Fiscal conservatives have long understood the danger of earmark spending. Rep. Jeff Flake, who spent years fighting for an earmark ban in the House of Representatives, called earmarks the “gateway drug” to out-of-control spending because of the way that lawmakers can be enticed to vote for a controversial bill by offering them earmarks for pork-barrel project in their home state. Led by Flake, conservatives succeeded in forcing leadership to impose an earmark ban after Republicans re-took the House in 2010.
A number of fiscally conservative senators have been fighting against pork-barrel spending in the Senate as well, and yesterday, February 2nd, Sen. Pat Toomey (PA) introduced an amendment to change the Senate’s rules to ban earmarks. FreedomWorks placed a Key Vote notice on this legislation.
Unfortunately, the amendment failed, 40-59. Sen. Toomey even managed to get seven Democrats to vote for his amendment, but thirteen Republican big-spenders voted against the amendment along with 46 Democrats, absolutely ensuring the bill’s failure. See how they voted here.
The thirteen Republicans who voted to defend their ability to fund pork-barrel projects are:
Alexander (TN) – (202) 224-4944, @SenAlexander
Blunt (MO) – (202) 224-5721, @RoyBlunt
Cochran (MS) – (202) 224-5054
Collins (ME) – (202) 224-2523, @SenatorCollins
Hoeven (ND) – (202) 224-2551, @SenJohnHoeven
Hutchison (TX) – (202) 224-5922, @kaybaileyhutch
Inhofe (OK) – (202) 224-4721, @InhofePress
Lugar (IN) – (202) 224-4814, @senatorlugar
Murkowski (AK) – (202) 224-6665, @lisamurkowski
Roberts (KS) – (202) 224-4774, @SenPatRoberts
Sessions (AL) – (202) 224-4124, @SenatorSessions
Shelby (AL) – (202) 224-5744, @SenShelbyPress
Wicker (MS) – (202) 224-6253, @SenatorWicker
It is important that we let our Senators know that we oppose their wasteful earmarks – they are a corrupting practice, and our country cannot afford them.
The school choice movement is rapidly gaining momentum in South Carolina. Last year, a school choice bill failed by just one vote in the South Carolina House of Representatives. A virtually identical bill, H. 4576, has been introduced this session and grassroots activists are determined to ensure that it passes. More than 350 citizens gathered in Spartanburg, South Carolina to rally for parental choice in education last night. The successful event sent a loud and resounding message to legislators: pass the school choice bill or ultimately pay a heavy price at the ballot box.
Cato Institute Scholar Andrew Coulson writes that “if they gave out awards for good policy design...the folks in South Carolina would be top contenders for gold.” The bold legislation would boost competition, increase parental choice and save taxpayers money. It would provide tax credits of up to $500 per child to families who send their children to private schools. Unlike most existing school choice programs, these tax cuts would be extended to homeschoolers. Coulson is correct; South Carolina is leading the fight for real school choice.
Granting tax cuts to parents that opt to homeschool or send their children to private schools would be a step in the right direction. A poll by the South Carolinians for Responsible Government found that 63 percent of South Carolinians support tax credits while only 29 oppose them. Many families are struggling to afford the cost of their children's private school tuition. Taxpayers are immorally forced to pay for government schools via taxation regardless if they have a child attending the school. Lowering the tax burden on families would enable them to send their children to better schools.
The bill would provide tuition assistance to low-income families through privately-funded non-profit Scholarship Granting Organizations (SGOs). The size of the scholarship is determined solely by the individual SGO. The Individuals who donate to SGOs will receive a dollar-for-dollar tax credit of up to 100 percent of their tax liability and corporations that donate may receive a dollar-for-dollar tax credit of up to 60 percent of their tax liability. These donation tax credits will encourage people to contribute to a good cause of helping low-income families pay for good quality private schools.
Education tax credits will help students escape failing South Carolina public schools. The disturbing statistics show just how bad South Carolina public schools are right now. During the 2010-11 academic year, a whopping 76 percent of South Carolina public schools (831 out of 1,037) failed to make adequate yearly process. South Carolina has consistently ranked in the bottom ten states on 4th grade reading. Only 58.6 percent of South Carolina high school students graduate on time, according to Education Week. The South Carolina Policy Council found that the state has the lowest SAT scores in the south.
The one-size-fits-all education model has failed children in South Carolina. Public schools in the Palmetto State are not preparing students to compete on a national scale. Education spending has skyrocketed but academic achievement and parental satisfaction remains low. It’s time to implement new, bold solutions to shake up the education status quo. After many years of attempting to pass a school choice bill in South Carolina, there's a very good chance that this will be the year that we finally achieve victory. We know that our over 20,000 FreedomWorks members in the great state of South Carolina are willing to stand up to the special interests that are blocking parental choice in education.
“To lean forward is to think bigger, listen closer, fight smarter, and act faster.” – MSNBC.com
Substantively, what does this quote mean? What message is MSNBC trying to put out with its two-year, multimillion dollar self-branding campaign to “lean forward”? The definition provided is a jumbled mix of vague and essentially meaningless platitudes. The murky, nebulous slogan itself is clearly just meant to be memorable and hopefully catchy. The viewer must examine the content of the commercials in order to discern what is actually at the heart of this campaign.
Although there are a few feel-good, uncontroversial broadcasts included in the advertising blitz, the bulk of the commercials are spent putting forward a progressive political agenda. Phil Griffin, the chief executive of MSNBC, has been quoted as saying, “MSNBC has established a sensibility, a position, a platform,” and that, “MSNBC is really the place to go for progressives.“
"Declaration of Forward”
The “lean forward” campaign strongly supports this assertion. The progressive message underlying them all fundamentally differs from conservative arguments. In the initial commercial “Declaration of Forward”, MSNBC claims that we are the “United States of Come-As-You-Are” and that, “our differences are what unite us.” This simply isn’t true. Our differences may make America unique or even beautiful, but what unites us as Americans are our shared principles. It’s troubling to see the progressive network co-opt the name and language of the Declaration of Independence in the “Declaration of Forward” commercial without recognizing that it is the principles laid out in that very document that weave us together as one people.
“Do Their Part”
Hardball host Chris Matthews appears in an interesting ad spot called “Do Their Part”. In it, Matthews says, “I think one of the problems of the country is that we’ve all been basically excused,” through tax cuts or allowing others to serve in the military. He’s pushing a theme of civic responsibility, but it’s more than a little bit hypocritical since he himself did not serve. Regardless, he argues that Americans must “do their part in this country, including paying fair taxes.” This doubtlessly refers to the progressive outcry over income inequality and “tax breaks for the rich” that I’ve mentioned in an earlier blog post.
However, looking at the numbers from 2009, the top 1% of earners paid 36.73% of income taxes. The top 10% of earners paid 70.47% of income taxes, and the bottom 50% of earners contributed only 2.25% of income taxes. In fact, the bottom 47% of earners paid no income taxes whatsoever, which is an oft-disputed statistic that PolitiFact.com has verified.
What percentage would Chris Matthews consider a “fair share”? Should the top 10% of earners pay 90% of all income taxes? How about 100%? Shouldn’t 47% of Americans contribute something in order to do their fair share? Matthews’ implicit claim that wealthy Americans aren’t paying enough in taxes only makes sense if you believe that the federal government has a revenue problem, not a spending problem.
“As Much An American”
That isn’t the only mildly ridiculous “Lean Forward” commercial featuring Matthews, though. He also appears in “As Much an American”, in which he slams Republican candidates for not admitting that the president is, as the title indicates, as much of an American as they are. For one thing, who’s saying that Obama isn’t? Is it really fair to demand in a commercial that the Republican candidates say something, and then blast them in the same commercial for not saying it yet? How are they supposed to respond to that?
Besides, wouldn’t this be a more appropriate demand to make of them in an interview? After all, Matthews does host a political television show, so this wouldn’t be particularly difficult for him to set up. The fact is that he wanted to take a cheap shot at the Republican field of candidates and he picked the most unfair format through which to do it.
“Blueberry Pie”
Perhaps the most famous of the “Lean Forward” commercials released so far would be Reverend Al Sharpton’s “Blueberry Pie” commercial. The near-incoherent, rambling story told by Sharpton was quickly parodied on Saturday Night Live. Even a blog post on the famously liberal Huffington Post website admitted that it’s “pretty wacky.”Still, of the many advertisements in MSNBC’s branding campaign, this one may have the most truth to it beneath the silliness.
Sharpton’s point is simply that the Bush-era Republican party made a mess of governing through deficit spending, bailouts, and expanding entitlement programs, and now Republicans are denouncing the Democrats for doing the same things. In other words, Republicans engorged themselves on the taxpayer-funded blueberry pie, and now they’re hypocritically attacking Democrats for feeding off of the same diner table.
Here’s what he doesn’t understand, though: The Republican party has undergone a major transformation after what amounts to a takeover by the Tea Party. Republicans who paid lip service to fiscal conservatism for decades while wasting tremendous amounts of cash are getting kicked out of office all over the country, and their replacements are serious when they talk about a return to limited, Constitutional government.
Put simply, Sharpton’s criticism is fair, but doesn’t apply to a new class of representatives who are on the frontlines in criticizing the Obama administration and Democrats in Congress for continuing and magnifying the policies of deficit spending, bailouts, and government expansion. The Tea Party is forcing Republicans away from the blueberry pie, but Democrats are asking for seconds, if not thirds.
The massive success of Fox News, a network that makes little effort to disguise its conservative leanings, has clearly influenced MSNBC to embrace its progressive identity in an obvious effort to boost ratings and viewership. The “Lean Forward” advertising campaign is, at its heart, polished gimmickry.
Last night more than 350 citizens of Spartanburg, South Carolina rallied for parental choice in education. FreedomWorks joined the Spartanburg tea party for this fantastic event that drove a very clear message home: legislators should support parental choice in education or they will be replaced by the citizenry.
Check out this great article in the Spartanburg newspaper this morning. Here is an exerpt.
More than 350 activists and community members gathered in Spartanburg’s Cleveland Park Thursday night to deliver a unified message to lawmakers about what was described as the state’s oppressive educational establishment: pass a bill through the General Assembly providing tax credits for families who send their children to private schools, or pay the price at the ballot box.
“Our kids are stuck in a failing system,” said David Spielman, campaigns coordinator for FreedomWorks. “Our kids in South Carolina, you know the whole joke goes, ‘Well, we’re not Mississippi.’ We need to inject competition into the system; it’s just that simple.”
FreedomWorks, a nonprofit group that advocates for less government and lower taxes, anticipates it will spend between $500,000 and $1 million in the Palmetto State this year trying to get a tax credits for private school bill passed. Such bills have failed to win state lawmakers’ approval since first being introduced in 2004, which supporters blame on entrenched interests.
As one of our million-plus FreedomWorks members nationwide, I urge you to contact your senator and ask him or her to vote YES on two amendments to S.2038, the Stop Trading on Congressional Knowledge (STOCK) Act. There are a large number of amendments and we have not had time to review them all because of the short time between their introduction and this vote. We suspect some senators face a similar challenge.
Two amendments that have caught our eye so far are:
Sen. Toomey amendment #1472, the Earmark Elimination Act.
Sen. Coburn amendment #1473 to prevent duplicative and overlapping government programs.
We will consider these votes when calculating the FreedomWorks Economic Freedom Scorecard for 2012 and may consider other amendments upon review. The Economic Freedom Scorecard is used to determine eligibility for the Jefferson Award, which recognizes members of Congress with voting records that support economic freedom.
Sincerely,
Matt Kibbe President and CEO FreedomWorks [Click here for a PDF version of this key vote notice.]
As one of our million-plus FreedomWorks members nationwide, I urge you to contact your representative and ask him or her to vote YES on H.R. 3578, the Baseline Reform Act. Introduced by Rep. Woodall (R-GA), the bill would reform the way that the Congressional Budget Office (CBO) calculates the baseline spending assumptions that are the basis for all of its projections of future spending. The legislation would remove the assumption from CBO calculations that spending will increase each year in proportion to inflation, which makes Congress’ new spending each year look like less than it is. The Baseline Reform Act would make the federal budget process more honest and transparent.
The American people are tired of the accounting gimmicks in the budgetary process. The current process starts by assuming a spending baseline of prior year spending plus inflation. This enables Congress to cut into the inflation adjustment and call it a “spending cut” even though actual discretionary spending levels will rise. Washington can spend $500 billion this year and $550 billion next year and call that a “spending cut” by using manipulative budgetary tricks. These dishonest tactics disguise the true cost of government programs.
The Baseline Reform Act would amend the Balanced Budget and Emergency Deficit Control Act of 1985 to eliminate the automatic inflation adjustment in the CBO’s annual baseline. Proposed budgets would then be compared to prior year spending levels. This would make spending increases and decreases more transparent to the American people. The Baseline Reform Act would help to put an end to budgetary gimmicks to give the American public a more honest look at how much Congress spends annually.
I urge you to call your representative and ask him or her to vote YES on H.R. 3578, the Baseline Reform Act. We will count their vote as a KEY VOTE when calculating the FreedomWorks Economic Freedom Scorecard for 2012. The Economic Freedom Scorecard is used to determine eligibility for the Jefferson Award, which recognizes members of Congress with voting records that support economic freedom.
Sincerely,
Matt Kibbe President and CEO FreedomWorks [Click here for a PDF version of this key vote notice.]
Tonight, the House of Representatives voted to repeal the CLASS Act, a key component of ObamaCare.
This is an important step toward Full Repeal of the government takeover of health care.
The bill now moves to the Senate, where Majority Leader Harry Reid, Democrat of Nevada, has signalled he will not let it come to a vote.
Twenty-eight House Democrats joined 239 Republicans to pass the bill, which passed with a solid majority of 267 members voting in favor and 159 against. (218 is a simple majority in the 435-member House.) All the "no" votes came from Democrats, who created the program.
Although President Obama's staff have said the president would veto H.R. 1173, the White House opted NOT to issue a formal veto threat on the bill, signalling a tacit willingness to sign it.
The bill, H.R. 1173, introduced by Rep. Charles Boustany, Republican of Louisiana, would repeal CLASS, which stands for the "Community Living Assistance Services and Support (CLASS) Act."
The CLASS Act, authored by late Sen. Ted Kennedy, Democrat of Massachusetts, presents a massive taxpayer bailout risk.
Democrats included CLASS in ObamaCare to help mask the controversial bill's true cost.
Recently disclosed documents reveal that, before ObamaCare was passed, President Obama's secretary of health and human services (HHS) knew that CLASS was unsustainable but purposely hid the information from Congress.
If the American people had been told about the bailout risk, ObamaCare would very likely not have become law.
This information was covered up -- an outrageous abuse of power -- until House Republicans forced HHS to disclose it.
Congressional investigators have proved that the Obama Administration lied to Congress and the American people about CLASS.
They should hold immediate hearings on the CLASS Act cover-up to find out: What did the White House know and when did they know it?
1. The Federal Reserve Has Far Too Much Power to Control Our Economy
Federal Reserve Chairman Ben Bernanke has the power to dramatically impact our economy at a drop of the hat. The central bank completely controls and determines the money supply. It is permitted to create as much money as it wants out of thin air with no restrictions. This is the antithetical to the principles that America was founded on. Our Founding Fathers would be outraged that one centralized institution has unchecked and unprecedented power to control the economy and thus our lives.
2. The Federal Reserve Has Significantly Devalued Our Currency
The laws of supply and demand apply to money. The more dollars we have in the circulation, the less the currency is worth. Our money supply has rapidly increased over the past century due to the Federal Reserve printing massive amounts of money like there is no tomorrow. This is what will almost inevitably happen when a quasi-governmental entity can simply print more money to its heart’s content. Since the Federal Reserve came into existence in 1913, the dollar has lost over 95 percent of its value. Today’s dollar is worth less than a nickel compared to the pre-1913 dollar.
3. The Federal Reserve Hurts the Poor and Middle Class the Most
Our hard-earned money is essentially stolen through a hidden inflation tax. Inflation is the increase in the supply of money and credit. It is often wrongly defined as the general rise in the price of goods and services. But higher prices are actually a direct consequence of inflation since increasing the supply of money decreases the purchasing power of the dollar. Inflation hurts the poor most since they have less disposable income. Consumers with low disposable incomes will be negatively impacted by higher prices for food and clothing.
4. The Federal Reserve is Run By Unelected and Unaccountable Bureaucrats
The Board of Governors at the Federal Reserve are not directly elected by the American people. This means that those who run the Federal Reserve are unaccountable to the people. The seven members of the Board ultimately decide the price or purchasing power of our money. That kind of central planning would never exist in a true free market economy.
5. The Federal Reserve Has Made Our Economy Less Stable
The Federal Reserve has brought us endless boom-and-bust cycles. The U.S. economy was much more stable before the Federal Reserve came into existence. It bears significant responsibility for every financial crisis over the past century including the Great Depression, the stagflation of the 1970s and recent economic meltdown. The Austrian Business Cycle Theory explains why we see such wide fluctuations in the economy. The theory states that a false boom occurs when the Federal Reserve lowers interest rates below the market rate which increases the supply of money. Artificially low credit cost sends out misleading economic signals to producers. They are inclined to respond by greatly expanding their production around the same time. In retrospect, these investment decisions called malinvestments are seen as a bad allocation of resources. Malinvestments will lead to wasted capital and economic losses. The expansion of credit cannot continue permanently which means that inevitable bust will follow a false boom created by the Federal Reserve.
6. The Federal Reserve is Far Too Secretive
The central bank severely lacks transparency. Throughout its 100-year history, it has always operated under a veil of secrecy. The Federal Reserve has never been fully audited by any outside source. Our elected representatives in Congress have very little oversight over the central bank. It has continually resisted any kind of congressional oversight claiming that it would endanger its “independence.” A comprehensive audit of the Federal Reserve would not harm its so-called independence. It would only expose how the Federal Reserve has been manipulating our currency behind closed doors. And Ben Bernanke surely doesn’t want that to happen.
7. The Federal Reserve Benefits Special Interests
The policies of the Federal Reserve hurt the average American. It benefits the privileged few at the expense of the rest of us. The Federal Reserve erodes most Americans’ standard of living while enriching well-connected elites. The central bank serves big spending politicians, big bankers and their friends. Special interests receive access to money and credit before the harmful inflationary effects impact the entire economy. This is why high power lobbyists protect and defend the existence of the Federal Reserve.
8. The Federal Reserve is Unconstitutional
The Constitution makes no mention of a central bank. While there have been historical debates on the constitutionality of a central bank, I see no justification for the argument that the Federal Reserve is constitutional. The federal government only has about thirty enumerated powers delegated to it in the Constitution. The power to create a central bank is not explicitly granted to the federal government in our founding document. Due to my strict interpretation of the Constitution, I find the Federal Reserve to clearly violate the Constitution.
9. The Federal Reserve Routinely Bails Out Big Banks
The Federal Reserve acts as the lender of last resort. The Federal Reserve was ordered through a Freedom of Information Act request to release 28,000 pages of documents in March 2011. The documents exposed that one of the largest recipients of the Federal Reserve’s money was foreign banks during the 2008 economic meltdown. The top foreign banks that received money were the Brussells and Paris based Dexia SA, the Dublin based Depfa Bank Plc, the Bank of China and Arab Banking Corp., according to Campaign for Liberty.
In July 2011, due to a provision under the misguided Dodd-Frank financial overhaul law, the Government Accountability Office (GAO) conducted a one-time, watered-down audit of the Federal Reserve. The GAO investigators were not allowed to view most of the Federal Reserve’s monetary policy decisions including discount window lending, open-market operations and details on its transactions with foreign governments and banks. This first ever audit of the Federal Reserve revealed $16 trillion in secret bailouts to corporations and banks around the world in less than three years. These bailouts happened without a single vote taking place in any chamber of Congress.
10. The Federal Reserve Encourages Deficit Spending
The Federal Reserve is largely responsible for the out-of-control spending by Congress. The federal government can only obtain money through taxation, printing or borrowing money. Printing money has become the federal government’s preferred method. This is also the most destructive method since the federal government is able to simply print more money as needed to finance its drunken spending spree. It has become a never-ending cycle of spending and printing more money. Voters can put pressure on their representatives to halt politically unpopular tax hikes and lenders could stop loaning money to the U.S. government. But it’s fast and easy for the Federal Reserve to print more money at a whim.
As one of our million-plus FreedomWorks members nationwide, I urge you to contact your representative and ask him or her to vote YES on H.R. 1173, the Fiscal Responsibility and Retirement Security Act of 2011. Introduced by Rep. Boustany (R-LA), the bill would repeal the Community Living Assistance Services and Support (CLASS) Act. The CLASS Act is a key component in ObamaCare that presents a massive taxpayer bailout risk. President Obama has said he would veto H.R. 1173. Voting to repeal CLASS at this time advances the larger goal of full ObamaCare repeal.
CLASS creates a new government entitlement program to pay for nursing home and home health care costs. The voluntary program is entirely funded by individual participant’s premiums. It is poorly designed and actuarially unsound since it will mainly attract older, sicker people who would take out a lot more than they put into the program. South Dakota Democratic Senator Kent Conrad has even described it as a “Ponzi scheme of the first order, the kind of thing Bernie Madoff would have been proud of.” CLASS will inevitably collapse, making it a taxpayer bailout waiting to happen.
In 2010, Democrats claimed their health care takeover "wouldn't cost taxpayers a dime." The new CLASS entitlement was one of several budget gimmicks added to ObamaCare to make this claim seem true. CLASS was purposely crafted to look like a revenue-generator during its first 5 years of operation, when the government would be collecting premiums from participants but not yet paying out benefits. This made the federal books look better by some $70 billion. But in the long run, CLASS will in fact cost taxpayers hundreds of billions.
Recently disclosed documents reveal that, before ObamaCare was passed, President Obama’s Secretary of Health and Human Services, Kathleen Sebelius, knew that CLASS was unsustainable but purposely hid the information from Congress. If the American people had been told about the bailout risk, ObamaCare would very likely not have become law. This information was covered up until Congress forced Sebelius to disclose it. This is an outrageous abuse of power. Congress should hold immediate hearings on the CLASS Act cover-up to find out: What did the White House know and when did they know it?
ObamaCare is already costing the nation billions, with premiums rising and some economists blaming the law, which doesn't take full effect for another two years, for continuing economic uncertainty and poor job growth. If not fully repealed, ObamaCare will cost us trillions of dollars, and more important, our freedom to control our own health care.
I urge you to call your representative and ask him or her to vote YES on H.R. 1173, the Fiscal Responsibility and Retirement Security Act of 2011. We will count their vote as a KEY VOTE when calculating the FreedomWorks Economic Freedom Scorecard for 2012. The Economic Freedom Scorecard is used to determine eligibility for the Jefferson Award, which recognizes members of Congress with voting records that support economic freedom.
Sincerely,
Matt Kibbe President and CEO FreedomWorks [Click here to see a PDF version of this key vote notice.]
WHAT: FreedomWorks and its Chairman Dick Armey will join the Spartanburg Tea Party and local conservative activists for a school choice rally in Spartanburg’s Cleveland Park from 6:30-8:30pm ET on Thursday February 2nd. The event will kick off with a reception, followed by a series of speakers discussing the important benefits of implementing school choice, and the critical role the grassroots will play in turning those ideas into legislative change. The event will also feature a special video message from conservative Senator Jim DeMint.
WHEN: Thursday, February 2nd from 7-8:30pm ET.
WHERE: Cleveland Park, 141 South Cleveland Park Drive, Spartanburg, SC 29303
WHY: South Carolina currently ranks 47th in the nation in test scores, despite spending an annual average of almost $12,000 per student. Parents and families across the state believe it’s time to put children first and enact real education reform in South Carolina. The recently introduced choice bill, H. 4576, proposes simple solutions to make student tuition more affordable for families, including tax credits for students attending independent schools, tax credits for non-profit scholarship grants, tax credits for students with special needs, and tax credits for classroom supplies.
FreedomWorks will support local grassroots trainings and voter education events in the weeks leading up to the South Carolina General Assembly’s vote. The campaign has already armed ten distribution centers across the state with tens of thousands of voter education materials, including door hangers, yard signs, district-targeted palm cards, tee shirts and bumper stickers. Voters can also sign a FreedomWorks online petition which generates emails directly to lawmakers demanding that the State House put children over special interests and support school choice bill H. 4576.
Join FreedomWorks, and the Spartanburg Tea Party as we host a rally in support of school choice and education reform in South Carolina on February 2, 2012. Join us at Cleveland Park (141 S. Cleveland Park Drive, Spartanburg, SC 29303) at 6:00PM as we make it clear, "School Choice is the right choice."
FreedomWorks has teamed up with local tea party groups and pro-school choice groups to see that we have real education reform and that we take back the education of our kids from the establishment.
Join former House Majority Leader, and FreedomWorks Chairman Dick Armey, FreedomWorks staff and others as we send a message to lawmakers that "enough is enough."
This event will be action-packed and will give you a valuable opportunity to get involved in the fight to pass school choice. I hope you can come to make your voice heard and pick up materials that will help in passing this important reform.
According to some tests South Carolina ranks 48th in overall education performance despite spending just shy of $12,000 per student. Yet with overwhelming support for reform from parents and students alike, the political establishment continues to prevent meaningful education reform that would bring choice and competition. It is time to tell our politicians that they must stop standing in the way of reform. School choice is the right choice!
If you are interested in attending this free and important event, please RSVP to David Spielman at dspielman@freedomWorks.org. Thanks and we look forward to seeing you at this great event.
Click Here to sign FreedomWorks petition supporting H.4576
This chart, published by House Minority Leader Nancy Pelosi's office, has made the rounds online recently, particularly on social networking websites.
However, is this chart really telling the whole story? After all, the House of Representatives proposes and ultimately controls federal spending, not the president. So, why would Pelosi's office put out a chart based around the presidents?
Obviously, it downplays the skyrocketing debt during President Obama’s term relative to other presidencies. The chart does not even mention that at the time of publication, the president had only been in office for two years, compared to eight years for Ronald Reagan, Bill Clinton, and George W. Bush. More importantly, the chart also disguises the fact that massive spikes in debt creation usually came while Democrats controlled the House. Here’s the reality:
This chart is structured like Pelosi's chart. The major difference is that we’ve highlighted Congress since 1981, instead of the presidency. Of those sixteen Congresses, Democrats controlled the House nine times while Republicans controlled it seven times. While in power, the Democrats dramatically outspent the Republicans. The 471% increase in the debt during 18 years of Democratic control is staggeringly more than the 105% increase during 14 years of Republican control.
Consider the contrasting stories told by these two charts. Pelosi's office is telling a fairy tale that places the blame for an exploding debt squarely on Republican presidents, especially Reagan and George W. Bush. However, reality provides a very different account: It was Democrats controlling the House that swelled the debt. Presidents don’t hold the “purse-strings” of government, only the veto power. Nancy Pelosi’s chart is simply deceptive.
Undoubtedly, many readers will correctly argue that both percentages are far too large and that both parties are to blame for profligate spending in Washington. It’s helpful to look at each individual Congress. It reveals that overspending is indeed a bipartisan problem, particularly during the last ten years.
The stunning rise in the national debt since 2000 occurred under both Republican and Democratic leadership in the House and the presidency. Neither party can claim a spotless record with regard to deficit spending and debt creation. Still, the degree to which the Democrats in Congress under President Obama’s leadership have engaged in both of these practices is frightening. The federal government will default on its debts if the public does not force those in power to cut back spending.
The chart put out by Nancy Pelosi's office is not only misleading in its attempt to shift away blame, it also misses the larger point. Our focus must be aimed directly at addressing the debt in a serious and lasting manner. The grassroots-generated Tea Party Budget is a realistic, significant effort to accomplish just that by cutting spending by $9.7 trillion dollars over the next ten years and balancing the budget in four years.
If you would like to learn more about the Tea Party Budget, here is the link.
It is axiomatic that there are as many visions of the current state and future prospects of the tea party movement as there are individuals who identify with its principles. But one thing is certain: the tea party is changing.
Love it or hate it, there’s no denying that the tea party has reached a crossroads. Gone are the heady days of 2009, when hundreds of thousands of activists, many of them political neophytes, made history with the 9/12 March on Washington to vent their frustration over government spending and bailouts. Gone also is the sense of inevitability that built steadily throughout 2010, until a groundswell of anti-establishment anger propelled tea party-aligned candidates to upset victories in local, state and federal elections all across the country...
As the 2012 election season begins in earnest, the tea party still identifies most comfortably with the ideological purity of its populist roots, but is also seeking to expand its electoral influence and institutionalize its minimalist philosophy of government. However, in large part, the tea party’s future will be determined by how closely its members study the lessons of their recent past.
In Indiana, for example, tea party activists suffered an embarrassing loss in the 2010 Senate primary due to their inability to compromise and coalesce behind a single conservative candidate. Rather than allow themselves to be consumed with bitterness and mutual recrimination, Hoosier activists chose to adapt to the changing political climate by getting better organized and better trained in the fundamentals of grassroots campaigning... In short, the tea parties in Indiana have started acting as if they are working for the Republican establishment instead of trying to defeat it...
Having been burned many times in the past by Republicans who say one thing to get elected and do another once in office, tea partiers are often reluctant to come together and compromise in support of a candidate who is not their first choice, or to seize the levers of power that control the Republican Party apparatus at local and state levels. But unite and seize power they must...
This Week’s Legislative Highlight: On Wednesday, the House will finally vote on a bill, H.R. 1173, to repeal the Class Act provision of Obamacare. The Class Act is a long-term care insurance program that even advisors to the Obama administration warned back in 2009 would be absolutely impossible to fund. Worse, it was used as a budget gimmick, as it was funded by collecting taxes for two years before the benefits were to begin, so that the extra years of taxes were counted as a surplus. While the program was recently suspended by the administration after Health and Human Services Secretary Kathleen Sebilius admitted that it was not fiscally solvent, this bill would make sure it never comes back.
House/Senate Schedule: The House and Senate are both in session all week, and with both parties having returned from their legislative strategy retreats, the business of lawmaking is back in full swing. Both chambers will be in town until the week of Presidents’ Day (20 February).
Senate/Insider Trading: There will be a cloture vote today at 5:30 on the STOCK Act, S. 2038, a bill which would bar members of Congress from making stock transactions based upon private information. The legislation would require that members of Congress instead set up blind trusts for their money.
Senate & House/FAA: Both chambers will go to conference on the extension of funding for the Federal Aviation Administration. A temporary measure has been agreed to in order to get ahead of the January 31st deadline, but a longer-term extension is in the works and may come to a vote as soon as this week.
House/Spending: Last December, Congress passed a two-year freeze on pay increases for all civilian government employees, including members of Congress. The House will vote Wednesday on H.R. 3835, a bill to extend the freeze for a third year. This is in contrast to President Obama’s State of the Union Address, in which he suggested a 0.5% pay increase for all federal workers.
House/Budget: Two bills are being introduced from the House Budget Committee as part of a series of ten bills seeking to reform aspects of the budget process. The two bills this week are:
H.R. 3582, the Pro-Growth Budgeting Act, introduced by Rep. Tom Price (GA-6). This bill would require that every major bill or resolution (defined as a bill which the Congressional Budget Office expects to cost at least .25% of GDP, or about $39 billion) be subject to a second CBO report. This report would not only analyze the impact of the bill upon the government’s budget, but also upon the economy as a whole.
H.R. 3578, the Baseline Reform Act, introduced by Rep. Robert Woodall (GA-7). This bill would reform the way that the CBO calculates the baseline spending assumptions that are the basis for all of its projections of future spending. The legislation would remove the assumption from CBO calculations that spending will increase each year in proportion to inflation, which makes Congress’ new spending each year look like less than it is.
House/Member Initiative: Rep. Tim Scott (SC-1) has introduced a bill, H.R. 2145, which would prohibit unions from automatically deducting dues from any federal government employee’s paychecks, thus empowering those employees to make their own decisions regarding whether they want their money to go towards supporting the activities of a union they may not have even voted to join.
House/Member Initiative: Rep. Lynn Jenkins (KS-2) is introducing a Concurrent Resolution (no bill number yet) which would check the abuse of Executive Orders by making all spending authorized by executive order invalid until approved by legislation in Congress. Article I, Section 8 of the U.S. Constitution is very clear that all appropriations should originate in the House of Representatives, and this bill merely clarifies that point.
I, however, place economy among the first and most important republican virtues, and public debt as the greatest of the dangers to be feared. —Thomas Jefferson
Last week on January 26th Congress voted against a measure to deprive the president of the authority to raise the debt ceiling. In a 44 – 52 vote, the president was granted permission to add another $1.2 trillion to the national debt, deferring for some time any difficult albeit necessary fiscal decisions. For the first time in over half a century, the national debt is roughly equal to the gross domestic product of the United States. This situation is analogous to an individual whose debts are equal to the total value of his income and savings. Mainstream economists will note, however, that this is not as dire of a situation as it first appears to be. After World War II, the national debt was 122 percent of GDP, about 22 percent higher than that of today. This is true, although there are several other factors that are worth consideration in comparing and contrasting the fiscal solvency of the United States in 1946 with that of today.
In the first place, the post WWII period in the United States was marked by massive spending cuts as the war ended. Many of the New Deal programs had been scaled back prior to this time in order to allocate revenue toward wartime expenses. Secondly, the reduction of New Deal regulation and spending, coupled with the removal of wartime regulations and spending freed up the economy, allowing for rapid economic growth and the absorption of millions of returning soldiers into the workforce. Americans witnessed a never before seen rise in their standard of living. The vibrancy of the postwar American economy, made possible by massive spending and regulatory cuts, provided a solid foundation upon which the national debt could be reduced to manageable levels. Furthermore, interest rates remained relatively low during this period, fluctuating between 1 and 2 percent. By the time interest rates finally rose (starting in 1970 and continuing through the early eighties) the national debt was less than half of GDP, making the cost of servicing the debt far less burdensome.
Now let us contrast the postwar situation with that of today. Our national debt is equal to GDP. Economic growth is exceptionally weak, and a host of new regulations and taxes are on the horizon. In addition, the current administration insists on spending as a means of spurring economic growth, a plan which has unambiguously failed to grow anything other than the national debt.
More importantly, interest rates are remaining historically low at about 0.25 percent. The threat of inflation is a laughable notion to most economists, although it should certainly not be discounted as such. As production dwindles in this country, and the monetary base expands indefinitely, inflation is inevitable and so will be the resulting spike in interest rates. The interest rate is a price, just like the price of milk or cell phones. The interest rate is the price of money, the price of capital. To attempt to manage it via central banking defies all economic logic. Most economists would agree that enacting a price control on milk, to set the price of milk lower than the market price, would result in a shortage of milk. The removal of the control would solve the shortage problem, but for a time milk would be more expensive than it was originally in order to ration the now diminished supply of milk. This principle applies to the interest rate. When Ben Bernanke suppresses the interest rate through inflation and “open market operations” he guarantees that there will be a shortage of capital. He can then do one of two things when this shortage becomes apparent: 1) He can allow rates to rise, which they must in order to compensate for the capital misallocation that resulted from the loose monetary policy currently being pursued. 2) He can continue to keep rates low by printing more money which will lead without fail to hyperinflation, the destruction of the dollar. The prospect of rising interest rates is not just speculative. It is a certainty that will have severe ramifications for our debt situation.
Another important factor to keep in mind is that the national debt was financed differently in 1946 than it is today. Government debt during and following WWII was typically financed with long – term bonds, meaning that even if interest rates had risen, the interest payments on the principal would not have increased. Today, much of our national debt is financed with short – term paper, meaning that a sudden spike in interest rates would cause the interest payments on our debt to increase once the temporarily low interest rate rolled over. This is eerily similar to the manner in which the mortgage market collapsed. Risky mortgages were financed by unqualified borrowers at adjustable rates, with the initial teaser rates being incredibly low. We all know how that ended. Rates rose to a point where borrowers could no longer afford their mortgage payments and the housing market collapsed. The same thing will happen to the Federal government if it does not soon abandon its reckless spending and monetary policies.
There is alarmist propaganda coming from both sides of the aisle, particularly from the left, alleging that a decision to not raise the debt ceiling would immediately lead to a United States default on its debts. What they fail to realize is that this default is unavoidable if the Federal government does not enact massive spending cuts and actually prove to its creditors that it is capable of paying back these loans. Our current policy of raising the debt ceiling to finance government spending and pay our creditors is analogous to an individual paying one credit card off with another. The only way to compel our politicians to do the right thing is by forcing them to deal with the prospect of default. If such action is not taken, it will only be a matter of time before our creditors cease to lend us money and default becomes a painful inevitability. Even worse is the possibility that politicians will try to avoid default by printing the money to pay off our debts, destroying the value of the dollar in the process.
We, as a nation, should avoid the temptation to approve the accumulation of more debt based on the misleading fact that after World War II our national debt was 122 percent of GDP. A closer analysis will reveal that the economic foundation of the United States was much sounder during that time than it is today. The only recourse for our current debt situation is to instill discipline in our government by disallowing increases in the debt ceiling and forcing dramatic spending cuts. This is the only possible way to avoid a sovereign debt crisis a là Greece and Italy or hyperinflation a là Zimbabwe.
Join FreedomWorks for a Get Out the Vote Training Seminar in Pittsburgh, PA on Tuesday, Feb. 7th from 6:00pm to 8:30pm! RSVP NOW!
We will be talking about how you can help Take America Back in 2012 by utilizing the various campaign tools that FreedomWorks offers.
Learn how to effectively phone bank for candidates, how to walk your neighborhood and how to lead yard sign blitzes in your area for your favorite candidate.
Join us at the Embassy Suites - Pittsburgh International Airport, located at 550 Cherrington Pkwy, Coraopolis, PA 15108 on Tuesday, Feb. 7th at 6:00pm.
The event is free and open to the public. We will provide materials and handouts that go along with the presentation.
Wherever politics intrudes upon economic life, political success is readily attained by saying what people like to hear rather than what is demonstrably true. Instead of safeguarding truth and honesty, the state then tends to become a major source of insincerity and mendacity. – Hans F. Sennholz
Fearing legislated failures, the politician’s speech is seldom precise or logically reasoned. Seeking a favorable image, the politician talks in generalities, exaggerates and obfuscates.
Social Security – Fairness for Young Americans
This is an election year, which exacerbates political gamesmanship and mendacity. Currently, the DC joust is the payroll tax cut. And Democrats probably have a political advantage in reducing the payroll tax by 2% for every worker in American – 160 million workers. Workers will have up to $2000 in additional take-home pay. Who doesn’t want more spendable income?
This week, President Obama, in the State-of-the-Union speech, demanded, “Pass the payroll tax cut without delay.” However, the following statement is probably more accurate, “Pass $325 billion more Social Security debt on to young Americans and even the unborn.” The payroll tax is intended to pay for Social Security benefits. Generally, the Social Security tax is 12.4% of a worker’s income - 6.2% is paid by the employer, and 6.2% by the employee.
Immorally, the Social Security tax revenues for over 40 years have been raided and misappropriated by many administrations – Republicans and Democrats alike. Previous administrations intentionally and wrongly used the money for general government programs, and wrote IOU’s to Social Security. Hence, America has enormous unfunded Social Security obligations, which must be paid by more taxes – in addition to the 12.4% Social Security tax.
Immorally, Presidents like Lyndon Johnson used a budget gimmick and the Social Security revenues to hide the cost of the Vietnam War. Richard Nixon raised the benefits by 20%, which he made known by a note attached to the seniors check just before the 1972 presidential election. Johnson and Nixon didn’t care about future federal debt obligations. Once again, President Obama, the Democrats and some Republicans also don’t care. They want a winning issue for the November 2012 election.
Realistically, most of the 160 million American workers do not understand the ramifications of their increased pay checks. They don’t appreciate that the unfunded, Social Security liabilities must be paid by additional taxes, and that Social Security will probably become a welfare program. Depending on personal savings at retirement some of today’s workers will receive benefits, many will receive reduced benefits and some will receive none. How is that fair to every worker that paid the 12.4% tax?
Worse, future workers most surely will be taxed more to maintain some semblance of the Social Security program – government hates to terminate a program, especially Social Security. Thus, young workers – who never had an opportunity to object to government’s forty years of deceit – will be burdened with increased taxes and reduced benefits. This is modern America’s “taxation without representation.”
Most likely the 2012 tax-cut gambit to influence 160 million voters will become law, and the Social Security swindle and deception will continue. The following is a solution which would permit young people to be free of the Social Security burden and fraud.
The Freedom Bargain:
Allow young American workers to put their entire payroll tax into an IRA. That is 6.2% of their income. In exchange for investing in their IRA, the worker forgoes any and all claims to Social Security.
Call this the Freedom IRA, which is in addition to all other forms of retirement accounts – 401k, Roth 40Ik, private accounts and others. .
Mechanics of the Freedom IRA:
In exchange, a worker that elects to create a Freedom IRA puts 6.2% of their income into an IRA and irrevocably gives up Social Security. The employer deposits the money directly into worker’s IRA.
Young workers will benefit from private accounts which they own. Young workers will also be free from the manipulations and deceits of the politicians.
Today’s politicians cannot claim that which will destroy Social Security. Wrongfully for over 40 years, thousands of politicians have already raided and redirected the money intended to pay benefits.
Free young people from political gamesmanship and fraud. Allow them to save 6.2% of their earnings in their own Freedom IRA. America, at least, should be fair to young workers and those who are about to become workers.
"Collecting more taxes than is absolutely necessary is legalized robbery." —President Calvin Coolidge
At FreedomWorks, we have a saying that goes, “Lower Taxes + Less Government = More Freedom”. It’s a fairly simple, yet effective formula with an end in mind that virtually all Americans would agree is desirable. So why is it so difficult to accomplish in the modern political world? The answer boils down in part to the difference between how the federal government treats tax cuts and spending hikes.
Today, it’s popular among Democrats to bash the “Bush tax cuts”. Since cutting taxes is almost always politically popular, savvy Democrats focus on the cuts for higher-income Americans. The argument goes that by lowering taxes, particularly for people who didn’t really need it, the federal government also lowered revenue, and that this drop in revenue was the major cause for the enormous deficit and skyrocketing national debt. On the face of it, the argument is simple, intuitive, and effective. It seems obvious that if a country has lower taxes, government will take in less money. It’s an elegant way for Democrats to advocate raising taxes and at the same time place blame for the deficit and debt on the Bush administration and Republicans in Congress. However, let’s test this argument by taking it to the extreme: What if you raise the income tax to 90%? Or even 100%?
People won’t work, or at the very least they’ll work significantly less than they did before. If you only receive a tiny fraction of the monetary reward for your work, you just don’t work as hard or as much, if at all. The less you work, the less of your income can be taxed away, lowering revenue. Taken to the other extreme, a 0% income tax obviously won’t bring in any revenue. Therefore, the revenue-maximizing tax rate is somewhere between these two extremes.
This is a simplified version of the argument popularized by economist Arthur Laffer, whose graph of this phenomenon is commonly referred to as the “Laffer curve”. During the Reagan presidency, the Laffer curve played a significant role in guiding the public policy which helped lead to widespread prosperity. Economists disagree over what exactly is the revenue-maximizing tax rate, or if there even is one that may be broadly applied across various levels of income or to different countries. Still, the point here is that to a certain point, cutting taxes can increase revenue, which means that the argument made by Democrats today isn’t as obvious or irrefutable as it may seem.
Still, even if one concedes that perhaps the Bush tax cuts lowered tax rates below the revenue-maximizing point, is that really such a bad thing? Should the government extract every last dollar possible from the American people? After all, the revenue-maximizing tax rate isn’t necessarily the optimal tax rate. Considering the spendthrift policies over the last decade since the institution of the tax cuts, it would appear likely that the additional revenue would have simply emboldened Congress to spend even more. Besides, even in 2003, the year with the lowest federal revenue following the start of the Bush tax cuts, the federal government still took in $1.782 trillion dollars in revenue, which was more than it took in only five years prior in 1998. (Source: OMB historical tables)
Revenue quickly bounced back, however, and by 2005 it had grown to $2.153 trillion dollars, which was more than $100 billion dollars higher than the previous mark set in 2000 before the tax cuts. Revenue continued to rise despite the lowered taxes until 2008, the beginning of the recession. So, the tax cuts certainly did not cripple the budget in any truly substantial and prolonged manner. Tax cuts did not create the debt, spending did. Trillions of dollars in debt come from spending trillions of dollars more than you take in. When Congress decided to pass a law cutting taxes across the board for Americans, they ought to have been responsible with spending until they could see how the tax cuts would affect revenue long-term. Instead, they continued to spend without restraint.
The tax cuts allowed Americans of all incomes to save more of the income they earned from being redistributed by government bureaucrats. So, why do the” Bush tax cuts” continue to be maligned by the Democrats and in the media? It’s fairly simple. First, as mentioned before, it’s a way for Democrats to advocate raising taxes, particularly on the wealthy, while at the same time making an excuse for their part in creating the debt and deficit. Second, and perhaps more importantly, these tax cuts have been cursed with the label of a highly unpopular president, even today. Despite the fact that it was Congress who voted these on these bills, President George W. Bush’s advocacy for the tax cuts tied his name to them from the start. One could say that this was a nifty rhetorical trick by the Democrats, as they manage to continue blaming current political issues on the former president. However, Republicans have largely played along and also refer to them as the “Bush tax cuts”. In other words, the Republicans have failed to win the public relations battle and barely tried to fight it in the first place.
Still, these tax cuts began more than a decade ago. Why are they still temporary? Why are they still an important political issue? The main reason is the “sunset” provision placed in the bill, which meant that the tax cuts would be revoked if not extended by Congress after a certain period of time. As badly as the Republicans lost the public relations battle over the “branding” of the tax cuts, they essentially lost the war by agreeing to these provisions. Why would across-the-board lower taxes for all Americans be temporary? When the federal government still takes in, at the least, close to two trillion dollars a year in revenue after the cuts are made, why are the cuts still considered controversial?
The problem lies with how the federal government treats spending. Whereas tax cuts are considered temporary and require periodic extension, spending assumes a certain baseline amount and only increases from there. The culture in Washington is so distorted that bureaucrats feel a need to spend every last dollar budgeted to them and then plead for more besides that. If you come in under-budget on a project in many federal agencies, you’ll simply receive a smaller budget next year. If you use the entirety of your budget, then your agency clearly needs additional funds. Next year’s budget will almost automatically add those extra dollars, making the bureaucrat’s job easier instead of forcing them to be efficient with their allotted cash. This breeds a culture of inefficiency and waste that culminates into larger and larger federal outlays.
Considering the inexorable impulse of the bureaucracy toward increases in spending, perhaps it should not be a surprise that any drop in revenue would be considered a crisis by Democrats who sincerely believe in the goals of these bureaucrats. After all, the bureaucracy needs that money, doesn’t it? Increased spending therefore becomes permanent and inevitable.
The contrast between how Washington treats tax cuts and spending hikes paints a bleak picture. In a sensible society, wouldn’t it be the tax cuts that are typically permanent and the spending hikes that are temporary and which require periodic justification in order to be extended? Luckily, there’s a simple solution to this mess: Cut spending. The grassroots-generated Tea Party budget slashes $9.7 trillion dollars in spending over the next ten years, balances the budget in four years, and makes the so-called “Bush tax cuts” permanent. It accomplishes these seemingly impossible feats without raising taxes.
Let’s consider the FreedomWorks equation one more time: “Lower Taxes + Less Government = More Freedom”. We know that we as Americans want more freedom. The tax cuts achieved the first element of the equation and it’s time to add the second element by cutting spending, thereby decreasing the size and scope of the federal government. Only then will Americans have more freedom from an enormous national debt, massive deficit, and heavy tax burden.
If you would like to learn more about the Tea Party Budget, here is the link.
Most of us are aware how U.S. government regulations hurt people living in the United States. But too little attention is paid to how federal regulations can be damaging towards U.S. citizens living outside the country. American expatriates cannot even escape the regulatory nightmare that’s coming out of Washington, D.C.
United States citizens should be free to live in a different country without the U.S. federal government breathing down their necks. The United States has a worldwide tax system which means that a U.S. citizen living outside of the United States cannot legally escape the wrath of the Internal Revenue Service (IRS). The United States is the only industrialized nation that taxes citizens on income earned abroad, even if they are taxed in their country of residence. Taxing U.S. citizens living and working abroad undermines individual liberty as well as the sovereignty of other nations.
Stringent new banking regulations have further hurt expats living abroad. President Obama signed the Hiring Incentives to Restore Employment (HIRE) Act of 2010 into law which contains a harmful but little-known provision called FATCA (Foreign Account Tax Compliance Act.) The supposed intention of FATCA is to crack down on those who evade U.S. taxes by hiding assets in foreign banks. But FATCA will have widespread negative consequences on the U.S. economy, financial markets and law-obeying U.S. citizens overseas.
FATCA forces all foreign financial institutions (FFIs)—that includes banks, stock brokers, hedge funds, pension funds, trusts, insurance companies— to reveal accounts held by U.S. citizens to the IRS. These FFIs will be required to provide an annual report to the IRS and collect tax withholdings for the IRS from U.S. citizens. The yearly report must disclose the name and address of each U.S. citizen as well as their largest account balance in the year and total debits and credits.
This new banking rule infringes on the privacy of U.S. citizens in addition to creating a bureaucratic nightmare for financial institutions. According to American Citizens Abroad Director Jacqueline Bugnion, “the FATCA legislation treats all Americans with overseas bank accounts as criminals, even though most of them are honest, hard-working individuals who happen to be living and working or retired abroad.”
On January 1, 2014, the IRS will start imposing a 30 percent withholding tax on U.S. securities for any FFI that does fully comply with FATCA. This will only incite foreign institutions to withdraw their investments from U.S. financial assets. Total foreign investment exceeds $21 trillion, according to the U.S. Bureau of Economic Analysis. Various FFIs threatening to disinvest in U.S. securities is a serious issue that should not be ignored.
The European Banking Federation and the Institute of International Bankers expressed their concerns with FATCA by stating that, “… many FFIs, particularly smaller ones or those with minimal U.S. investments or U.S. customers, will opt out of U.S. securities rather than enter into a direct contractual agreement with a foreign tax authority (the IRS) that imposes substantial new obligations and the significant reputational, regulatory, and financial risks of potentially failing those obligations, or may disinvest their U.S. customers in order to reduce their compliance burdens under an FFI Agreement.”
Foreign financial institutions are already turning away American clients. “We have become toxic citizens,” says American Citizens Abroad founder Andy Sundberg. Due to FATCA, a U.S. citizen abroad is now seen as a significant legal and financial risk. An increasing number of U.S. businesses and citizens abroad are finding it significantly more difficult to open foreign bank accounts and get insurance coverage.
A growing number of Americans living abroad are actually renouncing their U.S. citizenship. This seemingly drastic step makes it much easier for them to have a bank account and operate a business overseas. In Time Magazine, a business owner John based in Switzerland says that, “the U.S. government creates conflict and abuses me. I feel under duress to understand and comply with laws that have nothing to do with and are constantly changing—almost never in my favor... Every time I turn around, I get smacked in the face with some new restriction as a result of being a U.S. citizen abroad. "
The IRS should not bully American citizens living and working outside of the United States' borders. FATCA will have devastating impacts on the U.S. economy while infringing on the liberty of American expatriates. It needs to be repealed immediately.
This Week’s Legislative Highlight: This week’s most notable business is a bill that has NOT passed, as Tuesday the 24th marks the 1,000th day since the Senate has passed a budget. It is perhaps appropriate that this unfortunate milestone coincides with the President’s State of the Union Address, a stark reminder of the irresponsibility of Obama’s fiscal policy.
House/Senate Schedule: The House will remain in session into February, with allowances for each party’s strategy retreat. The Senate will be in session until Presidents’ Day (20 Feb.).
House/Agenda: This will be a light work week for the House. First, the State of the Union Address will preempt business on Tuesday, 24 January. In addition, Republicans held their strategy retreat last week and the Democrats will hold theirs this week. As is traditional, most important legislative business for the year will be held off until after these meetings are through. A full schedule will resume next Monday (30 Jan.).
Senate/Agenda: The Senate is back in town, and their full legislative agenda is unclear at this time. However it does appear that the Protect Online Piracy Act will be addressed Tuesday, and the Senate should vote on the House’s resolution disapproving of raising the debt ceiling on Thursday.
Senate/Regulation: In response to the enormous level of displeasure expressed by major websites and thousands of concerned constitutions, Harry Reid appears likely to “vitiate” the cloture motion on the Protect IP Act (PIPA), S. 968. This move would essentially withdraw the motion to proceed and would suspend the bill, which indicates that Reid doesn’t think he has the 60 votes he needs. PIPA is the bill which would allow the government shut down web sites which even have a tangential relationship (like a link) to a site that conducts online piracy, which would have been the broadest regulatory authority over the internet ever granted to the government.
Senate/Spending: The Senate is likely to vote Thursday on the H.J. Res. 98, the Resolution of Disapproval on the President’s request to raise the debt ceiling to $16.4 trillion. As discussed in last week’s Hill Update, presuming that the resolution passes the House, it has no effect unless the President approves it, as agreed under the Budget Control Act which Congress passed last August.
House/Budget: In response to the milestone of 1,000 days since the Senate has passed a budget, the House will vote on H.Res. 516 on Tuesday, a resolution to remind the Obama Administration “that the passage of a fiscal year 2013 Federal budget is of national importance.” The resolution notes that the House passed a budget in April of 2011, while the Senate has failed to do so since April of 2009.
House/Member Initiative: Rep. Doug Lamborn (CO-5) has introduced the Budget Before Borrowing Act, H.R. 3778, which would make it out of order for Congress to consider an increase in the debt ceiling until after a budget resolution has been passed by both chambers. Thus, Congress would have to at least declare how much it intends to spend before reaching for the nation’s credit card.
House/Keystone XL: On Wednesday (25 Jan.), the House Commerce Committee’s Subcommittee on Energy and Power is holding a hearing on H.R. 3548, the North American Energy Access Act. Introduced by Rep. Lee Terry (NE-2), this bill would require the Federal Energy Regulatory Commission (FERC) to issue a permit for the job-creating Keystone XL pipeline project within 30 days after the passage of the bill, and deems the permit issued if FERC fails to act.
