Madame Speaker, I find it odd that HR 5140, a bill allegedly
designed to provide a stimulus for the anemic American economy, contains
provisions that could damage the economy and hurt American taxpayers.
Specifically, the provisions increasing the loan limitations of the Federal
Housing Administration and the Government Sponsored Enterprises (e.g. Fannie
Mae and Freddie Mac), will exacerbate the long-term problems in the housing
market, and may even lead to a future taxpayer bailout of the housing industry.
The recent bursting of the housing bubble should have taught my colleagues the
dangers of government policies that distort the market by diverting resources
to housing, when those resources would be more efficiently used in other
sectors of the economy.
Ironically, many of the same members who insisted
that upper-income taxpayers be denied the tax rebates are enthusiastic
champions of the provisions in HR 5140 increasing the FHA loan limit to
$633,500 and the GSE loan limit to $729,750. This increase in the loan limits
represents a generous taxpayer subsidy to high-income homeowners.
A one-time “rebate” check, while it may
provide a temporary boost to many working American families struggling with the
current downturn, is not going to provide the type of sustained income growth
necessary to restore consumer confidence. In fact, history shows that when the
government forgoes serious tax cuts in favor of one-time “rebates”
most people either save the money for a “rainy day” or use it to pay
down some of their debt.
In addition, I am concerned that the 50% bonus
depreciation and the increase in the amount of qualifying purchases that small
businesses can expense in the year they bought their equipment will be of
limited effectiveness because they are limited to one year. A more effective
way to stimulate the economy would be to make the 2001 and 2003 tax cuts
permanent. I also hope Congress considers the long-term tax cuts contained in
HR 5109, the Economic Growth Act.
Congress should also pass my
Tax Free Tips Act (HR 3664), which makes tips exempt from
Federal income and payroll taxes. Making tips tax-free will strengthen American
families and the American economy by allowing millions of hard-working
Americans to devote more resources to their children’s, or their own,
education, or to save for a home, retirement, or to start their own
businesses.
Another disturbing feature of HR 5140 is that,
instead of taking the fiscally responsible course and pairing the tax cuts with
spending cuts, this bill simply adds to the national deficit. Madame Speaker,
unless Congress acts soon to reign in its excessive spending, the American
people will face confiscatory tax rates or skyrocketing inflation.
Tax cuts by themselves will not restore long-term
economic health unless and until this body finally addresses the fundamental
cause of our economic instability, which is monetary policy. The inflationary
policies of the Federal Reserve are the root of the boom-and-bust cycle that
has plagued the American economy for almost 75 years. The Federal
Reserve’s inflationary polices are also at the root of the steady decline
in the American people’s standard of living. A good step toward monetary
reform would be for Congress to pass my HR 2576, which repeals the Federal
legal tender laws. This would allow people to use alternatives to
government-issued fiat money and thus protect themselves from Federal
Reserve–created inflation.
One of the best things Congress could do for the
American economy is to repeal, or at least reform, the misguided Sarbanes-Oxley
law, particularly Section 404. Rushed through Congress in the wake of the Enron
and WorldCom scandals in order to show that Congress was “getting
tough” on corporate crime, Sarbanes-Oxley imposes unreasonable costs on
small businesses and entrepreneurs.
A survey by Financial Executives International, an
organization of chief financial officers, put the average cost of compliance
with Sarbanes-Oxley at $4.4 million, while the American Economics Association
estimates Sarbanes-Oxley could cost American companies as much as $35 billion.
Because of these costs, many small businesses are delisting from United States
stock exchanges. According to a study by the prestigious Wharton Business
School, the number of American companies delisting from public stock exchanges
nearly tripled the year after Sarbanes-Oxley became law, thus these companies
are finding it more costly to attract the necessary capital to grow their
business and create jobs.
In conclusion, Madame Speaker, HR 5140 does not
provide the kind of permanent, deep tax relief that will protect long-term
economic growth, and will actually compound the damage Congress has already
done to the housing market. Instead of pretending that we are addressing
America’s economic problems via temporary tax cuts, Congress should
address the fundamental problems of the American economy by pursing serious
monetary reform, spending cuts, and regulatory reform. Congress should also
provide real long-term tax relief to the American people by passing legislation
such as HR 5109 and HR 3664.
