Ron and Rand Paul Introduce Audit the Fed Legislation

Originally posted at FreedomWorks.org.

With longtime Federal Reserve critic Rep. Ron Paul (R-TX) the chairman of the House Subcommittee on Domestic Monetary Policy and Sen. Rand Paul (R-KY) willing to lead the fight in the Senate, this is our best opportunity to pass a real Audit of the Fed. On Wednesday, the father and son duo introduced companion legislation, H.R. 459 and S.202, in both congressional chambers to require a full and thorough audit of the Federal Reserve. In the last congressional session, Ron Paul’s Federal Reserve Act of 2009 gained a bipartisan group of 320 cosponsors. With an increased number of freedom fighters in both chambers, it has a better chance of passing this time around.

Since its inception in 1913, the Fed has never been audited. It has always operated under a certain veil of secrecy. For decades, few people have questioned the legitimacy of the Federal Reserve. The current economic crisis has changed everything. All of the sudden, grassroots activists across the nation are demanding transparency at the Fed. Without a comprehensive audit, the American people will never know how the Fed is manipulating our money behind closed doors.

One thing is clear: nearly all of our original Founding Fathers would be appalled at the power given to the central banking system. Fierce opposition arose to the concept of the Fed’s predecessor, The Bank of The United States. In 1791, Jefferson wrote a letter to George Washington stating that the contents of the bill to incorporate the Bank of the United States “have not, in my opinion, been delegated to the United States by the Constitution.” The powers of the Federal Reserve far exceed the first Bank of the United States.

He was joined in opposition by notable Founding Fathers such as James Madison and Thomas Paine. In Common Sense, Thomas Paine writes “as to assume authority of any assembly in making paper money, or paper of any kind, a legal tender, or in other language, a compulsive payment, it is a most presumption attempt at arbitrary power. There can be no such power in a republican government: the people have no freedom—and property no security—where this practice can be acted.” If such a system runs contrary to our founding principles, it’s a shame that we have turned our backs on the actions of the Fed for so long.

It is crucial to end the secrecy of the Fed. Rep. Ron Paul says that this is a necessary step to “stopping the business cycle, ending inflation, building prosperity for all Americans, and putting an end to the corrupt collaboration between government and banks that virtually defines the operations of public policy in the post-meltdown area.”

The Fed’s loose monetary policy is largely to blame for the current economic meltdown. Inevitably, the long period of unsustainable negative real interest rates gave individuals a tempting incentive to borrow from the banking system. Unfortunately, the artificially low interest rate misled millions of people to take out loans that they could not afford to pay back once the interest rates eventually rose. Government-established central banks tampering with the market provoked an artificial boom followed by the current inescapable bust or crash. We still haven’t recovered from the recession that officially began in December 2007.

We often hear horror stories of currency collapse in foreign countries. Just a few years ago, citizens in Zimbabwe walked around with wheelbarrows full of cash. With an annual inflation rate of 89.7 sextillion percent, the wheelbarrow was worth more than their pile of practically worthless cash.  In the Weimar Republic of Germany, people used their worthless paper money as fuel to heat their homes.  We are not immune to such disaster.

Our dollar has lost 97 percent of its value since the creation of the Fed. Many of us may not often think about who controls the value of our dollar but we ought to. We have trusted the secretive Federal Reserve with a monopoly on our money. History shows us that entire civilizations have risen and fallen based on the value of their currency. With sound money crucial to our future prosperity, we must push for an audit of the Fed to expose how the Fed is manipulating our money supply behind closed doors.

 

Rent Seeking General Electric to Head Obama’s “Jobs” Council

Originally posted at FreedomWorks.org.

On Friday, President Obama signed an executive order to establish the “Council on Jobs and Competitiveness” led by General Electric’s (GE) CEO Jeffrey Immelt. President Obama and Immelt released statements claiming that the new council would “put our economy into overdrive.” To those paying attention to their relationship, it should come as no surprise that Immelt was selected as chairman. The Obama administration and GE have had a disturbingly close relationship for the past two years.

First, it’s important to distinguish the difference between free enterprise and crony capitalism. Free enterprise means that businesses must provide a product or service that consumers want in order to thrive. With no special government protections, every business must compete with each other through innovation and entrepreneurship. GE, however, has epitomized crony capitalism. Instead of earning an honest dollar in the marketplace, GE has used government largesse to advance their interests. GE has become the definition of a rent-seeking company. This economic term refers to a company that seeks to obtain benefits through the political arena.

General Electric’s lobbying efforts have paid off for them. In the 2008 elections, GE’s political action committee shelled out $1.55 million to mainly Democratic candidates. By far, then-presidential candidate Barack Obama was the largest recipient of GE’s money. How has Congress paid off General Electric for their past political contributions? During the Bush administration, GE persuaded the government to expand the Temporary Liquidity Guarantee Program so it would qualify as a recipient. As the Washington Post noted a year later, “General Electric, the world’s largest industrial company, has quietly become the biggest beneficiary of one of the government’s key rescue programs for banks.”

Furthermore, “Public records show that GE Capital, the company’s massive financing arm, has issued nearly a quarter of the $340 billion in debt backed by the program, which is known as the Temporary Liquidity Guarantee Program, or TLGP. The government’s actions have been ‘powerful and helpful’ to the company, GE chief executive Jeffrey Immelt acknowledged in December.”

The rent seeking company has become a main spokesperson for self-serving legislation such as the costly cap and trade legislation. If passed, it would add to the company’s bottom line at the expense of taxpayers and the American economy. In a leaked email, GE Vice Chairman John G. Rice wrote,

On climate change. We were able to work closely with key authors of the Waxman-Markey climate and energy bill, recently passed by the House of Representatives. If this bill is enacted into law it would benefit many GE businesses.

Listed in President Obama’s budget is a line item titled “climate revenues” totaling $646 billion over eight years. This has inspired GE to start a joint venture called Greenhouse Gas Services in order to invest and manage in trading greenhouse gases. As Washington Examiner writer Tim Carney reports,

In short, GE plans to get rich by being one of the government’s closest partners — which it has always been, thanks to its unmatched lobbying efforts… While many companies hire lobbyists to win earmarks, General Electric’s unmatched lobbying force has secured a tax increase — or its equivalent — in President Barack Obama’s budget.

It’s clear that the new council’s mission is not to boost jobs or competition. In fact, the opposite is the case. As Tom Borelli of the Free Enterprise Project said, it’s “not about jobs creation but the 2012 election. Obama needs to rally big business donors from companies such as General Electric. Obama and Immelt are mutually dependent on each other.” Rent-seeking General Electric will likely use the council to further line their pockets with taxpayer dollars and restrict their competitors. Simply, this is a prime case of special interest politics.

 

Utah Shows How to Solve the Looming Public Pension Crisis

Originally posted at FreedomWorks.org.

Public employee pensions are a ticking fiscal time bomb. Nearly every state in the nation is struggling to reform their broken pension plans. For many years, public sector unions have over promised government workers lucrative pensions that they cannot afford to pay. This has created a looming crisis for state budgets and taxpayers. It could be even worse than officials are predicting.

Official estimates claim that state and local pension plans are underfunded—or overpromised—by roughly $1 trillion. But as Cato Institute scholar Chris Edwards says “these estimates greatly understate the poor shape of pensions because they rely on optimistic assumptions to value future liabilities, a practice Warren Buffet has called ‘accounting nonsense.” A study by University of Chicago Professor Robert Novy-Marx and Northwestern University Professor Joshua Rauh has found that state and local pension funds are underfunded– or overpromised–by a whopping $3.2 trillion.

The American taxpayer could be on the hook to bailout government employee pension plans. This looming bailout needs to be paid closer attention. Last year, Senator Bob Casey (D-PA) introduced a bill costing taxpayers $165 billion to bailout troubled union pension funds. According to Washington Examiner writer Mark Hemingway,

The mother of all taxpayer bailouts is right around the corner. Union bosses want taxpayers to foot the cost for bailing out the labor organizations’ many failing pension plans that millions of their members are counting on to ‘be there’ when they retire. Unfortunately, the average union pension plan has only enough money to cover 62 percent of its financial obligations.

Why should taxpayers be forced to bailout public sector unions? Private sector workers generally receive far less benefits than government employees. We should not be on the hook to bailout severely mismanaged public sector pension plans. Many government pension plans have engaged in dubious behavior such as understating liabilities and overstating asset growth rates. Bailing out union pension plans will reward fiscal recklessness and the poor decisions that created the problem in the first place.

Fortunately, there’s some hope. In the new Congress, Rep. Chaffetz (R-UT) has reintroduced his resolution to oppose a federal bailout of public employee pension plans. Furthermore, the resolution would encourage states to adopt defined contribution plans to replace defined benefit plans. Regarding the looming fiscal crisis he stated,

Another wave of debt problems is coming our way.  State and local government employee pension funds have unfunded liabilities of more than $3 trillion, and many states will not be able to deliver on promised benefits to government employees. Many of these states will undoubtedly be coming to the federal government for bailouts.

Rep. Chaffetz has seen the success of defined contribution plans in his own state. Last March, Utah switched to these 401(k) style plans for new state and municipal workers. During the stock market crash in 2008, the state pension fund lost 22 percent of their assets. The state’s pension plans were in a terrible shape until Sen. Dan Liljenquist (R-UT 23rd District) reformed the system. Since then, the state contributes 10 percent (12 percent for public safety workers and fireworkers) of the new worker’s salary to the defined contribution plan. Workers are still free to choose a defined benefit plan if they wish. But most seem to prefer the benefits of owning their personal 401 (K) style pension plan.

The results have been astounding. Polls show that the majority of Utah voters support the pension reform. The Wall Street Journal reports,

The reform has benefits for taxpayers and public employees. Workers own their retirement account and can carry it to another job. They also benefit because politicians can no longer steal from the pension plan to pay for other government spending. As for taxpayers, the reform will eventually slash state pension liabilities in half and they no longer bear the risk of having to pay higher taxes if the stock market declines.

Over a dozen more states appear to be interested in the Sen. Liljenquist’s successful plan. Montana could be next to adopt the plan.  The defined contribution plan has been a win for taxpayers, state workers and state budgets. We need to take a lesson from Utah’s public pension reform.

 

Opposition to ObamaCare Increased in House By Nearly 16 Percent

Originally posted at FreedomWorks.org.

On Wednesday, the House passed a bill to completely repeal ObamaCare 245-189 with three Democrats—Rep. Mike Ross (AR), Dan Boren (OK) and Mike McIntyre (NC)—joining the unanimous Republican vote. This is a huge victory for freedom. The next step is to force Senate Majority Leader Harry Reid (D-NV) to vote on full ObamaCare repeal. Over at FoxNews.com, FreedomWorks Vice President of Health Care Policy Dean Clancy tells us exactly how to do that. While the fight may be far from over, we can get this unconstitutional government takeover repealed through hard work and determination. We won’t stop until the repeal bill lands on President Obama’s desk.

The level of opposition to ObamaCare continues to rise. In March 2010, 212 lawmakers – 178 Republicans and 34 Democrats—voted against enacting ObamaCare. This week, a bipartisan group of 245 lawmakers —242 Republicans and 3 Democrats—voted to repeal the health care law. This means that opposition to ObamaCare in the House increased by 15.6 percent since last March. The Wall Street Journal reflects on the numbers by saying, “the March vote, at 219-212 , was a lot closer and would have gone the other way had moderate Democrats not been bullied into supporting the legislation.”

Likewise, the majority of Americans oppose the new health care law. Rasmussen Report polls have shown that the support for repeal of ObamaCare has remained steady. Every week since the law’s passage, their polls have shown that the majority of Americans favor repeal. According to their latest weekly poll, 55 percent of likely voters favor repeal.

Democrats who voted for ObamaCare faced a tough election year. On November 2nd, the American people’s voice was heard at the ballot box. A total of 35 Democrats listed below who supported ObamaCare were defeated in 2010. Unfortunately, nine Democrats listed below who originally voted against ObamaCare decided to vote against repeal this week. The recent historical election should have been a warning sign. Their vote against repeal could potentially harm them if they decide to run again in 2012.

A day after the ObamaCare repeal vote, the House voted 253-175—with 14 Democrats joining the Republican majority— for a resolution that would task committees with developing a better health care plan. House Speaker John Boehner said that these proposed reforms would be “common-sense reforms that bring down the cost of health insurance.” We look forward to offering these lawmakers numerous proposals on free market health care plans that will improve health care quality while lowering cost.
Democrats Who Voted For Enactment in 2010 and Were Defeated at 2010 Polls: (35)

•        Ann Kirkpatrick, AZ-1

•         Harry Mitchell, AZ-5

•         John Salazar, CO-3

•         Betsy Markey, CO-4

•         Allen Boyd, FL-2

•         Alan Grayson, FL-8

•         Ron Klein, FL-22

•         Suzanne Kosmas, FL-24

•         Melissa Bean, IL-8

•         Debbie Halvorson, IL-11

•         Bill Foster, IL-14

•         Phil Hare, IL-17

•         Baron Hill, IN-9

•         Mark Schauer, MI-7

•         Jim Oberstar, MN-8

•         Dina Titus, NV-3

•         Carol Shea-Porter, NH-1

•         John Hall, NY-19

•         Scott Murphy, NY-20

•         Dan Maffei, NY-25

•         Bob Etheridge, NC-2

•         Earl Pomeroy, ND-AL

•         Steve Dreihaus, OH-1

•         Charlie Wilson, OH-6

•         Mary Jo Kilroy, OH-15

•         John Boccieri, OH-16

•         Kathy Dahlkemper, PA-3

•         Patrick Murphy, PA-8

•         Chris Carney, PA-10

•         Paul Kanjorski, PA-11

•         John Spratt, SC-5

•         Ciro Rodrigues, TX-23

•         Solomon Ortiz, TX-27

•         Tom Perriello, VA-5

Democrats Who  Voted Against Enactment in 2010 and Against Repeal in 2011: (9)

•         John Barrow, GA-12

•         Daniel Lipinski, IL-3

•         Stephen Lynch, MA-9

•         Collin Peterson, MN-7

•         Larry Kissel, NC-8

•         Heath Shuler, NC-11

•         Jason Altmire, PA-4

•         Tim Holden, PA-17

•         Jim Matheson, UT-2

United States Slips on Economic Freedom Index

Originally posted at FreedomWorks.

Back when I was young in the 1990’s, I remember people often using the phrase “it’s a free country!” But as the years passed, that line became less commonly used. In recent years, I cannot recall one person using this old expression. This seems to be a sign that a great number of Americans are realizing that their freedoms are slipping away.  So just how free is America today?

The newly released Heritage Foundation and Wall Street Journal’s Index of Economic Freedom 2010 rates countries based on ten components of economic freedom. This year, the United States slipped to the ninth freest country in the world. The researchers have included the United States in the “mostly free” category. According to the study, the United States is behind the countries of Hong Kong, Singapore, Australia, New Zealand, Switzerland, Canada, Ireland and Denmark. We’ve become less free since the 1990’s. In the first annual Index of Economic Freedom in 1995, the United States was the fourth freest country in the world.

This should be a huge warning sign. If current trends continue, the United States may not be listed in the top 10 freest countries in future years. The study assigned the United States a 77.8 out of 100 rating based on components such as property rights, business freedom, government spending, and trade freedom. The Heritage/Wall Street Journal study defines economic freedom as “the fundamental right of every human to control his or her own labor and property. In an economically free society, individuals are free to work, produce, consume, and invest in any way they please, with that freedom both protected by the state and unconstrained by the state.”

The good news is that America is relatively free compared to the rest of the world. For most Americans, it is likely virtually impossible to imagine living in the least economic free countries in the world. Based on limited available information due to government-imposed secrecy, North Korea is listed as the least free country in the 2011 Index. In the ten least free countries, the state controls and owns nearly every aspect of economic activity from trade to property. Since a lack of property rights and free trade are major explanations of poverty in the developing world, it’s no wonder that these countries are also the world’s poorest.

Freedom promotes wealth and prosperity. Peruvian economist Hernando de Soto once estimated that approximately 4 billion poor people in third world countries owned at least $9.3 trillion worth in real estate. But these assets were considered “dead assets” because citizens lacked a formal legal title to their property. As Steve Forbes remarked, “imagine what would happen to the global economy if even a fraction of that $9 trillion were liberated.”

We may be fortunate compared to the rest of the world. But we still have a lot of work to do. The Index of Economic Freedom finds that the United States’ “score is 0.2 point lower than last year, reflecting deteriorating business freedom, trade freedom, government spending, and monetary freedom.” As the study notes, the U.S. government spending spree has become unsustainable. The United States ranks 122nd out of 179 countries on government spending. Moreover, “drastic legislative changes in health care and financial regulations have retarded job creation and injected substantial uncertainty into business investment planning.”

Let’s strive to move America to number one on the Index of Economic Freedom. In just the past two years, the United States has dropped from sixth to ninth place. Congress must act to make real spending cuts. We can easily become freer by repealing recently passed bad legislation such as ObamaCare, the “stimulus” and the Dodd-Frank financial overhaul. Simultaneously, let’s work on eliminating programs shown to be inefficient.  How about privatizing Amtrak and ending rail subsidies to save taxpayers $31 billion? Eliminating energy subsidies including ethanol to save $17 billion? Or ending agricultural subsidies to save nearly $29 billion? The list goes on and on. The sooner we start making these cuts, the better for freedom.

 

Welcome 112th Congress—We Will Hold Government Accountable in 2011

Over a century ago, Judge Gideon Tucker first said “no man’s life, liberty or property is safe when the legislature is in session.” Those words still ring true today. As the 112^th Congress starts Wednesday, we should remain watchful but there is some reason for hope. Immediately after the new Congress gets sworn in, the Constitution will be read on the floor of the House for the first time in the history of America. While this is merely a symbolic gesture, it is encouraging that our Founding document will be in the spotlight where it belongs.

The real test will be whether lawmakers will legislate within the bounds of the Constitution that they will take an oath to support and defend. Fortunately, the Republican House majority is proposing a number of rules to increase transparency and rein in government spending. To help ensure that all members uphold their oath, members would be required to cite specific constitutional authority for any bill that they introduce. As a plank in the Contract FROM America, we hope that this new rule passes with wide support.

These proposed changes to the House rules are a step in the right direction to restore fiscal responsibility and limited government. If these rules are passed, every bill will be made publicly available at least three days before the House or the committee votes on it. Additionally, the rules include a “Cut-As-You-Go” provision that requires that all new spending must be offset with a reduction in spending elsewhere in the budget.

With the rise of the Tea Party movement, more Americans are holding their legislators accountable for their votes. The November election was a huge wake up call. Americans lined up at their voting booths to send their big spending representatives packing out of Washington. The Obama administration has taken notice.

We have a lot to watch out for in 2011. While we should keep a close eye on the new Congress, there is a potentially even greater threat to our liberties. The power of the executive branch is out of control. In article 1, section 7 of the Constitution, the process of creating a new law is outline, putting authority with the legislation. The omnipotent executive branch, however, has disregarded these limits by enacting thousands of new provisions without proper approval from Congress.

We must limit the excesses of executive power by giving the American people and elected officials a voice in all major regulations imposed on us. FreedomWorks continues to support Rep. Geoff Davis’s (R-KY) REINS Act which would require Congress vote on any federal regulation introduced by the executive branch that would impose at least $100 million in compliance costs. During the health care debate, lawmakers removed end-of-life counseling—or death panels— from the Obamacare legislation due to public outcry. But the death panels didn’t stay dead for long. Over the Christmas holiday, the death panels were secretly inserted into the law by faceless bureaucrats at the Health and Human Services. According to the New York Times, “Under the new policy, outlined in a Medicare regulation, the government will pay doctors who advise patients on options for end-of-life care, which may include advance directives to forgo aggressive life-sustaining treatment.”

Despite Congress’ rejection of some bad policy, the executive branch has enacted it nevertheless. While Cap and Trade remains unpopular with the American people and their legislators, the EPA has already set caps on greenhouse gas emission. According to reports, the Federal Reserve may be preparing for a back-door bailout of profligate states such as California and Illinois without Congressional approval. The IMF is likely getting ready to bailout Portugal and Spain followed by Italy and Belgium. Since American taxpayers pay the largest share of IMF dues, our tax money will be propping up poor economic policies in other countries. Moreover, the United Nations has already developed an Internet Governance Forum in hopes of regulating the Internet globally. Our Congressional representatives will have no say in the matter.

This year, let’s continue to keep close tabs on Congress. But let us also focus our efforts to exposing the excessive powers within the executive branch. Our Founding Fathers created a system of checks and balances for a reason. They wanted to prevent one branch of government from infringing on our freedom. In 2011, let’s stand up to government abuses from all divisions of government.