Critics claim that Republicans haven’t been specific enough in our pledge to cut government spending. That is simply not true. The very first day of the new Congress, I reintroduced two bills to make specific cuts to our out-of-control federal spending. One bill, H.R. 68, would end all federal subsidies for the Corporation for Public Broadcasting (CPB), the parent organization of National Public Radio (NPR). My second bill, H.R. 69 more narrowly restricts federal tax dollars from going just to NPR. Both are examples of specific cuts Congress can make now to keep our unsustainable federal debt of more than $14 trillion from getting worse.
Economy & Budget
Is manufacturing becoming a lost cause in America?
U.S. manufacturing contributed as much as 30 percent of GNP after World War II. Since 2007, due to the recession and other factors, that share of GNP has fallen to 11 percent today. And the products American industry has stopped making aren’t just the products of “mature industries.” They are also microprocessors and cell phones and navigation systems and other innovations that define high tech.
The critical phase in technology is when a company moves from start-up to mass production. This high tech “scaling” is happening primarily in China. One Taiwanese company alone, Hon Hai Precision Industry Company, employs more than 800,000. That’s more than the worldwide headcount of Apple, Dell, Microsoft, Hewlett-Packard, Sony and Intel added together.
The Economic Outlook
Thank you very much and good morning ladies and gentlemen.
Let me thank the National Chamber Foundation and all the staff who organized this event—and thank you all for coming.
At the outset, I’d like to express, on behalf of the U.S. Chamber of Commerce, our shock and sadness over the tragic shootings in Arizona.
Under any circumstance, the violence, injury, and loss of life that occurred are an outrage to us all. We are especially offended by the fact that this rampage was directed at our democracy itself—striking down public servants as well as free citizens who had come to engage in a dialogue and express their views.
We are praying for a full recovery for Congresswoman Giffords and the others who were injured. And our hearts go out to the families of those who lost their lives.
While the New Year has begun on this sad note, I can report that when it comes to the nation’s economy, we begin 2011 in better shape than we found ourselves last year. The state of American business is improving.
Last week the 112th Congress was sworn in. I am pleased that I will be chairing the Monetary Policy Subcommittee of the Financial Services Committee, which has oversight of the Federal Reserve. Obviously, this position will facilitate my efforts to ensure the Fed provides the American people with more information about what they have been doing with and to our money. Not surprisingly, since my chairmanship was announced, apologists for the Fed have been recycling the old canard about how increased transparency threatens the Fed’s so-called political independence.
With 11 straight months of private sector job growth, America is moving in the right direction. Yet with still too many people searching for work, the Obama administration is continuing its efforts to spur hiring. Last week, as part of that pursuit, the White House Initiative on Asian Americans and Pacific Islanders hosted its Summit on Entrepreneurship and Small Business Growth in Silicon Valley.
The valley is home to many of the world's largest technology corporations and is an enduring symbol of our country's ingenuity and innovation. And, it should be noted, hundreds of Silicon Valley's tech companies are run by Asian Americans and Pacific Islanders - a fact that reflects just how important the culture of entrepreneurship and innovation are in their community.
When control of Congress is split between the two parties, it is much easier to produce gridlock than advancing legislation. Campaign promises can often dissipate amidst the inability to muster enough support to push important legislation through. That is certainly the case now with a Republican House and a Democratic Senate – not to mention an electorally shaken President Obama.
Republicans, however, have a unique opportunity to follow through on their campaign promise of reduction in government spending and overall fiscal discipline. Congress is expected to vote soon on raising the debt ceiling beyond the current $14.3 trillion in order to allow continued government borrowing. The current debt level is about $300 billion shy of that mark.
A failure to authorize an expansion of the debt could stop government deficit spending in its tracks. But it could also lead to a default on the nation’s obligations. This could be catastrophic for the country, as recently argued by Austan Goolsbee, chairman of the U.S. Council of Economic Advisers. In that respect, Mr. Goolsbee specifically decried a Republican opposition to raising the debt ceiling as playing a “game of chicken”.
By law, a statutory limit restricts the total amount of debt the federal government can accumulate. This limit can only be increased by Congress. Treasury Secretary Timothy Geithner noted in a letter to Congress yesterday that this “debt ceiling” will be reached as early as March 31, 2011.
Many “Tea Party” candidates campaigned on the promise to vote against any increases to the debt ceiling. Following through on this pledge would be unbelievably reckless and could potentially crater the U.S. economy.
“The budgetary consequences of this conservative pledge
would be catastrophic and far-reaching, forcing the immediate cessation of more
than 40 percent of all federal government activities (excluding only interest
payments on the national debt), including Social Security, military operations
in Iraq and Afghanistan, homeland security, Medicare and unemployment
insurance. This would not only threaten the safety and economic security of all
Americans but also have dire impacts for the economy and job growth.
This week the House of Representatives adopted rules which could make it more difficult to fund more government spending through increased taxes on individuals or businesses. When coupled with the extension of 2001 and 2003 taxpayer relief laws late last year, it would appear many policymakers in Washington have realized higher tax burdens remain ill-advised in the current economic climate.
Unfortunately, some strategically placed administration officials and lawmakers have failed to embrace this approach. They continue to push proposals that reject the common-sense philosophy behind the new House rules and the tax-rate extensions.As part of the bargaining over extending the current individual tax laws, the president insisted on the resurrection of the death tax -- which fell to zero this year but was poised to roar back in 2011 at 55 percent. The White House compromised at a 35 percent rate, but the problem with this duplicative tax remains: citizens are taxed throughout their entire life on their property, income, and possessions. By taxing individuals' estates after death, the government charges their heirs once again on these same possessions.
On day one of this new Congress, the House Republicans first step is backwards. While professing great concern about spending and debt, they abandon pay-as-you-go budgeting, returning to the Bush-Cheney approach -- endless borrowing. They claimed so much wasteful spending could be eliminated, but reject the very rule that required them to cut spending as one way to offset the revenue loss from each new tax break they give away. Their misleading “Cut-Go” just cuts fiscal discipline and says, “Go borrow from the Chinese.”
They are like the fellow who bellies up to the bar, asking for just one more tax break for his buddies, while declaring, “put it on my tab.” But it’s really “our” tab. All Americans will be indebted for Republican addiction to endless borrowing for endless tax breaks.
We cannot eliminate deficits by revisiting Republican trickle-down economics -- this nonsense dug the deficit hole in the first place. Even Republican economists, like former CBO Director Doug Holtz-Eakin, concede that “there is no serious research evidence” to support the too frequent claim that “tax cuts pay for themselves.”
As we head into the next year and the 112th Congress, understanding the data behind our economic recovery will be crucial if the economy is to grow and strengthen. A closer look at how states fared in 2010 as well as how they fared during the last four recessions can be a useful guide to both Republicans and Democrats who are serious about shaping strong, smart, and strategic job-creation policies in 2011.
Simply put, the Great Recession of 2007-09 was the worst post-World War II recession, and this fact is substantiated in a recent report by the U.S. Congress Joint Economic Committee.