Concurrent Resolution on the Budget for Fiscal Year 2015

Floor Speech

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Mr. McCLINTOCK. Mr. Chairman, I yield myself 6 minutes.

Mr. Chairman, the budget substitute offered by the Congressional Black Caucus is a good faith effort to lift a growing portion of our population out of chronic poverty and despair, a goal all of us share. It attempts to do so over the next 10 years by raising $2.3 trillion of taxes on corporations and the wealthy and running up an additional $4.3 trillion of debt to increase overall Federal spending by $6.7 trillion to fund so-called stimulus spending relative to the Republican budget. My fear is that it will accomplish exactly the opposite of what it intends, harming the very people it is trying to help.

Let's start with some fundamentals on tax policy.

First, we need to understand that businesses do not pay business taxes. There are only three possible ways for business taxes to be paid: they are paid by consumers as higher prices; they are paid by employees as lower wages; and they are paid by investors as lower earnings--your 401(k) or pension plan, for example.

Secondly, we need to understand what a trillion dollars is. Divided by the number of U.S. households, it comes to about $8,200 for every family in America.

As much as we like talking about taxing the wealthy, there aren't enough wealthy people in this country to make more than a dent in these numbers. Indeed, many of the so-called wealthy are actually small businesses filing under subchapter S.

Raising taxes by $2.3 trillion ultimately, then, means that families, on average, will have $18,000 less to spend on their own needs that they will pay through higher prices in stores, through lower wages at work, or as lower retirement savings.

In addition, the CBC budget would plunge our Nation $4.3 trillion further into debt after 10 years relative to the House Republican budget. That is more than $35,000 per household. That is not a theoretical number. That amount, plus interest, will have to be paid back in future taxes just as surely as if it appeared on your credit card statement. In fact, families will be required to pay this debt back before they pay their credit card, and the IRS is quite insistent that they do.

Again, not all of that will be direct taxes. Much of it will be hidden in higher prices, lower wages, and lower retirement savings for families. But make no mistake; it must all be paid back, and families will bear that burden.

Let's look at the massive increase in spending designed to jump-start the economy. That policy has already failed us, and failed us miserably, and here is why:

Government cannot inject a single dollar into the economy until it has first taken that dollar out of the economy. If I take a dollar from Peter and give it to Paul, it is true Paul is going to have an extra dollar to spend. He is going to take it into a store. The storekeeper is going to order more inventory, the manufacturer is going to order more resources, and that dollar will ripple through the economy.

But we have completely forgotten the other half of that equation. Peter now has one less dollar to spend in that economy--one less dollar to ripple through it. So, in the end, we have not stimulated the economy at all. That is why the trillions of dollars we have already spent trying to stimulate the economy have not worked.

Indeed, this does great damage to the economy because we are transferring huge amounts of capital from the productive sector, which invests its money based on the highest economic return of a dollar, to the public sector, which invests based on the highest political return of the dollar. Those are two very different things. Indeed, that is the difference between FedEx and the post office; it is the difference between Apple Computer and Solyndra; it is the difference between the Reagan recovery and the Obama recovery.

So I beg my colleagues to reconsider. We have tried these policies and they do not work. Under this administration, we have seen record tax increases, record spending increases, and record debt. The result is tragic.

The poverty rate for Americans of African heritage has grown from 12 percent in 2008 to 16.1 percent today. Median income for White households has declined by 3.6 percent during this administration, but it has dropped by 10.9 percent for African American households. Compare that to the Reagan years, when median income increased for all Americans by 4.4 percent but grew by 4.5 percent for African American households.

No one doubts the sincerity of the Congressional Black Caucus in bringing this budget substitute to the floor, but there is an old saying: You can't fix a broken bucket by pouring more water in it; at some point, you have to fix the bucket.

The House Republican budget does this by reducing the tax and regulatory burdens that are choking investment in job creation and that are causing the long, cold winter that our country has endured. If we want to see morning again in America, we need to restore the policies that have produced it before.

With that, I reserve the balance of my time.

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Mr. McCLINTOCK. Mr. Chairman, I yield myself the balance of my time.

Mr. Chairman, it is human nature, I think, to resist concluding that our beliefs have been disproven by experience. The more we invest in our mistakes, the less willing we often are to recognize and correct them; but sooner than later, we have to acknowledge from our own experience that certain policies work and certain policies don't, whether they are tried by Republicans or Democrats.

My Democratic colleagues are right to praise the Clinton administration's handling of the economy; but we must ask: What were those policies?

In 1995, he announced that the era of Big Government is over. Working in cooperation with the Republican Congress, they reduced Federal spending by a miraculous 4 percent of GDP. They enacted what amounted to the biggest capital gains tax cut in American history.

They reformed entitlement spending by abolishing the open-ended welfare system. They produced four budget surpluses in a row, and the economy flourished, and it expanded for all Americans.

My colleagues are also right to heap scorn on George W. Bush's handling of the economy; but we have to ask again: What were those policies?

Well, he increased Federal spending by 2 percent of GDP. He enacted the biggest expansion of entitlement spending since the Great Society. He began the era of stimulus spending. He ran up what, at the time, were record budget deficits. Don't my colleagues see that they are advocating the same policies that got us into this mess?

My objection to President Obama is not that he has changed Bush's policies, but, rather, that he has not changed them. He has taken the worst of them and doubled down on them. The CBC substitute takes us further down this path of debt and doubt and despair.

In 1862, Abraham Lincoln sent this message to the Congress--and I think that they are words meant for us today. He said:

The dogmas of the quiet past are inadequate to the stormy present. The occasion is piled high with difficulty, and we must rise with the occasion. As our case is new, so we must think anew and act anew. We must disenthrall ourselves, and then we shall save our country.

I invite my friends to think anew and act anew; to disenthrall ourselves from the policies that have failed; and to return to the policies of individual liberty, constitutionally limited government, and personal responsibility that produced the most prosperous, happy, and free society in the history of civilization. In short, freedom works, and it is time that we put it and our country back to work.

I yield back the balance of my time.

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