What’s Happening in Congress – The Top 10 Things You Need to Know this Week, 2/6/2012

1. This Week’s Legislative Highlight: The House is expected to call for a conference report on the differing House and Senate versions of the extension of the payroll tax cut.  While the House and Senate remain deeply divided over details of the extension, an innovative alternative proposal to keep the tax cut on the table without draining revenue from Social Security has emerged in the Social Security Preservation through Individual Choice Enhancement (SSPICE) Act.  Sponsored by Rep. Jeff Landry (LA-3), this bill, HR 3551, gives taxpayers the option to keep their 2 percent payroll tax cut in exchange for delaying their eligibility for benefits by one month, which the Chief Actuary for Social Security says is enough to pay for the cut, reducing Social Security’s unfunded liabilities by $2.1 trillion over its 75-year budget window.
2. House & Senate Schedule: The House and Senate both remain in session, and both chambers will remain so until the week of President’s Day (February 20-24), when they will return home to meet with constituents.
3. Senate/FAA: The Senate will vote on the conference report on the bill to reauthorize the Federal Aviation Administration.  The House has already passed its end of the report, and the Senate is expected to follow suit without much delay.
4. House/Spending: The House should vote Tuesday on H.R. 1734, the Civilian Property Realignment Act, which would create a commission to identify obsolete or unused Federal properties and lands which could be sold in order to both raise money and save on maintenance costs.  The commission would work similarly to the old BRAC commission which closed many redundant military facilities after the end of the Cold War.
5. House/Budget: The House will consider the next two out of the ten budget process reform bills being introduced by Rep. Paul Ryan over the next several weeks.  On Tuesday, the first of these bills to reach the floor should be H.R. 3521, a bill to reintroduce the President’s power to use a line-item veto for spending bills.  Introduced by Rep. Paul Ryan (WI-1), this would give the president the opportunity to recommend specific cuts to the year’s budget, although these recommendations would be subject to a vote by Congress.
6. House/Budget: The second budget reform bill this week is H.R. 3581, the Budget and Accounting Transparency Act.  Since the housing crisis of 2008, the government now explicitly runs the Government-Sponsored Entities (GSEs) Fannie Mae and Freddie Mac, and this bill, introduced by Rep. Scott Garrett (NJ-5), seeks to force the government to recognize the costs of administering Fannie and Freddie, by including their operating costs in the federal budget.  The bill would also change the way that the CBO calculates the costs of these loan-granting institutions by holding them to the same accounting practices as similar private institutions.  This bill should reach the floor by Wednesday.
7. House/Spending: A major bill which is on the horizon is highway and transit funding.  Congress has just been extending transportation funding instead of actually passing a new highway budget. This is similar to how the Senate has treated the budget for the past 1000-plus days, except that the transportation funding has been extended since 2005, and each time the extension has contained budget increases and/or massive amounts of earmark spending projects.  Transportation spending now exceeds its funding source (the federal gas tax), and the Highway Trust Fund is being depleted by the excess spending. 
8. House/Financial Regulation: Later in the week, the House is expected to take up S. 2038, the Stop Trading on Congressional Knowledge (STOCK) Act, which was passed by the Senate last week.  This is the bill to prevent insider trading by regulating the investments of members of Congress and their staff.  However, some major concerns have been raised about the open-endedness of this bill and the possibilities for abuse, as theoretically any information that is passed onto any company or investor, even accidentally, could be a cause for legal action against the member or staffer involved.  The House is expected the amend the Senate version of the bill in order to prevent it from being overly broad, but the details of these amendments are not yet available.
9. Call your Congressman!
10. Call your Senator!

The trouble with legislation today is that the devil is in the details, and those details are usually created by the federal bureaucracy. The Patient Protection and Affordable Care Act, popularly known as ObamaCare, was signed into law on March 23rd, 2010. So, why is it a surprise that some religious institutions, particularly Catholic hospitals and universities, will be required by law to provide contraceptives in their employee health care plans? Surely the outcry over this mandate would have come out nearly two years ago when the bill became a law, right?

Well, no. Modern legislators specialize in writing vague, pleasant-sounding laws that in effect delegate their lawmaking power to the federal bureaucracy. In other words, Congress writes a law demanding an “end” and tells the bureaucracy to decide what “means” will be necessary in order to achieve that end. In itself, this process is entirely unconstitutional due to its breach of the separation of powers doctrine. The federal bureaucracy is at least nominally a part of the executive branch, so when Congress allows an agency such as Health and Human Services to decide exactly how crucial components of bills such as ObamaCare will function, the power to make law shifts from the legislative to the executive branch. 

This is a win-win for Congressmen. They get to claim the credit for passing a health care reform bill while passing off the blame for unpopular details like this contraception decision to the bureaucracy. Better yet, once the provisions of the bill are finally enacted, a new bureaucracy will be created or an existing one will expand dramatically. Citizens will undoubtedly get caught in the web of regulations spun by this bureaucracy, and they will then go to their Congressman for help cutting through the red tape. As a result, the Congressman not only receives credit for passing a pleasant-sounding law, but also gets to look like a hero to his constituents after confronting the bureaucracy on their behalf.  He garners votes both ways.

Let’s examine the contraception controversy a little more carefully. It began soon after the January 20th decision from Health and Human Services that only churches and other houses of worship would be exempted from the new ObamaCare requirement that employee health care plans include contraceptives. The Secretary of HHS, Kathleen Sebelius, has defended the mandate by arguing that because Catholic hospitals and universities usually aren’t primarily staffed by Catholics, that they ought to be treated like any other employer. Frankly, this argument completely misses the point.

At its heart, this is a debate over principles and the First Amendment to the Constitution. The relevant portion of the amendment is, “Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof.” In other words, people have the right to follow their conscience when it comes to religious matters. For the Catholic Church, contraceptives and other forms of birth control such as sterilization are very much so a moral matter and Catholic doctrine opposes their use. The “free exercise” of religion is not limited to worshipping in a church. Following a doctrine or set of beliefs is integral to every faith and clearly falls under the “free exercise” of religion.

Forcing Catholic employers to offer contraceptives as part of their employee health care plans fundamentally violates their First Amendment right to follow their conscience with regard to contraception. The popular liberal refrain to this argument is that many American Catholic women have used or at least condone the use of contraceptives, but is that really the point? First, the issue at hand is a mandate on employers to provide contraceptives, not a mandate on women to use them. Second, regardless of disagreements within the Church over contraception, Church doctrine still prohibits its use.  Those who stray from doctrine on this issue can just go out and purchase contraceptives without a government mandate forcing their employers to violate their beliefs on the matter. This mandate is just another case of our intrusive federal government completely disregarding Constitutional restrictions on its power.

The blowback from this decision is powerful and coming from all over the country. Senator Marco Rubio from Florida wrote that, “As Americans, we should all be appalled by an activist government so overbearing and so obsessed with forcing mandates on the American people that it forces such a choice on religious institutions.”  Monsignor Robert McClory, the vicar-general of the Archdiocese of Detroit, is quoted in the Detroit Free Press as saying, “It’s dangerous and threatening… We're being told to violate our conscience or be in violation of the law.”

Catholics understand that a dangerous precedent will be set if this decision goes by unchallenged. Even Sister Carol Keehan, head of the Catholic Health Association and an important supporter of ObamaCare, called the decision a “jolt”. Catholic doctrine teaches that life begins at conception, so for Catholics this ruling is no different than one that would require Catholic employers to provide for abortions in their employee health care plans. If those of us who believe in the free exercise of religion from federal government interference don’t protest this decision, regardless of whether or not we’re Catholic, then where do we draw the line?

White House Press Secretary Jay Carney argues, "We need to make sure that those employees of all different faiths have access to contraception… That's why we sought what we believe is an appropriate balance." Given the choice between how to balance our right to the free exercise of religion against our “right” to contraceptives, the Obama administration came down in favor of contraception. Contraceptives can be bought almost anywhere in the country at an affordable price. Our religious freedom is priceless and must be safeguarded. 

The Obama administration and much of the Democratic party fundamentally do not understand this line of thinking. One senior aide to a Senate Democrat was quoted by Politico as commenting, “Who are we going to really lose over this? Ron Paul voters? …Catholics who don’t believe in condoms aren’t going to vote for Barack Obama anyway. Let’s get real.” In other words, it’s all about votes, not principle.

The controversy over this Obama administration mandate is a perfect example of why this system of legislative delegation works for politicians and not for the American people. Despotism lurks beneath the surface of a system that places the legislative power in the hands of unelected bureaucrats instead of our elected representatives. Over the coming years, there is little doubt that more decisions like this will come down from the Obama administration. The only true and lasting solution is to repeal ObamaCare and to replace it with clear, honest health care reform that places power in the hands of patients and their doctors instead of federal bureaucrats.

FreedomWorks is looking forward to being back in the Austin, Tx area in a couple of weeks! Join us in Round Rock on Saturday, Feb. 18th at the Wingate Conference Center located at 1209 North Interstate Highway 35, off exit 359. The event starts at 5:00pm and is free and open to the public.

RSVP on FreedomConnector by clicking here!

Scrap Minimum Wage Laws

For far too long, we have witnessed government intervene in the market place in the name of helping those who are less fortunate. This involvement has become so heavily politicized that if one were to speak against such intervention they would be blamed for not caring about the less fortunate, regardless of their correct economic knowledge.  Government intervention includes price fixing, whether it is artificially maximizing or minimizing a price for a commodity or simply setting minimum wages for hourly wage earners. All of these policies do the exact opposite of what they are intended to do. Bureaucrats do not understand that a wage is in fact a price; therefore the same harmful effects of arbitrarily setting prices of goods will have the same negative impact as setting a minimum wage.

For example, when the government arbitrarily maximizes the price of a commodity, two major problems come about. Let’s say that the government set the price of a gallon of milk was selling at $4 a gallon, government bureaucrats believe the price is too high and set a maximum price of $3 a gallon. The first problem is that now that the price of milk is $3 more people can afford to buy the milk, creating a higher demand and a higher scarcity of milk which will cause the price to increase. The second major problem is that it puts producers out of business. Let’s say that it costs a farmer $3.50 to produce the milk, when it was selling at $4 a gallon they made a .50 cent profit on each gallon. Now that the maximum price is $3, they will now be losing money on each gallon they sell. It will not be long until the producer stops producing milk and will be less prosperous. There will be less milk available in the market.  

San Francisco recently joined the club in believing that setting a high minimum wage law creates more prosperity for everybody. The brilliant legislators set the minimum wage to $10.24 an hour, starting in early of 2012. David Frias, a minimum wage earner at a local movie theatre said "I know I'm going to have a little extra money in my wallet. San Francisco is a model for low-wage workers - it's full respect, I guess." Little does he understand that now that all employers in San Francisco must pay such a high wage, the only way to compensate for the high wage is to sell their goods at a higher price. So the wage earner is not any better off now than when he earned a lower wage. This burden is shifted too all consumers, even those who do not earn a “minimum wage.” Now that all prices are higher, the consumer will buy less, hurting almost all businesses.

The proper way to raise wages without government intervention is to allow the free market to operate completely. Allowing businesses to compete with one another is the most pure and productive way of creating the highest wages without effecting prices and forcing producers to pay a wage they can’t afford. Unemployment would drop significantly as those who are unemployed to do unfair minimum wage laws would then voluntarily work for a lesser wage than what was set as the minimum by the government. The key to employment and prosperity is production; therefore it is impossible to create more wealth than what is created by the market. In the same sense that we can’t pay an individual more than their worth of productivity.

Fiscal conservatives have long understood the danger of earmark spending.  Rep. Jeff Flake, who spent years fighting for an earmark ban in the House of Representatives, called earmarks the “gateway drug” to out-of-control spending because of the way that lawmakers can be enticed to vote for a controversial bill by offering them earmarks for pork-barrel project in their home state.  Led by Flake, conservatives succeeded in forcing leadership to impose an earmark ban after Republicans re-took the House in 2010.

A number of fiscally conservative senators have been fighting against pork-barrel spending in the Senate as well, and yesterday, February 2^nd, Sen. Pat Toomey (PA) introduced an amendment to change the Senate’s rules to ban earmarks.  FreedomWorks placed a Key Vote notice on this legislation.

Unfortunately, the amendment failed, 40-59.  Sen. Toomey even managed to get seven Democrats to vote for his amendment, but thirteen Republican big-spenders voted against the amendment along with 46 Democrats, absolutely ensuring the bill’s failure.  See how they voted here.

The thirteen Republicans who voted to defend their ability to fund pork-barrel projects are:

Alexander (TN) – (202) 224-4944, @SenAlexander

Blunt (MO) – (202) 224-5721, @RoyBlunt

Cochran (MS) – (202) 224-5054

Collins (ME) – (202) 224-2523, @SenatorCollins

Hoeven (ND) – (202) 224-2551, @SenJohnHoeven

Hutchison (TX) – (202) 224-5922, @kaybaileyhutch

Inhofe (OK) – (202) 224-4721, @InhofePress

Lugar (IN) – (202) 224-4814, @senatorlugar

Murkowski (AK) – (202) 224-6665, @lisamurkowski

Roberts (KS) – (202) 224-4774, @SenPatRoberts

Sessions (AL) – (202) 224-4124, @SenatorSessions

Shelby (AL) – (202) 224-5744, @SenShelbyPress

Wicker (MS) – (202) 224-6253, @SenatorWicker

It is important that we let our Senators know that we oppose their wasteful earmarks – they are a corrupting practice, and our country cannot afford them.

The school choice movement is rapidly gaining momentum in South Carolina. Last year, a school choice bill failed by just one vote in the South Carolina House of Representatives. A virtually identical bill, H. 4576, has been introduced this session and grassroots activists are determined to ensure that it passes. More than 350 citizens gathered in Spartanburg, South Carolina to rally for parental choice in education last night. The successful event sent a loud and resounding message to legislators: pass the school choice bill or ultimately pay a heavy price at the ballot box.

Cato Institute Scholar Andrew Coulson writes that “if they gave out awards for good policy design...the folks in South Carolina would be top contenders for gold.” The bold legislation would boost competition, increase parental choice and save taxpayers money. It would provide tax credits of up to $500 per child to families who send their children to private schools. Unlike most existing school choice programs, these tax cuts would be extended to homeschoolers. Coulson is correct; South Carolina is leading the fight for real school choice. 

Granting tax cuts to parents that opt to homeschool or send their children to private schools would be a step in the right direction. A poll by the South Carolinians for Responsible Government found that 63 percent of South Carolinians support tax credits while only 29 oppose them. Many families are struggling to afford the cost of their children's private school tuition. Taxpayers are immorally forced to pay for government schools via taxation regardless if they have a child attending the school. Lowering the tax burden on families would enable them to send their children to better schools.   

The bill would provide tuition assistance to low-income families through privately-funded non-profit Scholarship Granting Organizations (SGOs). The size of the scholarship is determined solely by the individual SGO. The Individuals who donate to SGOs will receive a dollar-for-dollar tax credit of up to 100 percent of their tax liability and corporations that donate may receive a dollar-for-dollar tax credit of up to 60 percent of their tax liability. These donation tax credits will encourage people to contribute to a good cause of helping low-income families pay for good quality private schools.

Education tax credits will help students escape failing South Carolina public schools. The disturbing statistics show just how bad South Carolina public schools are right now. During the 2010-11 academic year, a whopping 76 percent of South Carolina public schools (831 out of 1,037) failed to make adequate yearly process. South Carolina has consistently ranked in the bottom ten states on 4th grade reading.  Only 58.6 percent of South Carolina high school students graduate on time, according to Education Week. The South Carolina Policy Council found that the state has the lowest SAT scores in the south.

The one-size-fits-all education model has failed children in South Carolina. Public schools in the Palmetto State are not preparing students to compete on a national scale. Education spending has skyrocketed but academic achievement and parental satisfaction remains low. It’s time to implement new, bold solutions to shake up the education status quo. After many years of attempting to pass a school choice bill in South Carolina, there's a very good chance that this will be the year that we finally achieve victory. We know that our over 20,000 FreedomWorks members in the great state of South Carolina are willing to stand up to the special interests that are blocking parental choice in education.

“To lean forward is to think bigger, listen closer, fight smarter, and act faster.” – MSNBC.com

Substantively, what does this quote mean? What message is MSNBC trying to put out with its two-year, multimillion dollar self-branding campaign to “lean forward”? The definition provided is a jumbled mix of vague and essentially meaningless platitudes. The murky, nebulous slogan itself is clearly just meant to be memorable and hopefully catchy.  The viewer must examine the content of the commercials in order to discern what is actually at the heart of this campaign. 

Although there are a few feel-good, uncontroversial broadcasts included in the advertising blitz, the bulk of the commercials are spent putting forward a progressive political agenda. Phil Griffin, the chief executive of MSNBC, has been quoted as saying, “MSNBC has established a sensibility, a position, a platform,” and that, “MSNBC is really the place to go for progressives.“

"Declaration of Forward”

The “lean forward” campaign strongly supports this assertion. The progressive message underlying them all fundamentally differs from conservative arguments. In the initial commercial “Declaration of Forward”, MSNBC claims that we are the “United States of Come-As-You-Are” and that, “our differences are what unite us.” This simply isn’t true. Our differences may make America unique or even beautiful, but what unites us as Americans are our shared principles. It’s troubling to see the progressive network co-opt the name and language of the Declaration of Independence in the “Declaration of Forward” commercial without recognizing that it is the principles laid out in that very document that weave us together as one people.

“Do Their Part”

Hardball host Chris Matthews appears in an interesting ad spot called “Do Their Part”. In it, Matthews says, “I think one of the problems of the country is that we’ve all been basically excused,” through tax cuts or allowing others to serve in the military. He’s pushing a theme of civic responsibility, but it’s more than a little bit hypocritical since he himself did not serve.  Regardless, he argues that Americans must “do their part in this country, including paying fair taxes.” This doubtlessly refers to the progressive outcry over income inequality and “tax breaks for the rich” that I’ve mentioned in an earlier blog post.

 However, looking at the numbers from 2009, the top 1% of earners paid 36.73% of income taxes. The top 10% of earners paid 70.47% of income taxes, and the bottom 50% of earners contributed only 2.25% of income taxes. In fact, the bottom 47% of earners paid no income taxes whatsoever, which is an oft-disputed statistic that PolitiFact.com has verified. 

What percentage would Chris Matthews consider a “fair share”? Should the top 10% of earners pay 90% of all income taxes? How about 100%? Shouldn’t 47% of Americans contribute something in order to do their fair share? Matthews’ implicit claim that wealthy Americans aren’t paying enough in taxes only makes sense if you believe that the federal government has a revenue problem, not a spending problem. 

“As Much An American”

That isn’t the only mildly ridiculous “Lean Forward” commercial featuring Matthews, though. He also appears in “As Much an American”, in which he slams Republican candidates for not admitting that the president is, as the title indicates, as much of an American as they are. For one thing, who’s saying that Obama isn’t? Is it really fair to demand in a commercial that the Republican candidates say something, and then blast them in the same commercial for not saying it yet? How are they supposed to respond to that? 

Besides, wouldn’t this be a more appropriate demand to make of them in an interview? After all, Matthews does host a political television show, so this wouldn’t be particularly difficult for him to set up. The fact is that he wanted to take a cheap shot at the Republican field of candidates and he picked the most unfair format through which to do it.

“Blueberry Pie”

Perhaps the most famous of the “Lean Forward” commercials released so far would be Reverend Al Sharpton’s “Blueberry Pie” commercial. The near-incoherent, rambling story told by Sharpton was quickly parodied on Saturday Night Live. Even a blog post on the famously liberal Huffington Post website admitted that it’s “pretty wacky.”Still, of the many advertisements in MSNBC’s branding campaign, this one may have the most truth to it beneath the silliness. 

Sharpton’s point is simply that the Bush-era Republican party made a mess of governing through deficit spending, bailouts, and expanding entitlement programs, and now Republicans are denouncing the Democrats for doing the same things. In other words, Republicans engorged themselves on the taxpayer-funded blueberry pie, and now they’re hypocritically attacking Democrats for feeding off of the same diner table.

Here’s what he doesn’t understand, though: The Republican party has undergone a major transformation after what amounts to a takeover by the Tea Party. Republicans who paid lip service to fiscal conservatism for decades while wasting tremendous amounts of cash are getting kicked out of office all over the country, and their replacements are serious when they talk about a return to limited, Constitutional government. 

Put simply, Sharpton’s criticism is fair, but doesn’t apply to a new class of representatives who are on the frontlines in criticizing the Obama administration and Democrats in Congress for continuing and magnifying the policies of deficit spending, bailouts, and government expansion. The Tea Party is forcing Republicans away from the blueberry pie, but Democrats are asking for seconds, if not thirds.

The massive success of Fox News, a network that makes little effort to disguise its conservative leanings, has clearly influenced MSNBC to embrace its progressive identity in an obvious effort to boost ratings and viewership. The “Lean Forward” advertising campaign is, at its heart, polished gimmickry.

Last night more than 350 citizens of Spartanburg, South Carolina rallied for parental choice in education. FreedomWorks joined the Spartanburg tea party for this fantastic event that drove a very clear message home: legislators should support parental choice in education or they will be replaced by the citizenry.

Check out this great article in the Spartanburg newspaper this morning. Here is an exerpt.

More than 350 activists and community members gathered in Spartanburg’s Cleveland Park Thursday night to deliver a unified message to lawmakers about what was described as the state’s oppressive educational establishment: pass a bill through the General Assembly providing tax credits for families who send their children to private schools, or pay the price at the ballot box.

“Our kids are stuck in a failing system,” said David Spielman, campaigns coordinator for FreedomWorks. “Our kids in South Carolina, you know the whole joke goes, ‘Well, we’re not Mississippi.’ We need to inject competition into the system; it’s just that simple.”

FreedomWorks, a nonprofit group that advocates for less government and lower taxes, anticipates it will spend between $500,000 and $1 million in the Palmetto State this year trying to get a tax credits for private school bill passed. Such bills have failed to win state lawmakers’ approval since first being introduced in 2004, which supporters blame on entrenched interests.

Dear FreedomWorks member,

As one of our million-plus FreedomWorks members nationwide, I urge you to contact your senator and ask him or her to vote YES on two amendments to S.2038, the Stop Trading on Congressional Knowledge (STOCK) Act. There are a large number of amendments and we have not had time to review them all because of the short time between their introduction and this vote. We suspect some senators face a similar challenge. 

Two amendments that have caught our eye so far are:

• Sen. Toomey amendment #1472, the Earmark Elimination Act.
• Sen. Coburn amendment #1473 to prevent duplicative and overlapping government programs.

We will consider these votes when calculating the FreedomWorks Economic Freedom Scorecard for 2012 and may consider other amendments upon review. The Economic Freedom Scorecard is used to determine eligibility for the Jefferson Award, which recognizes members of Congress with voting records that support economic freedom.

Sincerely,

File Attachments
AmendmentstoStockAct.pdf	48.22 KB

Dear FreedomWorks member,

As one of our million-plus FreedomWorks members nationwide, I urge you to contact your representative and ask him or her to vote YES on H.R. 3578, the Baseline Reform Act. Introduced by Rep. Woodall (R-GA), the bill would reform the way that the Congressional Budget Office (CBO) calculates the baseline spending assumptions that are the basis for all of its projections of future spending. The legislation would remove the assumption from CBO calculations that spending will increase each year in proportion to inflation, which makes Congress’ new spending each year look like less than it is. The Baseline Reform Act would make the federal budget process more honest and transparent. 

The American people are tired of the accounting gimmicks in the budgetary process. The current process starts by assuming a spending baseline of prior year spending plus inflation. This enables Congress to cut into the inflation adjustment and call it a “spending cut” even though actual discretionary spending levels will rise. Washington can spend $500 billion this year and $550 billion next year and call that a “spending cut” by using manipulative budgetary tricks. These dishonest tactics disguise the true cost of government programs. 

The Baseline Reform Act would amend the Balanced Budget and Emergency Deficit Control Act of 1985 to eliminate the automatic inflation adjustment in the CBO’s annual baseline. Proposed budgets would then be compared to prior year spending levels. This would make spending increases and decreases more transparent to the American people. The Baseline Reform Act would help to put an end to budgetary gimmicks to give the American public a more honest look at how much Congress spends annually. 

I urge you to call your representative and ask him or her to vote YES on H.R. 3578, the Baseline Reform Act. We will count their vote as a KEY VOTE when calculating the FreedomWorks Economic Freedom Scorecard for 2012. The Economic Freedom Scorecard is used to determine eligibility for the Jefferson Award, which recognizes members of Congress with voting records that support economic freedom. 

Sincerely,

Matt Kibbe                                                                                                                                           President and CEO                                                                                                          FreedomWorks                                                                                                                                [Click here for a PDF version of this key vote notice.]

File Attachments
BaselineReformAct.pdf	49.08 KB

Tonight, the House of Representatives voted to repeal the CLASS Act, a key component of ObamaCare.

This is an important step toward Full Repeal of the government takeover of health care.

The bill now moves to the Senate, where Majority Leader Harry Reid, Democrat of Nevada, has signalled he will not let it come to a vote.

Twenty-eight House Democrats joined 239 Republicans to pass the bill, which passed with a solid majority of 267 members voting in favor and 159 against. (218 is a simple majority in the 435-member House.)  All the "no" votes came from Democrats, who created the program.

Although President Obama's staff have said the president would veto H.R. 1173, the White House opted NOT to issue a formal veto threat on the bill, signalling a tacit willingness to sign it. 

The bill, H.R. 1173, introduced by Rep. Charles Boustany, Republican of Louisiana, would repeal CLASS, which stands for the "Community Living Assistance Services and Support (CLASS) Act."

The CLASS Act, authored by late Sen. Ted Kennedy, Democrat of Massachusetts, presents a massive taxpayer bailout risk.

Democrats included CLASS in ObamaCare to help mask the controversial bill's true cost. 

Recently disclosed documents reveal that, before ObamaCare was passed, President Obama's secretary of health and human services (HHS) knew that CLASS was unsustainable but purposely hid the information from Congress.

If the American people had been told about the bailout risk, ObamaCare would very likely not have become law.

This information was covered up -- an outrageous abuse of power -- until House Republicans forced HHS to disclose it. 

Congressional investigators have proved that the Obama Administration lied to Congress and the American people about CLASS.

They should hold immediate hearings on the CLASS Act cover-up to find out: What did the White House know and when did they know it?

FreedomWorks is working hard to force the Obama Administration to come clean.

We must repeal CLASS as part of the Full Repeal of ObamaCare in 2013.

By educating the public about the CLASS Act cover-up, tonight's vote moves us a step closer to that goal.

Dean Clancy is FreedomWorks' Legislative Counsel & Vice President, Health Care Policy. 

[Click here to see a PDF version of this report.]

1. The Federal Reserve Has Far Too Much Power to Control Our Economy

Federal Reserve Chairman Ben Bernanke has the power to dramatically impact our economy at a drop of the hat. The central bank completely controls and determines the money supply. It is permitted to create as much money as it wants out of thin air with no restrictions. This is the antithetical to the principles that America was founded on. Our Founding Fathers would be outraged that one centralized institution has unchecked and unprecedented power to control the economy and thus our lives.

2. The Federal Reserve Has Significantly Devalued Our Currency

The laws of supply and demand apply to money. The more dollars we have in the circulation, the less the currency is worth. Our money supply has rapidly increased over the past century due to the  Federal Reserve printing massive amounts of money like there is no tomorrow. This is what will almost inevitably happen when a quasi-governmental entity can simply print more money to its heart’s content. Since the Federal Reserve came into existence in 1913, the dollar has lost over 95 percent of its value. Today’s dollar is worth less than a nickel compared to the pre-1913 dollar.

3. The Federal Reserve Hurts the Poor and Middle Class the Most

Our hard-earned money is essentially stolen through a hidden inflation tax. Inflation is the increase in the supply of money and credit. It is often wrongly defined as the general rise in the price of goods and services. But higher prices are actually a direct consequence of inflation since increasing the supply of money decreases the purchasing power of the dollar. Inflation hurts the poor most since they have less disposable income. Consumers with low disposable incomes will be negatively impacted by higher prices for food and clothing.

4. The Federal Reserve is Run By Unelected and Unaccountable Bureaucrats

The Board of Governors at the Federal Reserve are not directly elected by the American people. This means that those who run the Federal Reserve are unaccountable to the people. The seven members of the Board ultimately decide the price or purchasing power of our money. That kind of central planning would never exist in a true free market economy.

5. The Federal Reserve Has Made Our Economy Less Stable

The Federal Reserve has brought us endless boom-and-bust cycles. The U.S. economy was much more stable before the Federal Reserve came into existence. It bears significant responsibility for every financial crisis over the past century including the Great Depression, the stagflation of the 1970s and recent economic meltdown. The Austrian Business Cycle Theory explains why we see such wide fluctuations in the economy. The theory states that a false boom occurs when the Federal Reserve lowers interest rates below the market rate which increases the supply of money. Artificially low credit cost sends out misleading economic signals to producers. They are inclined to respond by greatly expanding their production around the same time. In retrospect, these investment decisions called malinvestments are seen as a bad allocation of resources. Malinvestments will lead to wasted capital and economic losses. The expansion of credit cannot continue permanently which means that inevitable bust will follow a false boom created by the Federal Reserve.

6. The Federal Reserve is Far Too Secretive

The central bank severely lacks transparency. Throughout its 100-year history, it has always operated under a veil of secrecy. The Federal Reserve has never been fully audited by any outside source. Our elected representatives in Congress have very little oversight over the central bank. It has continually resisted any kind of congressional oversight claiming that it would endanger its “independence.”  A comprehensive audit of the Federal Reserve would not harm its so-called independence. It would only expose how the Federal Reserve has been manipulating our currency behind closed doors. And Ben Bernanke surely doesn’t want that to happen.

7. The Federal Reserve Benefits Special Interests

The policies of the Federal Reserve hurt the average American. It benefits the privileged few at the expense of the rest of us. The Federal Reserve erodes most Americans’ standard of living while enriching well-connected elites. The central bank serves big spending politicians, big bankers and their friends. Special interests receive access to money and credit before the harmful inflationary effects impact the entire economy. This is why high power lobbyists protect and defend the existence of the Federal Reserve.

8. The Federal Reserve is Unconstitutional

The Constitution makes no mention of a central bank. While there have been historical debates on the constitutionality of a central bank, I see no justification for the argument that the Federal Reserve is constitutional. The federal government only has about thirty enumerated powers delegated to it in the Constitution. The power to create a central bank is not explicitly granted to the federal government in our founding document. Due to my strict interpretation of the Constitution, I find the Federal Reserve to clearly violate the Constitution.

9. The Federal Reserve Routinely Bails Out Big Banks

The Federal Reserve acts as the lender of last resort. The Federal Reserve was ordered through a Freedom of Information Act request to release 28,000 pages of documents in March 2011. The documents exposed that one of the largest recipients of the Federal Reserve’s money was foreign banks during the 2008 economic meltdown. The top foreign banks that received money were the Brussells and Paris based Dexia SA, the Dublin based Depfa Bank Plc, the Bank of China and Arab Banking Corp., according to Campaign for Liberty. 

In July 2011, due to a provision under the misguided Dodd-Frank financial overhaul law, the Government Accountability Office (GAO) conducted a one-time, watered-down audit of the Federal Reserve. The GAO investigators were not allowed to view most of the Federal Reserve’s monetary policy decisions including discount window lending, open-market operations and details on its transactions with foreign governments and banks. This first ever audit of the Federal Reserve revealed $16 trillion in secret bailouts to corporations and banks around the world in less than three years. These bailouts happened without a single vote taking place in any chamber of Congress.

10. The Federal Reserve Encourages Deficit Spending

The Federal Reserve is largely responsible for the out-of-control spending by Congress. The federal government can only obtain money through taxation, printing or borrowing money. Printing money has become the federal government’s preferred method. This is also the most destructive method since the federal government is able to simply print more money as needed to finance its drunken spending spree. It has become a never-ending cycle of spending and printing more money. Voters can put pressure on their representatives to halt politically unpopular tax hikes and lenders could stop loaning money to the U.S. government. But it’s fast and easy for the Federal Reserve to print more money at a whim.

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Dear FreedomWorks member,

As one of our million-plus FreedomWorks members nationwide, I urge you to contact your representative and ask him or her to vote YES on H.R. 1173, the Fiscal Responsibility and Retirement Security Act of 2011. Introduced by Rep. Boustany (R-LA), the bill would repeal the Community Living Assistance Services and Support (CLASS) Act. The CLASS Act is a key component in ObamaCare that presents a massive taxpayer bailout risk. President Obama has said he would veto H.R. 1173. Voting to repeal CLASS at this time advances the larger goal of full ObamaCare repeal.

CLASS creates a new government entitlement program to pay for nursing home and home health care costs. The voluntary program is entirely funded by individual participant’s premiums. It is poorly designed and actuarially unsound since it will mainly attract older, sicker people who would take out a lot more than they put into the program. South Dakota Democratic Senator Kent Conrad has even described it as a “Ponzi scheme of the first order, the kind of thing Bernie Madoff would have been proud of.” CLASS will inevitably collapse, making it a taxpayer bailout waiting to happen.

In 2010, Democrats claimed their health care takeover "wouldn't cost taxpayers a dime." The new CLASS entitlement was one of several budget gimmicks added to ObamaCare to make this claim seem true. CLASS was purposely crafted to look like a revenue-generator during its first 5 years of operation, when the government would be collecting premiums from participants but not yet paying out benefits. This made the federal books look better by some $70 billion. But in the long run, CLASS will in fact cost taxpayers hundreds of billions.

Recently disclosed documents reveal that, before ObamaCare was passed, President Obama’s Secretary of Health and Human Services, Kathleen Sebelius, knew that CLASS was unsustainable but purposely hid the information from Congress. If the American people had been told about the bailout risk, ObamaCare would very likely not have become law. This information was covered up until Congress forced Sebelius to disclose it. This is an outrageous abuse of power. Congress should hold immediate hearings on the CLASS Act cover-up to find out: What did the White House know and when did they know it?

ObamaCare is already costing the nation billions, with premiums rising and some economists blaming the law, which doesn't take full effect for another two years, for continuing economic uncertainty and poor job growth. If not fully repealed, ObamaCare will cost us trillions of dollars, and more important, our freedom to control our own health care.

I urge you to call your representative and ask him or her to vote YES on H.R. 1173, the Fiscal Responsibility and Retirement Security Act of 2011. We will count their vote as a KEY VOTE when calculating the FreedomWorks Economic Freedom Scorecard for 2012. The Economic Freedom Scorecard is used to determine eligibility for the Jefferson Award, which recognizes members of Congress with voting records that support economic freedom.

Sincerely,

Matt Kibbe
President and CEO
FreedomWorks
[Click here to see a PDF version of this key vote notice.]

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WHAT: FreedomWorks and its Chairman Dick Armey will join the Spartanburg Tea Party and local conservative activists for a school choice rally in Spartanburg’s Cleveland Park from 6:30-8:30pm ET on Thursday February 2nd. The event will kick off with a reception, followed by a series of speakers discussing the important benefits of implementing school choice, and the critical role the grassroots will play in turning those ideas into legislative change. The event will also feature a special video message from conservative Senator Jim DeMint.

WHEN: Thursday, February 2nd from 7-8:30pm ET.

WHERE: Cleveland Park, 141 South Cleveland Park Drive, Spartanburg, SC 29303

WHY: South Carolina currently ranks 47th in the nation in test scores, despite spending an annual average of almost $12,000 per student. Parents and families across the state believe it’s time to put children first and enact real education reform in South Carolina. The recently introduced choice bill, H. 4576, proposes simple solutions to make student tuition more affordable for families, including tax credits for students attending independent schools, tax credits for non-profit scholarship grants, tax credits for students with special needs, and tax credits for classroom supplies.

FreedomWorks will support local grassroots trainings and voter education events in the weeks leading up to the South Carolina General Assembly’s vote. The campaign has already armed ten distribution centers across the state with tens of thousands of voter education materials, including door hangers, yard signs, district-targeted palm cards, tee shirts and bumper stickers. Voters can also sign a FreedomWorks online petition which generates emails directly to lawmakers demanding that the State House put children over special interests and support school choice bill H. 4576.

Join FreedomWorks, and the Spartanburg Tea Party as we host a rally in support of school choice and education reform in South Carolina on February 2, 2012.  Join us at Cleveland Park (141 S. Cleveland Park Drive, Spartanburg, SC 29303) at 6:00PM as we make it clear, "School Choice is the right choice."

FreedomWorks has teamed up with local tea party groups and pro-school choice groups to see that we have real education reform and that we take back the education of our kids from the establishment.

Join former House Majority Leader, and FreedomWorks Chairman Dick Armey, FreedomWorks staff and others as we send a message to lawmakers that "enough is enough."

This event will be action-packed and will give you a valuable opportunity to get involved in the fight to pass school choice. I hope you can come to make your voice heard and pick up materials that will help in passing this important reform.

According to some tests South Carolina ranks 48th in overall education performance despite spending just shy of $12,000 per student. Yet with overwhelming support for reform from parents and students alike, the political establishment continues to prevent meaningful education reform that would bring choice and competition. It is time to tell our politicians that they must stop standing in the way of reform. School choice is the right choice!

If you are interested in attending this free and important event, please RSVP to David Spielman at dspielman@freedomWorks.org. Thanks and we look forward to seeing you at this great event.

 Click Here to sign FreedomWorks petition supporting H.4576

This chart, published by House Minority Leader Nancy Pelosi's office, has made the rounds online recently, particularly on social networking websites.

However, is this chart really telling the whole story? After all, the House of Representatives proposes and ultimately controls federal spending, not the president. So, why would Pelosi's office put out a chart based around the presidents?

Obviously, it downplays the skyrocketing debt during President Obama’s term relative to other presidencies. The chart does not even mention that at the time of publication, the president had only been in office for two years, compared to eight years for Ronald Reagan, Bill Clinton, and George W. Bush. More importantly, the chart also disguises the fact that massive spikes in debt creation usually came while Democrats controlled the House. Here’s the reality:

This chart is structured like Pelosi's chart. The major difference is that we’ve highlighted Congress since 1981, instead of the presidency. Of those sixteen Congresses, Democrats controlled the House nine times while Republicans controlled it seven times. While in power, the Democrats dramatically outspent the Republicans. The 471% increase in the debt during 18 years of Democratic control is staggeringly more than the 105% increase during 14 years of Republican control.

Consider the contrasting stories told by these two charts. Pelosi's office is telling a fairy tale that places the blame for an exploding debt squarely on Republican presidents, especially Reagan and George W. Bush. However, reality provides a very different account: It was Democrats controlling the House that swelled the debt. Presidents don’t hold the “purse-strings” of government, only the veto power. Nancy Pelosi’s chart is simply deceptive.

Undoubtedly, many readers will correctly argue that both percentages are far too large and that both parties are to blame for profligate spending in Washington. It’s helpful to look at each individual Congress. It reveals that overspending is indeed a bipartisan problem, particularly during the last ten years.

The stunning rise in the national debt since 2000 occurred under both Republican and Democratic leadership in the House and the presidency. Neither party can claim a spotless record with regard to deficit spending and debt creation. Still, the degree to which the Democrats in Congress under President Obama’s leadership have engaged in both of these practices is frightening. The federal government will default on its debts if the public does not force those in power to cut back spending.

The chart put out by Nancy Pelosi's office is not only misleading in its attempt to shift away blame, it also misses the larger point. Our focus must be aimed directly at addressing the debt in a serious and lasting manner. The grassroots-generated Tea Party Budget is a realistic, significant effort to accomplish just that by cutting spending by $9.7 trillion dollars over the next ten years and balancing the budget in four years.

If you would like to learn more about the Tea Party Budget, here is the link.

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It is axiomatic that there are as many visions of the current state and future prospects of the tea party movement as there are individuals who identify with its principles. But one thing is certain: the tea party is changing.

From a recent piece in Virginia's Bearing Drift Magazine:

Love it or hate it, there’s no denying that the tea party has reached a crossroads. Gone are the heady days of 2009, when hundreds of thousands of activists, many of them political neophytes, made history with the 9/12 March on Washington to vent their frustration over government spending and bailouts. Gone also is the sense of inevitability that built steadily throughout 2010, until a groundswell of anti-establishment anger propelled tea party-aligned candidates to upset victories in local, state and federal elections all across the country...

As the 2012 election season begins in earnest, the tea party still identifies most comfortably with the ideological purity of its populist roots, but is also seeking to expand its electoral influence and institutionalize its minimalist philosophy of government. However, in large part, the tea party’s future will be determined by how closely its members study the lessons of their recent past.

In Indiana, for example, tea party activists suffered an embarrassing loss in the 2010 Senate primary due to their inability to compromise and coalesce behind a single conservative candidate. Rather than allow themselves to be consumed with bitterness and mutual recrimination, Hoosier activists chose to adapt to the changing political climate by getting better organized and better trained in the fundamentals of grassroots campaigning... In short, the tea parties in Indiana have started acting as if they are working for the Republican establishment instead of trying to defeat it...

Having been burned many times in the past by Republicans who say one thing to get elected and do another once in office, tea partiers are often reluctant to come together and compromise in support of a candidate who is not their first choice, or to seize the levers of power that control the Republican Party apparatus at local and state levels. But unite and seize power they must...

Read the rest HERE.

Hill Update, 30 January 2012

This Week’s Legislative Highlight: On Wednesday, the House will finally vote on a bill, H.R. 1173, to repeal the Class Act provision of Obamacare.  The Class Act is a long-term care insurance program that even advisors to the Obama administration warned back in 2009 would be absolutely impossible to fund.  Worse, it was used as a budget gimmick, as it was funded by collecting taxes for two years before the benefits were to begin, so that the extra years of taxes were counted as a surplus.  While the program was recently suspended by the administration after Health and Human Services Secretary Kathleen Sebilius admitted that it was not fiscally solvent, this bill would make sure it never comes back.

House/Senate Schedule: The House and Senate are both in session all week, and with both parties having returned from their legislative strategy retreats, the business of lawmaking is back in full swing.  Both chambers will be in town until the week of Presidents’ Day (20 February).

Senate/Insider Trading: There will be a cloture vote today at 5:30 on the STOCK Act, S. 2038, a bill which would bar members of Congress from making stock transactions based upon private information.  The legislation would require that members of Congress instead set up blind trusts for their money.

Senate & House/FAA: Both chambers will go to conference on the extension of funding for the Federal Aviation Administration.  A temporary measure has been agreed to in order to get ahead of the January 31^st deadline, but a longer-term extension is in the works and may come to a vote as soon as this week.

House/Spending: Last December, Congress passed a two-year freeze on pay increases for all civilian government employees, including members of Congress. The House will vote Wednesday on H.R. 3835, a bill to extend the freeze for a third year.  This is in contrast to President Obama’s State of the Union Address, in which he suggested a 0.5% pay increase for all federal workers.

House/Budget: Two bills are being introduced from the House Budget Committee as part of a series of ten bills seeking to reform aspects of the budget process.  The two bills this week are:

• H.R. 3582, the Pro-Growth Budgeting Act, introduced by Rep. Tom Price (GA-6).  This bill would require that every major bill or resolution (defined as a bill which the Congressional Budget Office expects to cost at least .25% of GDP, or about $39 billion) be subject to a second CBO report.  This report would not only analyze the impact of the bill upon the government’s budget, but also upon the economy as a whole.
• H.R. 3578, the Baseline Reform Act, introduced by Rep. Robert Woodall (GA-7).  This bill would reform the way that the CBO calculates the baseline spending assumptions that are the basis for all of its projections of future spending.  The legislation would remove the assumption from CBO calculations that spending will increase each year in proportion to inflation, which makes Congress’ new spending each year look like less than it is.

House/Member Initiative: Rep. Tim Scott (SC-1) has introduced a bill, H.R. 2145, which would prohibit unions from automatically deducting dues from any federal government employee’s paychecks, thus empowering those employees to make their own decisions regarding whether they want their money to go towards supporting the activities of a union they may not have even voted to join.

House/Member Initiative: Rep. Lynn Jenkins (KS-2) is introducing a Concurrent Resolution (no  bill number yet) which would check the abuse of Executive Orders by making all spending authorized by executive order invalid until approved by legislation in Congress.  Article I, Section 8 of the U.S. Constitution is very clear that all appropriations should originate in the House of Representatives, and this bill merely clarifies that point.

I, however, place economy among the first and most important republican virtues, and public debt as the greatest of the dangers to be feared.
—Thomas Jefferson

Last week on January 26th Congress voted against a measure to deprive the president of the authority to raise the debt ceiling. In a 44 – 52 vote, the president was granted permission to add another $1.2 trillion to the national debt, deferring for some time any difficult albeit necessary fiscal decisions. For the first time in over half a century, the national debt is roughly equal to the gross domestic product of the United States. This situation is analogous to an individual whose debts are equal to the total value of his income and savings. Mainstream economists will note, however, that this is not as dire of a situation as it first appears to be. After World War II, the national debt was 122 percent of GDP, about 22 percent higher than that of today. This is true, although there are several other factors that are worth consideration in comparing and contrasting the fiscal solvency of the United States in 1946 with that of today.

In the first place, the post WWII period in the United States was marked by massive spending cuts as the war ended. Many of the New Deal programs had been scaled back prior to this time in order to allocate revenue toward wartime expenses. Secondly, the reduction of New Deal regulation and spending, coupled with the removal of wartime regulations and spending freed up the economy, allowing for rapid economic growth and the absorption of millions of returning soldiers into the workforce. Americans witnessed a never before seen rise in their standard of living. The vibrancy of the postwar American economy, made possible by massive spending and regulatory cuts, provided a solid foundation upon which the national debt could be reduced to manageable levels. Furthermore, interest rates remained relatively low during this period, fluctuating between 1 and 2 percent. By the time interest rates finally rose (starting in 1970 and continuing through the early eighties) the national debt was less than half of GDP, making the cost of servicing the debt far less burdensome.

Now let us contrast the postwar situation with that of today. Our national debt is equal to GDP. Economic growth is exceptionally weak, and a host of new regulations and taxes are on the horizon. In addition, the current administration insists on spending as a means of spurring economic growth, a plan which has unambiguously failed to grow anything other than the national debt.

More importantly, interest rates are remaining historically low at about 0.25 percent. The threat of inflation is a laughable notion to most economists, although it should certainly not be discounted as such. As production dwindles in this country, and the monetary base expands indefinitely, inflation is inevitable and so will be the resulting spike in interest rates. The interest rate is a price, just like the price of milk or cell phones. The interest rate is the price of money, the price of capital. To attempt to manage it via central banking defies all economic logic. Most economists would agree that enacting a price control on milk, to set the price of milk lower than the market price, would result in a shortage of milk. The removal of the control would solve the shortage problem, but for a time milk would be more expensive than it was originally in order to ration the now diminished supply of milk. This principle applies to the interest rate. When Ben Bernanke suppresses the interest rate through inflation and “open market operations” he guarantees that there will be a shortage of capital. He can then do one of two things when this shortage becomes apparent: 1) He can allow rates to rise, which they must in order to compensate for the capital misallocation that resulted from the loose monetary policy currently being pursued. 2) He can continue to keep rates low by printing more money which will lead without fail to hyperinflation, the destruction of the dollar. The prospect of rising interest rates is not just speculative. It is a certainty that will have severe ramifications for our debt situation.

Another important factor to keep in mind is that the national debt was financed differently in 1946 than it is today. Government debt during and following WWII was typically financed with long – term bonds, meaning that even if interest rates had risen, the interest payments on the principal would not have increased. Today, much of our national debt is financed with short – term paper, meaning that a sudden spike in interest rates would cause the interest payments on our debt to increase once the temporarily low interest rate rolled over. This is eerily similar to the manner in which the mortgage market collapsed. Risky mortgages were financed by unqualified borrowers at adjustable rates, with the initial teaser rates being incredibly low. We all know how that ended. Rates rose to a point where borrowers could no longer afford their mortgage payments and the housing market collapsed. The same thing will happen to the Federal government if it does not soon abandon its reckless spending and monetary policies.

There is alarmist propaganda coming from both sides of the aisle, particularly from the left, alleging that a decision to not raise the debt ceiling would immediately lead to a United States default on its debts. What they fail to realize is that this default is unavoidable if the Federal government does not enact massive spending cuts and actually prove to its creditors that it is capable of paying back these loans. Our current policy of raising the debt ceiling to finance government spending and pay our creditors is analogous to an individual paying one credit card off with another. The only way to compel our politicians to do the right thing is by forcing them to deal with the prospect of default. If such action is not taken, it will only be a matter of time before our creditors cease to lend us money and default becomes a painful inevitability. Even worse is the possibility that politicians will try to avoid default by printing the money to pay off our debts, destroying the value of the dollar in the process.

We, as a nation, should avoid the temptation to approve the accumulation of more debt based on the misleading fact that after World War II our national debt was 122 percent of GDP. A closer analysis will reveal that the economic foundation of the United States was much sounder during that time than it is today. The only recourse for our current debt situation is to instill discipline in our government by disallowing increases in the debt ceiling and forcing dramatic spending cuts. This is the only possible way to avoid a sovereign debt crisis a là Greece and Italy or hyperinflation a là Zimbabwe.