October 24th, 1997
WASHINGTON, DC – With the blessing of the 103 rd Congress, President Bill Clinton in 1993 increased taxes on the Social Security benefits of America’s senior citizens. This week, US Representative Ron Paul (R-Surfside) stepped forward with legislation to repeal that “oppressive, regressive” tax.
“I’m pleased to introduce the Social Security Beneficiaries Tax Reduction Act,” said Paul after introducing the legislation. “The tax hike levied on America’s senior citizens was nothing less than immoral. During these months in office I have waited and waited for someone to introduce this type of legislation, but when I saw no one else was willing, I knew I had to be the one to act.”
Paul said he made two promises when taking office in January: to uphold the Constitution, and to cut taxes.
“Cutting taxes should be the top priority of every Member of Congress. The level of taxation endured by our citizens is oppressive. And while I firmly believe massive, across-the-board tax cuts are not only morally correct and constitutionally proper, they are also economically sound. Unfortunately, very few politicians in Washington have the nerve to cut taxes because they want to maintain the status quo; they just do not have the political nerve to do what all Americans want – reduce the tax burden. But this legislation is something every Member of Congress should immediately support, because it affects our national treasure, our senior citizens.”
Paul called on the House leadership to rush the legislation through the committee process so as to expedite the repeal of the tax increase. The House is expected to remain in session for this year through the middle of November.
“It’s been four years since our nation’s senior citizens were ambushed by the president’s tax increase, and we must not delay another minute in repealing this tax. It is unconscionable that the Clinton tax increase on senior citizens has been allowed to last this long.”
Paul reminded his Republican colleagues that repealing the tax increase was a major plank of the 1994 “Contract with America.”
“Eliminating the 1993 Clinton tax increase on Social Security benefits must be an imperative for this Congress, this month. Let us in Congress resolve to allow our nation’s seniors to have something for which they can truly be thankful on Thanksgiving Day 1997; let’s cut the taxes on the Social Security benefits.”
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October 23rd, 1997
Mr. PAUL. Mr. Speaker, it has recently come to my attention that William E. Simon has publicly called for the Congress to reject the Clinton proposal to approve $3.5 billion in new funding for the International Monetary Fund (IMF). He points out that the IMF was established over 50 years ago as an institution to maintain the Bretton Woods system of stable exchange rates that the world rejected in the early 1970′s. The IMF has a poor track record. ‘All of the major currency and banking crises of the last five years have occurred under conditions of heightened surveillance by the IMF,’ according to Gregory Fossedal, a leading expert on the subject. George Schultz, the former Secretary of State and of the Treasury, has also called for the IMF’s elimination. Wisely, the House of Representatives did not include any new appropriation for the IMF. It is hoped that the conference committee will act as prudently.
Mr. Simon, the former Secretary of the Treasury and the current president of the Olin Foundation, authored in today’s issue of the Wall Street Journal an incisive article on the subject that I would like to include in the Record . This article clearly explains why the IMF ‘may actually promote crises, because governments often resist sound economic and financial policies * * * because they know that the IMF will be there to bail them out in the event of a crisis.’ We should add that the IMF will be bailing them out with U.S. taxpayers’ money if the conference committee fails to follow the sound judgment of the House and reject any additional IMF funding.
[FROM THE WALL STREET JOURNAL, OCT. 23, 1997]
(BY WILLIAM E. SIMON)
The Clinton administration is asking Congress to approve $3.5 billion in additional funding this year for the International Monetary Fund. Congress should not only reject this proposal, but also take the long overdue step of ending all future funding for the IMF. As a practical matter, the institution cannot continue to exist without the participation of the most powerful nation in the world. By withdrawing its funding, then, the U.S. can take a leadership role in putting this outdated organization out of business.
The IMF is ineffective, unnecessary and obsolete. It was established after World War II, together with the World Bank, to promote trade and development in an international economy that had been torn apart by two decades of depression and war. In the system of fixed exchange rates established by the Bretton Woods agreements, the IMF’s purpose was to provide short-term loans to countries experiencing temporary problems with their balances of payments. This was an important function during the period following the war, and the IMF generally performed it quite well.
But this function became obsolete in the early 1970′s when the world abandoned the Bretton Woods system in favor of the current system, in which currency values are set by the market. Instead of going out of business as that new system matured, the bureaucrats at the IMF invented a new function for themselves–namely, to provide so-called structural adjustment loans to countries that are, for various reasons, deeply in debt. These loans are granted on the condition that the recipient countries take steps to reduce their debt, often by increasing taxes and reducing government spending. This mission, of course, was never contemplated in the IMF’s original charter; indeed, these structural adjustment loans look very much like the development loans that are supposedly under the purview of the World Bank.
Many critics of the IMF point out that these loans have been quite ineffective in preventing currency crises and in promoting stable economic growth in developing countries. Quite the contrary, as these critics say, the IMF may actually promote crises, because governments often resist sound economic and financial policies (which may be unpopular) because they know that the IMF will be there to bail them out in the event of a crisis. As Gregory Fossedal, a leading expert on the IMF, has pointed out, ‘All of the major currency and banking crises of the last five years have occurred under conditions of heightened surveillance by the IMF.’ These include the crises in Mexico in 1994, in Africa in 1995 and in Thailand, Korea and Malaysia in 1997. The IMF, with the help of the U.S., has now bailed Mexico out four times since 1976, and it will no doubt do so again and again unless the IMF is put out of business once and for all.
Because the IMF has no legitimate function in our present system of floating exchange rates, we can eliminate it, and safely rely on private institutions, operating in the context of a free market, to provide liquidity and capital for developing nations, just as they do for the industrial nations.
As a former secretary of the Treasury, I do not lightly call for the elimination of a financial institution that has been in operation for more than 50 years, and that served a pivotal role in the international economy in the period following World War II. It is obvious, however, that the IMF no longer serves a constructive role in the world economy, and has not done so since the 1970s. We should therefore have the courage to close it down–and the most effective way to accomplish this goal would be to withdraw U.S. funding.
A few years ago, such a call to end the IMF would have been attacked on all sides as an extreme and highly controversial recommendation. But today a growing number of respected observers agree that the organization is no longer needed. George Shultz, the esteemed former secretary of state and of the Treasury, has recently called for the elimination of the IMF. In a 1995 lecture before members of the American Economic Association, Mr. Shultz observed that ‘the IMF has more money than mission.’ As a consequence, he said, we should ‘merge this outmoded institution with the World Bank, and create a charter for the new organization that encourages emphasis on private contributions to economic development.’ This would make a great deal of practical sense.
The House and Senate now have a golden opportunity to force the long overdue elimination of the IMF. There is no longer any reason to burden taxpayers with the expenses of this outdated institution.
(Bulleted paragraphs were entered into record but not spoken because of time constraints.)
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October 23rd, 1997
WASHINGTON, DC – Calling it “one more example of typical Washington games,” US Representative Ron Paul (R-Surfside, Texas) has announced that because of major, last-minute, tax-increasing changes to the legislation, he is no longer able to support what was originally designed to give parents more control over their children’s education. The new measure could come to a vote on the House floor as early as Thursday.
“This new measure claims to be a tool for parents, but in reality it is a tool for the tax-man,” he said. “This legislation, HR 2646, will stealthily increase taxes, while masquerading as a way for parents to save for their children’s education. I had worked hard to support the original version of this legislation even though it was much weaker than my own bill, the Family Education Freedom Act (HR 1816). This new measure, though, betrays us all: parents, children and taxpayers.”
Paul was an original cosponsor of HR 2373, the Parents and Students Savings Account Plus Act, which would have allowed parents to save $2,000 per year in special education accounts, the interest of which would not have been taxed as long as the funds were used to pay for education and related expenses. Paul said he felt the measure was weak because parents were not able to deduct the $2,000 investment each year from their taxable income. However, earlier this week HR 2373 was pulled from consideration and replaced with HR 2646, the Education Savings Act for Public and Private Schools. The new measure has provisions similar to HR 2373, but adds language which will result in increased taxes on the cash-payouts of employee vacation days. The added measure was set in place to “off-set” and “pay for” the bill.
According to the Joint Committee on Taxation, this legislation will result in a $66 million tax increase.
“This measure not only increases taxes, but it further expands an already burdensome tax code. I thought we Republicans were going to be scrapping the IRS and the tax code, not making it bigger. This legislation is a slap in the face to all parents, all employees and all employers. It is philosophically bankrupt to say there is a cost to government when people keep their own money. If we are concerned about revenues versus expenditures, then let’s cut expenditures, not increase taxes. We could cut the Department of Education, the Department of Labor, the Department of Commerce, the Department of Energy, or we could bring our troops home from Bosnia. We must not raise taxes.”
Paul said he will continue to fight for his “true education relief” legislation, the Family Education Freedom Act. His measure will let parents keep their own money, and take up to $3,000 per year per child in tax credits when they pay for education and education-related expenses such as tuition, books, computers and tutoring. His measure is applicable whether parents choose to place their children in public, private or home school settings.
“It is shameful that Congress is attempting to use children and the issue of education as a way to raise taxes. I refuse to take part in hoodwinking the American people.”
Paul said he was uncertain who is to blame to for the “bait-and-switch,” but suggested that the fault lies fundamentally in a system which allows Congress to arbitrarily tax income behind an “oppressive and confusing” set of laws, rules and regulations.
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October 23rd, 1997
Mr. PAUL. Mr. Speaker, I rise today to introduce the Davis-Bacon Repeal Act of 1997. The Davis-Bacon Act of 1931 forces contractors on all federally-funded construction projects to pay the local prevailing wage, defined as ‘the wage paid to the majority of the laborers or mechanics in the classification on similar projects in the area.’ In practice, this usually means the wages paid by unionized contractors. For more than 60 years, this congressionally-created monstrosity has penalized taxpayers and the most efficient companies while crushing the dreams of the most willing workers. Mr. Speaker, Congress must act now to repeal this 61-year-old relic of the era during which people actually believed Congress could legislate prosperity. Americans pay a huge price is lost jobs, lost opportunities and tax-boosting cost overruns on Federal construction projects every day Congress allows Davis-Bacon to remain on the books.
Davis-Bacon artificially inflates construction costs through a series of costly work rules and requirements. For instances, under Davis-Bacon, workers who perform a variety of tasks must be paid at the highest applicable skilled journeyman rate. Thus, a general laborer who hammers a nail must now be classified as a carpenter, and paid as much as three times the company’s regular rate. As a result of this, unskilled workers can be employed only if the company can afford to pay the Government-determined prevailing wages and training can be provided only through a highly regulated apprenticeship program. Some experts have estimated the costs of complying with Davis-Bacon regulations at nearly $200 million a year. Of course, this doesn’t measure the costs in lost jobs opportunities because firms could not afford to hire an inexperienced worker.
Most small construction firms cannot afford to operate under Davis-Bacon’s rigid job classifications or hire the staff of lawyers and accountants needed to fill out the extensive paperwork required to bid on a Federal contract. Therefore, Davis-Bacon prevents small firms from bidding on Federal construction projects, which, unfortunately, constitute 20 percent of all construction projects in the United States.
Because most minority-owned construction firms are small companies, Davis-Bacon keeps minority-owned firms from competing for Federal construction contracts. The resulting disparities in employment create a demand for affirmative action, another ill-suited and ill-advised Big Government program.
The racist effects of Davis-Bacon are no mere coincidence. In fact, many original supporters of Davis-Bacon, such as Representative Clayton Allgood, bragged about supporting Davis-Bacon as a means of keeping cheap colored labor out of the construction industry.
In addition to opening up new opportunities in the construction industry for small construction firms and their employees, repeal of Davis-Bacon would also return common sense and sound budgeting to Federal contracting, which is now rife with political favoritism and cronyism. An audit conducted earlier this year by the Labor Department’s Office of the Inspector General found that an inaccurate data were frequently used in Davis-Bacon wage determination. Although the inspector general’s report found no evidence of deliberate fraud, it did uncover material errors in five States’ wage determinations, causing wages or fringe benefits for certain crafts to be overstated by as much as $1.08 per hour.
The most compelling reason to repeal Davis-Bacon is to benefit the American taxpayer. the Davis-Bacon Act drives up the cost of Federal construction costs by as much as 50 percent. In fact, the Congressional Budget Office has reported that repealing Davis-Bacon would save the American taxpayer almost $3 billion in 4 years.
Mr. Speaker, it is time to finally end this patently unfair, wildly inefficient and grossly discriminatory system of bidding on Federal construction contracts. Repealing the Davis-Bacon Act will save taxpayers billions of dollars on Federal construction costs, return common sense and sound budgeting to Federal contracting, and open up opportunities in the construction industry to those independent contractors, and their employees, who currently cannot bid on Federal projects because they cannot afford the paperwork requirements imposed by this Act. I therefore urge all my colleagues to join me in supporting the Davis-Bacon Repeal Act of 1997.
(Bulleted paragraphs were entered into record but not spoken because of time constraints.)
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October 23rd, 1997
Mr. PAUL. Mr. Speaker, I was the original cosponsor of 2373, the Education Savings Act. That bill has changed. It is now 2646. I can support with reluctance this rule coming to the floor, but because of the changes that have occurred, I can no longer support this bill. There is nobody in this House that is a stronger supporter of credits and benefits and return of funds to parents to raise their children and give them a choice.
There will be Members on this floor today who will oppose this bill because they cannot stand the idea of returning funds to parents and giving them a choice, but I am opposing it because this is a net tax increase. This is costing, and for that reason I can no longer support this bill.
Mr. Speaker, I think the best way to give individuals and families a true choice is to give them tax credit. Unfortunately, this is a small step in the right direction, which I could have supported if we would not have had to raise taxes. We are closing a so-called loophole, a benefit provided to the businessmen and the individuals who benefit from the way their vacation time is deducted. The courts ruled in favor of the taxpayer and here we are undermining it.
According to the Joint Committee on Taxation, our own committee here in the Congress has estimated that what we do here today will raise taxes $1.8 billion over the next 2 years. With the most optimistic projections on how many people will use these savings accounts, they are claiming there will only be a return of $600 million. So in the next 2 years, if this goes through, we will raise taxes three times as much as we are so-called returning.
This is a net tax increase. It is not the way to go. We should do one thing to provide for these tax credits, one and only, and that is cut spending. Do my colleagues realize that if we would cut the National Endowment for the Arts by less than 3 percent we would have enough funds for this? That is all that we would need to do. But instead we go and we reverse the procedure of the courts which finally ruled in favor of the taxpayers, and now we are going to force them to reassess and revamp and make sure that those individuals on how they are handling their vacation time that more taxes will be paid.
Mr. Speaker, it is estimated the most optimistic estimates on this bill in order to project what might happen is that 12 million people would use these accounts, the maximum amount of $2,500 for 5 years. It means $120 billion would be stashed away. That is very unlikely, but I do predict that the taxes will go up, unfortunately.
(Remarks Entered Into Record)
EDUCATION SAVINGS ACT FOR PUBLIC AND PRIVATE SCHOOLS
(House of Representatives – October 23, 1997)
- Mr. PAUL. Mr. Speaker, I appreciate the opportunity to explain why I oppose the Education Savings Act for Public and Private Schools–H.R. 2646–despite having been an original cosponsor of the Parents and Student Savings Account Act–PLUS A+–bill and having been quite active in seeking support for the original bill. I remain a strong supporter of education IRA’s, which are a good first step toward restoring parental control of education by ensuring parents can devote more of their resources to their children’s education. However, this bill also raises taxes on businesses and I cannot vote for a bill that raises taxes, no matter what other salutary provisions are in the legislation.
- I certainly support the provisions allowing parents to contribute up to $2,500 a year to education savings accounts without having to pay taxes on the interest earned by that account. This provision expands parental control of education, the key to true education reform as well as one of the hallmarks of a free society. Today the right of parents to educate their children as they see fit is increasingly eroded by the excessive tax burden imposed on America’s families by Congress. Congress then rubs salt in the wounds of America’s hardworking, taxpaying parents by using their tax dollars to fund an unconstitutional education bureaucracy that all too often uses its illegitimate authority over education to undermine the values of these same parents.
- In fact, one of my objections to this bill is that it does not go nearly far enough in returning education authority to the parents. This is largely because the deposit to an education IRA must consist of after-tax dollars. Mr. Speaker, education IRA’s would be so much more beneficial if parents could make their deposits with pretax dollars. Furthermore, allowing contributions to be made from pretax dollars would provide a greater incentive for citizens to contribute to education IRA’s for other underprivileged children.
- Furthermore, education IRA’s are not the most effective means of returning education resources to the American people. A much more effective way of promoting parental choice in education is through education tax credits, such as those contained in H.R. 1816, the Family Education Freedom Act, which provides a tax credit of up to $3,000 for elementary and secondary expenses incurred in educating a child at private, parochial, or home schools. Tax credits allow parents to get back the money they spent on education, in fact, large tax credits will remove large numbers of families from the tax roles.
- I would still support this bill as a good first–albeit small–step toward restoring parental control of education if it did not offset the so-called cost to Government–revenue loss–by alterning the rules by which businesses are taxed on employee vacation benefits. While I support efforts to ensure that tax cuts do not increase the budget deficit, the offset should come from cuts in wasteful, unconstitutional Government programs, such as foreign aid and corporate welfare. Congress should give serious consideration to cutting unconstitutional programs such as Goals 2000 which run roughshod over the rights of parents to control their children’s education, as a means of offsetting the revenue loss to the Treasury from this bill. A less than 3-percent cut in the NEA budget would provide more funds than needed for this return of tax dollars to families who seek choice in their children’s educational needs.
- Mr. Speaker, we in Congress have no moral nor scientific means by which to determine which Americans are most deserving of tax cuts. Yet, this is precisely what Congress does when it raises taxes on some Americans to offset tax cuts for others. Rather than selecting some arbitrary means of choosing which Americans are more deserving of tax cuts, Congress should cut taxes for all Americans.
- Moreover, becasue we have no practical way of knowing how many Americans will take advantage of the education IRA’s relative to those who will have their taxes raised by the offset in this bill, it is quite possible that H.R. 2646 is actually a backdoor tax increase. In fact, the Joint Committee on Taxation has estimated that this legislation will increase revenues to the Treasury by $1.8 billion over the next 2 years.
- It is a well-established fact that any increase in taxes on small businesses discourages job creation and, thus, increases unemployment. It is hard too see how discouraging job creation by raising taxes is consistent with the stated goal of H.R. 2646–helping America’s families.
- Mr. Speaker, I would suggest that is this type of legislation–a backdoor tax increase masquerading as a tax cut–that is, in part, responsible for the widespread and ever growing disgust with this body.
- In conclusion, although the Education Savings Act for Public and Private Schools does take a small step toward restoring parental control of education, it also raises job-destroying taxes on business. Therefore, I cannot in good conscience support this bill. I urge my colleagues to join me in opposing this bill and instead support legislation that returns education resources to American parents by returning to them moneys saved by deep cuts in the Federal bureaucracy, nor by raising taxes on other Americans.
(Bulleted paragraphs were entered into record but not spoken because of time constraints.)
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October 21st, 1997
Mr. PAUL. Madam Speaker, tobacco industry leaders are under attack by nearly everyone. A tobacco-friendly tax provision that was hidden in the settlement was quickly removed by the Senate and the House once the public became aware of it. But without a tax benefit or higher cigarette prices, or both, there is no way the industry can afford the astronomical $368.5 billion settlement they have agreed to pay over the next 25 years. The industry makes only $8.4 billion annual pretax profit.
The tobacco companies deserve every bit of grief they are receiving, but for reasons other than commonly assumed. It is true they profit from selling a dangerous product, but so do automobile, airplane, and gun manufacturers as well as food producers, drug companies, and coffee farmers. When we boil it down, any product used incorrectly or excessively is dangerous. Even oxygen used incorrectly can be dangerous. And most people know tobacco is dangerous without the benefit of the nanny-state inspectors and the bureaucrats’ warning label.
Tobacco company executives symbolize much of what is wrong with corporate America and our corrupt system of special interests, favoritism, and interventionism. For decades, Big Tobacco lobbied for and gladly accepted subsidies and trade benefits, while anyone with a grain of common sense knew smoking was a bad habit that adversely affected some people’s health. It is no secret that young people could easily become addicted to nicotine.
There were specific gains to be realized from the charade that surrounded tobacco sales. Pretending that smoking was a benign habit made it easier to collect benefits from the nonsmoking taxpayers. And the alternative, arguing for personal responsibility, was hardly in vogue.
Over the past 50-plus years, responsibility for risk incrementally has been shifted from the individual to the State. As we moved further from a free society toward a managed welfare state, responsibility for nearly everything began to be systematically delivered to someone else through the State and its growing army of bureaucrats. The tobacco industry was a willing accomplice to this betrayal of individual responsibility.
The failure of Big Tobacco to fight Government’s requirement to put warning labels on cigarettes while accepting agricultural subsidies allowed the entire smoking industry to be invaded by the Federal Government.
Tobacco put the welcome mat out for big Government. Now it is only a matter of time before nicotine will be declared a drug and more FDA regulation will inundate us. Unfortunately, this will only compound our many problems with nicotine.
Madam Speaker, smoking should be treated no differently than compulsive eating, chocolate addiction, or driving too fast. But the way the tobacco corporate leaders are acting in cahoots with big Government, one would think they are conspiring to prevent this.
Madam Speaker, the question is who has responsibility for our well-being? Who should make decisions regarding risk-taking and personal habits, the Government or the individual?
During the Clinton health care debate, tobacco, and nearly every other industry took the easy way out. They conceded that it was Government’s responsibility, Federal and State, to provide medical care for everyone, as if it were in itself a constitutional right.
When the free market works, medical insurance premiums adjust to reflect the cost of habits like smoking, sky diving, overweight, and medical preconditions. When Government pays, the concept of insurance goes out the window and everybody gets everything paid for and no one can be discriminated against.
Persons who have harmed their health by smoking have learned they can coerce those with good health into paying for the consequence of their bad habit. In fact, many who harm themselves through their chosen lifestyles, not just a single bad habit, religiously believe they have a right to be taken care of by someone else. This group of individuals, not only those who smoke, but those who drink too much or perform sexual acts which increase their chance of acquiring AIDS or hepatitis, or who will not diet to take care of diabetes or heart conditions.
It is this abdication of personal responsibility, this misconceived notion that the State is responsible for us, that drives counterintelligent drug laws, which inspires the use of dirty needles, which serves to further spread AIDS and hepatitis. And instead of legalizing the right to buy a clean needle for a few pennies, the bureaucrats insist on making it the Government’s responsibility to coerce nondrug users into paying for free needles so the addicts can keep using their illegal drugs. Nothing could be more bizarre.
This lack of understanding responsibility, rights and subsidies has led the tobacco industry leaders to further compound the problem by not fighting the trumped up obligation to pay for any health care that may have arisen from smoking.
Not once have we heard a tobacco industry leader defend his right to sell something that is risky to someone but not others, which is the case with tobacco and most other products.
- Tobacco industry leaders are under attack by nearly everyone. A tobacco-friendly tax provision that was hidden in the settlement was quickly removed by the Senate and House once the public became aware of it. But without a direct tax benefit or higher cigarette prices, or both, there’s no way the industry can afford the astronomical $368.5 billion settlement they have agreed to pay over the next 25 years–the industry makes only $8.4 billion annual pretax profit.
- The tobacco companies deserve every bit of grief they are receiving–but for reasons other than commonly assumed. It’s true they profit from selling a dangerous product. But so do automobile, airplane, and gun manufacturers, as well as food producers, drug companies, and coffee farmers. When you boil it down, any produce used incorrectly or excessively is dangerous. Even oxygen used incorrectly can be dangerous. And most people know tobacco is dangerous without the benefit of the nanny-state inspectors and the bureaucrats’ warning label.
- Tobacco company executives symbolize much of what is wrong with corporate America and our corrupt system of special interests, favoritism, and interventionism, For decades, big tobacco lobbied for, and gladly accepted, subsidies and trade benefits while anyone with a grain of common sense knew smoking was a bad habit that adversely affected some people’s health. It was no secret that young people could easily become addicted to nicotine.
- There were specific gains to be realized from the charade that surrounded tobacco sales. Pretending that smoking was a benign habit made it easier to collect benefits from nonsmoking taxpayers. And the alternative–arguing for personal responsibility–was hardly in vogue.
- Over the past 50-plus years, responsibility for risk has incrementally been shifted from the individual to the State. As we moved further from a free society toward a managed welfare state, responsibility for nearly everything began to be systematically delivered to somebody else through the State and its growing army of bureaucrats. The tobacco industry was a willing accomplice to this betrayal of individual responsibility.
- The failure of big tobacco to fight Government’s requirement to place warning labels on cigarettes, Government intervention into distribution, while accepting agricultural subsidies, Government involvement in production, allowed the entire smoking industry, from production to distribution, to be invaded by the Federal Government.
- Tobacco put out the welcome mat for big government. Now, it’s only a matter of time before nicotine will be declared a drug and more FDA regulations will inundate us. Unfortunately this will only compound our many problems with nicotine.
- Smoking should be treated no differently than compulsive eating, chocolate addiction, or driving too fast. But the way the tobacco corporate leaders are acting in cahoots with big government, you would think they are conspiring to prevent this.
- The question is: Who has responsibility for our well-being? Who should make decisions regarding risk taking and personal habits–the government or the individual?
- During the Clinton health-care debate, tobacco and nearly every other industry took the easy way out. They conceded that it was the Government’s responsibility–Federal and state–to provide medical care for everyone as if it were, in itself, a constitutional right.
- When the free market works, medical insurance premiums adjust to reflect the costs of habits like smoking, sky diving, overweight, and medical preconditions. When Government pays, the concept of insurance goes out the window, everybody gets everything paid for, and no one can be discriminated against.
- Persons who have harmed their heath by smoking have learned they can coerce those with good health into paying for the consequences of their bad habit. In fact, many who harm themselves through their chosen lifestyles, not just a single bad habit, religiously believe they have a right to be taken care of by someone else. This group includes not only those who smoke, but those who drink too much, or perform sexual acts which increase their chances of acquiring AIDS or hepatitis, or those who won’t diet to take care of their diabetes or heart conditions.
- It’s this abdication of personal responsibility–this misconceived notion that the State is responsible for us–that drives counter-intelligent drug laws, which inspires the use of dirty needles, which serves to further spread AIDS and hepatitis. And instead of legalizing the right to buy a clean needle for a few pennies, the bureaucrats insist on making it Government’s responsibility to coerce nondrug users into paying for free needles so the addicts can keep using their illegal drugs. Nothing could be more bizarre.
- This lack of understanding responsibility, rights, and subsidies has led tobacco industry leaders to further compound the problem by not fighting the trumped-up obligation to pay for any health care that may have arisen from smoking.
- Not once have we heard a tobacco industry leader defend his right to sell something that is risky to some but not others–which is the case with tobacco and most other products. One pack of cigarettes a year never hurt anyone. Everyone who smokes doesn’t become addicted. Ninety percent of smokers never get a smoking-related illness. Absent fraud, the user is responsible for the risk he assumes, not the seller of any given product.
- It has been suggested by some that smoking cigarettes provides certain immunity from some diseases. I personally cannot stand smoking, and even as a child I knew it was dangerous. It was a time when parents had a lot more to do with assuming the responsibility for teaching children about all dangers–like fire, chemicals, heights, crossing highways, sharp objects, guns, and smoking.
- We still don’t hear a principled challenge to the demands of the various states to be reimbursed by the tobacco industry for the costs of smoking-related illnesses. States should not be in the medical business in the first place, let alone be extorting funds from the producers of tobacco products.
- Yes, the business leaders in the tobacco industry deserve sharp criticism. Once this precedent of paying medical bills is set, the manufacturers of automobiles will then be liable for all accidents even if the drivers are speeding and intoxicated. Chocolate addicts can then sue Hershey, fat people can sue cattle ranchers. The whole notion that tobacco companies should pay for tobacco-related illnesses is absurd.
- The tobacco deal does great harm, because it further undermines the principle of self-responsibility. The spread of this concept will not only push up the costs of medical treatment and the products involved, it could actually encourage the use of dangerous products. The response of potential users will be, ‘If I’m unfortunate and become ill or injured, the seller or the Government will be made to take care of me’–a very common reaction in a welfare state. To the extent one can lower the cost of one’s own risky habit by socializing it, one is less likely to worry about consequences and more likely to engage in that dangerous behavior.
- If this attitude toward consumer risk is not changed, the free society that we once had cannot be restored.
- I’d like to see a spokesman for tobacco come forward and insist on recognition of the moral principle that individuals have responsibility for themselves and a duty to make choices and assume the consequences of the risks they take. My advice to him would be to give up the subsidies, demand freedom, and fight the social misfits who argue for collective guilt and collective responsibility. Any other course of action will lead to more evils.
(Bulleted paragraphs were entered into record but not spoken because of time constraints.)
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October 19th, 1997
WASHINGTON, DC – As the days count down to the end of this legislative year, Representative Ron Paul (R-Surfside, Texas), said he is hopeful Congress will “do the right thing” and take a step toward restoring the right of parents to control the education their child receives.
“I am in no way optimistic that Congress will suddenly come to its senses, follow the Constitution, and abolish the Department of Education and end the federal government’s stranglehold on American academics,” said Paul. “But there is a chance, even if just a slight one, that Congress will at least step in the right direction and pass legislation to give all parents a tool to better provide for their child’s educational needs.”
Paul has been leading the charge for the Parents and Students Savings Account Plus (PASS A+) Act. Recently, he organized nine of his colleagues in writing a joint letter of support for the measure to all the members of Congress. The congressmen joining him included: Frank Riggs of California, Charlie Norwood of Georgia, David McIntosh of Indiana, Bob Schaffer of Colorado, Peter Hoekstra of Michigan, Cass Ballenger of North Carolina, John E. Peterson of Pennsylvania, Mark Souder of Indiana, and Lindsey Graham of South Carolina.
PASS A+ is a measure which was originally brought forward by Senator Paul Coverdell of Georgia during the budget agreements talks, and Representative Paul was very supportive of the measure. Coverdell’s measure was stripped from the budget package at the last minute over concerns that the president would veto the package.
PASS A+ was introduced by Rep. Paul and Speaker of the House Newt Gingrich to do the same thing as the Coverdell Amendment. It will allow parents to contribute up to $2,000 per year into Education Savings Accounts, with no interest being levied on the interest accrued on the account. From that fund, parents can pay for education-related expenses such as tuition, tutoring, home computers, and books, whether their child is in a public, private or home school setting.
In addition, Paul is the author and lead sponsor of HR1816, the Family Education Freedom Act, which allows parents to take up to $3,000 per year per child in tax credits to pay for education and educational expenses.
“The federal government needs to get out of the way and let parents of all backgrounds be able to afford to provide the absolute best education possible for their children,” said Paul. “Federal involvement in education is unconstitutional and is destroying our nation’s academic prowess. The time has come for parents to be in charge of their children’s education, not bureaucrats in Washington, DC.”
Congress is slated to end legislative business for the year in early November. If PASS A+ does not pass by then, the House and Senate will have to take up the measure in 1998.
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October 8th, 1997
Mr. PAUL . Mr. Speaker, frequently I am asked, when I am in my district, if Congress is making any progress in solving the problems that this country faces. I wish I could be more optimistic in my answer, yet I am optimistic about the people in the district and the people in the country, because I think they are beginning to see the problems correctly and they are beginning to sense that we should be doing more to solve the problems.
Truthfully, I cannot give them an optimistic answer about the progress we are making here within the House of Representatives and in the Senate. For instance, yesterday we had a piece of legislation come up rather quickly. It was the FDA legislation. There was no announcement the day before. There was no announcement last week. It came up suddenly, under suspension, with only minutes to prepare.
Actually, I came to the floor hoping that I could at least make a statement, asking for 1 minute, but because it was managed by both majority and minority that supported the bill, there just happened not to be any time available to discuss anything in the FDA legislation.
This legislation involved 177 pages. It was not available to me on the Internet. It is a complex piece of legislation, and something that I think is a very important piece of legislation. I had received numerous pieces of correspondence critical of this legislation and urging caution on its passage. The bill was rushed through rather quickly. There was no vote taken on this and, actually, not one single thing said in a negative manner about this particular legislation.
The pretense of the legislation is to speed up the process, to get drugs approved more quickly, to avoid the bureaucracy of the Food and Drug Administration and, quite frankly, there probably is plenty of bureaucracy over there that slows up the process. But if they are not doing a good job, why would speeding up the process necessarily be helpful?
If they speeded up the process to get drugs out, like Dexfenfluramine, which is a drug now known to cause heart valve disease, I cannot see the purpose of trying to speed up a process that guarantees very little to the consumer. Quite frankly, the Good Housekeeping seal of approval that the FDA puts on it I question. I favor the original Good Housekeeping seal of approval, something done more privately.
But the serious parts of this legislation, which I believe will come back to haunt many in this Congress, and I am predicting they will hear from the constituents and from many groups interested in this issue, in the first way the bill itself internationalized regulations for the first time. The regulations are to conform with all other nations when possible. I do not see this as a positive step in any way.
Unfortunately, it diminishes the State’s role in regulation and in food labeling and it allows more Federal regulation rather than less. This, to me, is not going in the right direction. We talk a lot about reducing the Federal control, but here is a piece of legislation that comes up rather quickly, no debate, no chance to really debate the issue at all and, at the same time, it enhances and empowers the Federal Government over the States and, at the same time, it introduces this notion that some of these regulations may well become internationalized.
In another area that I think we have done a poor job has to do with the budget. If the American people would go by what is said from here, so much optimism, that we are on the verge of having surpluses and we are running around arguing about how to spend the surpluses, I have to take a different side to that argument. I do not see the surpluses.
For instance, this past year they say the national debt is down to $30 billion, approximately. Well, $30 billion to a lot of people is still a significant amount of money. So a $30 billion deficit should not be ignored and, quite frankly, I think it is lower than was anticipated more by accident than by what we have done, especially if we look at the budget resolution, which actually introduced more welfare programs, not less. So the fact that we have a smaller deficit is not too reassuring to me.
If we look at the increase in the national debt, it suggests another story. The national debt has actually gone up nearly $200 billion in this past year. The national debt went from $5.22 trillion to $5.41 trillion. So why the discrepancy? Why is the deficit so small and yet the national debt is increasing rapidly? There is a very specific reason for this. More money is being borrowed from the trust funds, such as Social Security. That is not the solution. That is a problem.
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October 7th, 1997
Mr. PAUL. Mr. Speaker, today, out of nowhere, comes the stealth Prescription Drug User Fee Re-authorization and Drug Regulatory Modernization Act of 1997. Regrettably, but unlike certain militarily procured aircraft, a little rain will not make this bill disintegrate.
According to its proponents, this FDA-strengthening bill was more than 3 years in the making–a so-called compromise between industry and the administration, we are told. Yet, despite the 177 pages attempting to reform an administrative agency and its rulemaking direction, the leadership did not see fit to announce floor consideration of this bill in the Weekly Whip Notice, yesterday’s Shipping Post’s ‘Tuesday’s Forecast’ section or any other commonly accepted medium as near as I can discern. More curiously, in my attempts to draw some attention to the broadsweeping nature of the bill on the House floor and the process by which it had come up for consideration, I am told by the bill’s proponents that ‘there is no time available to speak regarding the bill.’ Instead, C-SPAN viewers will be treated to a love-in during which each of the bill’s drafters and advocates commend one another for the fine job of corporatism and internationalism they are about to bestow upon the American citizenry and in such a critical aspect of their lives; that is, their health.
When a 177-page bill comes to the floor under suspension with practically nothing more than an hours notice, one must always question what freedom-depriving regulation is about to be forced upon the citizens. Below is a sneak preview of the latest regulatory loss of individual liberty and State sovereignty.
So-called harmonization language contained in the bill requires the Secretary, through bilateral and multilateral agreements, to ‘harmonize regulation * * * and seek appropriate reciprocal arrangements’ with foreign regulatory agencies. Vocal opponents of this harmonization language convincingly argue this internationalizing of what is already an unconstitutional usurpation of States rights, is very likely to greatly limit the availability of food supplements by requiring prescriptions for dispensation as is the case in certain parts of Europe. Perhaps with such harmonization, we will not only have a Federal war on drugs, but a Federal war on riboflavin, folic acid, and bee pollen. At last, an American alfalfa czar.
Food supplement availability may be the least of concerns amongst those who still revere states’ rights and acknowledge the continued existence of the tenth amendment. Section 28 of H.R. 1411, as available on the Internet, entitled ‘National Uniformity,’ ‘prohibits states and subdivisions from regulating food, drugs, or cosmetics * * *’ The bill permits the FDA to set national standards for cosmetics but permits States to issue warning labels and take defective products off the shelves.
To the dismay of medical privacy advocates, the bill authorizes the FDA to mandate the tracking of medical patients who use certain medical devices for up to 36 months as well as conduct post-market surveillance of these patients.
The bill limits the speech of manufacturers who would claim health benefits on their product labels without the approval of a scientific agency of the Federal Government. The bill responsibly makes provisions for such Scientific Advisory Panels in section 6. According to the bill, these panels are to be made up of ‘persons who are qualified by training and experience * * * and who, to the extent feasible, possess skill in the use of, or experience in, the development, manufacture, or utilization of * * * drugs or biological products.’ Here we have yet another chapter in the book of corporatism detailing the means by which one politically connected private concern gains a competitive advantage or Government privilege at the expense of some less-politically-connected entity or the consumer via some Federal Government, regulatory framework.
A bill effecting a major reformation of the Food and Drug Administration with such serious implications for individual liberties and for States’ ability to effectuate their constitutionally-ordained police powers, warrants something more than the ‘stealth’ procedure by which this regulatory ‘bomb’ has been brought to the house floor. This bill apparently will be passed without a real opportunity for responsible debate or even a recorded vote. At a minimum, an opportunity to speak or inquire regarding the bill’s provisions on the house floor and/or the opportunity to amend the bill to improve or remove offensive language, should have been provided within the legislative process. Unfortunately, this was not the case. For these reasons, I oppose H.R. 1411.
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October 6th, 1997
Mr. PAUL. Mr. Speaker, H.R. 1370, reauthorizing the Export-Import Bank, should be rejected for several reasons. The claim to constitutionality is dubious. The Bank rewards special interest groups with political favors. Reallocating money from the job-producing, productive sectors of the economy to the less efficient sectors distorts credit allocation. Reauthorization of the Bank is both bad economics and bad politics.
Article I section 8 of the U.S. Constitution enumerates areas over which Congress has authority. The ninth and tenth amendments further reinforce that powers not vested in the U.S. Congress are reserved to the States or to the people. The fifth amendment of the Constitution forbids the taking from the people in order to subsidize the business of the politically well-connected. It is not through free trade that the Government subsidizes the politically well-connected. Rather, it is through such organizations as the Eximbank.
The justification of H.R. 1370 under the general welfare clause of the Constitution stretches the imagination of the intent of the Founding Fathers. Nowhere in the authors’ dreams could the general welfare clause be used to tax all American individuals in order to give corporate welfare to a few, specific, large political donors. The supporters of the bill have not satisfactorily explained how the authorization of the Eximbank could be justified as regulating commerce. To construe Congress’ power to coin money so broadly as to include the Federal regulation of the provision of credit by creating and perpetuating the Eximbank threatens the intrinsic value of American money itself. As former Federal Reserve Chairman Paul Volcker pointed out, ‘The truly unique power of a central bank, after all, is the power to create money, and ultimately the power to create is the power to destroy.’ Even if Congress has the constitutional authority to destroy money incident to its enumerated authority to coin, this is not to say it should do so through the reauthorization of the credit-misallocating Eximbank.
The U.S. Government takes money from its citizens through taxes to subsidize other nations’ purchases. Very often, our Government subsidizes the purchases by foreign governments, such as the People’s Republic of China or other brutal regimes, whose practices many Americans find objectionable. In fact, according to the Export-Import Bank’s 1996 Annual Report, the People’s Republic of China was the second largest recipient country of U.S. Eximbank loans or loan guarantees; American taxpayers subsidized $4.1 billion of mainland China’s purchases. It is one thing to permit voluntary exchanges between citizens of different countries but quite another to coerce the American taxpayer to subsidize the purchases of a country whose practices offend many. Such practices can best be explained by considering the way in which the Eximbank operates.
Maria L. Haley, one of the five Bank directors, is a long-time friend of Bill from Arkansas who ran then-Gov. Clinton’s program to attract foreign investment in the state. She advocated approval of loans to Pauline Kanchanalak (a Thai native living in Virginia) to set up Blockbuster video stores in Bangkok, Thailand. The Eximbank has never approved financing for franchise rights; retail stores abroad do not create U.S. jobs. Ms. Kanchanalak contributed $85,000 on June 18, 1996, the same day DNC fundraiser John Huang arranged for her to be invited to a White House coffee. Mr. Huang called her that day and twice more in August. The DNC eventually returned $250,000 of Ms. Kanchanalak’s donations because of questionable foreign origin. It is clear that the Bank sometimes acts as a slush fund to repay political favors–it is, however, not their money to lend. It is the taxpayers’ money.
The act of the government taking from its people to return only part of it–and that part with strings attached–is another sign of the so-called Nanny State. The strings are meant to induce the welfare or subsidy recipients to act in a manner that another group of individuals, through the coercive power of the State, subjectively consider desirable. A ‘Bully State’ might be a better characterization of such a government. The Frank amendment rightfully acknowledges this fact and attempts to maintain some form of equality of discrimination.
The section added by Rep. Bernard Sanders makes an effort to address the charge that the Bank uses taxpayer dollars from both individuals and job-producing small businesses to fund large corporations that export American jobs or downsize their workforce here. If money is to be taken from the paychecks of our citizens, then it should at least be spent on companies showing a commitment to reinvestment and job creation in the United States.
That the Eximbank works at cross-purposes with our stated foreign policy objectives is clear. The bank supports state-owned and military-controlled companies in foreign nations at the same time that our foreign policy calls for the privatization of the same companies and limitations on the activities of many foreign military companies. Amendments correcting these problems should be favorably considered by the House.
The supporters of the Export-Import Bank will point to the few examples of claimed jobs created through subsidized exports of the beneficiaries of their programs. They will be conspicuously silent on the greater number of jobs lost or forgone, dispersed throughout the country, due to the increased tax burden levied on the productive companies to support the less efficient companies living on government subsidies. The few beneficiaries of government largesse are easier to identify than the no less real, but harder to identify, losers of the government’s misguided policies.
The funding for the Export-Import Bank affords politicians the opportunity to pay back their contributors with other people’s money. By voting for reauthorization of the Bank, those individual politicians that depend on the political support of the few large companies subsidized at taxpayer expense can return the favor. This Congress should put a stop to this special interest favoritism. The Congressional Research Service, in a recent report, noted that the Bank’s ‘subsidized export financing raises financing costs for all borrowers by drawing on financial resources that otherwise would be available for other uses.’
Small businesses that are the engine of export growth and job creation in this country subsidize the larger corporations that are shedding jobs in America. This misallocation of credit occurs because the larger corporations have the resources to lobby politicians in order to seek special favors that are out of reach of the smaller businesses. These lobbyists will claim that these special interest subsidies are important to the country. Yet with over $600 million funding for the Bank, only $20 billion of our total U.S. exports of $700 billion are subsidized.
Arguments that we must reauthorize the Bank because it creates jobs, generates economic growth, and counterbalances the subsidies of our major trading partners is not supported by objective economic data:
| Country |
Percent of country’s exports subsidized [1] |
Percent rate of real GDP growth [2] |
|
Percent rate of unemployment [2] |
| Japan |
32 |
0.7 |
3.1 |
| France |
18 |
2.2 |
11.6 |
| Canada |
7 |
2.2 |
9.5 |
| Germany |
5 |
2.1 |
9.4 |
| Italy |
4 |
3.0 |
12 |
| U.K. |
3 |
2.4 |
8.2 |
| U.S.A. |
2 |
2.0 |
5.6 |
[Footnote] 1 Export-Import Bank, 1995 figures.
[Footnote] 2 Bureau of Economic and Business Affairs, 1995 figures.
It would be difficult for anyone but the most committed statists to argue that the dirigiste wonders of government bureaucrats could be demonstrated by macroeconomic statistics. However, if there is a broad relationship, it is directly inverse to the relationship the central planners envision.
In 1995, according to Export-Import Bank data, Japan subsidized 32 percent of its exports and France subsidized 18 percent while the United States only aided 2 percent of total exports. However in the same year, according to figures from the Bureau of Economic and Business Affairs, Japan’s real growth in Gross Domestic Product registered a paltry 0.7 percent against a solid 2.0 percent here in the U.S., and France had an unemployment rate of 11.6 percent, more than double the American rate of only 5.6 percent. Perhaps, following the logic of the Bank’s supporters, we should increase the portion of our subsidized exports to nine times the current level (with the accompanying tax increases) to double our unemployment rate, and, if that isn’t desirable, we could double that rate of subsidy (again with the increased tax burden) to cut our economic growth rate to one-third its current level. We should not jump off the bridge of special interest corporativism just because our competitors do.
‘Corporate welfare does not work anywhere in the world. It does not work because it penalizes a country’s winners with excess taxes in order to fund that country’s losers with inefficiently run government programs,’ testified Dr. T.J. Rodgers, President and C.E.O. of Cypress Semiconductor Corporation, before Congress in 1995. ‘They’ve got subsidies; we need subsidies,’ is exactly wrong. America will be much more competitive on a relative basis if we allow the nations with whom we compete to squander their taxpayer’s money, while we encourage our companies to win without subsidies. It’s like the Olympics: there comes the day when an athlete must walk alone into the arena of competition. The government cannot lift the weights and run the miles that are required to be a champion–only an individual can.’
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