e-News July 2, 2010

The Week Just Past: Another Congressional ‘Overreach’
Increasing Transparency in Financial Markets
CBO Rings the Latest Budget Alarm
Social Spending on the Backs of our Troops
Three Years Later: Export Jobs Wait!
Thanks for a Picatinny Leader

The Week Just Past: Another Congressional ‘Overreach’

“In the midst of one of the worst economic downturns in memory, Congress turned its attention to addressing the root causes for the near collapse in the banking and financial services sectors.  And true to form, Congress overreached in many respects.

“Yesterday the House passed the 2,300-page Dodd-Frank financial regulatory reform bill.  The Senate is expected pass it later this month.  

“Some provisions in the bill have broad bipartisan support, like those that enhance consumer protections.  But many simply go too far and will have damaging effects on our fragile economic recovery and do little to restore consumer confidence.

“More importantly, instead of rejecting the practices and policies that led to the current economic turmoil which has resulted in record unemployment and deficits, this so-called ‘reform’ bill makes permanent the failed policies of the past and fundamentally restructures the nation’s free market system, placing it firmly within government’s control.  In the process, the bill restricts access to credit and increases the costs of the credit used by small businesses on ‘Main Street.’

“Since the start of the recession more than 8 million jobs have been lost.  The key flaw of the Dodd-Frank regulatory plan is that it will restrict credit to families and businesses, leading to further job losses.

“We could have and should have done better.  We could have enacted a bill that does four things that Dodd-Frank does not address: 1) stop the taxpayer-funded permanent bailouts of Wall Street titans, 2) reform Fannie Mae and Freddie Mac—the root causes of the housing meltdown which may cost taxpayers as much as $380 billion; 3) empower businesses small and large to create jobs and spur economic growth, and 4) demand accountability from failed federal bureaucrats.  

“We could have built on the consumer-protection provisions in this bill and added these common-sense reforms. 

“But we did not.  As a result, our economy, our business sector and our taxpayers will be damaged.”

      Rodney Frelinghuysen

Recommended Reading:  John Taylor, writing in Thursday’s Wall Street Journal, “ The Dodd-Frank Financial Fiasco.  The bill all but guarantees bailouts as far as the eye can see, while failing to address real problems like Fan and Fred and our outdated bankruptcy code.”

Recommended Reading II: Sarah Wallace, writing in the Tuesday Wall Street Journal, “ The End of Community Banking. Creditworthy borrowers will be denied loans as small banks devote more and more energy to regulatory compliance.” 

Increasing Transparency in Financial Markets

Rodney voted Wednesday to bring more transparency to our financial institutions by voting to audit the Federal Reserve.

“Taxpayers want to know what the Federal Reserve is doing with their money. That’s why I voted for a motion that would require a full audit of the Federal Reserve by the Government Accountability Office (GAO),” he said.

“Unfortunately, Speaker Pelosi’s Majority defeated our common sense proposal, denying the people of New Jersey the opportunity to know what the Federal Reserve is doing with our tax dollars. The Fed has doled out trillions of federal dollars in government bailouts. It’s in need of reform, but first we have to get the Fed out from the shadows and make sure it has clear and accountable oversight.”

CBO Rings the Latest Budget Alarm

The non-partisan Congressional Budget Office (CBO) this week released a dire report on the fiscal future of the Federal budget. In its latest update of The Long-Term Budget Outlook, the CBO provides an overview of the looming debt crisis in the decades ahead.

CBO’s report includes the following key findings:

? The CBO report affirms that the massive health care overhaul fails to address the explosion in health care costs. The CBO report states: “Enactment of the [health care] legislation did not cause CBO to change its estimates of longer-term growth rates for spending on the government's health care programs.”

? The long-term budget outlook continues to worsen with each passing year Congress fails to act. Debt held by the public will eclipse the size of the entire US economy by the year 2023.

? Under CBO’s economic models, Americans’ living standards (real GDP per capita) begin to deteriorate in 2015, and the model breaks down completely in 2027 due to the crushing levels of debt. CBO cannot compute how an economy can function with such high levels of government borrowing to finance deficits, crowding out ever-increasing sectors of the private economy. “Unsustainable” is an understatement.

? The CBO projects that government spending as a share of the economy will double by 2043, up from its historical average of roughly 20%. Despite tax revenues above the historical average in the years ahead, the explosion in spending drives the unsustainable explosion in debt. The Long-Term Budget Outlook is clear: the explosive growth of spending is the problem.

To read CBO’s The Long-Term Budget Outlook, click here.

Recommended Reading IV: Alan Meltzner in Wednesday’s Wall Street Journal, “Why Obamanomics Has Failed."  Uncertainty about future taxes and regulations is enemy No. 1 of economic growth.”

Recommended Reading V: Roger Lowenstein writing in the June 27 New York Times Magazine, “ Looking for the Next Crisis, Pension Funds are massively short of money.”

Social Spending on the Backs of our Troops

More than two weeks ago, Secretary of Defense Robert Gates warned that the Pentagon will have to do “stupid things” if Congress doesn’t approve a $33 billion wartime supplemental funding bill for the troops in Afghanistan by July 4th.

As we begin the July 4th holiday, there is no chance that our warfighters in Afghanistan and Iraq will receive the funding they need until at least mid-July.  

That’s because instead of passing a “clean” funding bill to pay for President Obama’s “surge” of troops to Afghanistan, our withdrawal from Iraq and our operations in earthquake-ravaged Haiti, Speaker Nancy Pelosi and her House Majority insisted on adding to the measure over $35 billion in new domestic spending the President never sought. 

During debate on the wartime funding bill on the floor of the House last night, Rodney said:  “This is ‘Washington business as usual’ as this Congress uses funding for our deployed warfighters – many of them in harm’s way as we speak tonight – to provide for still more unnecessary social spending.”

The Department of Defense originally sought passage of the wartime spending bill before Memorial Day, but that slipped by, making the July 4th recess a “must-pass” deadline.  That deadline will be missed because the Senate will not reconvene until mid-July and they must approve the House’s additional spending. 

Funding for the Navy and Marine Corps will begin to run out this month, forcing the Pentagon to disrupt other programs. And by early August, the military may have to start furloughing civilians and might not be able to pay members of the active-duty military. 

View Rodney’s speech here.

Three Years Later: Export Jobs Wait!

Acknowledging that ratification “will create enormous potential economic benefits to create jobs” in the U.S., President Obama is once again promising to send at least one international trade agreement to Congress for approval.  He now wants Congress to approve our free trade agreement with South Korea by November.  The agreement was concluded back in April 2007! 

The U.S. Chamber of Commerce estimates that failure to enact the accord with the world’s 14th largest economy means the loss of $35 billion in exports and 345,000 jobs. 

No word on when or if the President will send agreements with Colombia and Panama to Congress for approval. 
Rodney has introduced H.Res. 987 which urges all three agreements to be implemented immediately. 

Thanks for a Picatinny Leader

After 44 years of dedicated service, the United States Army said “thank you” to a valued leader.  Dr. Joseph Lannon retired on Wednesday.  His last assignment was Director of the Armament Research, Development and Engineering Center, headquartered at Picatinny Arsenal.

“Our warfighters in Afghanistan, Iraq and around the world have probably never heard of Joe Lannon,” Rodney said. “But they are safer and more effective because of his life’s work.  The nation owes this patriot a debt of gratitude.”

Lannon has been the ARDEC director since 2005.  He will be succeeded by Dr. Gerardo Melendez, the director of the Command, Control and Systems Integration Directorate for the U.S. Army Communication-Electronics Research, Development, and Engineering Center at Fort Monmouth.