WASHINGTON – President Barack Obama is hell-bent on aiding and abetting an unconscionable “generational theft," U.S. Sen. John McCain warned in an address to the Heritage Foundation this week, making it clear that he thought the country would be much better off if he had been elected president.
If Congressional Budget Office-projected deficits prove close to accurate, McCain said, Americans will owe a debt by 2019 that is over 82 percent of the gross domestic product -- the highest level since 1948 and double the debt’s current share of the GDP.
“The nation would be bankrupt and our children and grandchildren would inherit for the first time in our history a land of limited opportunities. We will be committing a generational theft,” said McCain, R-Ariz.
The tipping point in his view for this seeming rush to national near-extinction: the general election of Nov. 2008.
“Elections have consequences and these consequences we are seeing now in full display,” he told a capacity crowd at the prestigious Washington-based think tank.
Critical case-in-point, said McCain, is the Obama Administration’s hugely expensive recovery program. He would have led a different and more targeted charge.
“Our plan included smart and fiscally responsible spending, provisions to stabilize the housing market, cuts in individual and corporate tax rates and the establishment of long-term mechanisms to control future spending and balance our budget,” the former Presidential candidate said.
“The total cost of the Republican alternative proposal was less than half that of the total cost of the so called compromise measure that was enacted, and I would argue that it was substantially more responsive to our current situation than the measure the President signed into law with great fanfare,” the Vietnam war hero concluded.
McCain said that he does his math differently than the present resident of the Oval Office.
“Does anyone really believe that we can expand non-defense spending to a record share of GDP, reform the healthcare system that is one-sixth of the economy, reinvent the energy portfolio that powers our lives and drive next generation broadband to every home -- while cutting taxes for 95 percent of Americans? It doesn’t add up. It won’t add up and it won’t last,” he argued.
Any notion of a lingering honeymoon period for the Obama team was officially eradicated when McCain peppered the audience with a barrage of rhetorical questions.
“Why did the stimulus bill contain hundreds of billions of dollars in spending that will not take place for three years? Why does the President’s budget envision borrowing trillions of dollars for new initiatives and education, healthcare, energy, the environment, transportation and technology -- without any, not a single spending offset or discipline?”
A revved-up McCain charged that President Obama was sticking five percent of Americans with the bill for a massive expansion of government.
“As budget policy this is risky business and bad economics and it is premised on a misguided approach to fairness that will not stand the test of time,” he said.
“Congress will undoubtedly keep the increased spending. Those are the lessons of history, but if it fails to enact higher taxes to pay for it, the deficits will remain close to a trillion dollars for the foreseeable future,” he added.
A Republican-headed administration, he advised, would have provided a mechanism to stop the spending once the economy turned around -- returning unobligated funding to the Treasury after two consecutive quarters of economic growth greater than two percent of inflation-adjusted gross domestic product.
After making the case that some fundamentally flawed policy of the new administration has put the nation on the road to perdition, McCain argued that it was never too late to pull back from the precipice.
“We have left our principles behind as we have delivered check after Treasury check, and we will not be able to continue down this road, but that is no reason to despair or abandon our efforts to write these costly mistakes.
“Rather, let us propose reason, debate, and exhaust every means to invest in the future of this country according to our faith and free people and free markets. It is faith that has produced more good for more people ever imagined in the most ambitious dreams of our Fathers. We might be standing at a moment when the great and accomplished history of the United States is about to swing on its hinge.”
“Let us not exploit this moment, this crisis for politic gain or establish a new governing convention to trust more in the wisdom and benevolence of government than the enlightened self interest of the people. Let us use it at careful and temporary stewards in the Nations wealth and do what every preceding generation has managed to do bequeath subsequent American generations a land of unlimited opportunities.”
But even stuck as he is in the Senate, McCain noted that he was at the helm of some measures that would help keep the fraying system honest.
The lawmaker addressed earmarks as perhaps the most common means by which members of Congress betray themselves and the country with “acts of official corruption.”
“Last month, Senator Feingold and I 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 and not merely to help publicize who is brining home the bacon, which is really all the 2007 lobbying and ethics and reform act did with respect to earmarks.”
Undiscouraged by the earmark setback, McCain explained that he and several Senate colleagues had decided that if Congress refused to reform itself, the next best thing is to provide the President with veto authority.
“Recently Senator Feingold and I and Congressmen Paul Ryan introduced legislation to grant the President specific authority to rescind or cancel congressional earmarks -- including earmark 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 port and out right corruption,” he said.
From Rescissions to Reconciliation
McCain said that beyond the serious ramifications of the budget numbers, the country also needed to be very concerned about the very real and critical fight over reconciliation – a device that allows for permanent and substantial changes to the laws that govern our nation by a simple majority vote.
He told the audience that the House has included so-called “reconciliation” instructions for both healthcare and education. Furthermore, the administration has been clear that it wants climate change added to their reconciliation instructions.
In other words, instructed McCain, under such instructions passage will require only 51 votes and not the normal 60- vote requirement, which makes the Senate the unique body that it is.
“I recently read where the administration is considering declaring greenhouse gases a health risk,” he recounted. “Just two weeks ago, the EPA delivered documents to the White House stating findings that the global warming threat is both public health and welfare.
“If this declaration is made, none of us should be surprised to see changes in environmental law used as an opening to define universal healthcare.
“I fully recognize that Republicans have in the past engaged in using reconciliation to further the party’s agenda,” he added. “I wish it had not been done then and I hope it will not be done now, but the ground work has been laid. I think that this would be a grave mistake. We should be working on these most pressing issues in a bipartisan thoughtful fashion and not under Speaker Pelosi’s ‘We won; we write the bill.’”
McCain spent some time highlighting some cold hard facts of the current fiscal predicament before talking about another personal design to put a lid on the dollars flying out of the Treasury and the printing presses at the U.S. Mint.
“Our current national debt is $10.7 trillion. The projected deficit for 2009 is $1.7 trillion. The total cost of the stimulus bill enacted last month is over $1.1 trillion,” McCain instructed.
“We gave the troubled assets the relief program known as ‘TARP’ $700 billion. Everyone expects that the Administration will request up to an additional $750 billion more. President Obama recently signed an Omnibus Appropriations Bill totaling $410 billion. Just last week, the Federal Reserve pumped another $1.2 trillion into our markets, and the President has submitted a budget request of $3.6 trillion. If those numbers stagger you, they stagger me.”
In January, McCain supported a resolution to oppose the releasing of the remaining TARP funds because he said he had seen no evidence that the additional and substantial expenditure of taxpayers’ money would be used for its intended purpose.
TARP, or the Troubled Assets Relief Program, 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 a lack of transparency promised by former Secretary Paulson were reason enough to oppose releasing additional funds, McCain maintained.
“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 that the money was being spent only as intended by Congress – to purchase mortgage backed securities and other troubled assets. It’s abundantly clear that there has been a stunning lack of transparency, accountability and effective management of TARP funds today,” he charged.
McCain concluded his remarks on TARP with a sharp warning:
“Should the Administration request additional TARP dollars, I will not support the release of another dime of these funds without first seeing a full and complete accounting of funds already spent or committed as well as the imposition of very strict conditions on the remaining funds as a way to ensure that any expenditures reflect the intent of Congress.”
McCain wanted to make it clear that neither he nor his party was ever just saying “no” -- with no plan of action as to the stalled economy.
“During the debate on the stimulus bill, Democrats charged that those of us that opposed the measure saw no need for any stimulus at all. Nothing could be further from the truth,” defended McCain.
For sure, he has some strong notions about what needs to be done with failing banks.
“Failed insolvent banks, zombies, can not be permitted to continue to operate using taxpayer subsidies,” he argued. “These institutions should be taken over. Their management and shareholders suffer the consequences of their failure and their assets resold to private sector entities as fast as it feasible.”
Saying that he is reserving judgment on the bank plan announced by Treasury Secretary Tim Geithner until more details roll in, McCain ventured that he had no doubt about what to do with the toxic assets and their evaluations.
“I have said before and I still believe that the least bad option, the least bad option would have been for the government to determine solvent banks from insolvent ones on the basis of the ongoing stress test, take control of insolvent banks and have a conservator sell off these assets.
“The bad banks would be dissolved and the toxic assets would be re-priced. This would include a public/private partnership to buy the assets but very different selling circumstances and I don’t know why solvent banks can’t dispose of these assets themselves,” he concluded.
If the former candidate was solid on handling banks, he also fielded some questions that showed he was confident as to how to handle other looming fiscal disasters as well – like the Big Three automakers.
Too Big to Fail
“I think one of the negative effects is the tens-of-billions that we have already poured into the automobile industry. I believe that they could have gone into a prepackaged bankruptcy, Chapter 11, and I think that they could have emerged more viable and more strengthened,” he opined.
“I noticed with some interest now the parts suppliers of the automotive industry are now seeking government bailout. Where does it stop? Who is too big to fail? Where is the small business person who is the engine of our economy? Should that person who is going out of business as we speak all over America be given some money to stay in business? What’s the fairness here?”
McCain said it was high time to simply face up to the grim -- but not hopeless -- reality.
“Old automotive jobs are not coming back, but with technology, with restructuring, with renegotiations of the labor-management contracts and going into Chapter 11, the Big Three can emerge, I believe, as vital competitors on the world stage. Right now, what I see is just a continuing infusion of taxpayers’ dollars with little or no beneficial effect.”
Avoiding the AIG Debacle
McCain’s clear intimation was that if he had been at the helm, there would have been no embarrassing display of a United States Senator going to the floor and warning the insurance giant AIG that if its selected executives don’t give back taxpayer-funded bonuses, the government was going to take them back.
“Let me tell you if we had let AIG go under, they would have had to restructure and these bonuses would not have been a problem. The problem began when we bailed out AIG…”
As it is, McCain is not just throwing up his hands.
He noted that he and a colleague had introduced legislation to establish a select committee to look at what happened.
“[Americans] know about greedy Wall Street, but they don’t know exactly how all of this transpired… I think that we need to have a select committee that will get all of these facts together and figure out what happened – one, so that the American people will have an understanding and, two, so that we can be sure that we enact the correct measures necessary to prevent it from ever occurring again.”
And speaking of preventative measures against spawning another debacle like AIG, McCain suggested that he would favor a consolidation a lot of the government’s oversight agencies.
“We got an alphabet soup of them, and we really have a merging and blurring of different aspects of our financial business in American today and so I do think that there has to be a consolidation of those,” he suggested.
“I think that we need an extensive set of hearings as to exactly what role these oversight agencies should play, what the consolidation should be…,” he concluded.
Addressing Climate Change
“First of all, I believe that climate change is real,” said McCain. “Second of all, I think that we have to act. Third of all, there is a model. It was acid rain. We developed a system as to how to address acid rain and we have largely reduced the affects of acid rain in America.
“Now, you can only take that model so far because that was certainly small in comparison to the issue of climate change. I never envisioned cap and trade to be a reason to raise revenues. I always thought that cap and trade was a way to reduce greenhouse gas emissions and if there is money associated with it that money should be earmarked to ways to reduce greenhouse gas emissions.
“Now, what the administration has done is taken this proposal of cap and trade and turned it into a source of revenue…
“If you did what the Administration proposal is, it will hurt the most vulnerable parts of America today and that’s the industrial areas of America that are already suffering…”
An Old Hand at Fixing the Economy
McCain hammered home that he is no Johnny-Come-Lately, clawing up the learning curve from ground zero. The seasoned hill warrior has seen it all before.
“When I came to the House of Representatives in 1983, inflation was in the teens. Interest rates were 21.5 percent and unemployment was in double digits -- because we had to ring out the economy because of the prolificacy of the ‘70s.
“We are about to see that movie again, and so I do not believe that raising taxes at this time on any group of Americans would do anything but harm our economy -- let me be very clear.”
Born in 1936 and with his age already an issue in 2008, it is unlikely that retired Navy Captain John McCain will ever outrank his father and grandfather – both full admirals – by ascending to the position as Commander-in-Chief, but he wants to be a force in the resurgence of his Party.
“When we Republicans came to power and gained the majority in both Houses, we let spending get out of control and the President of the United States did not exercise his veto power… A significant part of our base … became disillusioned and disappointed and some of them changed even their party registration.
“What happened was that we lost the enthusiasm, involvement and engagement of our base.
“We got to get it back.”
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