I read an interesting article today in The Hill newspaper. It turns out that the U.S. Government has lost $86.5 billion of the money they put towards last October's Wall Street bailout in the stock market.

To give you some background on this, last fall in exchange for a sizable cash injection to struggling financial companies, the government received preferred stock from companies that received funding as part of the Capital Purchase Program. The rationale was that as a company began to turn around their financial situation as a result of the funding, their stock price would increase and the government would reap the benefits. However, according to a report conducted by the nonpartisan research think thank Ethisphere, a different picture is taking shape.

"The worst performer for the government was U.S. Bancorp; the U.S. lost $3.7 billion in the preferred stock that company gave it in exchange for an injection of $6.6 billion through the Capital Purchase Program (CPP). That’s a loss of 56.1 percent, according to Ethisphere.

"On a relative basis, the government’s preferred stock in Huntington Bancshares lost 81.5 percent, or $1.1 billion. Stock in Webster Financial Corp. has lost 76.1 percent."

And, The Hill notes that these calculations only run through February 13th.  “Since then, the government has probably done a bit worse, as the Dow Jones Industrial fell 297 points on Tuesday….”

If Congress is going to play the Market with your money, I thought you should know how your portfolio is doing.

This might come as a surprise to you, but the United States is near the top of the list of industrialized countries with the highest corporate tax rates.

You may be asking yourself "so what," or "who cares," but it's important to recognize that lower corporate tax rates result in attracting more investment capital. A reduction of the federal corporate tax rate would increase firms' productivity and investment incentives, and ultimately stimulate our nation's long-term competitiveness by enhancing economic freedom.  The end result would be a boon to your family budget.

The trend for countries around the world is to slash corporate tax rates to spur economic growth, yet Washington has yet to come to grips with this financial reality. 

Currently, America's combined corporate tax rate sits at 40%, and it has been there since 1994. Last year alone, 23 counties slashed their corporate rates, including Canada, China, Columbia, the Czech Republic, Denmark, Germany, Hong Kong, Israel, Italy, Malaysia, New Zealand, Singapore, South Africa, Spain, Switzerland, and the United Kingdom.

According to a new study release by the accounting firm KPMG:
 
“U.S. corporate income tax rate is higher than all other global regions—14 percentage points higher than the global average and nearly 17 percentage points higher than the average among European Union nations. Of the 106 countries surveyed, only the United Arab Emirates, Kuwait, and Japan impose a higher corporate tax rate than the combined rate of 40 percent. The United Arab Emirates and Kuwait each have a staggering tax rate of 55 percent; Japan’s rate is 40.69 percent.”

The Heritage foundation reports that:

"Even Europe's old welfare states have joined the aggressive tax cut parade: Sweden has cut its corporate tax rate to 28 percent from 60 percent; Norway's rate has dropped over 50 percent to 28 percent; and Denmark's corporate tax rate is now 25 percent."

In fact, Sweden is considering reducing it further to 26.3 % from the 28% it is at now.

If our competitors around the world are making their country a friendlier place to do business while America’s corporate rates remain high, it doesn't take an economist to realize that our global competitiveness will be left in the dust.

For more information about the study, check out the non-partisan Tax Foundation's most recent newsletter (Pg. 5).

If we want to create jobs and stimulate the economy, one of the best ways we can do that is by cutting the corporate tax rate, not by spending hundreds of billions to stimulate government and creating more and more debt for our children.

As Congress readies itself to spend $300 million on golf carts as part of their multi-hundred-billion-dollar stimulus proposal, the non-partisan Congressional Budget Office (CBO) has provided  some very alarming numbers - and Congress should take heed.

According to the CBO, in 2009 and 2010, 98% of the tax cuts in the Democrats' economic "stimulus" package will go into effect, providing for 1.4% growth in our nation's Gross Domestic Product in that time. However, the other 2% of the stimulus tax cuts will go into the economy between 2011 and 2019 - along with about half the spending in the package. The problem with this equation is that the $1.1-trillion price tag (which includes the interest on the total package), our increasing debt and our crowding out of private sector activity will drive down our Gross Domestic Product to .2% less than it is today, prior to the stimulus.

So what you want to take away from these numbers is this:

Believe it or not, Congressional Democrats proposed a radical revision of health care policy as part of their economic "stimulus" bill.  “Comparative effectiveness," as it is called, not only lays the groundwork for a full-fledged government take-over of Americans’ health care system, but seriously limits the choices for patients and doctors in pursuing treatment. 

What it does is put in place a National Coordinator of Health Information Technology that will “monitor treatments to make sure your doctor is doing what the federal government deems appropriate and cost effective.” Your medical treatments will be tracked electronically by the government to decide whether you're "too sick" to receive health care treatment. They will decide for you what scope of treatments should be made available to deal with your current ailment.

If this wasn't bad enough, the Democrats would like to sneak this past the American people by tucking it into this massively bloated multi-hundred-billion dollar spending package that they are framing as a measure to create jobs and help our struggling economy.

Like you, I have no idea how this health care proposal even begins to create jobs or help Americans financially.  But, it’s a far-too-common practice in Washington to sneak things into bills marked “CRISIS:  MUST PASS NOW” rather than go through public debate and open consideration.

The Democrat-majority is attempting to take advantage of our struggling economic situation to put in place liberal policies that have nothing to do with economic recovery. Don't be fooled.

Betsy McCaughey, a former lieutenant governor of New York and an adjunct senior fellow at the Hudson Institute wrote a great piece that sums up the dangers of these health care provisions.  Read it here on Bloomberg.com.

If you thought that the $827 billion "stimulus" package being hashed out this week in Congress was bad enough, you're going to be really upset to find out that if this package is signed into law -- you the taxpayer-- will be on the hook for $9.7 trillion dollars in total funds to carry out all the economic bailout/stimulus/relief plans of the past year.

According to the Bloomberg report:

"The $9.7 trillion in pledges would be enough to send a $1,430 check to every man, woman and child alive in the world. It’s 13 times what the U.S. has spent so far on wars in Iraq and Afghanistan, according to Congressional Budget Office data, and is almost enough to pay off every home mortgage loan in the U.S., calculated at $10.5 trillion by the Federal Reserve."

Just like you, I'm getting pretty tired of these rushed multi-hundred-billion-dollar snap reactions. Months ago, we were told by then-President Bush and the Democrat-majority in Congress that we needed to act NOW to save our struggling financial markets. Without my support, we rushed through a $700-billion bailout bill (TARP) that was supposed to unfreeze the stagnant credit market. Guess what? It didn't work. And now, here we are again about to flush more money -- money we don't have -- down the drain in a sloppy and irresponsible spending spree that will leave the prosperity of our nation in great jeopardy.  And, President Obama is insisting that we push this bill through by Monday, February 16th.

I understand that Americans are hurting, and I want to help them; but there are wiser ways to go about this.  Congress should be working smarter, not faster.  And, Congress should focus on passing legislation that will allow our private sector to do what it does best – create jobs and prosperity.

But sadly, we're on the verge of placing free-market capitalism, the proven mechanism responsible for America's resounding wealth and prosperity throughout our nation’s existence, on the scrap heap of history.

Remember, it's going to be your children and grandchildren who will be paying the bill for our irresponsible spending spree.

A month into the 111th Congress, we've seen no signs of the “change” and “reform” to Washington promised by the Democrats last fall. Starting with a restrictive rules package meant to silence the House minority, the heavy-handed partisan talk continues.  For instance, President Obama made some strong remarks last night while before the House Democrats at their retreat in Williamsburg, VA.

According to Washington's DC Examiner newspaper:

"President Obama used some of his toughest partisan rhetoric yet... Accusing Republicans of engaging in 'phony arguments and petty politics,' Obama escalated the tone of his pushback against Republican complaints about the size and direction of the stimulus package."

Yahoo news reported today that:

"Obama... dismissed Republican attacks against the massive spending in the stimulus.

“‘What do you think a stimulus is?' Obama asked incredulously. 'It’s spending — that's the whole point! Seriously.'”

Maybe the Republicans’ problem is that this is simply a really bad piece of legislation.

Perhaps the spending that the President calls "essential" and "stimulating" is simply spending for the sake of spending.  Perhaps this bill pays little more than lip service to funding for transportation and infrastructure projects that will really put people to work. Maybe the bill is simply too bloated with pork barrel projects that will do nothing to put our economy on the track to greater prosperity.

The tone from the other side of the aisle is akin to:  There's a crisis facing our nation; something big needs to be done to fix it and this is THE solution. If you disagree or have a different solution, you are wrong and don't really care about fixing the problem and helping our nation.

Check out this link to see a list of examples of the wasteful spending provisions contained in this "stimulus" bill. While some of these projects may be worthy and deserve attention, they should be addressed separately and not lumped into a package that is strictly supposed to help the economy and put people to work.

The Hill newspaper's Congress Blog posed a question to Capitol Hill's influential lawmakers, pundits and interest group leaders in their weekly "Big Question" feature:

"Given Democrats’ grip on power, is there any need for them to seek Republican votes in favor of the stimulus?"

Here's what I had to say:

"On paper, no, but there’s much more to the responsibility of governance than merely having the votes to pass what you want. The success of this “stimulus” package will ultimately depend on how it’s viewed by the American people. And, until the recklessly irresponsible spending provisions in this package that will do NOTHING to create jobs and give an immediate jolt to our economy are removed, the Democrats will have a hard time calling this a success, regardless of how many votes they have."

Read the full post here.

Prior to the vote last week on the House Democrats’ 800-billion-dollar-plus spending package, I joined several of my House Republican colleagues in sending a letter to Speaker Nancy Pelosi about the ludicrous amounts spent on programs that have no impact on the immediate recovery of our economy.  For instance, the bill includes $15 billion for existing housing programs, the majority of which already have large unspent balances sitting in their accounts. 

Specifically, we expressed our concern that this bill opens the door for groups like ACORN to have access to billions more in taxpayer dollars. Between 1994 and 2008, ACORN has received at least $53 million in direct federal funding.  And, it receives millions more in federal funds indirectly through states and cities.

Last year, Congress included in the Housing and Economic Recovery Act of 2008 provisions that barred ACORN from receiving federal financial assistance under the Neighborhood Stabilization Program.  The provision barred funding for groups indicted for federal election fraud or hiring individuals indicted for such. 

Yet, under this new so-called “stimulus” bill, it is unclear whether the same restrictions apply. This is a serious omission that needs to be addressed.

As flawed as the American Recovery and Reinvestment Act of 2009 is in making reforms that will benefit our economy, these egregious omissions and gestures to political friends and allies is simply irresponsible and wrong.

To read the letter, check out the "Letters" section on my website under Financial Services.

Today, Congressmen Dave Camp (R-MI) and Eric Cantor (R-VA) will be offering a Republican substitute to the Democrats' trillion-dollar spending bill. So you're not confused, this substitute is different from the RSC's Economic Recovery bill I've talked about in recent posts, but still very effective in reducing tax rates for all Americans and stimulating the economy.  It's certainly a better cure for what ails us than the Democrats big spending package.

Below are a few of the highlights of the Camp/Cantor substitute, and how it will impact Minnesotans and families across America .

The legislation will reduce the lowest individual tax rates from 15% to 10% and from 10% to 5%.

As a result, every taxpaying-family in America will see an immediate increase in their income with an average benefit of $500 in tax relief from the drop in the 10% bracket and $1,200 for the drop in the 15% bracket. A married couple filing jointly could save up to $3,200 a year in taxes.

And according to research done by The Heritage Foundation, 272,306 filers in Minnesota’s 6th District will benefit from the reduction in the 10% bracket and 228,926 filers will benefit from the reduction in the 15% and the 10% brackets.

The legislation allows small business to take a tax deduction equal to 20% of their income.

In fact, small businesses (those employing less than 500 individuals) employ about half of all Americans, yet they can be subject to tax rates that siphon away one-third or more of their income. This legislation will immediately free up funds for small businesses to retain and hire new employees.

In Minnesota, there are 498,606 small businesses with 500 or fewer employees and according to the Small Business Administration Office of Advocacy, they represent 98.0% of the state’s employers while having created 78.4% of the state’s net new jobs from 2004 to 2005. It's vital that we lower the tax burden on these small businesses.

The legislation also includes a home-buyers credit of $7,500 for those buyers who can make a minimum down-payment of 5%.

This credit will go a long way in giving potential buyers the incentive they need to purchase homes now to help turn around our stagnant real estate market.

For more information about the plan, check out the website for the Office of the Republican Whip.

Today, the House is set to vote on the Democrat's $825-billion dollar "stimulus" package that according to them is primed to immediately jump start the economy. But as we know, there are serious doubts from respected economists about the bill's ability to resuscitate our stagnant economy.

Republicans at the House Ways and Means Committee have done some great work breaking down 1) the percentage of tax cuts and government spending that reaches the economy under the Democrat “stimulus” bill, and 2) the difference in tax relief that American families, workers and businesses would receive from the Democrat and the Republican plans comparatively.

Here's a link to their research that lays out their case perfectly with graphs to match.

I'll close the post with the Committee's "Bottom Line" from their research:

Last Friday, the House Ways and Means Committee concluded their markup of H.R. 598, the American Economic Recovery and Reinvestment Plan. Here's what Majority Leader Steny Hoyer had to say about it:

"This week, the Appropriations, Ways and Means, and Energy and Commerce Committees held markups on the American Recovery and Reinvestment Act to include important feedback from Members to improve the package."

If you were to take his words at face value, you'd think that the resulting bill is a remarkable example of bipartisanship and mutual give and take between the parties. However, the facts tell a different story.

Only 1 of 18 Republican Amendments that were offered as part of the stimulus package were accepted by the majority. What happened to the rest? REJECTED… WITH ONLY ONE DEMOCRAT supporting ONLY ONE of the remaining 17 measures.

This blatant lack of bipartisanship combined with new restrictive rules put in place by the Democrat majority to silence the Republicans is why my office is launching a new blog called the Majority Tracker. With the Democrats in control of Washington, it’s vital that the Republican minority not only present its own alternatives, but that Americans know what those alternatives are. The goal of the blog is to serve as a one-stop-shop for bloggers, reporters, and constituents to get the whole story of what’s taking place in the U.S. House of Representatives.

For more information on the 18 Republican amendments to the Democrats' stimulus package and for detailed accounts of what's happened in the House since the start of the 111th Congress, check out the Majority Tracker.

All we hear from the Obama Administration and Democrats in Congress is the need for a multi-hundred-billion dollar economic stimulus plan to turn around our economy. According to them, the longer we wait, the more we'll inevitably have to spend to turn the economy around. What's most troubling about the Obama plan is that some of the very people who work for him don't even think it will work.

In fact, while under the leadership of the man that Obama just hired to be his Budget Director – the Congressional Budget Office (CBO) said Obama's stimulus plan won't work. In fact, the CBO concluded that there are serious doubts that the bulk of the spending would have any immediate effect on our economy.

According to a recent Bloomberg.com article:

"A Congressional Budget Office analysis of President Barack Obama ’s plan found that most of the approximately $355 billion in proposed discretionary spending on highways, renewable energy and other initiatives wouldn’t be spent before 2011. The government would spend about $26 billion of the money this year and $110 billion more next year, the report said. About $103 billion would be spent in 2011, while $53 billion would be spent in 2012 and $63 billion between 2013 and 2019."

The report indicates that the CBO expects a "slow" recovery to begin later this year and that the economy will expand by a "modest" 1.5 percent in 2010, so much of the stimulus may not come until after the economy has already begun to recover. If the CBO is correct, this gigantic stimulus package doesn't do much at all to stimulate the economy in the short-term despite what the Democrats say. It's simply a mechanism to implement an enormous expansion of government growth and influence.  Instead of stimulating the economy to recover, this nearly $1-trillion spending bill will follow the early steps of economic recovery and add to an already large debt we’re placing on generations of taxpayers.

For a real alternative to help the sagging economy, check out The Economic Recovery and Middle-Class Tax Relief Act of 2009.

The best way to stimulate the economy and create jobs is to cut wasteful spending, reduce the tax burden on small businesses and families, and keep money in the private sector. Let’s make sure it stays that way.

Yesterday, we learned that the Senate approved the use of the second half of $700-billion financial service sector bailout funds.  They did so on the assumption that the Obama administration will know how to use these funds better than Bush Administration has.  There's even been a lot of talk around Washington that President-elect Obama's Treasury Secretary nominee, Timothy Geithner, is the only one who could figure this out. He apparently has had problems remember to pay his taxes, but the Senate appears ready to believe that he has the right stuff to get the financial service sector back in gear.

Let's hope all this trust is well-placed.  But given the mismanagement of the first half of funds and the lack of any evidence that releasing the second tranche is an appropriate step for stabilizing our financial markets and getting the markets moving again, I'm not overly optimistic.

While the Senate can release the funds without House approval, the House is currently in the process of putting in place certain new requirements and regulations regarding the application and monitoring of the new funds. As part of that process, I introduced yesterday an amendment to H.R. 384, the TARP Reform and Accountability Act.  My amendment would keep in place taxpayer protections passed as part of the HOPE for Homeowners program, which was meant to address the foreclosure problem even before the TARP was enacted.

When Congress passed the HOPE for Homeowners program last year, I was concerned that the taxpayer protections were weak, at best.  But, at least there was something there to protect the taxpayers who were footing the $300 billion bill.  But, now, Congress is considering H.R. 384, which would strip those provisions entirely in order to spur more participation in the program.  At this time, only 13 families have been helped.

The taxpayer protection provisions include requiring program participants to pay premiums that are used to sustain the program. H.R. 384 completely eliminates the upfront premiums and gives the FHA the authority to waive annual premiums as it sees fit. This taxpayer protection has been regularly touted by supporters of HOPE for Homeowners as a critical taxpayer safeguard.

Another important taxpayer protection stripped by H.R. 384, but secured by my amendment would ensure that taxpayers receive a home equity appreciation share as payment for their investment through HOPE for Homeowners. If homeowners who receive assistance through the program benefit from rising home values, they shouldn't be able to make a profit without paying back the taxpayers who lent them a helping hand to keep their homes in the first place.

Not surprisingly, the amendment was defeated on a nearly party-line vote. I guess it's just another example of the Democrats' “commitment to protect middle-class taxpayers."

Any minute now, the House will be voting on H.R. 2, the Children's Health Insurance Reauthorization Act of 2009. While I support the goals of the State Children’s Health Insurance Program (SCHIP), the bill on the floor reauthorizes it in a grossly irresponsible manner. At a time when the American people need responsible government more than ever, I can not in good conscience support this bill’s passage.

SCHIP was intended to ensure that children who have no means to obtain health care can gain access to it. The program was intended to cover those kids first and foremost. H.R. 2 makes no such provisions.

According to the non-partisan CBO, this bill will entice roughly 2.4 million people to drop their private insurance coverage in lieu of the taxpayer funded program. This is a serious problem, as SCHIP funds will be diverted from those low-income families who need it the most and will have the effect of making private insurance even more unaffordable.
 
Even worse, the sustainability of the bill depends on a very shaky revenue source. In fact, it’s a source that Congress is doing its best to get rid of all together – cigarettes. The bill is paid for primarily through a $0.61 increase in the federal tobacco excise tax, from $0.39 to $1.00.  With less people smoking as a result of high taxes and health ramifications, how does the government plan to sustain funding for the program? Only Congress could produce such a flawed line of reasoning.
 
What we have in front of us today is a bill that was given very little opportunity for debate with absolutely no opportunity for amendment. If nothing else, it's another fine example of the Democrats' abysmal view of bipartisanship and reaching across the aisle.

Democrat leadership in Congress and President-Elect Barack Obama have made it perfectly clear that they are dead set on renewing the Death Tax rather than letting it expire in 2010.

An editorial in today's Wall Street Journal does a nice job detailing the ins-and-outs of the death tax and it's impact on the struggling middle-class businesses that Obama and the Democrats say they want to protect.

Democrats want to make the current death tax rate of 45% permanent, and while the Democrats like to portray the tax as targeted to those super-wealthy folks like Bill Gates and Warren Buffett, that is simply not the case. According the WSJ piece:

"The death tax strikes most heavily at small- and medium-sized family-owned businesses that generate the majority of new American jobs. So hitting these family businesses with a multimillion dollar tax bill when the owner dies won't help job creation."

I am an original cosponsor of H.R. 205, the Death Tax Repeal Act, just reintroduced in the House. Don't let the them fool you with their messaging -- this tax isn't about the wealthy. It impacts family farms and businesses -- the lifeline of Main Street that is vital to a healthy economy. With the economy in such a fragile state, renewing this tax will continue to hamper the economic prospects of our nation. Let's let the death tax die, once and for all.