The impending Christmas holiday, which cannot be waived even with a 2/3rds vote of Congress, has motivated lots of deal making, and Congress adjourned for the year last night. Here are some of the things, in addition to the energy bill and the budget, that are on their way to the President's desk:

TRIA: A 7 year extension with some positive modifications to the Terrorism Risk Insurance Act which was put in place after the attacks of 9/11. This provides federal government reinsurance so that the private market can profitably offer terrorism risk insurance on major commercial properties around the country. This compromise was more than the no extension that some wanted and less than the subsidies that others wanted.

SCHIP: After a year long and often bitter fight over whether to expand the State Children's Health Insurance Plan to cover adults and middle class children (basically a step to socialized medicine), the Democratic leadership backed down and relented to a 16 month extension of the current program with some program revisions. This bill passed with a vote of 411-3. The floor speeches from virtually all the Democrats who spoke said not to worry, a Democratic President, House and Senate in 2009 will immediately expand the reach and cost of this program. (Heavy sigh).

Troop Funding: $70 billion was added to the budget today to fund the wars in Iraq and Afghanistan. This is considerably less than the $196 Billion asked for by the President but it clearly funds operations into the first quarter of next year.

Alternative Minimum Tax: The very last act of the 1st session of the 110th Congress was to extend the current AMT rates for this year. So, you escaped a tax increase.....this time. This was very contentious within the Democratic Caucus, but in the end they relented and allowed a vote to not raise the tax, rather than see 25 million taxpayers get a tax increase in an election year.  But, it is still scheduled to go up on 2008, so there will be another fight. The Democrats had to violate their own much-hyped "paygo" rules in order to allow you taxes to remain the same. Here is a 1 minute floor speech I gave on this issue to close out debate today.

All in all, not a bad day.

An article published in today’s Roll Call, exposes the politics that earmarks play in Congress.

The article cites a letter from Congressional Black Caucus (CBC) Chairwoman Carolyn Cheeks Kilpatrick (D-MI) who explicitly states, “Inherently, we understand that this earmark process is not equitable… There are a few examples of where your help could significantly assist a few members in highly contested races.”

In February, the Democratic Congressional Campaign Committee (DCCC) released a list of 29 members that are potentially vulnerable, not surprisingly, 20 of those members received airdropped earmarks in the omnibus appropriations bill. 

This letter appears to request taxpayer dollars to aid in political campaigns, which is improper and possibly illegal.  The earmark distribution process must be investigated to ensure that no federal laws are being broken.

There is finally a deal. The Democrats agreed to only spend the total budget amount that the president had asked for. That saves you nearly $150 billion over the next 5 years (because the base for future increases is lower) which is enough to avoid the increases in the alternative minimum tax that many want to see. I feel particularly happy about this because this all really started with the letter I circulated last spring on which 147 members of Congress agreed to uphold the president's veto of any spending bill over his requested amount. Bills went to the president, he vetoed them and the vetoes were upheld which is why majority Democrats had to make a deal. That all worked out quite well.

But I still voted against the spending bill.

• First of all, I actually thought the president's spending number was too high also. We cannot continue to increase spending by, or in excess of, the growth in the economy or we will never get to a balanced budget.
• Secondly, the deal included $11 billion in one-time new spending.
• Third, it has at least 8000 earmarks in it for nearly $20 billion. Much of this is complete waste. That's actually more than last year in spite of the Democrat leadership's pledges to reform this process.  It shows that the bipartisan earmark culture on Capitol Hill is alive and well.
• Fourth, the bill was 3500 pages long and weighs nearly 35 pounds. We got it at midnight on Sunday night and the first votes in rules committee happened about 14 hours later. Nobody, except the people who wrote it, really knows what is in it. I'm sure there's a lot of bad stuff. It should not happen like this.
• Fifth, there is a bunch of bad stuff I know is in there. Congressman Jefferson (D-LA), who is under indictment for taking bribes (allegedly money hidden in his freezer) for earmarks, received an earmark which is one of many hundreds thrown in the bill without any discussion or hearing. There is $10 million in there to pay for the legal defense of illegal aliens who are resisting deportation. And, the bill provides some funds for the border fence but reduces it from an ineffective one layer fence instead of two and does not provide the means to patrol it.

We saved some money. But there's a lot more left to be saved.

Today I found this graphic that the Heritage Foundation put together.  
Unfortunately it is absolutely true.



 

Late last night, Democrats released the omnibus spending bill that will be coming to the floor of the House for a vote tonight.  With barely 24 hours to look at this bill, it will be a mad dash to see what is exactly included in this spending measure that funds nearly every federal agency and will cost almost $1 trillion.

Democrats have talked a lot about fiscal responsibility, but they have not “walked the walk”.  In the short 10 months, while Democrats have been in the majority, Congress has passed legislation that would increase discretionary spending by a whopping $275 billion, and entitlement spending by $179 billion, over 10 years.

Here are a few things that I hope to see from the consideration of the omnibus spending bill and any other spending bill for that matter.

Earmarks

So far, the spending bills from the House have 6,651 earmarks, while the Senate spending bills have 4,700 earmarks.  This number is down from recent years, but Members have slipped millions worth of pork projects in conference reports.  This practice, known as “Airdropping” successfully bypasses transparency rules.

Authorization

The original request from President Bush in October was $933 billion. Since then nearly a quarter of the fiscal year has gone by. Counting previously appropriated funds, it is important that appropriations do not exceed the $933 billion level requested by the President.

Time

Upon becoming Speaker, Nancy Pelosi (D-CA), pledged to allow 72 hours of study before any bill would be brought to a vote.  However, in consideration of this massive spending bill, we have barely 24 hours to disseminate everything present in roughly 3,500 pages.

The latest press reports are indicating that Speaker Pelosi has backed down from a proposal to eliminate all earmarks in the omnibus spending package that she plans to move to the floor by the end of the week. 

Democratic leaders believe that earmarks are the last form of spending that should be cut. I believe that earmarks are currently the first form of spending that we should cut in the omnibus spending package.

The point here is that the earmark culture still commands power in Washington.  Speaker Pelosi is clearly signaling that she is willing to cut whatever is necessary in order to maintain earmarks.

Today, a Capitol Hill newspaper, The Hill exposed Representative Nancy Pelosi (D-CA) and her spending habits as the Speaker of the House.  According to the report, Pelosi has already spent 63% more than the former Speaker of the House, Representative Dennis Hastert (R-IA).  In the first nine months of her tenure as Speaker, she has spent a little over $3 million, which when compared to the $1.8 million spent by Speaker Hastert during the same period last year, fully illustrates the disparity.

This begs the obvious question of what could she possibly be spending all this money on? Well, for one thing…flowers. According to The Hill, approximately $16,000 of the $3 million was used to buy flowers. Don’t forget that these flowers were all paid for with taxpayer funds. 

In addition to her apparent penchant for botany, the Speaker spent $10,000 to pay for a single speech to be written for her and nearly $20,000 to hire a lawyer for the sole purpose of overseeing her transition into the Speaker’s chair. Again, all taxpayer dollars.

Sadly, this report, albeit outrageous, does not surprise me. Madame Pelosi’s spending spree is simply a microcosm of the larger lack of commitment to fiscal responsibility exhibited by the Democrats in this Congress.

In anticipation of the introduction and vote on a massive appropriations bill this week, Republican staffers, outside interest groups, and spending watchdogs are preparing for a frantic race to figure out what exactly is in this bill.

Republicans have been largely locked out of drafting meetings for the omnibus spending bill, which funds almost every federal agency.  Despite the Democrat’s new transparency rules this year, this appropriations measure is moving as an “amendment between houses”, which exempts the bill from earmark disclosure rules. I find this especially disturbing because Democrats, since winning the election, have peddled transparency and accountability ad nauseum as mandates from the American people to which they hold sacred.  Now, on the eve of this massive collection of spending bills worth billions of dollars of taxpayer money, their mandate is suddenly nowhere to be found. Unfortunately, even as they prepare to blitzkrieg enormous legislation stuffed full of secret earmarks in absolute silence, we now see what transparency really means to the Democrats.

Last week the Rules Committee approved a rule to introduce the bill Tuesday and fast-track it to the floor the same day.  This skirts normal procedures which require 72 hours notice before a bill goes to the floor.  To prevent this, Republicans offered an amendment that would have required a published list of earmarks, but the amendment was defeated. 

This bill was anticipated to come to the floor last night, but Democratic leaders pulled the bill in light of the inability to reach consensus among their own caucus, not to mention Republicans, concerned with the fiscal ramifications and undisclosed pork throughout the bill.

Appropriations Committee Chairman David Obey (D-WI) claims Republicans were bargaining in bad faith, but the truth is we were never invited to the table.

One of the great challenges will be finding where they buried earmarks in thousands of pages of legislation in only a few hours.

Despite claims by Democrats that the earmark process has been reformed, pet projects are still easily slipped into bills with minimal, if any, oversight.

Today, an article in the Washington Post highlighted that House Majority Leader, Steny Hoyer  (D-MD), inserted an earmark worth $450,000 into the 2008 education spending bill.  The earmark was intended to go to the California based “InTune Foundation Group”, a music-education nonprofit group. 

This isn’t the first earmark InTune has received; in 2005 it received $500,000 to develop lesson plans on funk music and Nobel Peace laureates.  Although, it was required to submit a report on the effectiveness of the program, InTune never did. In fact when the Department of Education tried to contact them, their phone was disconnected and the email address was out of service. 

In 2005 earmark, InTune stated that it would use some of the money to hire an educator, Joan Kozlovsky, to assess the program in 2005 and 2006.  However, according to Kozlovsky, she hasn’t heard from the nonprofit group in years.

In the face of failed evaluations and lack of compliance, Mr. Hoyer still felt it prudent to earmark an additional $450,000 of taxpayer funds to InTune. 

Not surprisingly, Maillard, current and past InTune employees have contributed at least $31,000 to Hoyer’s political action committee from 2004 to 2006.

This is outrageous, and taxpayers deserve better.  I have consistently made the argument that the connection between earmarks and contributions is widespread and ripe for abuse, this is just the latest example.

Is the earmark process reformed?  You be the judge.

Upon the assumption of her role as Speaker of the House of Representatives, Speaker Nancy Pelosi stated,

“Bills should be developed following full hearings and open subcommittee and committee markups, with appropriate referrals to other committees. Members should have at least 24 hours to examine a bill prior to consideration at the subcommittee level. Bills should generally come to the floor under a procedure that allows open, full, and fair debate consisting of a full amendment process that grants the Minority the right to offer its alternatives, including a substitute. Members should have at least 24 hours to examine bill and conference report text prior to floor consideration. Rules governing floor debate must be reported before 10 p.m. for a bill to be considered the following day.” 

Today Speaker Pelosi brought forth an energy bill. No one had seen it before then. It has some good things, some OK things and some bad things. I will vote against it because I believe the bad outweighed the good. But the point here is that we need an energy bill to reduce our dependence on foreign oil and petroleum in general. But this bill, although it will pass the House, will not pass the Senate and if it did, the President has said he would veto it.

Again there was an opportunity to accomplish a lot in this area in which there is agreement. I certainly wouldn't get all I wanted, but I would get some. The Speaker and the President would also get some but not all of what they wanted. There is clear common ground.

It seems that the Democrat House leadership is more interested in making political statements than accomplishing anything.

Maybe the Senate can fix the bill.

House Democrats are busy scurrying around the halls trying to drum up support for their new Energy bill.  Their new Energy bill has 31 new tax provisions that create new winners and new losers in the energy industry.  Here are some of the included tax provisions:

Winners:

Fringe Benefit for bicycle commuters.  The bill allows employers to provide employees that commute to work using a bicycle limited fringe benefits to offset the costs of such commuting (e.g. bicycle storage).  This proposal is estimated to cost $10 million over 10 years.

Income averaging for Exxon Valdez litigation amounts.  The bill would allow commercial fisherman and other individuals whose livelihoods were negatively impacted by the 1989 Exxon Valdez oil spill to average any settlement or judgment-related income that they receive in connection with pending litigation in the federal courts over three years for federal tax purposes.  The bill would also allow these funds to make contributions to retirement accounts.  This proposal is estimated to cost $215 million over 10 years.

Long-term extension and modification of renewable energy production tax credit.  The bill extends the place-in-service date for four years for qualifying facilities: wind; closed-loop biomass; open-loop biomass; geothermal; small irrigation hydropower; landfill gas; and trash combustion facilities.  It also includes a new category of qualifying facilities—facilitates the generate electricity from marine renewables  The bill would cap the aggregate amount of tax credits that can be earned for qualifying facilities place in service after December, 31, 2008 to an amount that has a present value equal to 35% of the facility’s cost.  This proposal is estimated to cost $6.626 billion over 10 years.

Losers:

Denial of section 199 benefits for certain major integrated oil companies (freeze current benefits at 6%)  The bill excludes gross receipts derived from the sale, exchange or other disposition of oil, natural gas, or any primary product thereof from the domestic production deduction for large integrated oil companies.  The bill would freeze the domestic production deduction for income of other taxpayers that is with respect to oil, natural gas, or any primary product thereof at 6%.  This is estimated to raise $9.992 billion over 10 years.

7-year amortization of geological and geophysical expenditures for certain major integrated oil companies.  The bill increase the amortization period for geological and geophysical expenditures(G&G costs) from 5 years to 7 years for large integrated oil companies.  Estimate to raise $103 million over 10 years.

Clarification of foreign oil and gas extraction income.  The tax code limits the ability of oil and gas companies to claim foreign tax credits with respect to foreign oil and gas extraction income.  Because of this limitation, there is a potential for oil and gas companies to manipulate their extraction income in order to achieve beneficial result under U.S. foreign tax credit rules.  This bill eliminates this potential, and would expand the present-law foreign oil and gas extraction income rules to apply to all foreign income from production and other activity related to the sale of oil and gas.  Estimated to raise $3.187 billion over 10 years.

Congressional Democrats have consistently argued that their higher spending level--$21 billion in FY 2008—is a small fraction of the overall federal budget.  But when you spread this out over 10 years, the difference amounts to $450 billion….hardly a small sum of money. 

To put this into perspective, this $450 billion could amount to: 

• A six-year repeal of the AMT,
• Twice the “cost” of extending the child tax credit for another 10 years,
• 91% of the “cost” of making the death tax permanent,
• 53% of the “cost” of making the individual income tax rates permanent,
• 11 times the amount of money needed to make marriage penalty relief permanent,
• Twice the amount needed to make the capital gains and dividend tax relief permanent, or
• Nearly the same amount as the non-interest portion of the Social Security surplus over 5 years.