W. Akin

Mr. AKIN

Mr. AKIN. Mr. Speaker, our topic this evening, and one that I think has received some coverage in the media, and is something that is of concern to many Americans, is the level of spending in the Federal Government, the budget that has been proposed, the size of deficits, and overall where the American economy stands. These are all very important topics. These topics could not be more timely. The President has just released his new budget for the next couple of years. We can take a look and see exactly what the numbers are. So these questions, probably even more so because of the high level of unemployment, have a quite a number of Americans asking some very serious questions and have, I would say quite honestly, a number of people in elected office here in Washington, D.C., extremely concerned about the fact that we are not doing what we should do in terms of fiscal responsibility. Now, one of the things that happens in the political world, and this may be a surprise to some people, but perhaps not to others, and that is that sometimes there is a significant gap between what people say and what they do. And so I prepared a few charts here just to give us an introduction to this subject about the budget, about spending, and about what is really true and what is really a significant factor, and what are more peripheral kinds of questions or issues. Now, the first statement was made by the President, President Obama, in his State of the Union address here in this chamber not very many days ago. This was his comment. He said, ``The true engine of job creation in this country will always be America's businesses, but government can create the conditions necessary for businesses to expand and hire new workers.'' Now, this particular statement is quite true. In fact, it corrects an extreme misconception that some in government would love to have passed onto the Americans, but in fact is not true. And that is that government never can create jobs. Well, you say, Congressman Akin, how is it that the government can't create jobs? Can't they take taxpayers' money, go out and hire somebody, and if they hire somebody doesn't that person have a job? Well, the answer is yes, but really no. What happens is when the government hires one person various economists would disagree a little bit on the exact number, but you take about 2 or 2.3 jobs out of the private sector for every job that you create in the public sector. So the government really doesn't create jobs, it simply takes money away from other people to hire someone. So when you say that the government is going to create jobs, that is actually economically false. What the President says here is true, ``The true engine of job creation in this country will always be America's businesses.'' That is true. In fact, he went on to acknowledge that it is not just any business, but it particularly is small businesses. Someone has figured the statistic that 80 percent of American jobs are in companies that have 500 employees or less. So small business, that is 500 employees or less, is very much the place where jobs are created. Now, we have some people in politics that are always blasting those rich guys, those people that own businesses. And we are going to tax the rich guy and make sure that he pays for everything. Well, there is only one little problem with that theory. And that is that a lot of the people that own those small businesses are reasonably well to do because they have successfully put a business together, have managed it, have taken considerable risks, have spent a whole lot of sleepless nights worrying about balancing the books, but somehow, in spite of all of that, they were successful. And they wake up 10 years later, after they created a small business, and they find out that they are a millionaire. Now, they may have started sleeping under a park bench somewhere, and a husband and wife look at each other, and there is a smile, and they look and they realize that their dream has come true. The American Dream worked for the owner of some small businesses. And what that means is, because those people do have money, they can reinvest that money in their own business. And when they do, they'll add a wing on the building, add some new machine tools or a new process or new idea, and create jobs in America. So what the President is saying is true--the true engine of job creation in this country will always be America's businesses. But government can create the conditions necessary for businesses to expand and to hire new workers. The government can do that. Maybe it would be more accurate to say that unless the government gets in the way, that's the natural cause of small businesses, to grow and to add additional jobs. What are the kinds of things that the government can do to try to create those jobs? Well, they want to create an environment. It's a little bit like if you're trying to grow a plant, what do you want for a plant to grow? Well, you've got to have some water, you've got to have some sunshine, you've got to have the right temperature. You've got to have the soil conditions and chemistry more or less right. In the same way you can grow jobs in America if you keep certain basic factors and functions in perspective. We're going to go into that in a minute. But let's take a look. This statement being true--these are the words, but here in fact are the actions of what is being proposed as you go further into the speech. First of all, what is being proposed are $2 trillion in tax increases over 10 years; $2 trillion in tax increases. We're going to talk about that in a minute, because who's going to pay those $2 trillion? Where's that money going to come from? You bet, it's going to be taxpayers. And then we have this job-killing cap-and-tax legislation. My chart says cap-and-trade. People want to call it cap-and-trade. They really want to call it the global warming tax. But this cap-and-tax legislation puts a big tax on energy. Now guess who uses energy, aside from homeowners, aside from people who drive cars. Of course, small businesses. They use energy. Depending on the type of small business, some use a great deal of energy. And so you have here a proposal which is about an even portion of government redtape and government taxation. If I had to judge the bill, I think the redtape may be more onerous than the taxation, which is bad enough. The combination of the two are deadly to small businesses and deadly to job creation. We'll get into that in a minute. What else is being suggested? We're going to have new taxes on employers who don't offer the government health insurance plan. So now what we're going to say to people if you're a businessman, Yeah, we're going to tax you on your energy, but we've got another tax, too, for you. That is, we're going to tax you on health insurance. And, guess what? You're going to pick up a big piece of the tab for this government-run health insurance plan, which supposedly only costs $1 trillion. Now that's not talking about the amount of cost shifting that's going to go to various State governments. But you have an extremely expensive proposal for government to take over one-fifth of the U.S. economy with this mandated, top down--I think I remember 400 or 500 times in this 3,000-page bill you have the ``shall.'' The government shall do this, shall do that. And so this is another proposal which the President says he wants to move forward with. And then it increases taxes on small business owners who make over $250,000. Well, a whole lot of small business owners can make over $250,000. But, again, as I have mentioned, if you put the taxes on these people, they'll pay their taxes but they're not going to put that money, that tax money, back into their business to create jobs. And so what we have here is the words that recognize that businesses create the jobs, and particularly small businesses create the jobs, but then in terms of action what we're doing is we're doing the very worst possible thing that you can do in terms of creating jobs and helping our economy. Let's take a look. You know, economics can be pretty boring sometimes. I try to make it as simple as I can. I'd like to talk to you this evening a little bit about job killers. If you want to kill a plant, you don't give it any water. If you want to kill a plant, you let it freeze. There's certain things you can do that makes it so that a plant dies. If you want to kill jobs, there's certain things you can do to kill them and there's also things you can to create them. Let's talk about the first factor. It wouldn't surprise you perhaps that the one that I would think of first is taxes. Now how does taxation affect small business people? Well, it's this way. If you tax them more and more, they're going to have less money to put into their business and so they're going to have less money to hire people. And that's the same effect I was talking about. The government can tax and hire somebody, but when they do, they're taking that money away from the small business. And so while you add some government worker, you lose two employees from the local company. And so tax increases are absolutely deadly, and they are going to be a big factor in unemployment. No big surprise. Other people have recognized this. This is not that complicated. This is not rocket science. This is not laser science. This is not quantum mechanics. It's simple lemonade stand-type economics. And other Presidents have recognized the problem. And so what did they do when they got into a recession and they're having trouble with unemployment? Well, JFK understood. He cut taxes. Ronald Reagan understood it. He cut taxes. And George Bush during the recession also cut taxes. In each of those situations the economy responded fairly rapidly to those tax cuts. And why? Because the small businessman is starting to get some money to plow into his business. So, first of all, taxes are a major factor. And if you raise taxes a lot, you're going to kill jobs. What have we just got over here? We've got $2 trillion in tax increases. We've got the cap-and-tax bill, the thing on taxing energy with all sorts of redtape in it. We also have the employers--the socialized medicine bill. Where the government to a large degree takes over health care, a trillion-dollar tag on that has to be picked up by a lot of small business people. And then you have, if that's not enough, increases on anybody making over $250,000. That hammers small business people. And this list doesn't even mention the fact that the tax cuts on capital gains, dividends, and death taxes, which were put in place during the beginning of the last recession under Bush to help the economy, those are going to expire. So they're going to compound this problem. So here we have words. We understand that jobs are created in businesses, but we don't really understand because our actions are saying we're going to do just exactly what it takes in terms of tax policy to kill jobs. The second factor if you want to kill jobs is redtape. Redtape means that it's more cost for businesses to do their work. If the government says, Yeah, but you've got to write a report; you've got to do this; to check with this; got to go to court to take care of this; you better do that; all of that red tape may not be a direct tax, but the net effect is it's costing a whole lot of time for an employer to try to comply with government redtape. Do you think we've got a fair amount of redtape in America? Think about the amount the average citizen has in their own life and then multiply that significantly for the average business. And so redtape is another big factor. We have words. This sounds good and in fact this is even true. The trouble is the actions are the exact opposite. I recognize that I've been joined by a good friend of mine, Congressman Bishop, and I'd like to yield you some time if you'd like to talk a little bit about the budget. I'd like to get into tonight a couple of different things that have been said, comments that have been made about this budget. First of all, I want to get a scale of how big it is. Second of all, I'd like to talk a little bit about can you blame it on the previous administration. We keep hearing that it was President Bush's fault that we're in the economic problems. And then I'd like to get back to the job creation question. But I think you've got some specific examples from your district where there were jobs that we're talking about, and particularly an employer that is affected by this budget. Could you share with us, please?

Mr. AKIN. Let me just get the connect, because you're building up to something here. What you're saying is that there are solid rocket motors that are being built in America, which are very high-tech, and they're being built by a particular company. And they're used for the space program but they're also used for something else. Is that correct?

Mr. AKIN. You know, Dr. Burgess, what you have communicated here, aside from being a doctor--we always put doctors sort of in a special category and maybe a little bit of an elevated platform. But what you have communicated is just the heart of a guy that has a business and how much risk you took and how you plowed into unchartered territory, just trusting that you could generate that business and then get the business going. And afterwards, you had employees. You provided a great product for people, and there are a whole lot of Texans who are thankful to Dr. Burgess for delivering them. But you gave us an understanding of how that whole system works. And just like your one example, there are really thousands upon thousands of business owners that are looking at this thing, and saying, What in the world is going on? Now we've talked about words and then actions. Here are some words, but families across the country are tightening their belts and making tough decisions. The Federal Government should do the same. Hey, that sounds pretty good. That's what you were just talking about, Doctor, that families have to tighten their belts and take a good look and make choices between one thing and another. Congressman Bishop just made a brilliant explanation of why the Federal Government is making lousy choices. Not only are we spending too much, taxing too much, borrowing too much, but we're also doing it for the wrong reasons. And that just doesn't make a whole lot of sense. This is starting to get to the point where I think things are going to get interesting. We're going to bring on another witness, a fantastic young man who really does know something about budgeting. The big question I think that comes to a whole lot of Americans' minds is this question: When is too much too much? When do we get to the tipping point where the whole thing, just like a table, dumps and the whole economy just basically falls to pieces? You know, just like in your business, if you had borrowed too much, you could have pushed it too far. You intuitively knew that. What happens when we start getting into this? We're saying that families across the country are tightening their belts, but we, sure as the dickens, are not because with our actions, we're going to double the debt in 5 years, raise the deficit to a record $1.6 trillion this year. That's 10.6 percent of GDP. Let's put this into perspective. It's one thing to have a deficit during a year; but when you compare the deficit to the overall product of the whole Nation, that's a significant statistic. And last year, we set a record. The year before we set a record. During the time George Bush was finishing and Nancy Pelosi had this Congress, we had a $450- something billion deficit. That was big. That was 3.1 percent of GDP. That was too much spending. And then we come back around to '09 and what do we do? We go from $4.5 billion--oh, billion isn't a big number anymore. Let's try trillion--to $1.4 trillion of deficit. That's three times more with the current President, and when you look at it as a percent of GDP, 9.9 percent of GDP. So now we've learned our lesson, right, for 2010. Certainly that was too much. No. No. We're going to go for $1.6 trillion instead of $1.4 trillion and 10.6 percent of GDP. When is enough enough? My good friend Congressman Hensarling, I don't want to pick on Texas too much, but you have really taken the lead on a number of these economic issues. We need some help tonight, and we need to ask that question, When is too much too much? Please help us.

Mr. AKIN

Mr. AKIN. That's what I meant.

Mr. AKIN. You know, the interesting thing is, as you make government bigger, it makes the citizens smaller. And it's gotten to the point now where that government has got to be trimmed. And I think people are ready to do it. I would like to just say that I appreciate your leadership these years that I've shared in the Congress with you, Congressman Hoekstra, and for the fact that you have consistently, before it was popular, you have always been in this position of trying to deconstruct the unnecessary elements of the Federal Government. And I think that in a sense that you and I have seen a time where more voters are going to think, Boy, I wish there were more Congressmen Hoekstras in the way that they vote and the way they keep taking the tough choices, regardless of political party, to do what is right and send that decisionmaking back to the local citizens. Send that tax dollar, let him keep it in his pocket, and keep the government small.

Mr. AKIN. The Federal Government is tone deaf.

Mr. AKIN. Do they get the grant?

Mr. AKIN. I tell you there is plenty of work to do. And it just needs some energy, some innovation both in Washington, D.C., but also at the State levels. What is the situation in Michigan in terms of unemployment? Do you have the same kind of problems there that other people are facing?

Mr. AKIN. You know, your simple little phrase--sometimes a simple phrase is very effective. You talked about, bring Michigan back. Or, bring Missouri back. The tragedy is that what you just said in a few sentences explains how to do it. It's not like this is that complicated. You don't have to be too bright to say, If you want jobs, you've got to have some company that's going to provide the jobs. And you don't have to be too bright to say that if you tax the hide off of the guy that owns the little business, he is not going to have any money to build a new wing or to buy a new machine tool or to add the new process to create the new jobs. It's not that complicated. But the trouble is we get these people down here who are so institutional, and they think we know what to do. We're going to tax the rich guy and redistribute the money. And somehow that makes the economy better. I mean that stimulus bill, the whole logic behind it was totally flawed. Yet, what you have just said in a sentence or two, gentleman, you put your finger on exactly what has to be done. And it's got to kill you to go back to Michigan. You love your State, you love the people in the State. And you understand what it takes to make it work. And people are just tone deaf.

Mr. AKIN. Is that current model something that could be changed? Let's say you were to, a State were to basically say hey, we are going to start over again. We are going to do a different approach. Is that the kind of thing a State could really be innovative on, or has the Federal Government just got them locked down?

Mr. AKIN. I couldn't help thinking about what you are saying and getting me excited a little bit about this. If I were in Missouri, I think it would be a Show Me Progress or something. They call us the Show Me State. And I think one of the ways that would really be pretty interesting and might change the paradigm quite a bit would be if you really want to give bonuses to teachers, why don't you let the parents of the students have a say in how their performance would be? Because I will tell you, if you think back about all of your teachers that you have had, I can't remember too much stuff the teachers taught me, but I can sure remember the people and the characters that I respected because of the way they lived their lives. And there were some that were just really, really treasures. They were like State treasures. They were such wonderful people. And I still remember them to the day. And I think sometimes I am guilty, I should have gone back and thanked them for putting up with a little brat like me. And if the parents have some chance to direct those bonuses, I am sure that would probably politically knock the train off the track. But there is an idea. Because those parents know whether their kids are getting the real stuff or not.

Mr. AKIN. Recall. You know, if you take a look at what the Federal Government was like when it was originally created, as I recall there were really only four laws. One of the laws was against piracy on the high seas. One of the laws was against counterfeiting, because the Federal Government printed the money. There was a law against being a traitor or a spy to your country. All of those laws had in common that it was really a Federal authority, as opposed to something that could be handled by the States. But the States had all the laws that hang him if he steals a horse or whatever the different State laws were. All of your laws almost were at a State level. Where now what has happened is people somehow think that all of the intelligence moved to Washington, D.C., and they have got all of these Federal laws, statute books full. Then you have got all of these bureaucracies full of rules and regulations. Somehow we have got to start taking this place apart and sending that authority to the State level. And with all due respect, gentlemen, a lot could go to the local and the parental level as well.

Mr. AKIN. How in the world could any statistics mean anything when you have got the situation you are talking about?

Mr. AKIN. You know what is exciting is you are talking about that spirit of ingenuity that Americans have. One of the things people down here in the institutional part of our government, they think everybody has got to have a Ph.D. and be an expert in this or that. And what I have seen so often in Americans, you use just a little bit of common sense, and as you are saying, you take that ingenuity and that can do spirit and just get the red tape and the government chains off of them and let them start to solve their problems.

Mr. AKIN. It is kind of like Lucy with the football and Charlie Brown trying to kick the football. There is always a string on the piece of cheese, and they say, Come on, mouse, get the cheese. Then they reel the string in. And they have been doing this for I don't know how many years. If you were Governor, wouldn't you think it would be smart in some States to say, I have seen this before. I really don't want you telling me how to run our schools. I don't want you telling me how to do the things that our State knows how to do for ourselves far better. You can just keep your money down in Washington, D.C. It is not a temptation to us anymore, and we are going to run a clean and efficient State where we really do things. Our objective is going to be one of the top performing States all across America, and this is a competition where we are going to start right now by saying no to a whole lot of government red tape.

Mr. AKIN. It came from your and my taxpayers.

Mr. AKIN. Whether the program works or not.

Mr. AKIN. That paints a picture. Doesn't it?

Mr. AKIN. Of course, that whole discussion suggests the Founders were a little smarter than we gave them credit for. There is nothing in the Constitution that justifies the creation of a Federal Department of Education in the first place. It was, I think, more of a concession to the NEA teachers union. And I am not sure if they got a very good deal anyway.

Mr. AKIN. Exactly. We know more what they are doing than they do.

Mr. AKIN. That is a novel idea.

Mr. AKIN. You know, it was interesting. When we were looking at that No Child Left Behind, it was my first kind of introduction to insider ball in Washington, DC, and the Department of Education. And there were all of these programs in the Department of Education, and each one was funded.

Mr. AKIN. What we attempted to do, and I think you were part of negotiating, trying to get this bill to be something that we could be proud of. And I think the deal was, How about we do this? How about we let the local superintendent of his school take a look at all 600- something of these programs, take the money that he could get for all of them, and if he wants to, direct it all to one or two of his favorite programs that meet the needs of their individual schools instead of having the red tape of 600 different Federal programs? And that seemed like a pretty logical thing, because each superintendent could take a look at their school and their own needs, and they could take the money and channel it in an effective way. Guess what the establishment down here said?

Mr. AKIN. I would assume.

Mr. AKIN. Let me ask you a question, because I know you are a proud resident of Michigan. I just want to say, speculatively, what would happen if you were the Governor of Michigan and somebody came to you with this health care bill, and the Congressional Budget Office, because it had been carefully written, said it was a $1 trillion bill, but when you looked at it, you said, ``Well it is $1 trillion to the Federal, but it has got unfunded mandates for the State of Michigan''? And you have probably got a balanced budget in some sort of amendment in Michigan. Wouldn't that make you frustrated if we are dumping the real cost of something down onto the States?