By Congressman Paul Ryan
Southern Wisconsin is hurting. The savings, economic security, and livelihoods of hard-working families have fallen victim to our deepening recession. The manufacturing sector – the bedrock of Southern Wisconsin’s economy for generations – continues to shed jobs at an alarming rate. The nation’s economy faces uncertainty and many challenges ahead. The first role of Congress is to do no harm. The last thing taxpayers need right now is a tax increase. Congress must combat wasteful spending and put an end to bloated government programs through hidden earmarks. Congress must also address the severe problems that lie ahead if we do not reform our entitlement programs. These programs continue to take up a larger portion of our budget each year, threaten to crowd out other government spending and hurt our economy if left unaddressed. As the Ranking Member of the House Budget Committee, I have a responsibility to help improve accountability and to monitor federal spending to prevent government waste and abuse, while putting forward long-term solutions to our entitlement crisis
While workers are losing their jobs and small businesses are either laying employees off or going out of business altogether, and the federal deficit is estimated to have reached $1.8 trillion, Congress passed and the President signed into law H.R. 1 with a cost to taxpayers totaling $1.1 trillion. According to the Congressional Budget Office (CBO), however, only 11 percent of the funding under this new law will be spent in the first year. And less than 1 percent is devoted to job creating and job retention tax incentives. H.R. 1 also includes “emergency spending” such as $300 million for golf carts, $50 million for the National Endowment for the Arts (NEA) and $8 billion for high speed rail to help build a Los Angeles-to-Las Vegas rail line, as well as hidden funding for Massachusetts shell fish and New York theater renovation. If the estimates of creating 3 million jobs with this law are correct, it will cost taxpayers $262,000 per job created. Ultimately, all of this spending, including interest, will lead to future tax increases with a cost per family of $10,000. It is for these reasons that I voted against this legislation and voted in favor of an alternative that would have provided fast-acting tax relief for working families and small businesses, as well as produced twice as many jobs at approximately half the cost.
Shortly after passing the above legislation, the House passed legislation with additional federal spending while facing the largest deficit since World War II. H.R. 1105 boosts spending for numerous programs that already received substantial increases in the “stimulus” legislation mentioned above. For example, the National Park Service received $750 million in the “stimulus” and received an additional $135 million under the Omnibus bill. And the National Endowment for the Arts (NEA) received $50 million in the “stimulus” bill and the Omnibus bill provides an additional $21 million. This legislation also includes 8,696 spending earmarks totaling $11 billion, including $15 million for California Emission Reduction Grants, $1.8 million for swine odor and manure management, $200,000 for tattoo removal, as well as $2.2 million for grape genetics. As a result, I voted against this legislation.
The President’s Budget Proposal for Fiscal Year 2010
The budget process is underway in Congress. The President’s proposed budget includes some good policy, such as preventing taxpayers from getting hit by the Alternative Minimum Tax (AMT). However, it also includes some troubling policies such as increasing government spending to the highest level since World War II and doubles the national debt in 8 years. It also includes a total of $1.4 trillion of tax increases, much of which fall on American small businesses that produce 60 to 80 percent of the new jobs in this country. As Ranking Member of the House Budget Committee, I will be putting forward a Budget Alternative that will reduce the deficit without raising taxes.
The President’s Budget Proposal for Fiscal Year 2010
President Obama’s budget proposal increases taxes by $1.4 trillion while the nation is in the midst of a recession. Many of these tax increases specifically hit 3 million small businesses by increasing the top two marginal income tax rates for individuals from 33% to 36% and from 35% and 39.6% respectively. In addition, the budget proposal limits the amount of tax deduction these taxpayers can take on their mortgage interest, charitable donations and state and local taxes. The budget also makes domestic companies vulnerable to takeovers by foreign competitors by increasing the tax burden on U.S. companies and increasing taxes on U.S. companies and manufacturers. The budget proposal also establishes a new tax through the “Cap and Trade” program that will be paid by all Americans through higher energy prices, i.e., electricity and fuel, as well as higher prices for food and shipping costs. It also hurts the manufacturing industry which has particularly been hit hard with job lay-offs and downsizing under the current recession.
H.R. 3970 – The Tax Reduction and Reform Act of 2007
Congressman Charles Rangel, Chairman of the House Ways and Means Committee introduced in the Fall of 2007, H.R. 3970, The Tax Reduction and Reform Act of 2007. The title of this bill does not reflect the $3.5 trillion tax increase over 10 years – the largest individual tax income tax increase in history, thereby smothering any future economic growth. According to the non-partisan Joint Committee on Taxation, 120 million taxpayers will receive a tax increases while only 9 million will receive a tax cut. While the legislation repeals the individual Alternative Minimum Tax (AMT), it replaces an enormous tax increase. Specifically, the legislation would impose 4-percent surtax on adjusted gross income (AGI) above $150,000 for single filers and $200,000 for joint filers. The surcharge increases to 4.6 percent for incomes over $500,000. The surtax constitutes an assault on small business, most of which pay individual income tax rates on their business income. When coupled with the expiration of the 2001 and 2003 tax relief provisions, the surcharge would effectively push the highest income tax rates from its current level of 35 percent to 44.2 percent – an increase of 26 percent. About 80 percent of these taxpayers at this top tax rate are job-producing small businesses – S-corporations, partnerships, and sole proprietorships. Economic research shows that an increase in the top income tax rates will dissuade these businesses from investing, hiring more workers, and paying higher wages. That is significant because small businesses employ roughly half of the private labor force and create approximately seven out of every 10 new jobs. By some measures, small businesses account for more than half of the nation’s economy.
H.R. 6110 – A Roadmap for America’s Future
According to the CBO, Social Security, Medicare, Medicaid and the rest of the government will consume nearly 40% of the economy by the time my three young children reach my age (39). This will require more than doubling the average tax burden of the past 40 years just to keep the government afloat. Continuing down this path will eventually strangle our economy. To meet this challenge and secure our fiscal future, I’ve introduced legislation, “A Roadmap to America’s Future.” Specifically, my legislation would do the following:
Health Care: Provide universal access to affordable health insurance, by shifting the ownership of health coverage from the government and employers to individuals. Individuals would receive a refundable tax credit of $2,500 and families would receive a $5,000 tax credit to purchase coverage.
Medicare and Medicare: Modernize Medicaid by giving states maximum flexibility to tailor their Medicaid programs to the specific needs of their populations and secure the Medicare program for those over 55 – so Americans can receive the benefits they planned for throughout most of their working lives. For those currently 55 and younger will, when they retire, Medicare will be reformed to resemble the kind of plan Members of Congress and Federal employees have, by providing a large annual payment to seniors to purchase a plan from a list of Medicare Certified Plans, or other comprehensive health care plans. Additional assistance is provided to low income individuals and those with chronic health conditions.
Social Security: Guarantees the current Social Security benefits for those who are in or near retirement (age 55+). Provide the option for worker under 55 to invest over one-third of their current Social Security taxes into personal retirement accounts. These personal accounts are the property of the individual, and are thus fully inheritable. My bill includes a guarantee that no one’s total Social Security benefits from the personal accounts will be less than if he/she had chosen to stay in the current system.
Tax Reform: Provide a flatter, simpler system for taxpayers to pay their income taxes and levels the playing field for American-made products to compete against foreign competitors making it easier for American manufacturers to keep jobs in the U.S. My legislation would do the following: (1) repeal the individual AMT; (2) provide individuals an alternative tax system that is fair, simple and efficient; and (3) replace the current corporate income tax code with a tax system that levels the playing field for American businesses.
Budget Boondoggle Award
Building on the tradition established by the late Wisconsin Senator William Proxmire’s Golden Fleece Award, I launched the Budget Boondoggle Awards. These “awards” are intended to highlight the most egregious, wasteful, and unnecessary spending American taxpayers were forced to fund. Despite claims to the contrary, earmarks continued to proliferate, with more than 8,500 of them in the recently passed Omnibus Appropriations bill alone. These earmarks include $200,000 for tattoo removal and $1.9 million for a water taxi service in Connecticut.
Stop Wasteful Government Spending
The amount of wasteful government spending earmarks has exploded for the past several years in Congress under both Democratic and Republican Majorities and we need to reform the process now. As a result, I, along with several of my colleagues have pledged not to submit any new earmark requests until the spending process is cleaned-up in Congress. We have also called upon the current Majority to impose a moratorium on earmarks until the earmark process is reformed. These calls have gone unanswered by the Majority.
Legislative Line-Item Veto: Targeting Wasteful Spending
To help combat earmarks and other forms of wasteful spending, I, along with Senator Russ Feingold, have once again introduced my bipartisan bill, the Legislative Line-Item Veto Act. Our legislation would enable the President to single out egregious earmarks, like the examples outlined above, when they arrive at the President’s desk for signature and send these specific items back to Congress for expedited votes on whether to rescind, or cancel, funding for these provisions. Our legislation protects Congress’ constitutional authority to make spending decisions by requiring both the House and Senate to vote to approve the President’s proposed rescissions before they can become law. If either chamber votes against a rescission by a simple majority, it will not be enacted. As a result, this legislation is fundamentally different than the line-item veto the Supreme Court struck down in 1998, which did not require Congressional approval for the President’s rescissions to take effect. I will continue to work with Senator Feingold to move our bipartisan legislation through Congress.
Congressman Paul Ryan serves Wisconsin’s 1st Congressional District. To contact him by phone in Washington, D.C., call (202) 225-3031. Or visit Paul Ryan at www.house.gov/ryan