David Perdue renews push for Senate to work through August recess
By Al Weaver
May 8, 2018
Sen. David Perdue, R-Ga., called Tuesday for the Senate to cancel the August recess so the chamber can remain in session to confirm nominees and pass legislation.
“We have a number of senators who will submit a letter to [Majority Leader Mitch McConnell, R-Ky.] later this week … and that letter will basically, again, encourage the leader to keep us here weekends, on Mondays and Fridays when necessary, and certainly in the August break if we haven’t funded the government by then,” Perdue said at a press conference.
Perdue, joined by Marc Short, the White House director of legislative affairs, and conservative leaders, hit Senate Democrats for their “clear and abusive obstructionism” in blocking nominees.
A group of GOP senators sent a similar letter to McConnell last year imploring their colleagues to remain in town during the August recess, Perdue said.
He also floated the idea of eliminating the 30-hour rule just as Senate Democrats eliminated the 60-vote threshold for federal judges and Senate Republicans did for Supreme Court nominees.
Perdue added the Senate should pass a government funding package prior to the August recess to ensure President Trump is not put in the same spot he was in March when he begrudgingly signed the omnibus spending deal to avoid a partial government shutdown.
He noted there are only 69 Senate work days between now and Sept. 30 — the end of the fiscal year — including Mondays and Fridays. The Senate is usually in session four days a week before lawmakers return to their home state.
Read more in Washington Examiner.
Trump: “I will never sign another bill like this again”
March 23, 2018
President Trump said he has signed the 2,232-page omnibus spending bill — but warns he will never do this again.
“There are a lot of things we shouldn’t have had in this bill but we were, in a sense, forced if we want to build our military, we were forced to have,” Trump said.
“There are some things we should have in the bill. But I say to Congress, I will never sign another bill like this again.”
Read more in CNN.
Let’s Make Congress Work Again
By U.S. Sen. David Perdue (R-GA)
In contrast to our current economic rebound, the United States debt is past the tipping point of a financial crisis. This should not come as a surprise.
Even though we are five months into the 2018 fiscal year, Congress has not funded the federal government for this year. Even after this week, Washington still may not get the job done.
Our national debt is over $20 trillion. We are on track to add another $10 trillion of debt over the next decade. The single biggest cause of our debt crisis is the funding mechanism used by Congress. It does not work, and Congress cannot fulfill its Constitutional obligations.
Enacted in 1974, the Congressional Budget and Impoundment Control Act, has only worked four times in 44 years. Since then, Washington has resorted to over 180 continuing resolutions and 19 government shutdowns, including one last month.
Why does this keep happening? The budget process has completely broken down. It will never work as designed and it needs to be changed.
Today, the Congressional budget process consists of three steps: the budget, authorizations, and appropriations. However, the budget resolution is not a law.
Therefore, the majority party uses the budget as a political statement about how the government should spend its money. The minority party then revolts during the authorizations and appropriations processes. As a result, hundreds of billions in expired authorizations still received funding.
Ultimately, Congress is supposed to pass 12 appropriations bills each year, but its average over the last 44 years is an embarrassing 2.5 annually. This grinds Congress to a halt.
Additionally, the current budget process only deals with 25 percent of the $4 trillion the federal government spends. This is primarily for the military, VA, and other discretionary domestic programs. The other 75 percent is Social Security, Medicare, Medicaid, federal employee pensions, and interest on the national debt.
We have seen Washington lurch from one deadline to the next instead of actually debating policy changes and setting spending levels. What’s worse, lawmakers don’t bear the brunt of these missed deadlines. Instead, the consequences are felt by those who rely on government functions—including our women and men in the military.
Right now, we are funding the federal government on borrowed time with a continuing resolution that expires this Friday. Unless Congress passes another continuing resolution or spending package by then, we may face a similar fate as last month.
Before shutting the government down, Senate Minority Leader Chuck Schumer (D-N.Y.) himself said shutdowns are “governmental chaos.” We need more certainty, not more chaos coming from Washington.
The good news is there is a growing realization from both parties that the current budget process is not working and it must be fixed.
Last year, Sen. Sheldon Whitehouse (D-R.I.), and I introduced an amendment acknowledging that the budget process is broken. It got a vote, and the entire United States Senate agreed.
The voices are getting louder. Sen. Bob Corker (R-Tenn.), another business guy in the United States Senate, said, “it’s impossible for the process we have today to work.”
Even Sen. Bernie Sanders (I-Vt.) recently said, “Enough is enough. We cannot continue to run a $4 trillion government on a month-to-month basis. We need an annual budget.”
The time to act is now. Let’s make Congress work again. Let’s change the failed funding process so Washington can deal with our national debt once and for all.
Read more in The Hill.
How Tax Reform Will Lift The Economy
The Wall Street Journal
Editor’s note: The following is a Nov. 25 letter to Treasury Secretary Steven Mnuchin :
Dear Mr. Secretary:
The present debate over tax reforms proposed by President Trump’s administration and embodied in bills that have passed the House of Representatives and the Senate Finance Committee has raised the basic question of whether the bills are “pro-growth”: Would the proposals raise current and future economic activity and generate federal tax revenue that would reduce the “static cost” of the reforms? This letter explains why we believe that the answer to these questions is “yes.”
Economists generally think of fundamental tax reform as a set of tax changes that reduces tax distortions on productive activities (for example, business investment and work) and broadens the tax base to reduce tax differences among similarly situated businesses and individuals. Fundamental tax reform should also advance the objectives of fairness and simplification.
The quest for such fundamental tax reform has been pursued by policy makers and economists for decades. Examples include the Tax Reform Act of 1986, proposals for reducing the double taxation of corporate equity by the Treasury Department and the American Law Institute (enacted in part in 2003), the “Growth and Investment Plan” from President George W. Bush’s Advisory Panel on Federal Tax Reform, and arguments from President Obama’s administration to lower corporate tax rates. The proposals emerging from the House, Senate, and President Trump’s administration, fall squarely within this tradition.
Reducing Corporate Tax Rates, as Proposed, Will Increase Economic Activity
While the overall House and Senate tax plans contain numerous household and business provisions, we focus on the corporate tax changes, returning to other provisions before concluding. A key concept in this context is the “user cost of capital,” which essentially measures the expected cost to firms of making additional investments in equipment. A considerable body of economic research concludes that reductions in the user cost of capital raise output in the short and long run. Several of the proposals that have emerged in the current debate are key to lowering the user cost of capital. For example, expensing, which allows firms to deduct the full cost of investment at the time it is made, lowers the user cost of capital relative to depreciation over time. A lower corporate tax rate also lowers the user cost of capital, which not only induces U.S. firms to invest more, but also makes it more attractive for both U.S. and foreign multinational corporations to locate investment in the United States.
There is some uncertainty about just how much additional investment is induced by reductions in the cost of capital, but based on an extensive body of scholarly research, many economists believe that a 10% reduction in the cost of capital would lead to a 10% increase in the amount of investment. Simultaneously reducing the corporate tax rate to 20% and moving to immediate expensing of equipment and intangible investment would reduce the user cost by an average of 15%, which would increase the demand for capital by 15%. A conventional approach to economic modeling suggests that such an increase in the capital stock would raise the level of GDP in the long run by just over 4%. If achieved over a decade, the associated increase in the annual rate of GDP growth would be about 0.4% per year. Because the House and Senate bills contemplate expensing only for five years, the increase in capital accumulation would be less, and the gain in the long-run level of GDP would be just over 3%, or 0.3% per year for a decade.
Is this estimate of the growth effect realistic? According to one leading model using an alternative framework, the proposal would increase the U.S. capital stock by between 12% and 19%, which would raise the level of GDP in the long run by between 3% and 5%. Yet another model, this one used in the analysis of the “Growth and Investment Plan” in the 2005 President’s Advisory Panel on Federal Tax Reform, found that a business cash-flow tax with expensing and a corporate tax rate of 30% would yield a 20.4% increase in the capital stock in the long run and a 4.8% increase in GDP in the long run. More conservative estimates from the OECD suggest that corporate tax changes alone would raise long-run GDP by 2%. In short, there is a substantial body of research suggesting that fundamental tax reform of the type being proposed would have an important effect on long-run GDP. We view long-run effects of about 3% assuming five years of full expensing, and 4% assuming permanent full expensing, as reasonable estimates.
Another advantage of the corporate rate reduction embodied in the House and Senate Finance bills is that it would lead both U.S. and foreign firms to invest more in the United States. In addition, U.S. multinational firms would face a reduced incentive to shift profits abroad, which would raise federal revenue, all else equal.
In the foregoing analysis, we assumed a revenue-neutral corporate tax change. Deficit financing of part of a reduction in taxes increases federal debt and interest rates, all else equal. For the House and Senate Finance bills, this offset is likely to be modest, given that the United States operates in an international capital market, which means that the impact of changes in interest rates resulting from greater investment demand and government borrowing are likely to be relatively small.
Lowering Individual Tax Rates Also Offers Generally Positive Economic Effects
The House and Senate bills also contemplate a number of individual tax provisions that can affect economic activity and incomes. In recognition of the fact that non-corporate business income is substantial in the United States, both bills would reduce taxation of non-corporate business income and increase the amount of capital expensing allowed. While difficult to quantify, as the bills specify different effective tax rates, these provisions would increase investment and GDP above the level associated with the corporate tax changes discussed above. Also on the individual side, both the House and Senate bills reduce marginal tax rates on labor income for most taxpayers, increasing the reward for work. Increases in labor supply, in turn, increase taxable income and tax revenues. One should note, however, that some taxpayers would face increases in effective marginal tax rates because of base-broadening features of the bills, such as limits on the federal tax deductibility of state and local income taxes. On balance, though, we believe that the individual tax base broadening embodied in the proposals would enhance economic efficiency by confronting most households with lower marginal tax rates. In addition, fairness would be served by reducing differences in the tax treatment of individuals with similar incomes, and simplification by reducing the number of individuals who itemize for federal tax purposes.
Confirming a Pro-Growth Objective Is Important for the Path Forward
You have consistently stressed that the objective of tax reform should be to enhance prospects for increased economic growth and household incomes. We agree with this objective, which is consistent with the traditional norms of public finance going back to Adam Smith. We believe that the reforms embodied in the House and Senate Finance bills would achieve this objective. The increased growth, in turn, would lead to greater taxable income and federal tax revenues, which would reduce the static cost of lost federal tax revenue from the reform.
We hope these analytical points of support for the growth effects of tax plans being discussed are useful to you and to the Congress as you complete the important economic task of fundamental tax reform. We would be happy to discuss our conclusions with you at your convenience.
Robert J. Barro, Paul M. Warburg Professor of Economics, Harvard University
Michael J. Boskin, Tully M. Friedman Professor of Economics, Stanford University; Chairman of the Council of Economic Advisers under President George H.W. Bush
John Cogan, Leonard and Shirley Ely Senior Fellow, Hoover Institution, Stanford University; Deputy Director of the Office of Management and Budget under President Ronald Reagan
Douglas Holtz-Eakin, President, American Action Forum, former director of the Congressional Budget Office
Glenn Hubbard, Dean and Russell L. Carson Professor of Finance and Economics (Graduate School of Business) and Professor of Economics (Arts and Sciences), Columbia University; Chairman of the Council of Economic Advisers under President George W. Bush
Lawrence B. Lindsey, President and Chief Executive Officer, The Lindsey Group; Director of the National Economic Council under President George W. Bush
Harvey S. Rosen, John L. Weinberg Professor of Economics and Business Policy, Princeton University; Chairman of the Council of Economic Advisers under President George W. Bush
George P. Shultz, Thomas W. and Susan B. Ford Distinguished Fellow, Hoover Institution, Stanford University; Secretary of State under President Ronald Reagan; Secretary of the Treasury under President Richard Nixon
John. B. Taylor, Mary and Robert Raymond Professor of Economics, Stanford University; Undersecretary of the Treasury for International Affairs under President George W. Bush
Read more at The Wall Street Journal.
David Perdue: ‘National Debt Surpassed $20 Trillion and No One in Washington Blinked’
Washington Free Beacon
Following multiple Senate votes confirming President Trump’s judicial nominees, Sen. David Perdue (R., Ga.) said Congress needs to address the national debt.
Perdue declared on the Senate floor that “our national debt surpassed $20 trillion for the first time and no one in Washington blinked an eye.”
Perdue argued that solving the debt is “going to take a multifaceted approach,” including tax reform and spending cuts.
“The way to fix it is in our grasp. No. 1, we need to fix Washington’s broken budget process. Two: We need to root out all the wasteful spending in the federal government today. Three: We’ve got to grow the economy by peeling and pulling back on a lot of regulations that are unnecessary and by revamping our tax structure and by unleashing our energy potential. No. 4: We need to save Social Security and Medicare and, lastly, we finally have to get after the real drivers of spiraling health care costs.”
Perdue mentioned that the Government Accountability Office put the country’s wasteful spending at over $700 billion, which is more than what the country spends on national security.
“It’s unconscionable that I’m standing here before the United States Senate tonight reminding us all that there is $700 billion a year that we spend in error, just bureaucratic error,” Perdue said.
Then, Perdue tied tax reform to solving the debt crisis.
“Along with reducing our spending by almost 20 percent each year, we need to grow the economy to solve this debt crisis,” he said. “The single most important thing that we can do to grow the economy next year is to change this tax code.”
Perdue credited cutting regulations under “the president’s guidance” for a strong economy in 2017, but suggested it could be even stronger.
“Who knows what this economy should be growing at right now if we just get Washington out of the way,” Perdue said.
“Part of the way to do that is to correct this archaic tax policy. Changing the tax code will mean more jobs and higher wages for American workers,” Perdue said, calling tax reform a “historic opportunity.”
But Perdue ended his speech by saying that tackling the debt will require more than just tax reform.
“I urge my colleagues to take seriously this opportunity we have of changing our tax code,” Perdue said. “It’s historic. At the same time, we’ve got to get serious about eliminating our redundant and outrageous, unnecessary spending.”
Read more at the Washington Free Beacon.