employees and employers – free to decide for ourselves what products we will buy or sell and what price we are willing to pay or charge; what jobs we will accept or not accept, hire or not hire; what we will pay or not pay, and what we will be paid or not be paid.
I think that’s what Jefferson was driving at in his first inaugural address. After he had reviewed the bountiful resources and blessings of the new nation, he asked, “With all these blessings, what more is necessary to make us a happy and a prosperous people? Still one thing more, fellow-citizens – a wise and frugal Government, which shall restrain men from injuring one another, shall leave them otherwise free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor the bread it has earned. This is the sum of good government.”
When the chief architect of Alexandria presented his plans for the city to the great Alexander, he proudly described its centerpiece. The entire city was to be laid out around a great fountain that featured a gigantic statue of Alexander. Water from this fountain would then flow outward from this central square to all parts of the city.
Alexander seemed unimpressed. The architect proudly said, “You see the symbolism, of course. All water, the life’s blood of the city, flows from your image.”
Alexander shook his head and said, “No, water is NOT the life’s blood of a city. COMMERCE is the life’s blood of a city.”
The statue of Alexander was placed at the entrance to its great port instead.
Commerce IS the life’s blood of any human society. No great civilization has ever risen without great commerce, and no civilization has endured that has not maintained its commerce.
And isn’t commerce just another word for freedom? The freedom of any two people to come together, to decide on terms they find mutually advantageous, and to make an exchange based on their own best judgment without the interference of some well-intentioned but meddlesome buffoon? And isn’t it that freedom that is the engine of any civilization’s prosperity?
True, sometimes we make bad decisions. Sometimes we pay too much for our pencils – or charge too little for them – or realize we didn’t need them after all. We don’t ask others to bail us out; rather, we go away from these experiences sadder and wiser. And aren’t the bad decisions we sometimes make, a very small price to pay for the freedom we have to make all the good decisions in our lives?
And if our prosperity isn’t what we’d like it to be, maybe that’s because something is interfering with that freedom of commerce that produces our prosperity. And if that’s the case, maybe we ought to do something about that.
I know these are difficult and uncertain times for commerce and for each of you struggling in the eighth year of this economy. But these challenges are because of transient public policies – and in that respect they are very much like the shooting stars that frightened young Abraham Lincoln on the prairie of Illinois that night so many years ago. They are a temporary phenomenon that will ultimately pass like a meteor shower.
Living it day by day, I know it must seem like the heavens are falling. But when it seems that way, I urge you to reflect on the miracles you perform every day in the commerce you conduct, and keep your eyes fixed on the natural principles of freedom that are still shining bright and unwavering in the firmament beyond. Steer by them, and rest assured that they will guide our nation back to the prosperity, happiness and freedom that we once took for granted.
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Congressman McClintock is the Chairman of the Federal Lands Subcommittee. The subcommittee held an oversight field hearing in St. George, Utah, on January 22, 2016 titled “Ensuring Local Input, Legal Consistency and Multiple-Use Resource Management in St. George Bureau of Land Management (BLM) Planning.” Congressman McClintock delivered the following opening statement at the hearing:
Opening Statement of Chairman Tom McClintock
House Committee on Natural Resources
Subcommittee on Federal Lands
Oversight Field Hearing titled “Ensuring Local Input, Legal Consistency and Multiple-Use Resource Management in St. George BLM Planning”
January 22, 2016
Today, the Subcommittee on Federal Lands has come to St. George, Utah to hold an oversight hearing on the Bureau of Land Management’s draft Resource Management Plans pursuant to the Omnibus Public Lands Management Act of 2009.
We are here because Congress is hearing a crescendo of complaints about BLM tactics and policies across the country and St. George seems to be a poster child of BLM Bad Behavior. We are here to get to the bottom of it.
During this Congressional session, the Federal Lands Subcommittee has sought to reinstate three fundamental principles for our stewardship of the federal lands:
• First, to restore the public’s right to use and enjoy the public’s lands. Preserving our lands for future generations does NOT mean closing them to this generation.
• Second, to restore principles of sound management to the public lands. That was Gifford Pinchot maxim for the Forest Service: To manage the lands “for the greatest good for the greatest number in the long run.”
• Third, to restore the federal government as a good neighbor to those communities that are impacted by federal land ownership. That means that we don’t run roughshod over the wishes of local communities.
We are concerned that a corporate culture has taken root within the BLM that is antithetical to these principles.
In 2009, Congress adopted and the President signed the Omnibus Public Lands Management Act that reflected years of good faith discussions and concessions made by the elected representatives of the communities directly impacted by these policies. For many years, members of this community – from grazers to recreationists to environmentalists – all worked together to craft a bill that would shape the future management of federal lands in this county. Local officials reluctantly agreed to designate over one hundred thousand acres of new wilderness, in exchange for the promise of multiple-use activities on the remaining federal lands which are the lifeblood of this community. As a result, the bill was hailed as a unique compromise among extremely disparate parties and a successful model for future collaborative agreements.
It then fell to BLM to write regulatory plans in good faith to carry out this unique compromise. Instead, we are informed that the local communities who trusted this process now believe the BLM was bargaining in bad faith and that its current proposal makes a mockery of the promises – both implicit and explicit – in that law.
The overwhelming consensus of these local representatives today is that what was painstakingly agreed to in the legislation that they negotiated, and Congress ratified, has since been distorted by unelected BLM bureaucrats to fit a narrow ideological agenda.
What we are hearing – loud and clear – is that these draft plans would dramatically restrict the public’s right to the full range of uses they were promised, including a local transportation corridor, motorized recreation, grazing and other activities. We are also hearing that the draft plans are inconsistent with the law that includes several provisions specific to the future of federal land management in this county. Finally, the subcommittee is very concerned with reports that BLM bureaucrats have deliberately ignored these concerns when local governments and concerned citizens have repeatedly raised them.
This subcommittee doesn’t normally hold hearings on individual land use plans. But it appears that the BLM, which administers nearly half of the land area of Washington County, has ignored the will of Congress and thumbed its nose at the people whose taxes support this government and whose livelihoods and quality of life are now directly threatened by it.
When one of Darth Vader’s victims protests, “But that’s not our agreement,” Darth Vader sneers, “I am altering our agreement. Pray that I do not alter it further.”
If bad faith and empty promises become the coin of the federal realm, it is highly unlikely anyone will enter into land use negotiations with it again or trust it in the future.
Instead, St. George will be used as a cautionary tale that Ronald Reagan was right when he warned, “If you get in bed with the federal government, you had better be prepared for something other than a good night’s sleep.”
We are here because Congress will not allow that to become the story of St. George and the BLM. And I would remind the BLM that the last time St. George fought a dragon, St. George won.
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Congressman McClintock delivered the following remarks on the House floor:
In Support of S.J.Res. 22 - Disapproving the EPA “Waters of the US” Rule
House Chanmber, Washington, D.C.
January 13, 2016
Congress gave the EPA jurisdiction only over navigable bodies of water large enough to support ship traffic. The EPA’s rule takes control over virtually every body of water in the United States, including many agricultural and drainage ditches, ornamental lakes, and small creeks and streams on private property.
In 2010, Mr. Oberstar introduced a bill to grant them this power, but the Pelosi Congress refused to pass it. So, the EPA has decided to seize this power anyway.
This rule not only threatens to upend 150 years of state water and property rights laws, but also presents us with a grave challenge to our Constitution. If allowed to stand, it means that Congress’ exclusive legislative powers have now passed unrestricted to the Executive – including the power to repeal existing laws that guarantee to states supremacy over their waters, and the power to amend laws to seize vast new executive authority, in direct defiance of Congress.
This rule must not stand.
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Congressman McClintock testified at a hearing of the House Rules Committee on January 16th, 2016 about the beneficial aspects of annual versus biennial budget bills. The Congressman serves on the House Budget Committee, which has begun a comprehensive review of the budget process.
Congressman Tom McClintock
Testimony to House Rules Committee
January 6, 2016
Much of Congress’ constitutional role involves the power of the purse -- setting priorities and allocating resources are our principal means of shaping policy and exercising the checks and balances at the core of our constitutional architecture.
Obviously, the current budget process is not working, and the House Budget Committee has begun a comprehensive overhaul of that process.
I cannot stress enough that the Budget Committee believes there needs to be a total re-write of the 1974 Congressional Budget Act, and that this is the top priority of its work this year. We are very concerned that consideration of a biennial budget bill – or any patchwork changes – makes consideration of a comprehensive reform measure this year much less likely. I would strongly urge the House to give its Budget Committee the time to develop and recommend a complete replacement of the process.
In the meantime, we should avoid making the problem worse. I commend the author and supporters of this bill for searching for a better way, but I am concerned that HR 1610 runs afoul of the law of unintended consequences.
Congressman McClintock testifying in the House Rules Committee
about the budget process, January 2016. Click here to watch.
At the heart of this bill is the universal frustration felt by all of us that the budget process consistently breaks down because of its complexity and magnitude. HR 1610 attempts to address this by changing the annual budget process to a two-year cycle in which the budget resolution, appropriations bills and reconciliation instructions are adopted in the first year of a session to cover the next two years.
We desperately need a process that produces responsible budgets and appropriations.
But we need to ask if this measure doesn’t take us farther away from this goal. This bill DOUBLES both the time-span and the amount of money that are at stake in the budget, reconciliation and appropriations bills. The difficulties of dealing with these tough fiscal issues are already enormous, and this bill would raise the stakes by a factor of two.
The nature of the fiscal process is quintessentially one of give and take and compromise. I think people are more likely to compromise if they know they’ll be able to revisit the issue in a year. I think they are less likely to compromise if they know the outcome will be locked into law for the next two years.
I think BOTH sides will be far more likely to dig in their heels on these tough issues under a two-year process, knowing that they won’t be able to revisit them the next year.
Proponents are rightly critical of Congress’ preference to “kick the can down the road” on the fiscal bills, particularly during an election year. But doesn’t a two-year budget process institutionalize this problem? Assuming you can reach agreement in the first year – which this bill makes less likely – the two-year budget puts the second year on auto-pilot BY DESIGN.
Proponents believe that Congress doesn’t have enough time to do oversight because of demands made by the annual budget process, and this reform would free up a whole year to do that. But we already do a lot of oversight. The House conducted more than 767 oversight hearings last year alone.
What gives oversight TEETH is the money that Congress appropriates. Otherwise, oversight is just hot air. Right now, agency administrators must appear before congressional committees EVERY YEAR to justify and defend their programs in order to receive funding. If an agency’s spending is inconsistent with Congressional intent, Congress can address the situation THAT YEAR in the appropriations process. When an agency is dependent on Congress for its budget, it is by necessity more responsive. Why would we render Congress impotent to act one year out of every two?
True, the two-year budget gives agencies greater certainty of what they will be able to spend. But doesn’t this come at the expense of Congress having far less certainty of what those same agencies will actually need and far less control over how they’re spending it?
Furthermore, it is difficult enough to peer one year into the future – far harder to anticipate conditions and needs two years hence. Under the biennial budget, agencies would start their budget process 28 months before the beginning of the second year and 40 months before the end. The natural result of this will be an explosion of ad hoc supplemental bills and re-programming changes in the second year that are the very antithesis of good budgeting.
I think the proponents of biennial budgeting tacitly admit these shortcomings. Recently, some have suggested modifying the proposal by retaining the annual cycle for reconciliation and appropriations bills and only imposing the two year cycle on the budget resolution.
The irony is, the budget resolution isn’t the problem. In 32 of the past 40 years, Congress HAS enacted a budget resolution – albeit sometimes slightly late. The appropriations bills are always the heavy lift: we have separately enacted all appropriations bills only four times in the last 40 years.
There is a reason that since 1940, most states have abandoned two-year budgets in favor of annual appropriations. In 1940, 44 states had biennial budgets. Today, only 19 do. Since 1968, some 15 states have gone from biennial to annual budgets; only three have gone the other way. The states that retain the biennial cycle are generally the smaller ones, and even then it is hardly a panacea. One of those states, Hawaii, has run up the second highest debt per capita in the country.
A lot of people believe we couldn’t possibly make the budget process more dysfunctional. I think we can and here’s how. We could:
• Craft a process that makes compromise and concession more difficult by doubling the time-span and money that’s at stake.
• Require that Congress kick the fiscal can down the road every election year – precisely when the American people are paying the most attention.
• Make Congress impotent to ACT on its oversight findings every other year.
• Make the final year of each session dependent on information that is between 28 and 40 months stale.
• And bypass the comprehensive review that the House Budget Committee has already begun that seeks to reform ALL aspects of the budget process.
Perhaps we should take a word of advice from Hippocrates. First, do no harm.Read More
House Amendment 1 to HR 2029 – Omnibus Spending Act: NO. This is the 2,000-plus page $1.15 trillion spending act to fund the government through September 30, 2016. A bill of this complexity always has good and bad provisions, and the question comes down to whether in balance it moves the government in the right direction.
On the plus side:
• It stops bailouts of insurance companies required by Obamacare.
• It ends the oil-export ban on American petroleum. (Although it should be noted that the president has the authority to do so on his own, and in 13 months we are likely to have a president who will anyway).
• It blocks the proposed IRS rule that would formalize the harassment of Americans because of their political views.
• It extends the victims compensation fund for 9/11 responders.
• It provides major increases in defense spending.
• It requires all travelers entering the United States who recently visited such rogue states as Syria and Iran to obtain visas, notwithstanding the Visa Waiver Program.
These features have to be balanced against some decidedly negative features including:
• It increases taxpayer support of the International Monetary Fund which bails out irresponsible foreign governments like Greece.
• It funds a wide variety of highly objectionable Obama policies, including the EPA’s Waters of the U.S. initiative that asserts EPA control over all waters in the United States; the illegal Obama executive orders on amnesty; the terrorist-friendly admission of poorly vetted Syrian refugees and support of Planned Parenthood’s barbaric practices.
• It QUADRUPLES the H-2B visas for foreign workers from 66,000 to 250,000, taking American jobs and depressing American wages.
• It funds the administration’s war on coal, making it virtually impossible for coal-generated electricity to continue.
• It reauthorizes the Land and Water Conservation Fund, which is used to increase federal land holdings.
• It provides for massive increases in solar and wind tax subsidies.
• It delays the Obamacare “Cadillac Tax,” which primarily benefits labor unions – reducing Obamacare revenues without reducing Obamacare costs and in essence shifting funding of the program from the unions to the taxpayers.
But for me, the real issue involves the damage “the Omnibus” does to the overall spending trajectory of the federal budget. The Congressional Budget Office projects that within eight years, interest on the federal debt will exceed the entire defense budget. At that point, the ability of the federal government to meet its basic functions comes into grave doubt. Shortly thereafter, Medicare (in 2030) and then Social Security (in 2033) collapses.
In May, after many years of trying, Congress finally enacted a budget that changes that trajectory to one that balances within ten years. But instead of following through on that plan, in October Congress replaced it with one that restores the disastrous spending trajectory that will bankrupt this country within the decade. “The Omnibus” fulfills that bleak destiny.
It increases overall federal spending by $50 billion from the May budget in the first year alone (or about $400 for an average family). In fact, this bill puts spending perilously above the trajectory set in the budget adopted by Congress in May. It takes us that much farther down a steadily more dangerous road that leads toward a steadily darkening future.
House Amendment 2 to HR 2029 – Tax Extenders Act: YES. Called the “Protecting Americans from Tax Hikes Act” this 233-page bill provides a complex list of changes to the tax code. Once again, there is both good and bad.
It makes a variety of temporary business tax deductions, most notably the Research and Development Tax Credit and a provision that allows businesses to deduct the cost of many major equipment purchases in the year they are made. Permanency of these business tax deductions is essential if they are to serve their purpose of promoting growth and investment policies.
On the negative side, the bill also makes permanent the failed stimulus package as it affects welfare programs such as the “Earned Income Tax Credit.” These are not true tax credits, solely deducted from actual tax liability, but rather are welfare payments administered through the tax code. The three biggest of these programs, (EITC, Earned American Opportunity Credit and Enhanced Child Tax Credit) amount to $198 billion over the next ten years – one third of the projected cost of the bill. This doesn’t include a wide variety of additional tax credits that fund the administration’s “Green energy initiative” and an array of other special interest sops.
Which brings us to the $622 billion gorilla in the room – the ten-year increase in the nation’s debt that the Joint Committee on Taxation projects as a result of this measure. It is important to understand exactly how this figure is calculated.
First, two-thirds of the cost is associated with extending or making permanent the various business tax provisions discussed above. These are defined as tax cuts – therefore reductions in revenue -- but this is true only in theory and not reality. The reality is that current taxes will not be cut as a result of this measure – they are simply not going to be increased. Without this bill, struggling job creators would be hit with massive tax increases over what they are currently paying, with severe economic consequences.
Second, it increases the debt on paper but not in practice. In practice, these tax provisions are routinely extended and are already accounted for in the CBO’s “alternative forecast” model, which projects actual anticipated spending. These changes would simply bring the alternative forecast (what we actually spend) in line with the baseline forecast (what we theoretically spend), providing for more honest accounting of a deficit that is already there but not acknowledged in the baseline forecast.
Third, because the extensions are routinely done late in the year, they do not provide the economic incentive necessary to maximize their impact. Making investments based on the possibility of later tax benefits – rather than the certainty -- introduces a significant element of risk that reduces their effect on behavior.
Fourth, these provisions have a positive dynamic effect that will partially offset their paper cost with new revenues produced by resulting economic growth. It is impossible to accurately quantify that effect, but it could be significant and can’t be ignored.
This is not the case with the extensions of “stimulus” policy that use the tax code to administer welfare payments. These provisions actually require additional outlays of real money to provide these “refundable” credits. The theory is that this money will be spent by non-taxpaying families to create additional economic activity, but ignores the fact that it reduces the amount available for taxpaying families to spend by the same amount.
For me, the issue boils down to this: does the imperative of preventing a scheduled major tax increase on job creators in the seventh year of the Obama economic malaise outweigh the damage done by roughly $200 billion of new spending over the next ten years? I think it does, although I doubt it will generate enough new revenue to offset the actual costs of the bill. In this respect, it will widen the actual deficit at a time when the national debt poses the greatest single threat to our nation’s security and welfare. Because of this, concomitant cuts in spending are all the more imperative, something “The Omnibus” spending bill (adopted as Amendment 1 to HR 2029) spectacularly fails to do.
House floor remarks delivered by Congressman McClintock:
Armed Americans are the Best Defense Against Armed Terrorists
December 10, 2015
Ever since the terrorist attack in San Bernardino, leftist politicians have called for more restrictions on gun ownership for Americans. These are the same politicians who have worked for years to open our nation to unprecedented and indiscriminate immigration from hotbeds of Islamic extremism.
The most effective defense against an armed terrorist is an armed American. If one person in that room in San Bernardino had been able to return fire, many innocent lives could have been saved. But Californians are subject to the most restrictive gun laws in the country, making it very difficult for law abiding citizens to exercise their second amendment right to defend themselves. And in a society denied its right of self-defense, the gunman is king.
I repeat: The most effective defense against an armed terrorist is an armed American. Yet the President and his followers act to increase the number of terrorists entering through porous borders and lax immigration laws, while at the same time acting to decrease the number of armed Americans.
Their latest ploy was announced by the President on Sunday and has been parroted by his Congressional allies this week to the point of disrupting the work of the House. In the President’s words, “Congress should act to make sure no one on a no-fly list is able to buy a gun.” He asked, what could possibly be the argument against that?
While serving in the California State Senate a decade ago, I discovered that suddenly I couldn’t check in for a flight. When I asked why, I was told I was on this government list. The experience was Kafkaesque. My first reaction was to ask, “Why am I on that list?” “We can’t tell you that.” “What are the criteria you use?” I asked. “That’s classified.” I said, “How can I get off this list?” The answer was, “You can’t.” I soon discovered another California State Senator had been placed on that list. A few months later, U.S. Senator Edward Kennedy found himself on that list.
I, at least, had the office of the Senate Sergeant at Arms to work through – something an ordinary American would not. Even so, it took months working through that office and repeated petitions to the government to get my name removed from that list. The farce of it all was that I was advised in the meantime just to fly under my middle name, which I did without incident.
In my case, it turned out to be a case of mistaken identity with an IRA activist the British government was mad at.
This could happen to any American. And the fine point of it is this. During this administration, the IRS has been used extensively to harass and intimidate ordinary Americans for exercising their first amendment rights. What the President proposes is that on the whim of a federal bureaucrat, Americans can be denied their second amendment rights as well, with no opportunity to confront their accuser, contest the evidence, or avail themselves of any of their other due process rights under the Constitution.
The concept that the Left is seeking to instill in our law is that mere suspicion by a bureaucrat is sufficient to deny law-abiding American citizens their Constitutional rights. And given the Left’s demonstrated hostility to freedom of speech and due process of law, it’s not hard to see where this is leading us.
I would support the President’s proposal IF it established a judicial process where an individual could only be placed on such a list once he was accorded all of his constitutional rights to be informed of the charges, given his day in court, accorded the right to confront his accuser and contest the evidence against him and submit himself to a decision by a jury of his peers. But that is the farthest thing from the Left’s agenda.
The President’s proposal would have done nothing to stop the carnage in San Bernardino, where the terrorists were not on any watch list. Indeed, one was admitted from Saudi Arabia after vetting that the President has assured us is rigorous and thorough. And several of the guns used in this massacre weren’t even acquired directly, but rather through a third party.
Of course the American people don’t want terrorists to have guns! They don’t want terrorists in our country at all! But the President’s policies have left our nation’s gates wide open – while he seeks to take from Americans their means of self-defense.
So I leave off as I began: the best defense against an armed terrorist is an armed American. That’s what the second amendment is all about. It is an absolutely essential pillar of our security.
Our best defense of all is the Constitution itself, and it, in turn, must be defended against all enemies – foreign and domestic.
# # #Read More
H.R. 22 – TEA 21 “The Highway Bill”: No. The Highway Trust Fund – accent on the “Trust” – was a promise made to highway users that the gas taxes they paid at the pump would be used for highways. Period. That promise was broken long ago and now shattered by this act. HR 22 is a five-year, $305 billion highway bill, but only $207.4 billion will be spent on anything remotely resembling highways (and much of that wasted on environmental mitigation, inflated labor costs and highway beautification projects). $48.7 million will be raided to prop up failing mass transit systems. (I have nothing against mass transit; I simply believe that highway users should pay for highways and mass transit users should pay for mass transit).
But in addition to raiding our highway taxes, this bill demands more revenues derived in a variety of undesirable ways. It sells off 66 million barrels from the Strategic Petroleum Reserve at the very bottom of the market (a board of directors that managed its assets so recklessly would be sued); hires private debt collectors to turn the screws on taxpayers (doesn’t that sound like fun?); raids the Federal Reserve of funds set aside to protect depositors and raids interest paid to large banks that are required to purchase Federal Reserve stock.
Oh, and to add insult to injury, this “highway bill” reauthorizes the Export-Import Bank, a posterchild of crony capitalism that puts U.S. taxpayers at risk for loans made to foreign corporations to buy American products with which to undercut American companies.
If there is any question why Congress is held in such low esteem, I submit HR 22 as Exhibit A.
434 Cannon HOB
Washington, DC 20515
Congressman Tom McClintock was elected in November 2008 to represent the 4th Congressional District in the United States Congress.
During 22 years in the California State Legislature, and as a candidate for governor in California’s historic recall election, Tom McClintock has become one of the most recognizable political leaders in California.
First elected to the California Assembly at the age of 26, McClintock quickly distinguished himself as an expert in parliamentary procedure and fiscal policy. He served in the Assembly from 1982 to 1992 and again from 1996 to 2000. During these years, he authored California’s current lethal injection death penalty law, spearheaded the campaign to rebate $1.1 billion in tax over-collections to the people of California, and became the driving force in the legislature to abolish the car tax. He has proposed hundreds of specific reforms to streamline state government and reduce state spending.
In 2000, McClintock was elected to the California State Senate, where he developed innovative budget solutions such as the Bureaucracy Reduction and Closure Commission and performance-based budgeting, and advocated for restoring California’s public works.
From 1992-1994, McClintock served as Director of the Center for the California Taxpayer, a project of the National Tax Limitation Foundation. In 1995, he was named Director of Economic and Regulatory Affairs for the Claremont Institute’s Golden State Center for Policy Studies, a position he held until his return to the Assembly in 1996. In that capacity, he wrote and lectured extensively on state fiscal policy, privatization, bureaucratic reform and governmental streamlining.
McClintock’s commentaries on California public policy have appeared in every major newspaper in California and he is a frequent guest on radio and television broadcasts across the nation. Numerous taxpayer associations have honored him for his leadership on state budget issues.
McClintock has twice received the Republican nomination for the office of State Controller, narrowly missing election in 2002 by the closest margin in California history – 23/100ths of one percent of the votes cast.
McClintock is the Chairman of the Water and Power Subcommittee of the House Natural Resources Committee, and is a member of the Budget Committee and the Natural Resources Committee. He is also a member of the Subcommittee on National Parks, Forests, and Public Lands.
Tom McClintock and his wife, Lori, have two children, Justin and Shannah.
Armed Americans are the Best Defense Against Armed Terrorists https://t.co/GlvJa7gynu
Good hearing happening now on the draft discussion of the National Park Service Centennial Act... https://t.co/mPwIcscOwn
Federal Lands Subcommittee - Hearing Now on Discussion Draft of "National Park Service Centennial Act" Watch Live -1.usa.gov/1IEtyXX