The Corner

McCain Addresses Fiscal Responsibility

Sen. John McCain and conservatives have had their differences over the years, no question. However, conservatives have always appreciated McCain’s steadfast commitment to fiscal responsibility in Washington. Given the current government’s unprecedented profligacy, this would appear to be a great moment for McCain. His lengthy address at the conservative Heritage Foundation did not disappoint in this regard. For fiscal hawks, McCain’s speech amounted to meat so red it was still mooing.

And, interestingly, McCain deviated from his prepared remarks to make this observation criticizing the Obama administration’s approach to global warming and highlight an important development that hasn’t gotten much media attention:

I recently read where the administration was considering declaring greenhouse gases a health risk. Just two weeks ago the EPA delivered findings to the White House that global warming threatens both “public health and welfare.” If this [position is adopted], none of us should be surprised to see changes in environmental law used as an open door to universal health care.

McCain also took some questions afterward. Here he weighed in on AIG — David Weigel has already discussed his response here. After the jump, I’ve included a few more highlights from the speech — starting with McCain on the “stimulus package”:

Regrettably, the so called “bipartisan stimulus compromise” is further evidence that neither Congress nor the administration are focused intently, as the American people demand us to be, on the immediate threats to our prosperity, but, to a great extent, are exploiting the crisis to advance narrower interests and policy initiatives that are best left for debate in better economic times. Let me be very clear – that measure was not bipartisan, contained too little that was stimulative in the near term if ever, and was hardly a compromise worthy of the name. The $1.2 trillion in new spending was simply a last-ditch effort to cobble together enough votes to pass a bad bill, much of which will not induce real and sustained economic growth. 

 

As both a policy and political matter, it is vitally important that Republicans refrain from becoming or appearing to become the party that just says “no.” During the debate on the stimulus bill, Democrats charged that those of us who opposed the measure saw no need for any stimulus at all. Nothing could be further from the truth. We understand fully the economic situation we are in, and we offered an alternative proposal to get our economy moving again while contributing less to our spiraling deficits and our ultimately growth choking debt. It was supported by every Republican member of the Senate – so don’t tell me we didn’t support a stimulus.

Our plan included smart, fiscally responsible spending; provisions to stabilize the housing market; cuts in individual and corporate tax rates, and established long-term mechanisms to control future spending and balance our budget. The total cost of the Republican alternative proposal was less than half than that of the total cost of the so-called “compromise” measure that was enacted, and I would argue it was substantially more responsive to our current situation than the measure the president signed into law to great fanfare.

 

Our proposal would have helped fix the housing crisis, invested in our nation’s infrastructure through effective and restrained spending, put money immediately back into the hands of all Americans through a payroll-tax holiday, and allowed businesses to keep more of their profits to hire new employees, invest in capital, and expand their businesses.

 

Perhaps most importantly, our alternative provided a mechanism to stop the spending once our economy turned around, returning unobligated funding to the Treasury after two consecutive quarters of economic growth greater than 2 percent of inflation adjusted GDP.

On TARP:

I want also briefly to address the Troubled Asset Relief Plan (TARP). In January, I supported a resolution to oppose releasing the remaining TARP funds because I had seen no evidence that the additional and substantial expenditure of taxpayers’ money would be used for its intended purpose. TARP was created to allow the Treasury Department to purchase up to $700 billion in “toxic assets” from financial institutions to help homeowners avoid foreclosure and to stimulate the economy. The misuse of the first $350 billion of TARP funds combined with the lack of transparency promised by former Secretary Paulson were reason enough to oppose releasing additional funds. It was my firm belief that no further TARP funds should have been released until we were able to impose strict standards of accountability and ensure the money was being spent only as intended by Congress – to purchase mortgage-backed securities and other troubled assets.

 

During the debate in January, in an open letter to members of Congress, 26 public interest organizations wrote that “The stated purpose of the TARP was to purchase toxic mortgage assets. The TARP was also designed to reignite the flow of credit into the market and help stabilize Wall Street. To date, neither has been accomplished.” The letter also stated that the Treasury Department “has invaded the free market, propping up some companies to the detriment of others and purchasing stock in banks without requiring accountability or transparency about the use of taxpayer funds.”

 

Less than two weeks after enactment of the program, Secretary Paulson decided to use TARP funds to recapitalize banks — a decision that was made with little or no input from Congress, and was an option that was explicitly rejected by Paulson and Chairman Bernanke when they were selling the TARP plan to Congress.

 

With no regard for Congressional intent, the Treasury Department used TARP funds to prop up the banking industry and to guarantee securities backed by student loans and credit card debt. But most troubling to me was the use of TARP funds to help bail out the domestic auto industry — in direct defiance of Congress. In December, after extensive discussion and debate, the Senate rejected a plan to pump billions of federal dollars into the domestic auto industry because we saw no evidence of serious concessions from the industry and no assurance of the domestic auto manufacturers’ long-term viability.

 

Rather than being granted an unconditional handout from the taxpayer, auto industry leaders should have been required to consider how they can restructure their business models in order to fix the problem themselves and build more competitive products — including changes in management, renegotiating labor agreements, and reorganizing under the bankruptcy process, steps they should have taken years ago. Unfortunately, that concern was ignored by former president Bush when he decided to give away over $17 billion in TARP funds to the domestic automakers with no assurances they would fundamentally change the way they do business to improve their viability. I continue to believe this was a critical mistake.

On earmarks:

I am aware that earmarks consume a very small percentage of a budget measured in the trillions. But given the seriousness of our current situation and the problems confronting American families, who wake up every morning wondering if they will lose their job or their house or if they will be able to afford their children’s education, it is deeply, deeply offensive that Congress will not stir itself to relinquish any of its self-serving prerogatives in solidarity with the people we serve, who have had to tighten their own budgets, change their spending habits, and temporarily, at least, restrain their ambitions. It’s all the more offensive given that we have had in recent times all the evidence we should require to understand that earmarks are, perhaps, the most common means by which members of Congress betray themselves and the country with acts of official corruption.

 

The $410 billion omnibus appropriations bill contained approximately 9,000 earmarks. While change has been promised, it has not been delivered by either the Congress or the president. According to Citizens Against Government Waste, in 1991 there were 546 earmarks totaling $3.1 billion. In 2008 there were 11,610 earmarks totaling $17.2 billion — an increase of 337 percent in seventeen years!  The numbers for FY 09 are shaping up to be just as bad, with this year’s total earmark tally nearing 12,000.  

 

Thirteen earmarks from the omnibus spending bill, totaling nearly $9.4 million, were directed to clients of the PMA Group, a lobbying firm recently forced to close their doors after being raided last November by the FBI for suspicious campaign donation practices. That firm remains under investigation today.

 

Last month, Senator Feingold, and I, along with Senators McCaskill, Burr, Lieberman, Graham, Coburn, and Corker, offered an amendment to curtail the earmarking practice once and for all. We didn’t have the votes, but I was pleased that 35 senators are now on record supporting serious reforms. Our goal is to curtail the practice, not merely to help publicize who is bringing home the bacon, which is really all that the 2007 Lobbying and Ethics Reform Act did with respect to earmarks.

 

If Congress refuses to reform itself, which, sadly, is usually a reliable presumption, the next best thing is to provide the president with line-item veto authority. Recently, Senator Feingold and I, along with Congressman Paul Ryan, introduced legislation to grant the president specific authority to rescind or cancel congressional earmarks, including earmarked spending, tax breaks, and tariff benefits. Granting the president the authority to propose rescissions which then must be approved by the Congress could go a long way toward restoring credibility to a system that encourages waste, special interest pork, and outright corruption.

On Sarah Palin:

God bless them — Over 50 million people voted for me and Sarah Palin — mostly for Sarah Palin [LAUGHTER] … but there was a sizable majority of the other party returned to Congress. And, elections have consequences. Elections have consequences. And these consequences we are seeing now in full display.

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