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Congressman Tom McClintock

Representing the 4th District of California

House Budget Resolution for Fiscal Year 2018

October 4, 2017
Speeches
House Budget Resolution for Fiscal Year 2018
House of Representatives
October 4, 2017
 
Mr. Speaker:
 
For the first time in many years, this budget uses the reconciliation process for the purpose it was intended: to bring mandatory spending under control.
 
The appropriations that dominate so much of the debate comprise less than one third of current federal spending.  That one third is called discretionary spending.  The budget sets a level and the appropriations process spends to that level.  That’s everything from general government to defense.  We’ve actually reduced that spending compared to 2010.
 
The other two-thirds of spending is called “mandatory spending.” It is beyond the annual control of Congress. It continues automatically until and unless the statutes that call for it are actually changed.  And it’s mandatory spending that is eating our country alive.
 
Mandatory spending is supposed to be controlled by reconciliation.  Instructions are sent to the various authorizing committees to make whatever changes are necessary in current law to stay within mandatory spending limits.  
 
But this powerful fiscal tool has been ignored or squandered in past budgets, and this neglect is undermining the solvency of our country.
 
For the first time in many years, the House budget actually restrains mandatory spending, by instructing committees to find at least $200 billion in savings over the next decade.  
 
This budget will get us back to balance within the decade -- and here’s why that’s important.
 
If the Democrats have their way and we maintain our current path, the CBO warns that just four fiscal years from now – in 2022 – our annual deficits will surpass a trillion dollars.  That’s where economists warn we run the risk of damage or even loss of our access to credit – a sovereign debt crisis.  Venezuela is having that now – and even within our own territory, the Commonwealth of Puerto Rico.  Pension systems implode, basic services falter and the economy collapses.  
 
Two years after that – in 2024 – the CBO warns that the annual interest cost on our debt will reach $654 billion.  That’s more than we currently spend on defense.  
 
At the same time, we charge the highest corporate tax rate in the industrialized world, sending trillions of dollars of capital and hundreds of thousands of jobs to other countries.  In the last eight years, we’ve averaged only half our post-war economic growth.  
 
I would remind our friends on the left that corporations don’t pay corporate taxes.  There are only three possible ways to pay a corporate tax.  It is paid by consumers through higher prices.  It is paid by employees through lower wages.  And it is paid by investors through lower earnings.  
 
Cutting corporate taxes means lowering prices on consumers, increasing wages for employees and increasing earnings on pension plans.
 
Tax relief is absolutely vital to reviving the economy, but experience warns us that revenue growth only partially offsets revenue lost to tax reductions.  
 
The ranking member says this is a choice between taxes and debt.  Wrong. taxes and debt are two sides of the same coin.  Taxes and debt are the only two possible ways to pay for spending.  Once we’ve spent a dollar, we’ve already decided to tax it.  We either tax it now or we borrow it now and tax it later.  Either way, it is entirely driven by spending.   
 
By restraining spending, this budget makes possible the tax relief our economy desperately needs to grow.  
 
Frankly, we could do much more if we could summon the political will to do so.  I will present such a budget tomorrow on behalf of the Republican Study Committee.  
 
But this budget moves us a long way in the right direction.  It sets in motion the policies that presidents from Calvin Coolidge to John F. Kennedy to Ronald Reagan have all used to revive and expand our economy.  It brings us closer to that day when families will awaken to a new and prosperous morning for America.