Economics21

search
Close Nav

New Congress Breaks into Action With Smart Bills

commentary

New Congress Breaks into Action With Smart Bills

April 17, 2015

This article originally appeared in MarketWatch

In describing the 114th Congress’ first 100 days, MarketWatch columnist Rex Nutting uses a four-letter word, dumb, no less than nine times. But maybe Congress’ “five dumbest things” make sense after all. Passing a budget, rolling back taxes, approving Keystone XL and reining in an overreaching agency might increase Congress’ popularity with voters back home.

Keystone XL

Surveys consistently show that most Americans approve construction of Keystone XL, so Congress passed a bill to authorize it. Unions, such as the Laborers’ International Union of North America, want TransCanada to build Keystone. Canada is our closest ally and biggest trading partner. We still import oil, and the more oil we import from friendly countries, the more energy security we have.

By holding a vote on Keystone rather than issuing a press release, as Nutting advises, congressional leaders forced some members to take a position that was against the wishes of their constituents. Voters might want to change their representative or senator in 2016.

Climate change

Nutting decries Republicans for not passing an amendment stating that humans have “significantly” contributed to global warming. Since when do members of Congress have to vote on scientific issues? Furthermore, the Earth has been warming and cooling for millennia, certainly before the industrial revolution. It has been steadily warming since the Little Ice Age of the 1700s. Over the past 15 years, despite increasing greenhouse gas emissions, the warming by some measures has stopped.

As Georgia Institute of Technology professor Judith Curry stated in testimony this week before the House Committee on Science, Space, and Technology: “Recent data and research supports the importance of natural climate variability and calls into question the conclusion that humans are the dominant cause of recent climate change. This includes the slowdown in global warming since 1998, reduced estimates of the sensitivity of climate to carbon dioxide, [and] climate models that are predicting much more warming than has been observed so far in the 21st century.”

The budget

Republicans are on track to pass the first joint budget resolution since 2002 that balances the budget over the coming decade. According to Nutting, “the Republican budget is so dumb!” Plus, it’s full of “dumb gimmicks.” The Senate has not passed a budget resolution since April 2009, so it has become an achievement for Congress just to pass a joint resolution.

Take the House budget resolution, which balances the budget over the next decade without tax increases. It cuts $5.5 trillion in spending from baseline over 10 years. If the budget were passed, outlays would decline from 20.3% of GDP in 2016 to 18.3% in 2025. Under current policy, spending is projected to rise by 5% annually over the next decade. Under the proposed budget, it would rise by 3%. The budget would still grow, but at a slower rate. As I have written elsewhere, only in the perverted world of Washington budgeting would a steady increase in government outlays of 3% per year be described as a cut.

While Nutting censures Congress for passing a budget, he neglects to criticize the recently passed “doc fix,” signed into law by the president on Thursday, which would increase the deficit by $141 billion over 10 years, according to the nonpartisan Congressional Budget Office. Without offsetting cuts, that is an example of excessive spending worthy of criticism.

Estate tax

On Thursday, the House passed a bill to repeal the estate tax, now 40% tax on assets above $5.4 million. Nutting calls this “a dumb idea all by itself.” But the estate tax is one of the least efficient components of the U.S. tax system. Collecting it is laborious, and fewer than 1% of Americans pay it, because they hire smart tax lawyers and accountants. In 2012, 9,400 people filed estate-tax returns and $14 billion was collected, less than one-half of 1% of total IRS revenues. That’s a lot of trouble for not much revenue, especially when tax filers cannot even get IRS help over the phone.

People such as Bill Gates, Bill Clinton and Warren Buffett put their fortunes in family-run foundations. They won’t be paying estate tax on their assets above $5.4 million. Others hire lawyers for tax planning and avoidance, and some move to states without estate taxes, such as Florida.

Not everyone can completely avoid the estate tax, and some family firms have to be broken up to raise the funds to pay the tax. Congress is right to try to end the estate tax: no taxation without respiration.

National Labor Relations Board

Nutting criticizes Republican attempts to rein in the National Labor Relations Board over its new “quickie election” rules. Beginning April 14, the NLRB will hold elections for union representation about two weeks after the employer has been contacted by the union. Sounds good, but here’s the downside: Only after the election would there be a hearing to decide who is entitled to vote. This is important because the choice of bargaining unit, defined as the group of workers who would be represented by the union, could determine the outcome of the election.

Say that all employees in a manufacturing plant cast a vote, but only a minority wants union representation. Under normal circumstances, the union would lose. But if the bargaining unit is redefined after the vote to include only those sections of the workforce that voted for the union, the union wins.

Republican NLRB members Philip Miscimarra and Harry Johnson III wrote in their dissent: “This means the election would take place first, and only later, if at all, would there be a hearing regarding issues as fundamental as (i) who can actually vote, (ii) which employees who cast votes would, in the end, be excluded from the bargaining unit and would not even have their votes counted, (iii) whether people who represent themselves as employee-voters during the campaign may actually be supervisors …, (iv) whether other people who appear to be supervisors may actually be employee-voters, and (v) whether the union-represented workforce, if the union prevails, will ultimately exclude important employee groups whose absence would adversely affect the outcome of resulting negotiations.” Overturning such a rule is eminently sensible.

The central question is whether it is “dumb” for Congress to pass bills that the president will veto, or whether members should only pass bills that the president will sign. The United States does not have a parliamentary system, where most bills passed become law. Rather, checks and balances limit the power of the president and Congress alike. With scheduled votes, members are forced to take a stand before going back to face their constituents. People can judge for themselves whether they approve of the bills passed by Congress, and if they want them signed into law. For that, they may need to elect different politicians and a different president in 2016.

 

Diana Furchtgott-Roth, director of Economics21 at the Manhattan Institute, is the coauthor of "Disinherited: How Washington Is Betraying America's Young." Follow her on Twitter here.

Original Source

Interested in real economic insights? Want to stay ahead of the competition? Each weekday morning, e21 delivers a short email that includes e21 exclusive commentaries and the latest market news and updates from Washington. Sign up for the e21 Morning eBrief.

e21 Partnership

Stay on top of the issues that matter to you most



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ERROR
Main Error Mesage Here
More detailed message would go here to provide context for the user and how to proceed
ERROR
Main Error Mesage Here
More detailed message would go here to provide context for the user and how to proceed
Close