Date: 03/10/2011

Date: 03/08/2011

Date: 5/3/2010

Congress Freezes Its Own Pay

by Ron Paul

Last week Congress did something fiscally responsible. It’s not very often I can say that. Granted, it was small in the grand scheme of things, but I was glad to be an original cosponsor, along with Congressman Harry Mitchell of Arizona, of a bill to block the automatic pay raise that Congress otherwise receives every year. Every Member of Congress gets this raise unless it is expressly voted down. For the second year in a row Congress has voted to freeze its own pay, which, in a time of skyrocketing deficits and high unemployment, is the very least Congress can do.

The country is in a serious recession, bordering on depression. Unemployment is grossly underreported, and not likely to get better anytime soon. American citizens and businesses are overtaxed, yet tax revenues still fall far short of our government’s voracious appetite for spending. This is no time to raise taxes. And since congressional salaries come from tax revenue, allowing ourselves a raise would fly in the face of economic reality.

Of course, Congress ignores economic reality all the time. But if Congress can freeze salaries as a first step towards fiscal sanity, it can freeze – if not drastically cut – a vast array of federal expenditures.

At the very least, Congress could freeze current spending levels, instead of constantly increasing them. We could stop increasing the debt ceiling every few months, as has become our habit. We could freeze regulations that add to the burden on our struggling small businesses. We could freeze intrusive bailouts that upset the balance of the market and cost us billions – billions we could instead use to eliminate the oppressive income tax! We could freeze the money supply and stave off the tsunami of inflation the Fed has been generating for years.

Furthermore, we could address the mismanagement and waste in foreign affairs which adds immensely to our budget. Like entitlements, militarism is expensive. We need to reject sanctions as a precursor to military action, and embrace free trade as the most effective method for spreading liberty. After all, as the great economist Frederic Bastiat said – when goods don’t cross borders, armies will. It is time to bring our troops home, instead of instigating expensive new wars when we’re already hopelessly mired in several conflicts already. We need to rethink the whole idea of pre-emptive war- not only because it’s wrong and counterproductive, but because we literally cannot afford it!

We could do much to restore fiscal sanity to this country simply by stopping the madness and bringing our troops home – from Iraq, Afghanistan, Korea, Japan, Germany, and so many other places. This costly global empire does not serve the interests of the American people and we should end it peacefully and voluntarily now, lest it end in chaos later.

Though it may be wishful thinking on my part, I’m encouraged by the small step taken by Congress last week. Fiscal sanity can begin with a small step, and I want to encourage Congress to move in this direction.

In his latest column Ron Paul predicts that spending will top $4 trillion this year and asserts that contrary to the government’s belief, public spending is not the key to prosperity. On the contrary, it will eventually lead to massive inflation and a dollar crisis, tragically hurting prudent and responsible savers more than anyone else.

Download the column as an MP3 file here (3:23 minutes).

Budget Expands Government as Economy Contracts

by Ron Paul

Last week the House passed another budget that increases federal power, raises taxes, and increases the national debt. I voted against it, and was pleased to see that not a single Republican representative voted for it. Legislators often see bipartisanship as constructive, but I disagree especially where the destruction of our economy or our liberty is concerned. There has been too much bipartisan consensus on expanding government far beyond the bounds of the Constitution which we all swore to defend and uphold. Because of this, I have never been able to vote for a budget. However, it was good to see Republicans come together on this important vote, even if their alternative budget was almost as bad.

Despite the deterioration of our economy, this is the largest budget ever passed, at $3.6 trillion. Gross domestic product and tax receipts are shrinking. The government has less money to spend this year, and so it spends more – $1.5 trillion more – than it has. When the economy expands, the government expands. Worse, when the economy contracts, the government expands more. Even more troubling is that even though the size of the budget boggles the mind, it is never the final word on federal spending. No allowance has been made for future bailouts and stimulus plans that are highly likely. There are always supplemental bills passed later in the year. War spending is one of those. Spending on Afghanistan is only partially included in budget, with a supplemental request expected in the future. History shows that true costs far exceed estimates. So even though these numbers sound appalling enough, I predict spending will top $4 trillion this year, raising the national debt by over $2 trillion when all is said and done.

Some may notice that the neo-conservatives who masterminded the policy of global interventions are not complaining about the level of military and foreign spending. This is because rather than drawing down our costly interventions, Obama is largely staying the course on these issues. In fact, this week a group of leading neoconservatives met to discuss how best to support the President on foreign policy! I am disappointed and concerned that, in spite of a change in leadership, we will remain the policeman of the world, placing ourselves at grave danger in many ways.

As our mountain of debt is projected to double with the new budget, many are wondering how long our country can keep this up before serious repercussions are felt. Obviously we can’t continue down this road indefinitely. Certainly, no country has ever prospered when their public sector spent half or all of the nation’s GDP. Yet we are saddled with leadership that seems unwaveringly convinced that the key to prosperity is public spending. This will be exposed for the lie that it is when our creditors wake up and call in our debt. The temptation at that time will be for the government to simply print up dollars in the amount needed. This type of debt repudiation could signal the end of the dollar as its value sinks to zero. We are seeing all the signs that this could happen. Certainly there are no signs of the alternative, which is paying down debt and taking the path of fiscal responsibility.

Tragically, it is those who save their dollars, the most prudent and responsible among us, that will be hurt most by this irresponsibility in Washington.

House Democrats recently adopted a budget with massive tax hikes, many of which are directed at those Americans who can least afford them. By allowing the Bush tax cuts to expire in 2010, this budget will raise income taxes not only on those in the highest income brackets, but raises the lowest bracket from 10% to 15% as well. Estates would again be taxed at 55%. The child tax credit would drop from $1000 to $500. Senior citizens relying on investment income would be hurt by increases in dividend and capital gains taxes. It’s not just that the Democrats want to raise taxes on the rich. They want to raise taxes on everybody. The problem is, policing the world is expensive, and if elected officials insist upon continuing to fund our current foreign policy, the money has to come from somewhere.

The wars in Iraq and Afghanistan have already cost us over $1 trillion. The Democrats’ budget gives the President all the funding he needs for his foreign policy, so one wonders how serious they ever were about ending the war. While Democrats propose to tax and spend, many Republicans aim to borrow and spend, which hurts the taxpayer just as much in the long run. Supporting a welfare state is expensive as well. Over half of our budget goes to mandatory entitlements. The total cost of government now eats up over half of our national income, as calculated by Americans for Tax Reform, and government is growing at an unprecedented rate. Our current financial situation is completely untenable, and the worst part is, as government is becoming more and more voracious, the economy is shrinking.

The bottom line is that Washington has a serious spending addiction. While both parties debate how to raise the revenue, both parties seem happy to spend over $3 trillion of your money in various ways. While some in Washington criticize the war in Iraq, very few are criticizing the interventionist mindset that got us into the war in the first place. Many so-called “Iraq War critics,” criticize this administration rather than truly opposing the decades old policies that led to war. They claim they will eventually get the troops out of Iraq, but the danger is that they simply plan to move them around to other countries, not bring them home. The American people want peace. Minding our own business is the best way to achieve it. Not only is it also a whole lot cheaper, but free trade and friendship with other countries benefits all involved.

This spending spree is exactly the wrong policy for an economy on the brink of recession. History has shown that all empires eventually crumble under a worthless currency and with an exhausted military. Since too many of our nation’s leaders haven’t taken the time to learn from history, we are seeing mistakes repeated through recently enacted policies such as the new House budget.

One Christmas tradition Congress could do without is the broken process of passing the annual Omnibus Spending Bill, which we recently did right before the holiday recess. Every December Congress fights and argues over spending and never seems to be able to pass the necessary appropriations until the very last minute. There is panic and threats of government shut downs and reduction in essential services. And they always threaten the essential services, as if there is no waste they could possibly eliminate instead.

This past December, right on cue the administration warned about dire civilian defense department layoffs if the money didn’t come soon. And so at the very last minute the Omnibus was rushed through in a whirlwind, just in time to save the day. Members of Congress had less than 24 hours to read the nearly 3,500 page bill before a vote was taken. The bill was supposedly much too important to waste time reading it. I feel differently. I feel the important bills are the ones we should take especial care to closely examine. However, we are led to believe that if the Omnibus bill failed, horrible things would have happened.

But the situation is a setup that ensures our government spending balloons every year just as the elites and special interests dictate. The vast majority of Members of Congress don’t actually know what the money is being spent on until after passage and by then it is too late. To address this flawed and corruptible process I have proposed a very simple change called the Sunlight Rule, which mandates that bills be presented to Congress and staff for review in their final form no less than 10 days before they come to the floor for a vote. This would allow the representatives of the American people time to read the bills before having to make a decision on them. Every now and then you hear criticisms of congressmen and women for not reading the bills.

That is a problem, however in cases like the Omnibus spending bills, a few hours is not nearly enough time to comb through and evaluate the hundreds of pages they contain. The rules do not currently specify any amount of time that must be allotted for Congress to read or deliberate any legislation before a vote. That needs to change. Congress should read the bills. But to do that requires an appropriate amount of time. More appropriately phrased, Congress should be ALLOWED to read the bills. And no member of Congress should, in good conscience, vote affirmatively on a bill they haven’t fully analyzed. I am hoping that in the New Year more of my colleagues will resolve to take a stand for honesty and due diligence in representing the people of this country and that we can enact the Sunlight Rule. With it, we will be a wiser, more open Congress and our decisions in Washington will be more deliberative and fully informed as they ought to be.

This week Congress finished work on its final spending package for the year. This “Omnibus” bill contains many of the spending bills that did not get passed throughout the year. Last minute changes made by the Senate mean President Bush is likely to sign the legislation into law. What this bill means is lots more of Washington spending your money. And, with a year of talking and fighting about earmarks, we did not see a significant change in that area either.

Especially disconcerting is the overseas spending. Let me point to just one example. In that portion of the bill for military construction, there were nearly one billion dollars in earmarks for spending overseas. Again, this is just in the portion for military construction projects. One dozen foreign countries will benefit from this taxpayer sponsored largess. Equally bad, we are building these new military facilities overseas while we continue to close our military bases here at home designed to defend the United States. During the most recent round of base closures, I introduced legislation that would halt base closures here in the United States while our men and women are engaged in combat missions in the Middle East.

How odd is it that while this legislation failed to pass, we are now earmarking hundreds of millions of dollars for bases in countries such as Bahrain and Qatar? Our policy is gone awry, is costing us billions here, and billions there, totaling trillions of dollars when added up. Yet the last key piece of legislation passed by Congress this year does absolutely nothing to even begin to address this problem. In fact, as I have suggested here, it only exaggerates the problem. If this is Washington’s idea of the spirit of Christmas and charity then it is a sick joke. This holiday season we should be more concerned about the less fortunate here in our own country. People are facing the possibility of losing their homes because of a mortgage crisis brought on by inflation, businesses are being pushed into bankruptcy by a burdensome regulatory state, and the tax code makes it hard for many people to afford basics like medical care, gasoline, and educational expenses for their children.

America is a generous country, at this time of year that is more visible than ever. But, in this case, charity truly must start at home. We need to stop these overseas earmarks and put those dollars to work here in this country. We need to dredge our own ports and river mouths. We need to build bridges in America instead of constructing multi-billion dollar facilities abroad. And, most importantly, we need to allow people to keep their own resources so they can afford life’s necessities, as well as the ability to support the charities of their own choosing. In the true spirit of Christmas charity Washington should have given back to hardworking taxpayers their own earnings. Despite the recent actions of Congress, I do hope everyone has a Merry Christmas and safe travels.

As the year draws to a close, the battle over spending in Washington is heating up. The Democrats want to expand government healthcare, while the President has vetoed the second attempt to expand SCHIP. The latest version of the State Children’s Health Insurance Program would have expanded the entitlement program and raised taxes, just as the earlier version did and the President showed fiscal restraint with his veto. Reducing our entitlement programs here at home is not against saving the children, as the rhetoric goes, it is about saving the country’s economy.

The fact is we have huge trade imbalances, massive deficits, and a $9 trillion national debt, which balloons to $60 trillion if unfunded future liabilities in social security and other promises we have made to Americans are included. We are at a crucial point in history right now. We must think very carefully about our next moves. There is coming a time, if we continue on this path, when all that our tax dollars and government revenues will be able to do is pay interest on the mountain of debt we have compiled in the past few decades. That will mean no government programs or services of any kind will be funded, yet future generations of Americans will still struggle under a crushing tax burden with nothing to show for it.

That is why fiscal restraint and common sense with the budget are so vitally important in government. The difference now is that our printing presses at the Federal Reserve are getting worn out as we have expanded our money supply to the breaking point with yet another rate cut this week. As the dollar falls, it is losing its reserve currency status as many countries are shifting to the Euro or the Chinese yuan or other currencies. The more that trend continues, the weaker we become on the world stage. Those foreign governments and entities that enabled us to spend so much for so long are wearing thin and cutting us off. The truth is our enemies won’t need a nuclear weapon to harm us if we keep spending phantom dollars at the current rate.

In fact, they won’t need to do anything but sit back and watch as we spend ourselves into oblivion. Historically, empires fail because they run out of money, or more accurately, run out of the ability to spend or inflate. Unfortunately, that is exactly the direction we are headed. We need to control spending, immediately, before it is too late. I applaud the President for his veto of the SCHIP expansion bill. It is a step in the right direction. But it is just one small step. What our economy needs right now is to go full gallop away from the tax and spend policies that have gotten us into this mess.

Congressman Charlie Rangel recently unveiled a tax plan that Republicans estimate would raise taxes by $3.5 trillion over 10 years. Democrats questioned the math. Now, the Democrats on the Joint Economic Committee have released a report on the total costs of the military operations in Iraq and Afghanistan , including “hidden costs” such as interest on the money we’re borrowing, and long term healthcare for vets. The bill comes to $3.5 trillion. Republicans are, of course, questioning the math on this item. One thing taxpayers know is taxing and spending is expensive, and government cost estimates tend to be on the conservative side relative to the actual bills. However extracted and spent $3.5 trillion is an unimaginable extra burden on our economy. If $3.5 trillion is the true cost of these military adventures, $11,500 is the amount every man, woman and child in this country pays. So, a family of four would pay $46,000 just for this war. This is an especially painful number to me, as the median household income of my constituency in Texas is just $43,000 a year.

In other words, war has cost more than an entire year’s worth of income from each middle class Texas family. What about the impact of these costs on education, the very thing that so often helps to increase earnings? $46,000 would cover 90% of the tuition costs to attend a four year public university in Texas for both children in that family of four. Obviously, it would far outpace the cost of a community college degree, so vital to so many in the workforce. But, instead of sending kids to college, too often we’re sending them to Iraq , where the best news in a long time is they aren’t killing our men and women as fast as they were last month. The Heritage Foundation estimates a $3.5 trillion tax increase would be responsible for 2,200 lost jobs in my district alone, over 70,000 lost jobs across Texas . That’s 70,000 Texans in unemployment lines, without health insurance for their families. Some Democrats may not want to spend $3.5 trillion on Iraq , but they do want to raise it in new taxes.

And, by digging our economy into a deeper hole, they would create a lot more demand for the social programs they propose. Tax and spend policies create needs they can never satisfy. A government check does not make up for a lost job. Americans do not want more of this. Americans believe in hard work and self-sufficiency, not standing in line for government hand-outs. We are supposed to be living in a land of opportunity, but opportunities fade fast if more tax and spend policies are enacted. The more Congress meddles in the economy, the bigger the problems get. Congress should not increase taxes by $3.5 trillion and the administration needs to end the occupation of Iraq with its costs of $3.5 trillion to taxpayers. Let the hardworking American taxpayers keep their money. Families need that $46,000 far more than government does.

Last week this column addressed the train wreck that federal spending has become. To score political points politicians will make loud noise about fairly small matters such as earmarks, even while refusing to address the real problem. Namely, that our federal government is too big and does too much. Politicians prefer to pass a bill or create a program every time somebody points to a new social problem, this way they can tell their constituents how much they are doing to help. Instead of rationally explaining the proper role of government, politicians have attempted to play the role of friend, preacher, parent, social worker, etcetera– in essence, whatever any organized special interest can demand. Waste, fraud and abuse are often easy targets. Everybody knows a story of the government doing something absolutely ridiculous and wasteful. Plus, recent headlines have been packed with stories of corruption in Washington. One thing that has not drawn enough attention is the link between the size of government and the mismanagement that leads to wasted money. If the government was restrained within its proper constitutional functions, it would be far better managed and much more readily would proper oversight occur. You see, while waste, fraud and abuse are very easy to attack, it seems they are much more difficult to actually address within the current federal behemoth.

For example, the General Accounting Office puts out a “high risk list” and describes this list as programs with “vulnerabilities to fraud, waste and abuse and mismanagement.” There are currently 27 programs and operations on this list, up from 26 last year. But here are the more surprising facts, the list was originated with 14 programs in 1990. Of those original 14 programs, from 17 years ago, only 8 have been removed. How can it be that 6 programs remain on such a list nearly two decades later? While government is supposed to move slowly, this is ridiculous. What GAO is saying is that a problem exists, we have been aware of it for 17 years, and it is still not corrected. Of course, with the size and scope of federal activity, including attempting to rebuild societies in the middle east, and massively expanding federal involvement in education (along with thousands of other “programs”), it is small wonder that this list doesn’t really get addressed.

Yet it does seem reasonable to ask “If you can’t stop waste in 6 federal programs after 17 years, how exactly will you improve local schools or foreign nations?” In the time that the GAO list has existed, there have been 33 additions and a mere 18 removals, including two this year. Only when the people demand the federal government stop trying to meet any and all demands, and instead return to a constitutionally limited republic, will the list of programs subject to waste, fraud and abuse be dramatically reduced. While government will never be perfect, a limited government is far more able to not only identify problems, but to actually correct them.