A Teleconference With Senators John Thune & John Ensign

by John Hawkins | March 16, 2009 5:20 pm

What follows are my notes, not quotes, from a teleconference with Senators John Thune and John Ensign about the upcoming budget battle.

Opening Statement

John Thune: The budget that has been proposed clearly contradicts Obama’s promise of fiscal responsibility. It’s the largest tax increase in American history. It spends too much, taxes too much, and borrows too much. His budget would get us up to 28% of the GDP. It will double the budget in five years and triple it in 10 years.

The President said that he had 2 trillion in surpluses. But, it’s a huge tax increase. It would also cut charitable giving. It was borrowing money that got us into the current economic system. Rather than this generation sacrificing for future generations, we are asking the next generation to sacrifice for us. That’s not the American way.

John Ensign: The President promised that he would not raise taxes on people below $250,000, but the energy tax increases break that promise. If you turn on your lights, use air conditioning, use a refrigerator, your taxes would be going up.

Very few people in this administration have worked in the private sector and they may not understand that some people have to lay people off instead of raising prices. Two thirds of the jobs created in 2006 came from places where the Obama tax increase is targeted

(I was dropped off the call somehow — I got back on)

You are going to see a dampening effect on our economy if his budget is passed.

Q&A Session

Is any of this spending going to be a short term increase? That has only happened twice in history. Do you think we are creating a new baseline of spending?

Ensign: Look at his budget. It goes up everywhere except in the military because he assumes the highest level of spending in Iraq for 10 years and then saves money by cutting it. So, it’s a false cut. Everything else explodes.

Thune: They are so overly optimistic on revenue. They are also dramatically underestimating spending. The stimulus alone could run to 3 trillion dollars over 10 years.

We could be seeing 1.5 to 2 trillion dollar deficits for the next five years with his real numbers. Would you agree?

Yes, absolutely. That sounds very possible. I think the deficit is going to be much worse than projected.

The President’s budget assumes the highest unemployment rate of the next 2 years won’t be higher than 8.1%. That’s what it is right now. So, that’s a rosy projection.

On capital gains tax rates, we have lowered them in last 20-30 years. Each time, they said we would lose revenue. But, each time, 3-4 years afterwards, we have had dramatic increases in revenue. He is assuming over 100 billion in new revenue by increasing capital gains, but history shows the opposite.

How much agreement are you finding amongst your Democratic colleagues?

They can pass a budget with 51 votes and then implement things like cap and trade and health care in the budget process. The Democrats are looking for 51. I am hoping we can keep the Republicans unified, but I think when push comes to shove, they will get 51.

A number of senators sent a letter saying reconciliation was not the right place to do these large policy changes.

Senator Byrd was one of the people to sign onto that letter. Hopefully, that will be enough to keep the Dems from putting anything through in reconciliation. It was supposed to decrease spending, not increase the size of government. If they use it that way, it will create a civil war in the US Senate.

The top two tax rates are scheduled to expire. Is there any talk of expiring that.

I don’t think they want to go on record as being in favor of raising taxes. Even a lot of Democrats realize they shouldn’t raise taxes on people creating jobs in a recession.

We are going to be releasing a new study tomorrow on the annual burden of cap and trade on the average household. The burden would be disproportionately born on lower income households. Cap and Trade will be very regressive.

The Obama team will say that their tax credit will offset cap and trade. It actually won’t cover the costs for the poor and the people in the middle won’t get it. He’s breaking his tax pledge.

Can we make a case that people are going overseas unless something changes?

The next tax increase in the Obama budget, 1.4 trillion, is the net GDP of Spain. It will cause businesses to flee the U.S.

In Estonia, the corporate tax rate is zero. How do we compete with that?

Compare zero with 35% in the US.

Summary: Thune and Ensign are both excellent conservative senators and they were both knowledgable and effective in tearing into Obama’s budget. However, here’s the reality: Obama’s massive budget, the tax increases, cap and trade, his health care plan — it’s only going to need 51 votes to pass. That means they can allow Democrats who have tough election battles next year to vote “no” and it will still pass. In other words, it’s highly likely we’re going to get rolled and all we can do is try to make the Democrats and Obama pay as big a price as possible for their incredible irresponsibility.

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