(Editor’s note: Below are the edited remarks of Mackinac Center President Joseph G. Lehman’s introduction and Congressman Dave Camp’s comments during a Club Mid event at the Mackinac Center on Jan. 26, 2012.)
Good afternoon, ladies and gentlemen. Welcome to the Mackinac Center. I’m Joe Lehman, president of the Mackinac Center. It’s really great to have a full house, but it is not a surprise. It’s a great time to be a Mackinac Center supporter and it’s a great time to be putting the right ideas in front of elected officials in Lansing and Washington. Here in Michigan we’ve just had the best year for reform since Gov. Engler’s first term. Gov. Snyder and the Legislature, some of whom are with us today, have really wrapped up an impressive list of accomplishments: a truly balanced budget; a significant business tax cut; massive expansion of charter schools; elimination of a vast array of corporate welfare programs and sensible new rules that make it harder for labor unions to drive our state, our schools and our municipalities into bankruptcy.
Michigan House Speaker Jase Bolger and some of his colleagues told me that they would be here today so please stay for the reception after Dave’s talk and tell them what you think of their accomplishments last year.
Now, you have played a key role in all those accomplishments that I’ve just listed because of your support of the Mackinac Center. The Mackinac Center doesn’t lobby. The Mackinac Center doesn’t vote in the Legislature, but we do help create the intellectual climate that makes it easier for lawmakers to put free-market policies into place. Gov. Snyder met with our Board recently and said that he refers often to the Mackinac Center’s list of our favorite ideas —101 ideas that we think would be a good start — and he checked off a few of those this past year. The governor said that he reads our online news service every day, Michigan Capital Confidential. More than 5,600 supporters last year donated more than $5 million to the Mackinac Center. Those are new records for us. Thank you for your part in that. We’re focusing every dime of it on making Michigan freer and more prosperous.
But Washington has been a different story than Lansing. Congressman Camp and his colleagues have their hands full trying to repeal Obamacare, trying to keep the government from impoverishing us and our children and our grandchildren and so forth, trying to prevent bureaucrats from micromanaging our lives. Dave speaks often in the district, but I think this is the first time he’s addressed an audience exclusively of Mackinac Center supporters. Dave’s roots are in Midland. He first went to Congress in 1990, and he’s risen steadily in responsibility since then. He’s now the chairman of the House Ways and Means Committee, which writes the federal tax laws. Ways and Means —I just learned this recently —Ways and Means is the very first committee Congress established back in 1789, which tells you something that you need to know about the Congress.
Dave was a member of the so-called Super Committee that made daily headlines for a big chunk of last year, and today Dave will tell us a little about what he knows of Republican reformers and Democratic presidents. I hope we hear a few things about the Super Committee that didn’t make the news media, so welcome to the Mackinac Center.
Thanks a lot, Joe, and thanks for the great work the Mackinac Center does. I can tell you I often take your publications on airplanes, where you can’t always turn on your electronics, and read those and you really do cover the waterfront of issues and it really is helpful to have those. I know you do a lot of good work behind the scenes, not just publications, but your website and all kinds of issue advancement, so thanks for all that you do and to all the help that you give us.
There’s obviously a lot going on. The president is giving his fourth State of the Union Address and tonight you’re going to have Republican candidates debating [in Florida] just before the primary, which is this coming Tuesday. That will really help determine who’s going to challenge President Barak Obama this fall. As you look at all the news and watch all the photo activity just remember, it’s only January. We’ve got a long way to go.
A lot of people ask me, “What’s going to happen this year? What do you think that Congress will be able to accomplish?” I think in order to look ahead you really have to understand what’s happened and what we’ve endured because we’ve been here before. They say the past is prologue.
In January of 1996, Bill Clinton was president, facing re-election. Newt Gingrich was Speaker of the House and Newt had just complained about a seating chart on Air Force One and the federal government had shut down twice as a result of an impasse between the president and Congress. So the partisanship was pretty well underway and the political rhetoric in the campaign season was pretty well underway then, too. Just eight months later, having vetoed twice legislation, Bill Clinton signed into law welfare reform and that was crafted by the Republicans in Congress, which I played a key role in drafting and getting signed into law. That was the most successful piece of social policy in the last 20 years. So just think of these two data points. Since passing the law, despite the recession — and the last data we have is 2010, that’s the last year available — welfare caseloads dropped 57 percent nationwide, from 1996 to 2010, even with the recession. The employment rate — particularly for single mothers because that is the most vulnerable population in a downturn — their employment since 1996 has remained higher than 1996 despite the high unemployment we’ve had, which is almost doubled what it was in 1996. So by requiring work or some sort of training or education for work, we successfully broke the cycle of dependency that was created by welfare states and we did it with a Democrat president in office and we did it in an election year.
Unfortunately, there are a lot of naysayers out there. Not all in Washington, there’s quite a few on cable, too, if you watch that. They believe that nothing’s going to happen this year, that nothing big can get done in an election year and that we’re going to have to wait. Waste a whole year. Some might think waiting is a safe bet. I think the smart move is to be prepared to embrace whatever opportunity might come along and try to compel action, just like they did in 1996.
I believe we need to do what’s right. We need to do what’s right for the economy, for this country, and I believe it’s getting a tax code that is simple to understand and fair for every working American. Tax reform done right not only helps strengthen our economy and gets Americans back to work, but it also will help reduce the national debt, which is increasingly reliant on places like China, which doesn’t have our best interest at heart. So for the last 50 years we’ve spent more than we’ve had. In the last three years the spending by the Obama administration has skyrocketed. If the president had his way and his 2012 budget were enacted, he would have increased the debt twice as much as President Bush did in only half the time.
So Washington’s debt is now greater than our entire economy, our GDP if you will. Just last week the president approached Congress with a request to raise the debt ceiling so he could spend more of your tax dollars. The solution to pay for our $15 trillion debt is not with tax hikes. It’s not with new spending, like the failed stimulus package, because Washington doesn’t have a revenue problem. They have a spending problem. You shouldn’t be asked to pay more in taxes just so Washington can continue to feed an insatiable spending appetite.
Michigan, more than any other state, with three consecutive years of double-digit unemployment, knows that in the long run a strong economy produces more jobs and more revenue. More jobs are how we’ll reduce both the deficit and regain the prosperity that all Americans deserve.
Comprehensive tax reform is the only way to create a robust economy and really solidify America’s role as the unquestionable leader. Now two years ago nobody was really talking about tax reform. Sen. Conrad and I were both on the Simpson-Bowles Commission and our job was to work on a proposal on tax reform and try to highlight that issue, and we approached it by trying to eliminate all the credits and deductions and loopholes and special favors —all these special favors that are all throughout the tax code. Now when Simpson-Bowles grabbed hold of that they added $2 trillion to the proposal we were working on so it was not something I could support, but it was something that I also made the first hearing of the Ways and Means Committee when we got the majority in 2011. We then put that in the House-passed budget and that tax reform has created 1 million jobs in the first year alone.
Then it became a focal point of the Super Committee. We spent a lot of time on tax reform in the Super Committee and now we’ve got a lot of Republican presidential candidates talking about tax reform. So momentum is building on that issue and, if we keep working on it, we can and we must get it done in the foreseeable future. I’ve said time and time again, you may have heard me say this before, that our tax code is 10 times the size of the Bible with none of the Good News. So I will continue to aggressively pursue comprehensive tax reform for both business and families. That’s what comprehensive means — both for individuals and employers. If the president does wrong and refuses to engage in this issue and refuses to join in this effort, I think that all of you should remember that inaction when November comes around. I believe any time is a good time for tax reform and I stand ready to work with the president to get it done. For the last two years I’ve been in meetings with the Secretary of the Treasury and they promised us white papers and all this background work and none of it has come forward. They’ve just hit the pause button on that.
But we do have to think of Ronald Reagan’s warning, what inaction means. His quote is, “Freedom is never more than one generation away from extinction. We didn’t pass it to our children in the blood stream. It must be fought for, protected and handed on for them to do the same or one day we will spend our sunset years telling our children and our children’s children what it was once like in the United States when men were free.”
Our economic freedoms, the free flow of capital and goods, have made this nation the envy of the world, and that very freedom is at risk from a central government that constantly seeks to pick winners and losers by handing out special rates through the tax code, or making matters worse, we once again face a massive tax increase in January of 2013. If that were to happen, federal tax revenues are projected to soar to a level that has never happened in the history of the country and that would be unsustainable. You don’t need an economics degree to know what that would mean for economic growth and for job creation if that were to happen.
If the 2001 and 2003 rates expire and if the new health care law takes full effect, the top individual rate will rise above 40 percent, capital gains taxes will surpass 25 percent and the affected rate on dividends will more than triple today’s 15 percent. The death tax next year could consume half of some estates, so there’s a lot in play at the end of this year. Tax reform is absolutely critical for those reasons.
I don’t care how much money you have or how much money you make. There should be a limit on how much is taken by the government and I don’t think the government should take as much as they would be taking if those rates expire, especially after you add in all the other taxes you pay: the gas tax, state taxes, property taxes. To say it in simple terms, I’m trying to find a way to restore some sanity and simplicity as well as fairness and flatness to the tax code that would allow families to thrive; allow small businesses to grow. Look at big businesses. They all start out as small businesses, and to allow America to remain the economic envy of every nation in the world. I’m well aware that that might cause some problems with people who have used the tax code to benefit particular industries or activities at the expense of economic efficiencies, simplicities and fairness. The tax code should collect the revenue that the government needs as efficiently as possible but it should not be a tool of industrial policy.
I recognize that progress in that direction won’t be easy. I think what people in Washington need to understand is that the American people are demanding action. I hear it wherever I go and, more important, they’re demanding results. Here are my principles of tax reform: fair, simpler and pro-growth. Some have used the term crony capitalism, and I didn’t coin that phrase, but I want to end it. Politics and politicians should not choose the industry of the day. I think that’s the job of our private economy driven by the spirit of the American people in a nimble free market. If families and employers are unimpeded by a complex, cumbersome and excessive tax code, not only will we earn their trust again but we’ll help restore the hope and promise of the American dream.
It’s a big challenge. There’s no doubt about that. It’s an election year. But as I’ve learned, big challenges can lead to big successes and a motivated Republican Congress and American electorate can compel even a Democratic President to do what’s right and I look forward to working with all of you on these efforts.