May 20th, 2004
Washington, DC: Congressman Ron Paul today voted to maintain the $1,000 child tax credit permanently, joining more than 270 of his congressional colleagues in making sure that families with children do not suffer a tax increase. Because of procedural rules in the 2002 tax cut passed by Congress, the child credit otherwise would have decreased to $700 per child next year before being completely eliminated in 2010.
The legislation passed today will prevent an average tax hike of $610 on 30 million taxpayers with 49 million children. Middle- and low-income families are protected from tax hikes by the House bill. Under current law, the child credit is refundable up to 10 percent of earned income in excess of $10,750. The plan raises the 10 percent rate to 15 percent this year - a year earlier than scheduled under current law. Military families also will benefit, as they will now be allowed to include combat pay when calculating the refundable child credit.
The overwhelming majority of families who benefit from the child tax credit are not wealthy by any stretch. Nearly 80% earn less than $75,000, even though most are dual-income couples working full time.
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May 19th, 2004
<br />
Reject the Millennium Challenge Act<br />
Mr. Chairman, though the ill-conceived Millennium Challenge Act has already become law and therefore we are only talking about its implementation today, it is nevertheless important to again address some very fundamental problems with this new foreign aid program.
I believe that the Millennium Challenge Account (MCA) may be one of the worst foreign policy blunders yet - and among the most costly. It is advertised as a whole new kind of foreign aid - apparently an honest admission that the old system of foreign aid does not work. But rather than get rid of the old, bad system of foreign aid in favor of this “new and improved” system, we are keeping both systems and thereby doubling our foreign aid. I guess it is easy to be generous with other people’s money. In reality, this “new and improved” method of sending US taxpayer dollars overseas will likely work no better than the old system, and may in fact do more damage to the countries that it purports to help.
The MCA budget request for fiscal year 2005 is $2.5 billion. We have been told that somewhere between 12 and 16 countries have met the following criteria for inclusion in the program: “ruling justly, investing in people, and pursuing sound economic policies.”
It is a good idea to pay close attention to these criteria, as they tell the real tale of this new program. First, what does “investing in people” mean? It is probably safe to assume that “investing in people” does not mean keeping taxes low and government interference to a minimum so that individuals can create wealth through private economic activity. So, in short, this program will reward socialist-style governance.
In fact, this program will do much more harm than good.
MCA will hurt recipient country economies. Sending US aid money into countries that are pursuing sound economic policies will not help these economies. On the contrary, an external infusion of money to governments meeting the economic criteria will actually obscure areas where an economy is inefficient and unproductive. This assistance will slow down necessary reform by providing a hidden subsidy to unproductive sectors of the economy. We thus do no favors for the recipient country in the long term with this harmful approach.
MCA is a waste of taxpayer money. Countries that pursue sound economic policies will find that international financial markets provide many times the investment capital necessary for economic growth. MCA funds will not even be a drop in the bucket compared to what private capital can bring to bear in an economy with promise and potential. And this capital will be invested according to sound investment strategies - designed to make a profit - rather than allocated according to the whim of government bureaucrats.
MCA is corporate welfare for politically-connected US firms. These companies will directly benefit from this purported aid to foreign countries, as the money collected from US taxpayers can under the program be transferred directly to US companies to complete programs in the recipient countries. As bad as it is for US tax dollars to be sent overseas to help poor countries, what is worse is for it to be sent abroad to help rich and politically-connected US and multi-national companies.
MCA encourages socialism and statism. Because it is entirely geared toward foreign governments, it will force economically devastating “public-private partnerships” in developing nations: if the private sector is to see any of the money it will have to be in partnership with government. There should be no doubt that these foreign governments will place additional requirements on the private firms in order to qualify for funding. Who knows how much of this money will be wasted on those companies with the best political connections to the foreign governments in power. The MCA invites political corruption by creating a slush fund at the control of foreign governments.
MCA encourages a socialist approach to health care in recipient countries. In rewarding a top-down government-controlled approach to health care, the program ignores the fact that this model has failed miserably wherever it has been applied. Ask anyone in the former communist countries how they liked their government healthcare system.
Finally, MCA is another tool to meddle in the internal affairs of sovereign nations. Already we see that one of the countries slated to receive funds is the Republic of Georgia, where former cronies of dictator Eduard Shevardnadze staged a coup against him last year and have since then conducted massive purges of the media and state institutions, have jailed thousands in phony “anti-corruption” campaigns, and have even adopted their own political party flag as the new flag of the country. The current government in Georgia does not deserve a dime of aid from the United States.
Though the Millennium Challenge Account is advertised as a brand new approach to foreign aid - foreign aid that really works - it is in fact expensive and counter-productive, and will be very unlikely to affect real change in the countries it purports to help. The wisest approach to international economic development is for the United States to lead by example, to re-embrace the kind of economic policies that led us to become wealthy in the first place. This means less government, less taxation, no foreign meddling. Demonstrating the effectiveness of limited government in creating wealth would be the greatest gift we could send overseas.
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May 6th, 2004
<br />
Statement on the Abuse of Prisoners in Iraq<br />
Mr. PAUL: Mr. Speaker, I rise in opposition to this resolution as written. Like so many resolutions we have seen here on the Iraq war, this one is not at all what it purports to be. Were this really a resolution condemning abuse of prisoners and other detainees, I doubt anyone here would oppose it. Clearly the abuse and humiliation of those in custody is deplorable, and the pictures we have all seen over the past week are truly horrific.
But why are we condemning a small group of low-level servicemembers when we do not yet know the full story? Why are we rushing to insert ourselves into an ongoing investigation, pretending that we already know the conclusions when we have yet to even ask all the questions? As revolting as the pictures we have seen are, they are all we have to go by, and we are reacting to these pictures alone. We do not and cannot know the full story at this point, yet we jump to condemn those who have not even yet had the benefit of a trial. We appear to be operating on the principle of guilty until proven innocent. It seems convenient and perhaps politically expedient to blame a small group of “bad apples” for what may well turn out to be something completely different - as the continuously widening investigation increasingly suggests.
Some of the soldiers in the photographs claim that their superior officers and the civilian contractors in charge of the interrogations forced them to pose this way. We cannot say with certainty what took place in Iraq’s prisons based on a few photographs. We have heard that some of those soldiers put in charge of prisons in Iraq were woefully unprepared for the task at hand. We have heard that they were thrown into a terribly confusing, stressful, and dangerous situation with little training and little understanding of the rules and responsibilities. What additional stresses and psychological pressures were applied by those in charge of interrogations? We don’t know. Does this excuse what appears to be reprehensible behavior? Not in the slightest, but it does suggest that we need to get all the facts before we draw conclusions. It is more than a little disturbing that this resolution does not even mention the scores of civilian contractors operating in these prisons at whom numerous fingers are being pointed as instigators of these activities. While these individuals seem to operate with impunity, this legislation before us all but convicts without trial those lowest in the chain of command.
But this resolution is only partly about the alleged abuses of detainees in Iraq. Though this is the pretext for the legislation, this resolution is really just an enthusiastic endorsement of our nation-building activities in Iraq. This resolution “expresses the continuing solidarity and support of the House of Representatives…with the Iraqi people in building a viable Iraqi government and a secure nation.” Also this resolution praises the “mission to rebuild and rehabilitate a proud nation after liberating it…” At least the resolution is honest in admitting that our current presence in Iraq is nothing more than a nation-building exercise.
Further, this resolution explicitly endorses what is clearly a failed policy in Iraq. I wonder whether anyone remembers that we did not go to war against Iraq to build a better nation there, or to bring about “improvements in… water, sewage, power, infrastructure, transportation, telecommunications, and food security…” as this resolution touts. Nor did those who urged this war claim at the time that the goals were to “significantly improv[e]…food availability, health service, and educational opportunities” in Iraq, as this legislation also references. No, the war was essential, they claimed, to stop a nation poised to use weapons of mass destruction to inflict unspeakable harm against the United States. Now historical revisionists are pointing out how wonderful our nation-building is going in Iraq, as if that justifies the loss of countless American and Iraqi civilian lives.
This resolution decries the fact that the administration had not informed Congress of these abuses and that the administration has not kept Congress in the information loop. Yet, Congress made it clear to the administration from the very beginning that Congress wanted no responsibility for the war in Iraq. If Congress wanted to be kept in the loop it should have vigorously exercised its responsibilities from the very beginning. This means, first and foremost, that Congress should have voted on a declaration of war as required in the Constitution. Congress, after abrogating this responsibility in October 2002, now is complaining that it is in the dark. Indeed, who is to say that the legal ambiguity created by the Congressional refusal to declare war may not have contributed to the notion that detainees need not be treated in accordance with the Geneva Convention, that governs the treatment of prisoners during a time of war? Until Congress takes up its constitutional responsibilities, complaints that the administration is not sufficiently forthcoming with information ring hollow.
This resolution calls on the administration to keep Congress better informed. But Congress has the power - and the obligation - to keep itself better informed! If Congress is truly interested in being informed, it should hold hearings - exercising its subpoena power if necessary. Depending on the administration to fulfill what is our own constitutional responsibility is once again passing the buck. Isn’t this what has gotten us into this trouble in the first place?
I urge my colleagues to oppose this resolution.
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May 6th, 2004
<br />
Don’t Start a War with Iran!<br />
Mr. Speaker, I rise in strong opposition to this ill-conceived and ill-timed legislation. Let’s not fool ourselves: this concurrent resolution leads us down the road to war against Iran. It creates a precedent for future escalation, as did similar legislation endorsing “regime change” in Iraq back in 1998.
I find it incomprehensible that as the failure of our Iraq policy becomes more evident - even to its most determined advocates -we here are approving the same kind of policy toward Iran. With Iraq becoming more of a problem daily, the solution as envisioned by this legislation is to look for yet another fight. And we should not fool ourselves: this legislation sets the stage for direct conflict with Iran. The resolution “calls upon all State Parties to the Treaty on the Non-Proliferation of Nuclear Weapons (NPT), including the United States, to use all appropriate means to deter, dissuade, and prevent Iran from acquiring nuclear weapons…” Note the phrase “…use all appropriate means….”
Additionally, this legislation calls for yet more and stricter sanctions on Iran, including a demand that other countries also impose sanctions on Iran. As we know, sanctions are unmistakably a move toward war, particularly when, as in this legislation, a demand is made that the other nations of the world similarly isolate and blockade the country. Those who wish for a regime change in Iran should especially reject sanctions - just look at how our Cuba policy has allowed Fidel Castro to maintain his hold on power for decades. Sanctions do not hurt political leaders, as we know most recently from our sanctions against Iraq, but rather sow misery among the poorest and most vulnerable segments of society. Dictators do not go hungry when sanctions are imposed.
It is somewhat ironic that we are again meddling in Iranian affairs. Students of history will recall that the US government’s ill-advised coup against Iranian leader Mohammed Mossadegh in 1953 and its subsequent installation of the Shah as the supreme ruler led to intense hatred of the United States and eventually to the radical Islamic revolution of 1979. One can only wonder what our relations would be with Iran if not for the decades of meddling in that country’s internal affairs. We likely would not be considering resolutions such as this. Yet the solution to all the difficulties created by our meddling foreign policy always seems to always be yet more meddling. Will Congress ever learn?
I urge my colleagues to reject this move toward war with Iran, to reject the failed policies of regime-change and nation-building, and to return to the wise and consistent policy of non-interventionism in the affairs of other sovereign nations.
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May 5th, 2004
Washington: Although Federal Reserve officials today announced the short-term federal funds rate will remain unchanged, their report makes it clear that the “policy accommodation” of promoting economic growth through exceedingly low interest rates is coming to an end. In other words, the Fed has signaled that it can and will increase interest rates in the near future. The current funds rate of 1%- the lowest in 45 years- results from years of aggressive Fed rate cutting. The incredible increase in American housing prices over the last ten years is directly attributable to this Fed easy credit policy, yet few Americans understand that housing prices are artificially high- and destined to fall significantly when interest rates rise.
During recent testimony by Mr. Greenspan before the Joint Economic committee, Congressman Ron Paul pressed the Chairman to acknowledge the potential severity of a collapse in housing prices. “I think the Fed is mistaking debt with collateral,” Paul stated at the hearing, referring to recent Greenspan statements touting home equity loans as the engine driving economic growth. “New debt is not wealth,” Paul added. Still, Chairman Greenspan continued to insist that Americans are richer because of paper increases in the value of their homes. Yet the very Fed policy responsible for higher demand and higher housing prices- cheap credit- is about to change.
“Federal Reserve manipulation of interest rates and the money supply has created a perilous situation for millions of Americans,” Paul stated. “Rising interest rates may well cause housing prices to fall dramatically, leaving many homeowners who bought at the height of the bubble owing more than their homes are worth. Homeowners with adjustable-rate mortgages are especially vulnerable, as are those who used paper gains in real estate values as collateral for second, third, and even fourth mortgages. The Fed’s easy-credit policies are directly responsible for lowering creditworthiness standards and encouraging millions of Americans to overextend themselves. If trillions of dollars in housing equity disappear, no amount of Fed sorcery will keep record amounts of Americans out of bankruptcy.”
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