Tom McClintock

Tom McClintock

CALIFORNIA's 4th DISTRICT

S. 764 - GMO Food Labelling: YES

2016/07/14

S. 764 – GMO Food Labelling: YES.  Mankind has genetically modified crops and livestock since the dawn of recorded history (it’s called cross-breeding, and it gives us seedless grapes and sweeter corn).  A movement has recently emerged that contends – despite every scrap of available scientific evidence – that genetic modifications are dangerous and demands that all foods be labeled as to their genetic modifications.  State governments are now responding with intricate labeling requirements. The food industry fears this will produce a patchwork of local and state regulations that would make interstate commerce impossible. The House acted to provide a voluntary, uniform standard for those producers that wanted to market their products accordingly.  The Senate version mandates product labeling. I MUCH preferred the voluntary standard and would normally oppose the mandate.  However, in this case it would prevent a serious disruption in food markets threatened by patchwork local requirements, and as a practical matter it means a pro forma disclaimer that will educate the public that virtually every food they’ve eaten for years is in some way genetically modified.  In short: it is a bad precedent that we shouldn’t follow very far, but in this case it does more good than harm.

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House Rules, Or Rules for Radicals?

2016/07/05

House Rules, Or Rules for Radicals?
Congressman Tom McClintock
House of Representatives, Washington, D.C.
July 5, 2016

Mr. Speaker:

    On the afternoon of June 22nd, a large number of Democrats brought the deliberations of the House of Representatives to a standstill in one of the most disgraceful and childish breaches of decorum in the history of this institution.  In complete contempt of this House and the rule of law, they shouted down all with whom they disagreed, they blocked access to the microphones as members sought to address the chair, and they illegally occupied the Hall of the House – forcing an early adjournment and costing this House three full days of legislative deliberations.

    Abraham Lincoln said it best, “There is no grievance that is a fit object of redress by mob law.”  What we saw was the mob law of Occupy Wall Street brought to the House Floor.   

    They are seeking to use the recent terrorist attacks as justification for making it harder for law-abiding Americans to defend themselves.  A strange logic, but so be it.  They certainly have a right to their opinions, a right to express those opinions on the House floor, and a right to use all of the procedures of the House to act on their opinions.  What they do not have is the right to prevent those with different views from exercising the same rights.  Yet that’s precisely what they did.  

    These Democratic members have many procedures and opportunities to bring their bills to the House for a vote.  They could have executed a discharge petition to bring their bill immediately to the floor.  They could have moved to have their bill inserted into any bill pending on the House Floor – a common motion that we routinely hear and vote upon several times a week.    

The fact is, their proposals were considered in the Senate and voted down.  Their proposals were considered in a House Committee and voted down.  Their discharge petition is pending at this desk right now, awaiting enough signatures to execute it.  

    Their only problem is that they don’t have enough votes.  Well sorry, that’s called “democracy.” The majority of their colleagues simply disagree with them – for some very good reasons.

    Their rights were honored and protected by the Republican majority under the rule of law.  Yet they denied those same rights to others by replacing the rule of law with the rule of the mob -- and they did so on the most sacred ground of our democratic republic – the Hall of the House of Representatives.

    Instead of working within the time-honored rules of the House to convince the majority to their way of thinking, they decided to tear down the rules.  This was the lawless Left on full display and I hope the American people took a long hard look at it, and understand the threat to our democratic traditions and institutions that this conduct reveals.

    In recent days, we have seen other Leftist mobs assembled under a foreign flag violently attack American citizens who were merely trying to exercise their right to peaceably assemble in support their candidate for President.  We have seen this administration attempt to criminalize political dissent, and use our government to intimidate people out of participating in our political process.  And now we have watched this lawless behavior imported onto the floor of the House of Representatives.  

    The House leadership decided not to confront this unprecedented spectacle as it unfolded, and I do not gainsay their decision here.  It was obvious the members involved were trying to provoke a physical confrontation.  

But serious damage was done that day to our orderly process of government and it cannot go unchallenged.  Doing so would establish a dangerous and corrosive precedent antithetical to everything which this institution – and our country – stands for.

    The Constitution provides that the House may sanction members for disorderly behavior, and the members responsible for the events of June 22nd and 23rd must be called to account for their actions.  If we fail to do so, we will have replaced the House Rules with “Rules for Radicals.”  

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The Enemy Among Us

2016/06/17

The Enemy Among Us
Congressman Tom McClintock
House of Representatives, Washington, D.C.
June 16, 2016

Mr. Speaker:

The terrorist attack on Orlando should bring into sharp focus the growing threat our nation faces from Islamic terrorism.  Although Islam is a religion, it is often accompanied by a poisonous political ideology that is antithetical to everything our country stands for.  That ideology now poses a direct threat to the liberty and safety of our people, and we have every right to defend ourselves against it.

    We knew for years that the terrorist’s father was broadcasting pro-Taliban and anti-American rhetoric aimed principally at a large and growing Afghan Islamic population within the United States.  We knew that the terrorist himself had travelled repeatedly to Saudi Arabia under mysterious circumstances; that he associated with known terrorists and Islamic radicals in the United States; and that he had expressed the most virulent anti-American views.  And we took no action because there are far more instances of such threats than we can begin to assess or address.  

    This administration has drastically increased the admission of refugees from regions where overwhelming majorities believe in imposing Sharia Law.  Those who are fleeing Islamist ideology should be welcome in this country at assimilable levels; but those who are coming here to impose it are a direct threat to our Constitution and have no business being admitted to our shores.  Yet this administration sees no difference between the two.   

    Earlier this year, when Governor Rick Scott of Florida, acting on behalf of law enforcement, requested information on the Islamic immigrants being inserted into his state, he was refused that vital public safety information.

    While seeking to radically increase the number of Islamists being admitted to this country, this administration has failed not only to enforce our immigration laws but it has actively undermined those laws.  As a direct result of these deliberate government policies, we are enduring Islamist attacks within our borders that will continue to increase in both frequency and severity.  

    These policies have encouraged a large and growing fifth column that is violently hostile to our country, and it has become deeply imbedded within our communities.  San Bernardino and Orlando were just the first bloody foretaste of what is to come until and unless these policies are stopped and reversed.

    Last year, the House passed the SAFE Act – an acronym for “Safety Against Foreign Enemies.”  It was the first, tentative step toward properly screening refugees from hotbeds of Islamic extremism.  It merely required affirmative verification of a refugee’s lack of hostile intent if they are coming from Islamist strongholds in Iraq and Syria.  135 Democrats in this House opposed the SAFE Act, and Senate Democrats killed it in January at the behest of their President.

    The very same politicians who will not allow us even to confirm the intent of Islamists entering America are at the same time using the Orlando atrocity as an excuse to disarm loyal and law-abiding Americans.  Within hours of the attack, the Left began to use this terrorist atrocity to justify more restrictions on the rights of Americans to defend themselves.

    They would have us believe that terrorists who are bent on destroying our country by savagely killing Americans will somehow make one exception to their contempt for our nation by meticulously obeying our gun control laws.  

    The leftists tell us to leave it to the police.  Really?  In Orlando, it took more than three hours for police to secure the scene and confront the attacker, while hostages were being shot and the wounded were left to bleed to death.  Three hours.  In San Bernardino, the terrorists had already fled before police even arrived at the scene.

    The first line of defense against an armed terrorist is an armed American. Yet the Democrats seek to make it harder for Americans to arm themselves while increasing the threat posed by mass immigration from those countries where Islamist ideology is rampant.  

    Is it possible they don’t understand that there is an international arms market and that terrorists can get their hands on any kinds of weapons they want as effortlessly as teenagers can buy pot?   While the Orlando terrorist got his guns legally, he could just as easily have gotten them illegally.  That’s not the case for a law-abiding American citizen.  Law abiding citizens obey our laws.  Terrorists do not.

    The Left’s vision for our country is one in which Americans are forbidden from fighting back and must helplessly wait to be rescued while they are terrorized by Islamic extremists who should never have been in this country in the first place.  And that is going to continue until this country wakes up to the danger it faces and takes decisive action at the ballot box.

     That is ultimately the choice before us: we can either suffer increasingly violent attacks on increasingly defenseless Americans or we can chose to finally take seriously the nature of the enemy we face and finally demand leaders who will secure our borders, empower Americans to defend themselves and act forthrightly to defend our country.
  

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House Overwhelming Approves Huffman/McClintock Amendment to Halt Costly Coal Shipments to U.S. Military Bases in Germany

2016/06/16

Washington, D.C.- For the second year in a row, the House of Representatives today overwhelmingly passed a bipartisan amendment offered by Rep. Jared Huffman (D-CA) and Rep. Tom McClintock (R-CA) to strike a congressional earmark from the 2017 Defense Appropriations Bill that would spend millions of dollars to ship Pennsylvania coal over 3,000 miles to American military bases in Germany. 

The “zombie” earmark, which was first included in the annual defense spending bill in 1972, requires the Department of Defense to purchase anthracite coal from Pennsylvania to heat military bases at Kaiserslautern, Germany. Until the Huffman-McClintock effort last year to bury the nearly half-century old earmark, Congress had approved the earmark every year since 1972.

“Just last year, Congress finally acted to save taxpayers millions of dollars by ridding ourselves of this zombie earmark,” said Huffman. “We proved that Republicans and Democrats can work together to cut wasteful spending while protecting the environment. But somehow this zombie provision — from the deepest days of the Cold War, and the golden era of congressional earmarks — somehow that provision was snuck back into this year's bill. It just won't die. Burning dirty coal and our taxpayer dollars to power our overseas military bases is a terrible deal for Americans. I thank all my colleagues on both sides of the aisle who did the right thing today to ensure that this wasteful earmark was buried yet again.”

“I do not support the war on coal waged by this administration and my friends on the left,” said Congressman McClintock. “I do support the war on waste, and I support this amendment based on that fiscal imperative.  We are told that our defense budget is so stretched that we must scavenge museums for aircraft parts. Yet there appears to be plenty of money to squander in a corrupt earmark that dates back to 1961.  If we don’t change the spending trajectory of this government, the Congressional Budget Office warns that in six years, interest on the national debt will exceed what we spent this year on defense.  That makes rooting out waste like this a national defense imperative.”

At its peak, the earmark mandated the government purchase more than a million tons of coal each year to power overseas defense installations. The Department of Defense purchases 5,000 to 9,000 tons of coal annually to meet the requirement in Kaiserslautern, costing taxpayers millions. According to a 1989 joint study of the Departments of Defense, State, and Commerce, mandates to use U.S. coal at defense installations in Europe cost taxpayers approximately $1.1 billion between 1962 and 1988.

The amendment was supported by the following national organizations:

Sierra Club, Earthjustice, NRDC, Taxpayers for Common Sense, National Taxpayers Union, Council for Citizens Against Government Waste (CCAGW), R Street, Less Government, Taxpayer Protection Alliance, the Coalition to Reduce Spending, Campaign for Liberty, Friends Committee on National Legislation (FCNL), Council for a Livable World, London Center for Policy Research, Project on Government Oversight, Women’s Action for New Directions, and Heritage Action.


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Green Energy Executive Orders

2016/06/16

The House of Representative today passed an amendment offered by Congressman McClintock to forbid scarce defense dollars from being spent to fund Green Energy Executive Orders.  The amendment was adopted to the 2017 Defense Appropriations Bill.  The Congressman's remarks in support of the amendment are attached: 

Green Energy Executive Orders
Remarks by Congressman Tom McClintock
Amendment to Department of Defense Appropriations Bill
House of Representatives, Washington D.C.
June 15, 2016

    This amendment forbids scarce defense dollars from being spent to fund two executive orders and several other provisions of law that require the military to squander billions of dollars on so-called “Green Energy.”

    The House adopted this amendment by a voice vote last year and the year before and I hope it will do so again. 

    We have been told that the defense budget is so tight that the Air Force must scavenge museums for spare aircraft parts. 
 
    Yet it seems we have plenty of defense money to indulge the “Green Energy” mandates that are imposed upon our armed forces.

    The GAO reports that these mandates have cost the Navy as much as $150 per gallon for jet fuel.  In 2012, the Navy was forced to purchase 450,000 gallons of bio-fuel for its so-called “Green Fleet at the cost of $26.60 per gallon, when conventional petroleum cost just $2.50 per gallon.

    These mandates forced the Air Force to pay $59 per gallon for 11,000 gallons of biofuel in 2012 – ten times more than regular jet fuel cost.

    It’s not just biofuels.

    Two years ago, the Pentagon was required to purchase over 1,000 Chevy Volts, at a subsidized price of $40,000 each. 
 
    As Sen. Coburn’s office pointed out, “each one of these $40,000 Chevy Volts represents the choice NOT to provide an entire infantry platoon with all new rifles, or 50,000 rounds of ammunition that cannot be used for realistic training.”

    These “green energy” mandates have required the Army and Navy to install solar arrays at various facilities.  At Naval Station Norfolk, the Navy spent $21 million to install a ten acre solar array – which will supply a grand total of two percent of the base’s electricity.

    According to the Inspector General’s office, this project will save enough money to pay for itself in just 447 years.  Too bad that solar panels only last about 25 years.

    We don’t know exactly how much these mandates waste because, as the GAO reports, “There is currently no comprehensive inventory of which federal agencies are implementing renewable energy related initiatives and the types of initiatives they are implementing.”  But outside estimates are as much as $10 billion for the Department of Defense last year; a figure that is expected to grow in the future.
  
    We’re told this program is necessary for flexibility.  Really?  Shouldn’t “flexibility” free us to get cheaper and more plentiful fuels – not more expensive and exotic ones? 

    We’re told that the military should do its part for the environment – as if it is possible to fight an environmentally sensitive war.  

    That, I fear, is the real reason for this wasteful spending.  It is part of an ideological agenda imposed on our military that will pointlessly consume billions of defense dollars, mainly to keep money flowing to politically well-connected “green energy” companies that can’t get anyone else to buy their products.

    We have to ask ourselves how serious we are about meeting the defense needs of our nation.

    We have constantly warned how poorly funded is our military.  The program this amendment would end is an estimated $10 billion of sheer waste – grossly inflated energy costs that come directly out of our military preparedness.

    Ten billion dollars.  Divide that by the number of families in America – it comes to about $80 per family.  It makes a mockery of claims we’ve cut the military to the bone and puts the lie to any claim that we are serious about meeting our basic defense needs without bankrupting our country.

    I remind the House once again of Admiral Mullen’s chilling warning: that in his professional military judgment, our greatest national security threat is the national debt – because before we can provide for the common defense we must be able to pay for it.  And waste like this robs us of our ability to defend our nation and maintain the treasury upon which our defense depends.

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Carrying Coal to Kaiserslautern

2016/06/16

Washington, D.C. - For the second year in a row, the House of Representatives passed a bipartisan amendment offered by Rep. Jared Huffman (D-CA) and Rep. Tom McClintock (R-CA) to strike a congressional earmark from the 2017 Defense Appropriations Bill that would spend millions of dollars to ship Pennsylvania coal over 3,000 miles to American military bases in Germany. 

The “zombie” earmark, which was first included in the annual defense spending bill in 1972, requires the Department of Defense to purchase anthracite coal from Pennsylvania to heat military bases at Kaiserslautern, Germany. Until the Huffman-McClintock effort last year to bury the nearly half-century old earmark, Congress had approved the earmark every year since 1972.

Congressman McClintock delivered the following remarks on the House floor in support of the amendment:

Carrying Coal to Kaiserslautern
Huffman/McClintock Amendment to Defense Appropriations Act
Remarks by Congressman Tom McClintock
House of Representatives, Washington, D.C.
June 15, 2016


Mr. Chairman:

    I do not support the war on coal waged by this administration and my friends on the left.
  
    I DO support the war on waste, and I support this amendment based on that fiscal imperative.  

    We are told that our defense budget is so stretched that we must scavenge museums for aircraft parts.  Yet there appears to be plenty of money to squander in a corrupt earmark that dates back to 1961.


  
 

    That earmark requires that one – and only one – American Air Force base in Kaiserslautern, Germany must purchase 9,000 tons of Pennsylvania anthracite coal a year at a grossly inflated price plus the cost of transporting this overpriced coal across the Atlantic Ocean and halfway across the European continent. 

    The excuse we just heard is that we would otherwise have to buy coal from Russia.  Why in the world would we want to do that?  ONE company in Poland produces 49 million tons of coal from 23 mines – it produces more coal in an hour than this military base consumes in a year!

    The objection seems particularly ludicrous considering the fact that the NDAA authorizes HUNDREDS OF MILLIONS of dollars of rocket engines to be purchased from Russia.

    The Pentagon and successive Presidents have consistently protested this waste – but these protests have fallen on deaf ears in Congress – even while we’re told that our defense spending has been cut to the bone.
  
    If we don’t change the spending trajectory of this government, the Congressional Budget Office warns that in six years, interest on the national debt will exceed what we spent this year on defense.  That makes rooting out waste like this a national defense imperative.

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Breaking the Promise - Puerto Rico "PROMESA" Legislation

2016/06/09

Congressman McClintock's House floor remarks on H.R. 5278 (Puerto Rico "PROMESA" Legislation):

Breaking the Promise
June 9, 2016

    The House is expected to take up the “PROMESA” bill today, with serious implications to every taxpayer in the country.

    This bill applies a form of Chapter Nine bankruptcy to the general obligation bonds of Puerto Rico that are guaranteed by the commonwealth’s constitution.

    Article VI, Section 8 of Puerto Rico’s constitution explicitly provides that “interest on the public debt and amortization thereof shall be paid first.”  PROMESA ignores the Puerto Rican constitution and breaks that promise.

    Here’s why this is so important to the rest of the country. Every state government has similar constitutional provisions that guarantee their general obligation bonds.  This is what allows them to borrow at extremely low interest rates, because their debt is constitutionally guaranteed and therefore the risk of default is extremely low.

    If Congress is willing to undermine a territory’s constitutionally guaranteed bonds today, there is every reason to believe it would be willing to undermine a state’s guarantee tomorrow.  

    This, in turn, invites credit markets to question such guarantees as being no longer secured on constitutional bedrock, but rather dependent on the shifting whims of Congress.  And this, in turn, means the value of those bonds is devalued and interest rates paid by taxpayers on that debt will increase.  

    The governors of six states have already raised this warning.  And the U.S. Virgin Islands, whose credit is directly undermined by this bill, wants out of the bill for that reason. 
  
    PROMESA could have respected the $18 billion of constitutionally guaranteed debt and focused instead on restructuring the $54 billion of Puerto Rican municipal debt that is not constitutionally guaranteed.   After all, there is no reason to treat San Juan’s municipal debt any differently than San Jose’s.  But constitutionally-issued debt is fundamentally different, and its reliability must be maintained.  Tellingly, supporters of the bill voted down just such an amendment in committee. 

    Supporters say they have addressed this concern by inserting instructions to the control board to “respect the relative lawful priorities in the constitution, other laws, or agreements.”  Ironically, one of those “other laws” the control board is instructed to respect is the government’s repudiation of its debt.  

    Furthermore, the same section instructs the control board to “provide adequate funding for public pension systems,” and includes other contradictory instructions.  The only possible interpretation of these provisions is that the sanctity of the sovereign debt is subject to balancing – and therefore subordination to junior claims -- by the control board.  

    Just last week, Treasury Secretary Jack Lew and the White House admitted this was the intent of the bill.

    Meanwhile, another provision of PROMESA prevents lawful bond holders from enforcing their claims in court for a period of six months, but does not prevent the government from paying out other junior claims during this period.    

    Indeed, in anticipation of this bill, the new budget for Puerto Rico INCREASES general fund spending while it radically reduces its debt service payments.  

    Honoring the rule of law and maintaining the commonwealth’s full faith and credit guarantee would be a powerful signal to bond markets that the United States stands by its promises, even when it is inconvenient.   

    Under current law, it is in the interest of both sides – debtor and creditor – to work out terms that both can live with to restructure and repay this debt.  Indeed, until the prospect of a congressional bailout arose, Puerto Rico was negotiating terms of a debt restructuring with the mutual consent of its creditors.  

    It is also in the interest of the people of Puerto Rico to uphold the full faith and credit clause in their constitution, which will be vitally important for them to re-enter the credit market once their affairs are put back in order.  
    
    Puerto Rico faces both a crisis and an opportunity: a crisis born of slavish devotion to failed leftist economic policies and an opportunity to replace those policies with proven free market solutions that can create a fresh start for the people of Puerto Rico and shine as a beacon of hope for other similarly afflicted states.

    I fear the net result of this legislation will be to spread the crisis to other states with heavy debts by increasing their debt service costs, while squandering the opportunity to revive the Puerto Rican economy and to restore the American dream to that beautiful island.

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Memorial Day 2016

2016/05/31

Remarks by Congessman McClintock
Memorial Day 2016

    In 431 BC, the people of Athens gathered just as we gather today – and for the same purpose – to honor their fallen.  It was the first year of the Peloponnesian War.  Pericles – the father of Athenian Democracy – spoke that day.  

    According to Thucydides, most of his oration was about Athens, in sentiments we would find familiar as Americans.  He said, “Our system of government does not copy the institutions of our neighbors. It is more the case of our being a model to others than of our imitating anyone else. Our constitution is called a democracy because power is in the hands not of a minority but of the whole people. When it is a question of settling private disputes, everyone is equal before the law… We are free and tolerant in our private lives; but in public affairs we keep to the law.”

    Then he turned his attention to the fallen, and to their families.  And he said,

    “This, then, is the kind of city for which these men, who could not bear the thought of losing her, nobly fought and nobly died. It is only natural that every one of us who survive them should be willing to undergo hardships in her service. And it was for this reason that I have spoken at such length about our city, because I wanted to make it clear that for us there is more at stake than there is for others who lack our advantages; also I wanted my words of praise for the dead to be set in the bright light of evidence…I have sung the praises of our city; but it was the courage and gallantry of these men, and of people like them, which made her splendid…”

    Then he got to the fine point of it all.  He said, “So and such they were these men—worthy of their city. You should fix your eyes every day on the greatness of Athens as she really is, and should fall in love with her. When you realize her greatness, then reflect that what made her great was men…who knew their duty, men who were ashamed to fall below a certain standard.

    “They gave her their lives -- to her and to all of us -- and for their own selves they won praises that never grow old, the most splendid of sepulchers—not the sepulcher in which their bodies are laid, but where their glory remains eternal in men’s minds, always there on the right occasion to stir others to speech or to action. For famous men have the whole earth as their memorial. It is not only the inscriptions on their graves in their own country that mark them out; no, in foreign lands also, not in any visible form but in people’s hearts, their memory abides and grows. It is for you to try to be like them. Make up your minds that happiness depends on being free, and freedom depends on being courageous.”

    That was 24 ½ centuries ago.  Yet Pericles spoke for all of us who are here today – gathered for exactly the same reason.    

    It is not to mourn the dead.  As Pericles said, “One’s sense of honor is the only thing that does not grow old, and
the last pleasure when one is worn out with age, is not, as the poet said, making money, but having the respect of one’s fellow men.”

    The young men and women we memorialize today did not grow old, but they achieved the highest of all human ambition – the respect of their fellow man.

    Our purpose in coming here is, rather, to take stock of our own lives – measured against theirs -- and to ask, what are we doing to be worthy of the sacrifice they made?  What are we doing to defend these freedoms at home that they died to defend abroad?  

    It is sobering to note that the Athenian democracy, and the Roman Republic, and the other experiments with free societies that came before ours, did not fall because of the failure of their young people who took up arms in their defense.  They fell because those who stayed safe at home allowed their nations to decay from within.

    Like every generation that has come before us, ours must come to terms with these questions before we can hold our heads high in the presence of these honored dead.  

    What gives this occasion meaning is not just what they did, but what each of us do as we leave this ceremony today.

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Puerto Rico - Amendment to H.R. 5278 (PROMESA)

2016/05/25

The House Natural Resources Committee held a hearing on Puerto Rico on May 24th and 25th to markup H.R. 5278 (PROMESA). The committee has jurisdiction over all U.S. territories, including Puerto Rico. The hearing examined the legislation and also the financial issues confronting the territory. Congressman McClintock, a member of the committee, delivered remarks at the hearing and he offered the following amendment to H.R. 5278:

Amendment to H.R. 5278 (PROMESA)
Congressman Tom McClintock
House Natural Resources Committee
May 25, 2016

This amendment simply exempts from this act the debt issued by Puerto Rico that was backed by its constitutional pledge of full faith and credit and taxing power.  Of the commonwealth’s $72 billion of outstanding bonds, this would exempt roughly $18 billion of constitutionally protected debt.  And lest we forget, only 12 percent of Puerto Rico’s G.O. bonds are owned by hedge funds.  Forty percent are held by the people of Puerto Rico themselves.

I laid out the reasons for this amendment in my remarks yesterday. I agree that there is no reason to treat San Juan’s municipal debt any differently than San Jose’s.  But constitutionally issued debt is fundamentally different, and its reliability must be maintained.  

This is important to every state that relies on constitutional full faith and credit pledges.  The federal government has – until now – never threatened or considered undermining constitutional full faith and credit guarantees by allowing Chapter Nine provisions to be applied to sovereign debt – whether that debt is issued by a territory or a state.

If Congress is willing to undermine a commonwealth’s constitutionally guaranteed bonds today, there is every reason to believe it would be willing to undermine state guarantees tomorrow.  This, in turn, invites credit markets to question any constitutional debt guarantee as no longer secured on constitutional bedrock but rather dependent on the shifting whims of Congress.  If they do, the value of those bonds is devalued and interest rates paid by taxpayers on that debt will increase.  

The Governors of six states have already issued this warning: that “granting Puerto Rico such unprecedented bankruptcy authority would likely raise the borrowing costs of our states, reducing our ability to invest in vital services and eroding investor confidence in the whole notion of full faith and credit debt.”  Economist Ike Brannon of Capital Policy Analytics has noted that “There is evidence that the mere introduction of this legislation is already having adverse effects on the market.  The cost of credit default swaps on Illinois general obligation debt, which essentially function as insurance against default, has gone up nearly 100 percent this year, signaling a burgeoning uncertainty over the protections afforded to ‘full faith and credit’ debt.”  He estimates than even a minor 10 to 15 basis point increase in financing costs will cost taxpayers an additional $4 billion to $8 billion.

PROMESA could have respected the $18 billion of constitutionally-issued debt, while applying Chapter Nine to the remaining $54 billion of municipal debt of Puerto Rico.  Its supporters claim this is their intent, and they point to language in Title II of the bill instructing the control board to “respect the relative lawful priorities in the constitution, other laws, or agreements.”  The problem is that among those “other laws” is the government’s repudiation of its debt.  Further, the same section instructs the control board to “provide adequate funding for public pension systems,” and includes other contradictory instructions.  The only possible interpretation of these conflicting provisions is that the sanctity of the sovereign debt is subject to balancing – and therefore subordination to junior claims -- by the control board.  

This amendment removes any ambiguity by protecting the constitutionally issued debt from the effect of this bill.  If the supporters of this bill are sincere in their stated objective of wanting to protect Puerto Rico’s constitutionally issued debt, they should have no objection to this amendment.  If they are not sincere, then they should oppose the amendment, but at least openly admit their true intentions, and accept responsibility for the billions of dollars of increased interest costs that taxpayers across the country will have to pay on their state debts as markets adjust to this new world in which full faith and credit depends on the whim of Congress.

It is not only in the interests of high debt states like California, Illinois and New York to protect the full faith and credit guarantees -- it is also in the interest of the people of Puerto Rico to uphold the full faith and credit clause in their constitution.  They will desperately need that credibility in order to re-enter the credit market once their affairs are put back in order.

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Puerto Rico - Markup Hearing on H.R. 5278 (PROMESA)

2016/05/25

The House Natural Resources Committee held a hearing on Puerto Rico on May 24th and 25th to markup H.R. 5278 (PROMESA). The committee has jurisdiction over all U.S. territories, including Puerto Rico. The hearing examined the legislation as well as the financial issues confronting the territory. Congressman McClintock is a member of the committee and delivered the following opening statement and also offered an amendment.

Opening Statement
Markup Hearing on H.R. 5278 – PROMESA
Congressman Tom McClintock
House Committee on Natural Resources
May 24, 2016

My central concern with this legislation continues to be that it potentially undermines the reliability of the constitutional full faith and credit guarantees of the states.  These guarantees allow states to borrow at extremely low interest rates because debt repayment has first claim on revenues.  PROMESA takes Chapter Nine bankruptcy provisions and applies them retroactively to the commonwealth’s constitutionally protected debt.

Supporters argue this couldn’t possibly affect state debt because the commonwealth is not a sovereign state but rather a territory over which the federal government has constitutional jurisdiction.  This argument misses the point.  The federal government has – until now – never threatened or considered undermining constitutional full faith and credit guarantees by allowing Chapter Nine provisions to be applied to sovereign debt – whether debt is issued by a territory or a state.

If Congress is willing to undermine a commonwealth’s constitutionally guaranteed bonds today, there is every reason to believe it would be willing to undermine state guarantees tomorrow.

This, in turn, invites credit markets to question any constitutional debt guarantee as no longer secured on constitutional bedrock but rather dependent on the shifting whims of Congress.  If they do, the value of those bonds is devalued and interest rates paid by taxpayers on that debt will increase.  

PROMESA could have respected the constitutionally-issued debt, while applying Chapter Nine to the municipal debt of Puerto Rico.  After all, there is no reason to treat San Juan’s municipal debt any differently than San Jose’s.  But constitutionally issued debt is fundamentally different, and its reliability must be maintained.   

Supporters say they have addressed this concern by inserting instructions to the Oversight Board to “respect the relative lawful priorities in the constitution, other laws, or agreements.”  I should point out that one of those “other laws” is the government’s unlawful repudiation of that debt.  

Furthermore, the same section instructs the Oversight Board to “provide adequate funding for public pension systems,” and includes other contradictory instructions.  Of even greater concern, this provision is completely absent from Title III, which actually provides for the debt restructuring.   The only possible interpretation of these provisions is that the sanctity of the sovereign debt is subject to balancing – and therefore subordination to junior claims -- by the Oversight Board.  

This concern is further amplified by provisions that prevent bond holders from enforcing their claims for a period of six months, but does not prevent the government from paying out other junior claims during this period.      

Honoring the rule of law and maintaining the commonwealth’s full faith and credit guarantee would be a powerful signal to bond markets that the United States stands by its promises, even when it is inconvenient.   Under current law, it is in the interest of both sides – debtor and creditor – to work out terms that both can live with to restructure and repay this debt.  It is also in the interest of the people of Puerto Rico to uphold the full faith and credit clause in their constitution, which will be vitally important to re-enter the credit market once their affairs are put back in order.  Indeed, until the prospect of a congressional bailout arose, Puerto Rico was negotiating terms of a debt restructuring with the mutual consent of its creditors.  

If supporters are sincere when they say that their intent is to preserve the constitutional guarantee of sovereign debt, they should have no objection to the amendment I will offer tomorrow.  That amendment will explicitly remove debt backed by the commonwealth’s full faith and credit pledge from this act altogether.  I believe the amendment will put to the test the sincerity of the supporters’ claims that they do not seek to repudiate constitutionally guaranteed debt.  

For myself, although I see many other flaws with this bill, I would support it with this amendment.  I would vigorously oppose it without the amendment.

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Contact Information

434 Cannon HOB
Washington, DC 20515
Phone 202-225-2511
Fax 202-225-5444
mcclintock.house.gov

Committee Assignments

Budget

Natural Resources

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.


Serving With

Doug LaMalfa

CALIFORNIA's 1st DISTRICT

Paul Cook

CALIFORNIA's 8th DISTRICT

Jeff Denham

CALIFORNIA's 10th DISTRICT

David Valadao

CALIFORNIA's 21st DISTRICT

Devin Nunes

CALIFORNIA's 22nd DISTRICT

Kevin McCarthy

CALIFORNIA's 23rd DISTRICT

Steve Knight

CALIFORNIA's 25th DISTRICT

Ed Royce

CALIFORNIA's 39th DISTRICT

Ken Calvert

CALIFORNIA's 42nd DISTRICT

Mimi Walters

CALIFORNIA's 45th DISTRICT

Dana Rohrabacher

CALIFORNIA's 48th DISTRICT

Darrell Issa

CALIFORNIA's 49th DISTRICT

Duncan Hunter

CALIFORNIA's 50th DISTRICT

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