Homeowner Flood Insurance Affordability Act of 2013 -- Motion To Proceed

Floor Speech

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Mr. President, tomorrow night we have the State of the Union Address, and news reports say that one of the issues the President will be speaking about is income inequality. That brings me to something I should have spoken on a couple of weeks ago, because January 8, 2014, marked the 50th anniversary of President Johnson's call for a war on poverty. This anniversary provides a time to reflect on and reevaluate its twin aims of poverty relief and economic opportunity.

The goal of poverty relief is to ensure that even those who might find themselves in tough times have sufficient assistance to meet their basic human needs while lifting themselves out of abject poverty. In other words, we have to make sure people have a roof over their heads and food on their table, as minimums.

The goal of economic opportunity is to ensure the lower rungs on the economic ladder are strong enough to support that climb out of poverty. Economic opportunity is another term for the American dream that through hard work, as we know, we can improve not just a person's own lot in life but that a person's children and a person's children's children will be better off.

If we judge the war on poverty according to the first aim, a good case can be made that we have been very successful. Looking at the official poverty level that is based on income prior to many transfer payments, little has changed since 1964. However, consumption-based studies show the poor are much better off today than they were decades ago. A study available from the National Bureau of Economic Research that looks at consumption rather than income shows over a 26-percent decline in poverty since 1960.

There is little doubt that programs from Social Security to food stamps, from Medicaid to heating assistance, have helped increase the standard of living for those at or below the poverty level. However, economic growth and the general decline in the cost of technology have also been a great source of poverty reduction.

While providing relief from poverty is an admirable goal, the American dream has always been about opportunity. As President Johnson said in his State of the Union Address 50 years ago, the goal of the war on poverty ``is not only to relieve the symptoms of poverty, but to cure it and, above all, to prevent it.''

It is this goal of the war on poverty that has largely fallen flat. As I referenced earlier, the official poverty level has changed little in the 50-year fight on poverty, despite spending trillions of dollars on antipoverty measures. In 1964, around 19 percent lived in poverty. Today, according to the most recent census data, that number stands only slightly lower at 15 percent.

We all know America is the land of opportunity. In America, we have no caste system. Laws and social norms do not relegate any individual or any group of individuals to lower social status. It can be tough, but individuals can and do climb their way to the top. Sometimes this process can take generations, but it has always been a source of pride that the next generation is better off and has more opportunities than the generation that came just before.

Indeed, there is considerable upward mobility in our economy. A 2007 Treasury study on income mobility found that between 1996 and 2005, around half of those taxpayers who found themselves in the bottom quintile in 1966 moved to a higher income group in 2005.

How about the very top of the income distribution my colleagues are fixated on? Contrary to what some may claim, those at the top are not the same year after year. The Treasury study found of those taxpayers who were in the top one-hundredth of 1 percent in 1996, only 25 percent remained in that group in 2005.

While there is upward mobility in America, there is always room for improvement. And there certainly are those who feel trapped in a cycle of poverty.

Unfortunately, too often programs meant to help the less fortunate can act as an anchor, preventing Americans from climbing up the ladder of success. I have no doubt the vast majority of those living at or below the poverty lines are very hard-working people. Our programs do not act as an anchor because of the poor themselves but because too often programs meant to help actually turn out to punish success. Too often those who are seeking to escape generations of poverty feel as if the harder they work, the further behind they get.

The landmark welfare reform legislation Congress passed in 1996 sought to lift the anchor off the backs of the poor. It sought to increase opportunity by incentivizing individuals to work.

The welfare reform law was meant to reward personal responsibility and a strong work ethic rather than punish these traits so essential to success.

The landmark law established work requirements, requiring individuals to work when job ready and within 2 years after coming on assistance. To receive funding, States must require a minimum amount of work, and that participation must be in hours by families receiving assistance. This meets one of TANF's--Temporary Assistance for Needy Families--primary goals: to end the dependence of needy parents on government benefits by promoting job preparation.

In other words, if you are going to move up the economic ladder, you have to be in the world to work. If you are shunted off to the side of society, out of sight, out of mind, then there is no opportunity to move up.

In the years that followed, those who argued dire consequences would result, particularly for single mothers--these people were proven wrong. Following the enactment of welfare reform, there was a precipitous decline in welfare caseload and usage. At the same time, the single mother labor force participation rose and their incomes rose.

Unfortunately, President Obama has persistently implemented policies that erode these statutory regulations; thereby, discouraging personal responsibility and a strong work ethic.

On July 12, 2012, the administration issued what is referred to as guidance to States about this TANF Program. This guidance explained how States can now seek waivers of work requirements for welfare recipients for the first time since the TANF Program was created in the 1996 welfare reform law.

The 1996 welfare reform helped families to enjoy the dignity of self-sufficiency. It reduced poverty. Instead of pushing families out of poverty, the President's policies trapped Americans in soul-crushing government dependency.

While welfare reform made strides, too often those working hard to get a leg up feel as if they are only treading water. In November 2012, the Congressional Budget Office released a report looking at the effective marginal tax rate of low- and moderate-income workers; that is, how much extra tax or reduction in government benefits is imposed on an American worker when he or she earns an additional dollar of income; in other words, people are pretty sophisticated about looking at how much they get in a government program, and if they go into the world to work, are they going to be penalized for it instead of drawing help.

According to CBO, in 2013, the average marginal effective tax rate faced by low- to moderate-income workers was 32 percent. Keep in mind this is just the average. Many workers experience marginal effective rates far exceeding the top statutory rate of 39.6 percent paid by the highest income people in America.

For an example, an economist with the Urban Institute calculated the marginal effective tax rate of a single parent with two children under various scenarios. Just one scenario examined what would happen if a household income rose from $10,000 to $40,000.

Perhaps a single mother was able to increase her skills and earning potential by taking classes at night at a local community college. If this single mother had been receiving all the benefits she was eligible for, she would face a marginal effective tax rate of 80 percent as a reward for trying to make a better life for her and her family. That is a far higher marginal tax rate than most on the left even proposed for the much derided top 1 percent.

It is difficult to blame an individual in this situation who becomes disgruntled and just gives up, not seeking employment. It is we in the government who have tilted the scales against those low-income Americans trying to realize the American dream. In order to alleviate this disincentive, there must be a better coordination between benefits and how they are phased out.

Instead of reducing this disincentive to work, in recent years we have actually made it worse. The premium tax credit and cost-sharing subsidies that were enacted as a part of the Affordable Care Act will increase marginal tax rates by an average of 12 percentage points. Moreover, according to an analysis by the Joint Committee on Taxation, when the premium tax credit is fully in effect, some workers could experience ``infinite marginal tax rates.''

Some of you may wonder what is an infinite marginal tax rate. To put this into more understandable language, this means some workers could actually face marginal effective rates exceeding 100 percent.

For a worker in this situation, it means if they decide to put in a few more hours at work or get a second job to earn extra cash, they could actually end up worse off financially. Of course, this is an absurd result that tells people do not work hard, do not try to advance your situation, because if you do, we are going to take it all away from you.

Harvard economics professor and former chief White House economist Greg Mankiw recently opined on this result saying: ``It is hard to believe that the law is so badly written as to have this feature.'' Well, Professor, believe it or not, the President and the majority party did enact this law with this feature, and they did so with the full knowledge of the Joint Committee on Taxation analysis which I had made public.

Often I hear my colleagues on the other side come to the floor to pound the table about income inequality--something we are going to hear the President talk about tomorrow night in his State of the Union Address, we are told. There are a number of studies that examine income inequality. There is great variation among these studies on how income inequality is measured and the degree to which it has actually increased over the years.

However, all these studies do point to some degree of increasing inequality over the last several decades. That we have to admit. This has occurred during both Republican and Democratic administrations. It has also been occurring across most of the developed countries. It happens not

just in the United States but other places as well.

My colleagues on the other side of the aisle often cite income inequality to justify whatever Democratic policy agenda is up at that particular time. Whether it is taxing the rich, raising the minimum wage or extending unemployment benefits, they cite income inequality to justify their aims.

However, these policies either fail to address the root causes of inequality or are nothing more than a temporary bandaid. Income inequality is a symptom of much larger structural problems, not the disease itself. Raising taxes might be successful at generating revenue to fund greater wealth transfer payments, but it does nothing to rectify what caused the inequality in the first place.

Soak-the-rich policies do not create greater opportunity for low-income individuals. In fact, because of the negative effects on economic growth and capital formation, they can reduce opportunity not only for the poor but for all Americans. Our country has historically been a land of opportunity. Whether such policies are well intended or cynical political opportunism, they are not worth trading away our Nation's legacy of opportunity.

You do not have to take my word for the antigrowth effects of increasing taxes. Research by Christina Romer, President Obama's former chief economist, found that a tax increase of 1 percent of GDP reduces economic growth by as much as 3 percent. According to this study, tax increases have such a substantial effect on economic growth because of the ``powerful negative effect of tax increases on investment.''

In effect, what those who pursue wealth-destroying redistributionist policies are saying--to quote Margaret Thatcher--is that they ``would rather that the poor were poorer, provided that the rich were less rich.''

That may reduce inequality but at the expense of making us all worse off. Our goal must be to create wealth and to create opportunity for all Americans.

I reject the notion that in order to improve the lot of one individual someone else must be made worse off. The leadership of the majority has become fixated on redistributing the existing economic pie. I believe the better policy is to increase the size of that pie. When this occurs, no one is made better off at the expense of anyone else.

This is best achieved through progrowth policies aimed at growing the economic pie, not by taking from some and giving to others.

Similarly, increasing the minimum wage or extending emergency unemployment benefits also fail to address long-term causes of inequality. These proposals are well intended, and I myself have supported both under the right circumstances but neither strike at the heart of income inequality.

While there are many contributing factors, much of the research points to the widening wage gap between skilled and unskilled labor. If we are to address income inequality, the primary focus must be on ensuring individuals have the skills necessary to compete in a 21st century economy.

One way to accomplish this is through greater competition in education through increased school choice. We should also further expand our efforts made in 1996 to incentivize individuals to work and ensure those who want to work can gain the skills that are necessary for a 21st century economy.

There are certain ways we can help reduce poverty and promote opportunity. However, just throwing more and more money at existing programs is not the answer. According to a Congressional Research Service report, Federal spending on low-income assistance programs as a percent of Federal outlays has more than doubled since the 1970s.

No amount of money then will change the tried-and-true formula for escaping poverty; namely, graduate high school, wait until marriage to have children, and find a job and keep it for at least 1 year. While even those who follow this formula can fall on tough times, statistically it is rare that they will find themselves poor for a sustained period of time.

We should be sure our laws and programs encourage rather than discourage these three keys to success. One place to start is to take a look at reducing or eliminating the marriage penalty that can arise in both our tax laws and benefit programs.

The war on poverty will not be won as long as the value of marriage is diminished.

You cannot disagree with the facts. Children in single-parent households will face more challenges and are more likely to be poor.

Some economists say that children raised in single-parent homes are four times more likely to be living in poverty. According to census data, in 2012 just 6.3 percent of the families headed by married couples are poor. In contrast, 31 percent of those in single-parent households are poor.

Today, more children are born out of wedlock, more marriages are dissolved, families are not as strong as they could or should be, and we have a social problem that cannot be cured with more government spending. The war on poverty must be solved in part by encouraging and nurturing healthy families.

Of course, there is no magic cure-all for poverty. In fact, that is the point. The notion that experts in Washington can wage a successful war on poverty with spending programs as a weapon was never realistic. We are dealing with real people, with real lives trying to realize their dreams, not pieces on a chess board that we can move around as we wish.

Our goal should be to tear down the barriers to economic opportunity and simply get out of the way. When we discover that well-intentioned programs designed to help the poor are actually trapping them in generational poverty, we need to have the courage to chart a new course.

The American dream is not to be dependent upon others for bare substance but to have the opportunity to get ahead through your own hard work and perseverance. All Americans deserve the self-respect that comes from earning your own success in life.

Millions of immigrants have flocked to our shores because America offered greater economic opportunity than any other nation. We are at risk of losing part of what has made our society unique. We should seize the opportunity of this anniversary of the war on poverty 50 years ago to reevaluate our approach to ending poverty and get back to what has historically worked for generations of Americans, and that is simply to promote economic opportunity.

I yield the floor.

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