Economic Recovery Hearing
With the start of the 111th Congress and the first term of President-elect Obama less than two months away, U.S. Representatives Mark Kirk and Peter Roskam held an ad-hoc economic recovery hearing today to discuss actions to address the nation's financial crisis. The representatives heard testimony from Illinois leaders in the mortgage, banking and infrastructure industries as well as the business community including Doug Whitley, President of the Illinois Chamber of Commerce, Matt Feldman, President of the Federal Home Loan Bank of Chicago, Edward Wehmer, President and CEO of Wintrust Financial, Tod Faerber, President of the Illinois Road Builders Association and Todd Vandermyde, Legislative Director for the International Union of Operating Engineers Local 150.
"Given the decline in the stock and credit markets, we need effective action from Washington" Congressman Kirk said. "Congress could help or hurt our recovery. In 1931, Congress responded to the 1929 crash by ending free trade and raising taxes. It turned the 1930 recession into the Great Depression. Learning from our past, we outlined 10 major reforms which will accelerate our recovery. Our pro-growth policies will reward innovation and encourage investment, doubling the size of America's economy by 2012."
"As Congress prepares for a fresh term, we must look toward the future to establish effective change in our country's economic system," said Congressman Roskam. "It is essential the 111th Congress is able to create bipartisan solutions, enabling our country to regain financial stability while stimulating job growth. Congress must reflect on its previous decisions and redevelop an innovative plan for effective regulation which will help guard our financial system from over lending, unscrupulous banking practices and secure the confidence our markets need to rebound."
This year, global equity markets have lost more than $30 trillion. Since September, the Dow Jones Industrial Average has lost 34 percent of its value, comparable to the 44 percent decline in the Dow Jones during the 1929 stock market crash.
The representatives also discussed 10 reforms to double the size of the U.S. economy, creating jobs and opportunities for Chicagoland families. The proposals include:
1. Stop New Automatic Taxpayer Spending. Two thirds of the federal budget goes to entitlement spending. Under the House rules, require a three-fifths vote to expand any automatic spending program.
2. Enforce the Budget. While Congress occasionally adopts a budget, it regularly waives its limit within months. Require across-the-board cuts if Congress exceeds its annual budget target.
3. Double the Research & Development Tax Credit. Most members of Congress are still unaware of the key role research and development play in maintaining growth, even while living in the country that invented the telephone, airplane, computer and cell phone.
4. Reform to Reduce Lawsuits. Americans spend more on litigation than any other society. With 5 percent of the world's population, we have 70 percent of its lawyers. Congress should reform class action, product liability, malpractice and asbestos law to reduce needless lawsuits and endless litigation. This would level the playing field for Americans competing against foreign competitors who do not face such costs.
5. Set the Top Income Tax Rate at 24 percent. While leaving mortgage interest and charitable donations law in place, this reform will improve our investment climate, emphasizing productivity. America will attract business if we set a policy to be the largest economy with the lowest tax rates.
6. Set the Long-Term Capital Gains Tax at 10 percent. Our laws and tax policy should encourage long-term investment yielding the highest results.
7. Boost the Capital Loss Deduction to $20,000. Current tax law is asymmetrical with regard to taxing capital gains and writing off capital losses. Long-term gains are taxed at 15 percent while capital loss write-offs are capped at $3,000 per year. Increasing the write-off will help middle class families recover losses and rebuild their portfolios.
8. Secure America's Home Export Markets. Nearly all imports from Canada and Latin America already enter the U.S. without heavy duties. Congress should enact free trade legislation for the Western Hemisphere to lock in American export advantages against European and Asian competitors.
9. Dramatically Lower Obesity/Smoking. By creating better insurance preferences for healthy lifestyles and stopping tobacco marketing to kids, productivity will rise and taxpayer health care costs will fall. Lower heart disease, diabetes and cancer rates would save trillions.
10. Strengthen the Dollar's Importance. Several countries already use the dollar for all transactions. Against growing competition from the Euro, U.S. foreign policy should encourage more nations to adopt the dollar while the Federal Reserve should be charged with reducing wide swings in its value to restore predictability, limiting the role of speculators.
Congressman Kirk also discussed his bipartisan efforts with Rep. Chris Carney (D-Pa.) to triple the FBI's investigations into corporate fraud on Wall Street. Recent reports indicate the FBI has only 26 ongoing major corporate fraud investigations into possible criminal activity at companies such as Fannie Mae, Freddie Mac, Lehman Brothers and the American International Group (AIG).
In the current draft of the 2009 Commerce, Justice and Science appropriations bill, the U.S. House appropriates $10 million to the FBI to expand its investigations into mortgage fraud. The House adjourned before action was taken on the legislation.