On the eve of this historic Inauguration, it is easy to recognize the impact this event will have on American History. Since the founding of our great Republic, Americans have always relished our most sacred of traditions…freedom. This is yet another display which will be viewed all across the globe, and allows us, as Americans, to display our commitment to our founding virtues.

I encourage all Americans to welcome our new Commander – in – Chief and President, Barack Obama. We may not always agree on policy, but we are united by our American tradition, culture, and patriotism.

May God Bless this President and May God Bless America.

In today’s edition of Roll Call, there is a rather telling article regarding earmarks in the Economic Stimulus Package.  The article, titled “Artfully Redefining Earmarks,” clearly points out that some members clearly don’t get it, including those close to Speaker Pelosi.  House Majority Whip James Clyburn (D-S.C.) is quoted in the article saying: “I know the politics of all this.  I just think they’re wrong about it…I love earmarks.”

It should be noted that President-Elect Obama has clearly stated that any stimulus must be earmark free.  Therefore senior Democratic Members of the House are crafting “Legislative formulas …to ensure that their districts share in the wealth…,” in clear defiance of the standard bearer of their party.

It is Clyburn’s intent to have these formulas act as trade-offs for members, particularly freshmen, who need political cover in order to support a stimulus package. 

As I have said time and time again, Members of Congress are not ATM machines.  Fiscal stimulus goes beyond ideological boundaries; and earmarks, or legislative formulas for that matter, have no place in legislation designed at tackling our nation’s economic woes.

I am no fan of the Democrats pay-as-you go (PAYGO) rule that was put in place at the beginning of the 110th Congress, in fact their rule was nothing more than a cheap gimmick which they ignored on a wide range of bills. When taken together this would amount to an increase in the deficit by more than $420 billion.

Well the 111th Congress will further weaken the PAYGO by:

• Providing an exception for emergency legislation (theoretically anything could be termed “emergency legislation” in order to bypass PAYGO)
• Allowing the “banking” of savings in one bill so they can be used to offset spending in another bill. In addition to circumventing their rule in the 110th Congress, increasing the deficit by $420.1 billion, the Majority manipulated the rule by using the same offsets for multiple pieces of legislation (in one case they used a single offset 25 different times). Instead of addressing these violations and gimmicks, this new change stretches the rule to accommodate even more spending.
• The Democrats instituted their pay-as-you-go [PAYGO] rule at the beginning of the 110th Congress with a promise that it would end deficit spending. Since then, however, the fiscal imbalances have worsened dramatically: the deficit has swollen from $162 billion 2 years ago to current projections of more than $1 trillion this year; and the debt, which exceeded $10 trillion in September, may force the Treasury to borrow an additional $2 trillion this year alone, according to some analysts.
• Allowing the Majority to “shop” for budget baselines to make PAYGO compliance easier. Specifically, the rules package modifies the requirement that the House use the most recent baseline from the Congressional Budget Office. In 2008, the Majority waived the PAYGO rule for the Farm bill and justified the waiver based on an out-dated baseline.

The majority makes these exceptions, but still fails to plug existing loopholes in the overarching rule.  PAYGO does nothing to tackle the out of control growth of entitlement spending and it does not apply to entitlement spending increases in appropriations bills. It is clear that PAYGO indiscriminately favors tax increases.

This was published in today's edition of Investor's Business Daily.  It outlines a few of my thoughts and ideas on the path towards restructuring our financial regulatory system. 

Bold Changes Should Prevent Another Crisis
By REP. JOHN CAMPBELL

The credit markets continue to unfreeze. The general economy continues to sink. There are new stock market lows and unemployment highs and we don't know where and how it will all end.

But it will end. And we need to start thinking about what regulatory structure will replace the one that failed us so miserably this time. We came perilously close to an abyss (or collapse or Armageddon, depending on who is describing it).

I looked down into that abyss and what I saw was way scarier than any Stephen King movie. Therefore, I think we need dramatic changes to ensure that this sort of calamity does not befall us again.

So what do we do to keep it from happening again while still preserving free markets and rewarding enterprise and innovation? Here are a few thoughts:

1. Banks should be boring entities that you can trust. If you want to double earnings annually, go into another business. We have seen how important our regulated banking sector is to the entire economy. We cannot let them get into high-risk territory.
Read More...

Senator Tom Coburn (R-OK) recently released a report on the “Worst Waste of the Year.” This report details some of the most ridiculous, wasteful, duplicative, and flat out silly instances of spending that comes out of Washington, DC.

Coburn says that “Wasting taxpayer dollars in any year is unacceptable, but the extent to which it occurred in 2008 was a clear demonstration of how Washington politicians often put low-priority items ahead of more important needs.” I could not have said it better myself.

In his report, Coburn spells out a 7 step plan for reducing wasteful Washington spending:

1. Eliminate programs that do not work;
2. Eliminate or consolidate duplicative programs;
3. Eliminate earmarks;
4. Implement stronger transparency measures;
5. Conduct more congressional oversight;
6. End automatic budget increases for federal programs; and
7. Establish independent and enforceable performance measures for every program.

To view Senator Coburn’s report in full Click Here.

As part of my weekly report as Chairman of the Republican Study Committee’s Budget and Spending Task Force, I made note that according to the Congressional Budget Office’s (CBO) December Budget Review, the first two months of FY 2009, the federal government has run a deficit of $408 billion on a cash flow basis, which is 163% above the level through the first two months of FY 2008. .

CBO also notes a lower deficit figure of $267 billion if TARP spending to date is accounted for instead on a net present value basis. Including TARP Spending, federal outlays have increased by 48% and receipts have decreased by 6%. The FY 2008 deficit was $455 billion, the highest nominal deficit in U.S. history -- $293 billion or 180% more than the FY 2007 deficit.

For both the current fiscal year and FY 2010, some economists predict deficits of more than $1 trillion. To put this into perspective, a deficit of this magnitude would not only be the largest nominal deficit in U.S. history, but would also be the largest deficit as a percentage of GDP since World War II.

Recently, Americans for Tax Reform (ATR) unveiled a new project called the Center for Fiscal Accountability. The project specifically strives:

• To work with policymakers and activists to enhance transparency in government spending by creating searchable online databases;
• To develop best practices based on experiences at various levels of government;
• To highlight developments and efforts pertaining to the area of fiscal accountability;
• To educate taxpayers on fraud, waste and abuse in government finance and to provide them with the tools to combat these;
• To serve as a clearinghouse for information and to facilitate contact between parties involved in the effort to make government more accountable to taxpayers.

Not only does this website endeavor to hold federal government agencies accountable, it is also zeroing in on keeping state and local government accountable and transparent.

Here is a link if you’re interested in making sure your government is accountable to you.

According to some of the most recent reports, it is clear that Senator Ted Stevens has indeed lost his bid for reelection for Senate in Alaska (read article here).

Yesterday, Rep. Jeff Flake (R-AZ) and I wrote a letter to the Chairmen of the Appropriations Committees in both houses, asking that they thoroughly review 39 earmarks that Senator Stevens recently garnered in the Continuing Resolution. In light of Sen. Stevens’ recent conviction on charges of corruption, these earmarks worth $240 million should be inspected before any action is taken to fund them. A copy of the letter can be found here.

Many of you watched the final presidential debate on Wednesday night, and the candidates were asked, “What would you cut from the federal budget”.  If the answers given were unsatisfactory to you, the National Taxpayer’s Union (NTU) and Citizens Against Government Waste (CAGW), have teamed up to provide lists that show exactly where the waste is, and what needs to be cut. 

Don’t take my word for it, CAGW for instance lists 701 areas that can either be cut or dramatically reduced, totaling $1.9 trillion over five years.

National Taxpayer's Union

Citizens Against Government Waste – Prime Cuts

CAGW and NTU Joint Press Release

Below you will find an editorial I penned for Investor's Business Daily today.

Plan Will Save Free Market, Not Destroy It

By REP. JOHN CAMPBELL

This free-market, Milton Friedman devotee, conservative Republican congressman will be voting strongly in favor of the $700 billion bailout for Wall Street. What, you ask? Has the California sun fried my last brain cell?

No. I will vote for this bill because it will likely not cost anything, is not a bailout of anybody and will help every American with a bank account, a job or a retirement plan. It also will save the free market, not weaken it.

Allow me to explain.
Read More...

You would think that Senator Ted Steven’s (R-AK) legal battle would be the sole occupant of his time, but according to an article in The Hill yesterday, it seems that his insatiable appetite for earmarks hasn’t been abated one bit. 

According to the article, Stevens has managed garner more than $200 million in Senate’s version of the Defense Appropriations bill.  The Senate appropriator’s recently disclosed that they intend to include more than $3 billion in project requests that the Pentagon has not requested.

Because of Senator Steven’s indictment and its alleged link to earmarks, you would think that the leadership on Capitol Hill would take a second look at earmarks, but unfortunately this article serves as evidence that it is business as usual in the appropriations committees, and the taxpayer is at the short end of the deal.

I am sure many of you have been paying attention to the debate (or lack thereof) on energy in Congress.  Well now the majority has decided to take up a bill after months of pleas from Republican members of the House.  However, this bill is designed to fail, and worse yet it increases spending and taxes.  Don’t believe it?  Here are some of the details.

Lack of Incentive: The bill allows offshore drilling, only for States that choose it, no closer than 50 miles from the coast, however it also prohibits revenue sharing of new oil and gas proceeds, thereby removing any incentive for States to “opt in” and allow drilling off their coasts. Nor does the bill offer any lawsuit protection, so companies that do search for oil will continue to be hampered with limitless litigation by environmental groups.

This bill will raise taxes: This bill raises taxes on large oil and gas companies engaged in domestic energy production by nearly $13.9 billion over 10 years, all to provide tax breaks to favored energy projects and products. The bill also limits the use of foreign tax credits on the international operations of oil and gas companies, which pushes the overall tax hike in the bill up to $17.7 billion.

Reduces revenue: The Congressional Budget Office [CBO] has estimated the government could initially receive $5 billion in additional revenue without raising taxes by opening the OCS and allowing drilling in the Arctic National Wildlife Refuge [ANWR]. Yet this bill continues to limit drilling in the OCS.  According to CBO, it reduces revenue to the Treasury by $1 billion,

New Fees for Energy Companies: The bill raises $5.8 billion by imposing new fees on certain leases that currently pay no royalties. It also imposes $1.8 billion of new fees on non-producing Gulf of Mexico leases, and requires retroactive lease payments back to 1 October 2007 on certain leases.

Higher Spending, No Deficit Reduction: The bill increases the top line for appropriated spending by $6.6 billion, so that total 2009 nonemergency discretionary spending increases by 9.3 percent over 2008. All new revenue in the bill is set aside in a reserve fund to offset future appropriated spending increases. There is no guarantee this funding will be used to reduce U.S. dependence on foreign oil.

More Earmarked Spending: The bill restructures the New York Liberty Zone Program, making it a $2-billion earmark that can be used for any transportation infrastructure project in New York City. The measure also earmarks $25 million to establish a so-called “National Energy Center of Excellence.”

New Spending for Energy Block Grants: The bill also authorizes $2.5 billion in new spending for energy related block grants, and $3.4 billion to States for transportation grants.

Exploiting the Fannie-Freddie Bailout: The bill seeks to make Fannie Mae and Freddie Mac green when the problem is they are insolvent. It directs the two financially ailing firms to develop loan products and flexible underwriting guidelines to facilitate a secondary market for energy- and location-efficient mortgages on low- and moderate-income housing. The bill also calls for Fannie and Freddie to facilitate second and junior mortgages for energy-efficiency and renewable energy improvements.

It’s no secret that this Congress has had a problem passing appropriations bills on time.  Last year, we resorted to passing a giant omnibus bill at the last minute, and this year we likely will recess until after the election by passing a continuing resolution (CR), to fund the government at its current levels.  The good thing about a CR is that at least the government will continue operating at current levels rather than recklessly increase spending levels.

Over on the Senate side, Senator Jim DeMint (R-SC) has introduced an amendment that would give the Dept. of Defense and Dept. of Energy the ability to disregard more than $5 billion in defense earmarks contained in the upcoming $612.5 billion defense policy measure ( S. 3001).

Senator Levin (D-MI), Chairman of the Senate Armed Services committee has objected to the amendment, and the bill has stalled in the Senate.  I applaud Senator DeMint and his colleagues including Senator Coburn (R-OK) for taking a stand on this issue. 

We have generals and admirals in the field who know what they need to fight and win.  It is ridiculous that we would opt to divert needed resources towards unwanted and at times ineffective earmarks, and in the end it hurts our ability to effectively provide for our national security. 

Yesterday I blogged about the new CBO numbers on the deficit and the remarkable jump in the deficit figures. 

If that is extended over the full 2008-2018 period, CBO projects that spending will average 21.1% of GDP.  Federal revenues have never exceeded 20.9% of GDP (a level reached in 1944, 2000).  Keep in mind that 1944 was one of the most active years of the Second World War.

There is no precedent for federal taxes at the level CBO projects federal spending will be over the next ten years. Spending must be cut, and the next President and Congress must hold the proverbial fiscal line.  If fiscal discipline is not exercised, in spite of what some are saying about taxing only “the rich”, they will have to take a  big bite out of everyone’s paycheck in order to pay for the spending that is being proposing.

I know most of you will never forget where you were on September 11, 2001. I know I certainly won’t. That day has been permanently ingrained in the minds of Americans.  The attacks still resonate in the hearts and minds of Americans. But when we remember the 7th anniversary of that fateful day, I hope you take a moment to remember all those who were lost that day. Also take a moment to think of our sailors, soldiers, Coast Guardsmen, airmen, firefighters, police offices, and other first responders who have sacrificed themselves in the defense and preservation of our nation and freedom. This always reminds us of the importance of defending the Homeland and ensuring that terrorism will never strike on American soil again.

God Bless.