|
THE AMERICAN OPTION |
|
|
|
Written by Senator Jim DeMint
|
|
Thursday, 05 February 2009 |
[Senator DeMint gave
this speech at the Heritage Foundation in the wake of the unanimous rejection
by Republicans in the House of the Democrat Stimulus Bill]
I think all Americans owe a huge "thank you" to
all of the House Republicans and the 11 courageous Democrats who cast their
votes for freedom and opposed the stimulus bill last Wednesday night (1/28).
I'm here to discuss the very real problems facing our
economy and how we can secure prosperity for years to come. Americans are very
concerned about the direction of our country. I've never seen people more
anxious. They are worried about the economy, but even more worried about the
reckless spending and government intrusion into our culture and free markets.
Our economy is in trouble. The unemployment rate is now over
7 percent and climbing. Stock markets have plunged, jeopardizing the retirement
income of seniors. Nearly a million homes were repossessed last year. And in
the [last week] thousands of Americans have lost their jobs at some of our
nation's most recognized companies, including Home Depot, Microsoft, and
Boeing.
In the midst of these difficult and uncertain times,
Americans understandably voted for change. Frustrated with runaway spending,
Wall Street bailouts, and soaring energy prices, they voted for Barack Obama, a
candidate who promised to lower taxes, cut spending, increase domestic energy,
and create millions of new jobs.
Mr. Obama and I were elected to the Senate at the same time
and we've worked together on a number of common goals. I believe he wants to do
what is best for our country. But our economy needs more than hope and empty
promises. And with his first major piece of legislation, we have learned more
about his real agenda than we did after an entire year of debates and speeches.
The stimulus bill that
is being championed by Mr. Obama, which was passed by Democrats in the House last
Wednesday, is the worst piece of economic legislation Congress has considered
in a hundred years.
Not since the passage
in 1909 of the 16th Amendment--which cleared the way for a federal income
tax--has the United States seriously entertained a policy so
comprehensively hostile to economic freedom, or so arrogantly indifferent to
economic reality.
The bill, if it were a country, would have the 15th largest
economy in the world--right in between Australia
and Mexico,
greater than the gross domestic products of Saudi
Arabia and Iran
put together. And the American people will be forced to borrow 100 percent of
the unprecedented $1.2 trillion price tag, including interest. The stimulus
bill will cost well over $1 billion for every page it is printed on and
$400,000 for every job it hopes to create or save.
But after the accolades from the newspaper editorials have
been printed and politicians finish slapping themselves on the back for
"doing something," there will be little to show for all this new
spending. That's because this bill is based on hope, not reality. Democrats
have spared no expense to show how much they care, but in doing so they have
sacrificed common sense.
Proponents argue that we are facing a once-in-a-lifetime
economic crisis and that only an immediate and overwhelming stimulus can ignite
the economy, create jobs, and spur growth. That very well may be true, but the
spending bill passed in the House is just that: a spending bill, not
an economic stimulus package.
The Democrat bill takes money--actually, it borrows
money--and decides where it should go. It does virtually nothing to stimulate
the economy while it wastes billions of taxpayer dollars. It's a hodge-podge of
long-supported pet projects that the normal budget process would have thrown
out.
Using the troubled economy as their motive, Democrats have
opened the floodgates for all sorts of outrageous wasteful spending. Here are
just a few examples from the Senate's bill, which we are debating now:
* $400 million for researching sexually transmitted
diseases,
* $200 million for bike and pedestrian trails and
off-road vehicle routes,
* $200 million to force the military to buy
environmentally friendly electric cars,
* $34 million to renovate the Department of Commerce
headquarters,
* $75 million for a program to end smoking, which if
successful will bankrupt the children's health program the Democrats passed, as it's funded by cigarette taxes.
And those are just some of the ridiculous things they have
written into the bill. With over 600 pages of bill text and committee reports
that were just released to the Senate, we have just begun to
uncover the waste.
Of the $825 billion in the bill that is being sold as an
infrastructure investment, only $30 billion will actually go to build highways,
about $40 billion for upgrades to our telecommunications and electricity infrastructure,
and about $20 billion in business tax cuts. These are the only three components
of the bill that might arguably stimulate the economy and create jobs, if only
temporarily.
Altogether, only 11 percent of the so-called American
Recovery and Reinvestment Act of 2009 will have anything to do with either
recovery or reinvestment.
And rest assured, unlike the oceans at President Obama's
command, the elevated spending levels in this bill will never recede.
The tax side of the bill is little better. Think of it this
way: If nearly every Democrat in Congress supports a tax cut, it's not really a
tax cut. And, indeed, the text of the Democrats' plan reveals $212 billion of
smoke-and-mirrors gimmicks: temporary cuts and rebates exactly like those that
failed to stimulate the economy last year, and eco-shakedown tax credits.
As these facts become known and Republicans begin to
question the wisdom of the plan, the American people are being given their
first glimpse behind the curtain of our new, post-partisan leadership.
Any doubters of the bare-knuckled partisanship at the heart
of the Democrats' trillion-dollar catastrophe would do well to ask a simple
question: Cui bono? Who benefits from
this legislation?
Who indeed? Alternative energy companies, public employee
unions, teachers unions, university faculty and administrators, welfare
recipients, ACORN-style "community organizers," politicians who spend
the money, federal bureaucrats who allocate it, and the lawyers and lobbyists
who will influence every dime behind the scenes.
In other words, this
bill is a massive transfer of wealth not from the rich to the poor, but from
middle-class families and small businesses to favored Democratic constituencies
below and above them on the socio-economic ladder.
This bill is not a
stimulus, ladies and gentlemen; it is a mugging. It is a fraud.
Conservatives who fear proponents of this bill want to inch our economy closer
to European-style socialism are kidding themselves. The proponents of this bill
want to strap a big rocket on the back of our economy and launch it all the way
to Brussels!
This massive spending
bill is fatally flawed. It will not rescue our economy; it will strangle it.
That is why this bill must be stopped dead in its tracks. It cannot be fixed in
the Senate by adding a few tax cuts or taking away a little spending. It must
be scrapped entirely.
Fortunately, there is another way. A better way. A way that
will actually stimulate the economy, spur investment, and create jobs. A way
that will permanently keep billions of dollars--immediately--in the private
sector: in the hands of Americans who buy goods, provide services, start
businesses, and hire employees.
Call it "The
American Option." It is not innovative or particularly clever. In
fact, it's only 11 pages. But it will work. And it is based on proven American
principles of freedom and the opportunity to succeed.
The plan -- developed by scholars J. D. Foster and William
Beach here at The Heritage Foundation--is the best anyone has proposed since the
recession first took hold. I have adopted the plan and will offer it on the
Senate floor next week as a substitute.
The idea is simple: first, make the temporary tax cuts of
2001 and 2003 -- now set to expire in 2011-- permanent. Short-term tax relief,
of the sort envisioned by the Democrats' plan does not stimulate economic
growth.
It's the difference between a $1,000 gift one month, which
you might put away or use to pay off some credit card debt, and a
$1,000-a-month raise, which might get you thinking about buying a house or a
new car or taking a summer vacation or starting a new business.
To encourage people to take risks and create new jobs, we
must make tax relief for families and small businesses permanent. Recessions
are caused by uncertainty that keeps investors on the sidelines. By making low taxes permanent, plans and decisions
can be made with an eye toward the future.
With the 2011 tax-bomb defused, our plan will cut income tax rates across the board
compared to current law. The top marginal rate--the one paid by most of the
small businesses that create new jobs-- will fall from 35 percent to 25
percent. It simplifies the code to include only two other brackets, 15 and 10
percent.
These marginal rate reductions would be permanent and give
the private sector maximum predictability as it decides how to best spend its
recovered income. This is a matter of fairness. No American family should be
forced to pay the federal government more than 25 percent of the fruits of
their hard labor.
Just as we cut taxes
for families and small businesses, we need to cut them for corporations as
well, from 35 percent to 25 percent. And we shouldn't be afraid to say so.
Our corporate tax rate is one of the highest in the world, driving investment
and jobs overseas. Lowering this key rate will unlock trillions of dollars to
be invested in America
instead of abroad.
And rather than giving
large companies loopholes and targeted tax benefits--which only encourage them
to spend money on the lobbyists who secure such goodies--Congress should get
out of the business of picking winners and losers in the market and simply cut
everyone's taxes and let the best company win. My plan will make businesses
compete for consumers, not Congressmen.
To further simplify and improve the code, our plan would
also:
* permanently
repeal the alternative minimum tax once and for all;
* permanently
maintain the capital gains and dividends taxes at 15 percent;
* permanently
kill the Death Tax for estates under $5 million, and cut the tax rate to 15
percent for those above;
* permanently
extend the $1,000-per-child tax credit;
* permanently
repeal the marriage tax penalty;
* permanently
limit itemized deductions to home mortgage interest and charitable
contributions.
The Heritage Center for Data Analysis widely respected
economic forecasting model projects this plan would create nearly 500,000 jobs
this year, 1.3 million next year, 7.5 million by 2013, and a total of nearly 18
million jobs over the next decade.
The Democrats are forced to rely on hope to save or create
just 3 million jobs as a result of their plan. When pressed, they refuse to
stand behind these numbers. But with our plan -- the American Option -- long-term,
broad-based tax cuts will spur the American economy to create 7.5 million jobs
in five years and nearly 18 million jobs in just ten years. That is an average
of over 2 million new jobs a year.
Instead of taking a trillion dollars out of the economy so politicians can spread it around to special
interests, the American Option will keep
a trillion more dollars in the hands of American workers and businesses.
Instead of growing
government, where waste and corruption run rampant, we grow the private sector, where innovation flourishes. Instead of
giving the power and control of our economy to politicians and bureaucrats, we
give Americans and small businesses the freedom to spend and invest their own
money.
The evidence in support of this legislation is not
theoretical but historical, unlike the Keynesian arguments in favor of the
Democrats' debt plan. John F. Kennedy's 1964 tax reductions led to 9 million
new private sector jobs in five years. Ronald Reagan's 1981 tax cuts led to 7
million in the same time frame. And five years on, the 2001 and 2003 tax cuts
have led to the creation of 4 million and 6 million jobs, respectively.
Every time the United States
has cut marginal tax rates, millions of jobs have been created -- jobs that
lifted the unemployed into the workforce, the working poor into the middle
class, and the middle class into long-term economic security.
Similar stories can be told of Great
Britain rescued by Margaret Thatcher in the
1980s and Israel's
economic reforms under Finance Minister Benjamin Netanyahu.
Mr. Obama's own chief economist, Christina Romer, has shown
that tax cuts do truly stimulate economic activity, to the tune of $3 of
increased output for every $1 of tax relief.
On the other hand, the world's great experiments in spending
one's way out of a recession have three textbook examples. The first is
Franklin Roosevelt's response to the Great Depression. The New Deal began in
1933 with unemployment around 25 percent and effectively ended with the
establishment of FDR's "war economy" in 1940, with unemployment still
hovering around 20 percent.
The second example is from the 1970s, when huge Keynesian
deficits in the United States
neither spurred economic growth nor curtailed inflation.
The third example is Japan's
so-called Lost Decade, in which the Japanese government tried in vain for ten
years to spend its way out of a national real estate and investment market
collapse.
Every discredited idea
from these three monuments to economic mismanagement can be found in the fine
print of the Democrats' trillion-dollar socialist experiment--massive public
spending, skyrocketing deficits, inevitable tax increases, and the disastrous,
unintended consequences of hurried and arbitrary meddling in the economy.
That leads me to one final and overarching point, a point
the mainstream media refuses to understand and elite liberal institutions
refuse to acknowledge. It is the point conservatives must make if we ever hope
to rescue our economy from this bill and regain our national majority.
That point is very simple, and we must repeat it every day
on the floor of the Senate, from the well of the House, around household dinner
tables and office water coolers. Any time a pundit, a politician, or anyone
else says that this recession is the fault of the free market, that Mr. Obama
has inherited the problems of a conservative ideology, conservatives of every
stripe can answer with force and facts:
Conservatism has nothing to apologize for.
It was not
conservatism that foisted Fannie Mae and Freddie Mac onto the national credit
market.
It was not
conservatism that shook down the nation's banking system with the Community
Reinvestment Act.
It was not
conservatism that asked for, lied about, and then wasted $350 billion for the
Troubled Asset Relief Program. Nor
did conservatism sign on to the second tranche of the TARP funds now in the
hands of our notoriously irresponsible new Treasury Secretary.
It was not
conservatism that used taxpayer funds to bail out the perpetrators of the Wall
Street meltdown. It wasn't conservatism that led our financial industry to
make these reckless loans, and it certainly wasn't conservatism that made that
industry ask for the taxpayers to foot the bill for their idiocy.
It wasn't conservatism
that bailed out an auto industry bankrupted by its inability to manage costs
and strangled by the barnacles of unionism.
Every problem now
plaguing our economy can be directly traced to some government policy that was
passed over the vehement objections and prescient warnings of principled
conservatives. The same scenario is playing out with the Obama spending
bill, but the result is not pre-ordained.
This is not a moment for Republicans to rally simply in the
interests of party unity or to give the Democrats a run for their money. This
is not a time to merely fight the good fight. This is a fight we can still win.
The Democrat plan will not work, it will hurt our economy, it will kill jobs,
it will lengthen and deepen the recession, and it will delay any hope of
recovery.
We should all be encouraged by the movement among
congressional Republicans against this bill. But it is not enough to expose the
dangerous flaws of the Democrats' plan. That is why I am proposing this plan.
It is not simply a viable alternative, it is the American
Option to rescue our economy from an inexorable slide toward European
social-democracy. With a troubled economy, mounting national debt and an
entitlement crisis ready to explode, conservatives must offer bold and proven
solutions to secure America's
future.
We cannot simply derail the Liberal Express, we must show
our fellow countrymen a better path. There is nothing wrong with our economy
that a free people cannot solve. All we need is the freedom to take back from Washington
control of our economic destiny.
The policy approach I have outlined can work, and if
implemented, will work. How do I know? Because liberating people to pursue
their own happiness and fortune is the only thing that ever does.
Thank you very much, and may God bless America.
The Honorable Jim
DeMint (R-SC) is chairman of the Senate Steering Committee, a caucus of Senate
conservatives.
|
Discuss this item on the forums. (22 posts)
|
|
