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Congressman Tom McClintock

Representing the 4th District of California

Response to Amendment 5 Anti-Poverty Programs - Budget for Fiscal Year 2018 - House Budget Committee

July 19, 2017
Speeches

Congressman McClintock is a member of the House Budget Committee.  The Budget Committee held a hearing on July 19, 2017 on the Budget for Fiscal Year 2018.  The Congressman delivered the following remarks at the hearing:

Budget for Fiscal Year 2018
House Budget Committee
Response to Amendment 5
Anti-Poverty Programs

Since 1964, we have tried to end poverty the Democrats’ way.  According to the Heritage Foundation, we have spent $22 trillion fighting the war on poverty as a result.  Adjusted for inflation, this is three times more than all the military wars we have ever fought – combined.  Put another way, that is $176,000 taken from the lifetime earnings of every family in America over those 50 years.  

We have created 92 different federal programs in this effort.  

After more than fifty years of experience with these programs, I believe we are entitled to ask, “How is the war on poverty coming?”
 
In 1966, the poverty rate stood at 14.7 percent.  Today, it is 13.5 percent. $22 trillion dollars and 50 years later, poverty has barely budged.

Republicans have warned for years of the poverty trap: that the practical effect of these programs is to trap generations in poverty by robbing them of the incentive to succeed and denying them the dignity – the indescribable feeling of self-worth – that comes with a paycheck.

As the old adage says, “Give a man a fish and he will eat for a day.  Teach a man how to fish and he will eat for a lifetime.”

This budget is predicated on this simple principle. If you are able-bodied and with no dependents, in return for your welfare benefits, we ask that you look for a job or train for a job, and if a job is offered, we expect you to take it.  According to Forbes, when Maine applied this condition, 90 percent of this population found work and within a year their income rose 114 percent.  Let me repeat that: the incomes of these welfare recipients rose 114 percent in their first year once the work requirement took effect.   Alabama had similar results this year when 13 counties implement work requirements for SNAP.  

The reforms in this budget are specifically designed to change the incentives to get people back into the work force so that they, too, can see their incomes soar along with their self-respect and dignity.

They also assure that we can focus more resources on those who can't fend for themselves.

Not only do the Democrats propose keeping people trapped in poverty with their programs, but they also propose to harm the economy, robbing people of the opportunity to succeed.

Taxing the top one percent might make a good bumper sticker, but it hurts the very people they say they’re trying to help.  The vast majority of American businesses are individuals filing under Subchapter S – and most of that income is taxed in the top bracket.

Businesses don’t pay business taxes.  The only three ways a business tax can be paid is by us as consumers through higher prices, by us as employees through lower wages and by us as investors through lower earnings on our retirement savings.  And as Arthur Laffer has often warned -- and my home state of California is discovering -- there is nothing more portable in this world than money and rich people.  High taxes have already sent hundreds of billions of dollars of capital off shore.

Let me repeat this for my Democratic colleagues.  The only way a business tax can be paid is by consumers through higher prices, by employees through lower wages and by investors through lower earnings -- mainly on retirement plans.

Our tax plan produces more affordable products for consumers, higher wages and more jobs for employees and higher returns for your retirement fund.  There was a time when Democrats supported these policies -- that's what John F. Kennedy accomplished through tax cuts in the early 1960's, reminding us that a rising tide lifts all ships.

Because of these failed policies of the last 50 years, our nation is more than $20 trillion in debt.  The only way we are going to escape a fiscal and economic collapse is to restore the growth rates we had after Reagan cut the top tax rate from 70 percent to 28 percent. The economy grew at twice the rate it is now and tax revenues skyrocketed from $599 billion to $991 billion.  Put more simply, Reagan cut tax rates by more than half and tax revenues nearly doubled.  

History teaches us that lesson very clearly.  In the last sixty years, the top income tax rate has been as high as 91 percent and as low as 28 percent, but income tax revenues have stayed remarkably steady at between 13 and 20 percent of GDP.  

Indeed, some of the lowest income tax revenues came when the top tax rate was at its highest.  Some of the highest revenues came when the top rate was quite low.  But although the tax rate within this envelope has remarkably little effect on revenues, it has a huge impact on economic growth.

The success of our anti-poverty programs is not how much we spend on them, but on how many people are lifted out of it.  The Democratic anti-poverty programs have spent $22 trillion fighting poverty and the poverty rate has barely moved.  It seems the more we invest in our mistakes the less willing we are to admit them.    

I think it is time we connected the dots between poverty and Democratic policies.  Has it escaped anyone’s attention that the cities with the most entrenched Democratic machines – the cities where Democrats have had their way for generations – are the very same cities where poverty and unemployment are off the charts and where kids are trapped in failing schools with no way out.  

This is the unbroken legacy of the Democrats’ policies, and you see it vividly in any government they have controlled unopposed for more than ten years.  I don’t think there is a single exception to this rule.

This budget charts a new course, using policies that have proven time and again to dramatically improve the lives of those who have been victimized by the Democrats’ poverty trap.   The policies called forth by this budget have time and again produced economic growth and prosperity for our country.  It is time we had a rebirth of freedom; time for another morning to dawn in America, time to make America great again.