E-News Update: More Taxes. More Debt. More Bailouts.

Monday, December 14, 2009

With a year-end Democrat spending spree, it is difficult to even find a place to begin. But below are the major storylines from the past 10 days relevant to our nation’s fiscal health:

DEMOCRATS RAISE DEBT CEILING BY $1,800,000,000,000.00

In an attempt to continue financing through next year an increased appetite for spending, while simultaneously limiting the political fallout before next year’s elections, Politico reports that Democrats will be raising the debt ceiling — the cap imposed by Congress to control national debt — by $1.8 trillion to nearly $14 trillion. The debt ceiling has been raised once already this year, by $789 billion, to pay for the failed stimulus package passed in February. That bill forces American taxpayers to pay $100 million everyday for the next 10 years - just on the interest alone for the money needed to pay for the stimulus.

UNUSED AND REPAID BAILOUT MONEY SHOULD PAY DOWN DEBT…NOT NEW SPENDING

When the Wall Street bailout was passed in the fall of 2008, it was labeled an immediate fix needed to save our economy from irreversible ruin — at least that was the justification for borrowing hundreds of billions of dollars and adding to our national debt. Last week, Speaker Pelosi let the cat out of the bag that Democrats intend to use unspent money from the Troubled Assets Relief Program (the Wall Street Bailout) to finance more government programs and add more money to the failed stimulus package! You can see the failure of the last stimulus relative to unemployment, by viewing this graph here.

Pelosi and her allies see the unused TARP funds as a slush fund, when in fact, it represents nothing more than an anvil of debt around our kids and grandkids who will carry this debt burden and be responsible for its repayment. Not only that, we are all paying more today in the form of higher prices on food, gas and other items due to the weakened US dollar every time we run to our nation’s credit card. It’s not right. In fact, Section 106 (D) of the original TARP bill stipulates that any unused funds or repaid funds should pay down the debt. Republicans stand firm in demanding that this bailout money, both the unused funds and those that have been repaid by banks, should go directly towards paying down the debt.

This is exactly why I voted against TARP — it is simply becoming a piggy bank for Congress to spend with no oversight, positive outcome or purpose other than spending.

WAITING TILL THE LAST MINUTE…TO SPEND MORE

Just days away from a government shutdown, with budgets delayed since September, Democrats jammed every outstanding piece of the budget together into a $447 billion omnibus bill that increases non defense discretionary spending, up 12% from last year. Over the last two years, this non defense, non veterans discretionary spending has risen by 85%.

RAISING TAXES TO CUT TAXES

Last Wednesday, House Democrats passed the extension of a popular set of temporary tax breaks, but pays for it with a brand new permanent tax on investments managers - a tax that is harmful to small businesses. I opposed the legislation. The bill now goes to the Senate. The Congress shouldn’t be raising taxes to cut taxes. We should be cutting spending to cut taxes. And with massive deficits, and massive new spending, there are certainly plenty of places to cut back.

DEMOCRATS REVIVING THE “DEATH” TAX

The Death Tax was established in 1916 to help pay for World War I. Its purpose is to tax “wealthy” individuals and collect a significant portion of their assets for the federal government. The only problem? The truly wealthy find ways to preserve their assets with expensive life insurance and tax shelters, while farmers and family-owned businesses get caught up in this tax when they inherit the value of a business, its equipment, their property or home following the death of a loved one.

Often times, because family members don’t have the disposable cash to pay a 45% inheritance tax amounting to upwards of hundreds of thousands of dollars, some are forced to sell the business, lay off workers or sell the farm to pay the government. In a recession with high unemployment, finally lifting this unfair tax off our small business owners would go a long way in improving our job situation - particularly here in western Pennsylvania.

The Republican-backed tax cuts of 2001 incrementally reduced the tax and set it on track for elimination in 2010, but Democrats recently passed a bill that would instead set the death tax rate permanently at 45%. I voted against this tax hike, since I support the full repeal of the death tax. Economic data shows that if Democrats allowed this tax to expire as planned, it would have a positive economic impact on job creation and small business growth. Read more here.

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