Jobs & Economy

Southern Wisconsin’s families continue to work hard to make ends meet in an uncertain economy. The unemployment rate in Wisconsin is high at 7.1 percent as of April 2013, while the national unemployment rate is 7.6 percent. As the economy struggles, much focus has been on increasing taxes to address our deficit and our debt.  These tax increases would hit job creators, like those small manufacturers located in industrial parks in our communities, and hard-working families.  Our local manufacturers and families are already forced to live under the strains of the current difficult economy.  Asking them to pay more will hurt our local communities.  What the federal government needs to do is stop spending too much.  It simply can no longer afford to spend money that it doesn’t have and take out more loans to pay for that spending.

Economic growth comes when American families and small businesses work, save, and invest. Congress needs to prioritize legislation that encourages job creation by keeping taxes low, controlling government spending, and addressing the severe problems ahead if we do not reform critical government programs that are driving up our national debt. Left unchanged, these programs will continue to take up a larger portion of our budget each year, crowd out other government spending, and hurt our economy. As the Chairman of the House Budget Committee, I take seriously my responsibility to help improve accountability, monitor federal spending, and prevent government waste and abuse, while putting forward long-term solutions to our debt crisis.

A Down Payment on the Nation’s Debt

Five years ago, we had a financial crisis. It flared up suddenly, though the tinder had been building up over time. And the damage was severe. Four million families lost their homes. Nine million people lost their jobs. In some ways, Washington helped put out the flames. But much of what the government tried—more regulations, more spending—didn’t work. In fact, it may have delayed the recovery. Today, we face a crisis of another sort—one more predictable than the last and more dangerous than ever. We face the threat of a debt crisis.

Our national debt is growing faster than our economy. In other words, our obligations are growing faster than our ability to pay them. Debt held by the public is 73 percent of our economy. By 2023, the nonpartisan Congressional Budget Office (CBO) expects it to hit 77 percent. In fact, under an alternative scenario that assumes plausible policy choices, it will hit 87 percent by 2023. And total national debt is already bigger than our economy.  One of the biggest threats to our country’s economic growth now and in the future, is our mounting debt.  Our debt is the product of massive spending increases that occurred under many presidents and many Congresses over many years, but we are reaching a tipping point and can no longer afford to kick the can down the road and expect that we can solve our fiscal problems in the future. 

Budget Control Act of 2011

To understand the magnitude of the nation’s fiscal problems, it is important to take into consideration a number of economic milestones that have been passed during the past few years. The total debt surpassed its $14.29 trillion statutory debt limit in May of 2011, and unless Congress passed legislation to increase the statutory debt limit, the U.S. would exhaust its borrowing authority.  Most policy makers and economists agreed that if the debt limit was not raised, the federal government would not be able to pay its obligations such as defense operations, Medicare reimbursements, and Social Security checks – possibly triggering a default with serious negative repercussions for the economies and financial markets around the world.  Nobody wants the US to default on its obligations, but at the same time, we cannot just rubber stamp a debt limit increase.  For this reason, the House and the Senate passed the Budget Control Act of 2011 with bipartisan support, which created enforceable discretionary spending caps to cut and restrain spending over the next ten years, provide a mechanism for increasing the debt limit in two steps, and establish a Joint Committee to produce deficit reduction legislation.  I supported this law because it would cut government spending, avoid default and help create a better environment for job creation.

Sequestration

In November of 2011, the national debt surpassed the $15 trillion mark.  Shortly thereafter the Co-Chairs of the Joint Select Committee on Deficit Reduction issued a statement indicating they were not able to reach a bipartisan agreement prior to the committee's deadline.  The committee’s inability to agree on specific cuts triggered “sequestration cuts” – automatic, across-the-board spending cuts totaling $1.2 trillion over ten years – that were to take effect in 2013.  As you may know, these automatic, across the board spending cuts were proposed by President Obama who insisted that sequestration be included in the debt limit deal of 2011.  It is disappointing that the Joint Committee missed an opportunity to tackle our most pressing fiscal and economic challenges; however, this committee faced an extraordinary challenge after Senate Democrats failed to pass – or even propose – a budget.  In fact, the Senate failed to pass a budget for more than 1,400 days – nearly four years.  The simple truth is that we don't need special commissions and committees to develop solutions; we need the President and Members of Congress to do their jobs.

In an effort to avoid these across-the-board spending cuts, the House passed H.R. 5652, the Sequester Replacement Reconciliation Act of 2012, and also H.R. 6684, the Spending Reduction Act of 2012. I voted in favor of these bills, which would have prevented the sequester by replacing it with common-sense spending reductions that members of both parties should be able to support. For instance, these pieces of legislation included provisions that would stop fraud by eliminating government slush funds, put an end to bailouts, and reduce waste and duplicative programs. However, the Democratic-led Senate failed to consider any legislation that could have replaced sequestration.  As a result, the across-the-board spending cuts went in to effect on March 1, 2013.

The “Fiscal Cliff”

In addition to the, automatic across-the-board spending cuts, an across-the-board tax increase was also slated to go into effect in January of 2013.  This simultaneous increase in taxes and automatic cuts in federal spending was deemed the “fiscal cliff."  According to the Congressional Budget Office, going over the fiscal cliff would have substantially reduced the deficit; however, this restraint would have also reduced our nation's economic growth from 4.4 percent to negative 0.5 percent in 2013, putting us at risk of another recession. Fortunately, there was bipartisan consensus that action needed to be taken.  Recognizing the importance of acting to prevent the expiration of current tax rates, the House passed H.R. 8, the American Taxpayer Relief Act of 2012, by a bipartisan vote of 257 to 167—with my support—on January 1, 2013.  H.R. 8 prevented a tax rate increase on 98 percent of taxpayers and made these lower tax rates permanent so they would not expire again.  H.R. 8 also makes permanent 97 percent of the tax relief provisions for small businesses enacted in 2001 and 2003.  Without Congressional action to address this issue, the American people would have been hit with a $4.4 trillion tax increase; instead revenues will increase by $600 billion.  In the end, the choice presented to Member of Congress was to either raise taxes by $4.4 trillion or by $600 billion—I voted for the latter.  While not perfect, I supported H.R. 8 because this legislation prevents tax increases on 98 percent of taxpayers, or 114 million households.  The House had already passed legislation to prevent tax increases for every American family, and it is unfortunate that President Obama insisted on taking more from hardworking taxpayers.  

Funding the Government

Additionally, action was required by Congress to fund the federal government through the remainder of FY2013. The federal government, like any other business or household, must each year have a budget. In the absence of a year-long budget, the House and Senate must approve short-term spending bills known as "continuing resolutions" to keep the federal government operational.   In September of last year, Congress and the President approved H.J.Res. 117, a continuing resolution to keep the government funded through March 27, 2013. With this deadline fast approaching, the House took action by introducing H.R. 933, the Department of Defense, Military Construction, and Veterans Affairs and Full-Year Continuing Appropriations Act of 2013. This bill will allow government operations to be funded at the same levels provided in H.J.Res. 117, including the modifications made by the American Taxpayer Relief Act of 2012. H.R. 933 also includes the spending reductions recently enforced through sequestration, as required by the Budget Control Act of 2011. This bill allows the government to operate on a budget of $984 billion through September 30, 2013. The House passed H.R. 933 with bi-partisan support on March 7, 2013, by a vote of 267 – 151. I voted in favor of final passage.  The Senate passed an amendment in the nature of a substitute to H.R. 933 by a vote of 73-26.  The House concurred in the Senate amendment and the President signed the bill into law on March 26, 2013.

A Responsible, Balanced Budget to Grow the Economy and Create Jobs

On January 14, 2013, the White House announced that it would not meet the statutory deadline of submitting its budget proposal to Congress by February 4.  The President has only met this deadline once since taking office.  This, combined with the Senate’s refusal to comply with the statutory requirement to pass a budget for nearly 4 years is a true failure of leadership.  To bring these failures to an end, the House passed H.R. 325, the No Budget, No Pay Act of 2013 by a vote of 285 to 144 on January 23, 2013.  The legislation required both houses of Congress to pass a budget as stipulated by federal law.  Under this bill, if either the House or Senate failed to pass a budget, its members’ pay would be withheld.  This legislation also allowed the Treasury to borrow to only pay its bills coming due until May 18, 2013.  At the end of that period of time, the debt limit increased by the amount that was borrowed to pay the government’s bills until May 18, 2013 and the temporary suspension of the debt limit ceased.  H.R. 325 passed in the Senate on January 31, 2013 and was signed by the President.  I voted in favor of this bill because every family sets a budget to pay its bills.  Congress should do the same.

In response to this law, the Senate Budget Committee introduced and passed a budget resolution for FY2014, and I commend the Senate for finally taking action and introducing a plan so that Washington may return to a normal budgeting process instead of the recent trend of “budgeting by crisis.”  However, the budget passed by Senate Democrats still fails to propose serious solutions to our nation’s challenges.  Much like the budgets introduced by President Obama, this budget never balances – ever.  The Senate Democrats’ budget proposes raising taxes by as much as $1.5 trillion, simply taking more from hardworking families and successful small businesses in order to spend more in Washington.  It ignores the true drivers of our debt, continues the raid on Medicare, and imperils the health and retirement security that our seniors depend on.

My House colleagues and I passed our budget resolution for FY2014, “The Path to Prosperity:  A Responsible, Balanced Budget.”  This budget provides an exit ramp from the current unsustainable path – and an entry ramp to a better future.  The path to Prosperity will reduce our deficits by $4.6 trillion over ten years and will produce a surplus of $7 billion in 2023.  Under current law, spending will rise an annual average of 5.0 percent, resulting in $46 trillion in federal spending over the next ten years.  Alternatively, our budget will allow spending to increase annually by only 3.4 percent, reducing our spending over ten years to roughly $41 trillion.  Among other things, this budget will cut wasteful government spending, fix our broken tax code, protect and strengthen important priorities like Medicare and national security, and reform welfare programs like Medicaid to ensure that they can serve those in need.  By balancing the budget and tackling our debt, this budget will help grow our economy today and ensure the next generation inherits a stronger, more prosperous America.

A balanced budget is a reasonable goal because it returns government to its proper limits and focus.  By curbing government’s overreach, our budget will give families the space they need to thrive.  Yet the most important question isn’t how we balance the budget – it’s why.  A budget is a means to an end, and the end isn’t a neat and tidy spreadsheet.  It’s the well-being of all Americans.  Washington’s reckless spending drives the debt and this debt is hurting the economy today.  We’ll never get our debt under control unless we tackle its main drivers:  spending money we don’t have.  Unless we get at the heart of the problem, Americans will face a debt crisis – one that will threaten our most vulnerable in particular – and it is our responsibility to prevent such a crisis.  By giving families stability and protecting them from tax hikes, our budget will promote a healthier economy and help create jobs.

Job Creation and Economic Growth

The economic growth that our country needs cannot come from Washington.  It originates from the creativity and entrepreneurial spirit of the American people.  This spirit can only thrive if the government creates an economic-friendly environment that allows businesses to grow and create jobs.  In the 112^th Congress, the House Majority has pursued an agenda focused on job creation and economic growth.  As such, we passed 55 bills aimed at empowering small business owners and reducing regulatory burdens, fixing the tax code to help job creators, increasing competitiveness for American manufacturers, encouraging entrepreneurship and growth, maximizing domestic energy production, paying down America’s unsustainable debt burden and beginning to live within our means.  Unfortunately, 40 of these bills, despite most of them garnering bipartisan support in the House, died in the Democrat-controlled Senate.  Job creation and economic growth will remain a priority for House Republicans in the 113^th Congress. 

Reforming our tax code, eliminating the broken policies of the past, training workers to meet 21^st century needs, and approving the Keystone XL Pipeline and expanding oil production on federal lands are all areas where both parties can find common ground and bring positive changes that will allow businesses to grow and create jobs. I will continue to work to advance policies that address our economic challenges, foster innovation and investment, and help job creators without raising taxes on working families and small business owners. 

Reform the Tax Code

America has an economic problem, in large part due to our outdated, broken tax code.  The combination of complexity, high tax rates on business income, and prevalence of double taxation of capital and investment suppresses innovation, job creation, and economic growth.  The House-passed FY2014 budget would simplify the tax code to make it fairer to American families and businesses.  Our plan would reduce the corporate tax rate and level the playing field between American businesses and their foreign competitors.  It is also important to remember that 9 out of 10 businesses in Wisconsin file their taxes as individuals, not as corporations, and these small businesses employ more than half of all private sector workers.  With two-thirds of the net new jobs in America being created by small businesses, raising taxes on these businesses would kill job creation.  The budget proposes lowering the top rate while broadening the tax base by eliminating loopholes and tax shelters.  By making the tax code more conducive to innovation, investment, and sustained job creation, we can safeguard the American Dream for generations to come by preventing jobs from moving overseas. 

Consolidate and Strengthen Job-Training Programs

To keep pace with a technologically advanced and increasingly interconnected world, workers must develop new skills.  One estimate says 90 percent of jobs in a knowledge-based economy will require postsecondary education.  Higher education and job-training are crucial to this effort.  But the federal government is hindering workforce development with outmoded aid programs.  In January 2011, the Government Accountability Office (GAO) issued a report that found 47 overlapping federal job-training programs spent approximately $18 billion in 2009.  Since GAO issued that report, the Education and Workforce Committee has conducted extensive work in this area and identified more than 50 duplicative and overlapping programs.  Many of these job-training programs are uncoordinated, difficult to access, and not accountable for results.

The House passed the SKILLS Act on March 15, 2013, which reforms the workforce development system and streamlines duplicative and ineffective job training programs by consolidating 35 programs. It also creates a workforce investment fund to serve as single source of federal support for employers and strengthens role of state and local officials and job creators to tailor programs to meet local needs.  The Path to Prosperity FY2014 budget builds on these reforms.  It improves accountability by calling for the consolidation of duplicative federal job-training programs into more targeted career-scholarship programs and by tracking the type of training provided, cost per trainee, employment after training, and whether the trainee secures a job in his or her preferred field.  A streamlined approach with increased oversight and accountability will not only provide administrative savings, but improve access, choice, and flexibility to enable workers and job-seekers to respond quickly and effectively to whatever specific career challenges they face.  Moreover, the budget adopted a proposal from President Obama’s FY2013 budget to close chronically low-performing Job Corps centers.  Such a reform will allow those funds to be better invested in centers with proven track records. 

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