The Week Just Past: CBO’s Gloomy Economic Portrait

Tightening Congress’ Belt

Keystone Can Help the Gulf—and the Northeast

The CLASS Act (Poster Child of Bad Policy) Repealed

Honoring Excellence in Parsippany

“Free File” Your Federal Taxes

A Diminished Navy Can’t Meet Its Global Missions

The Week Just Past:  CBO’s Gloomy Economic Portrait

“While today’s headlines focus on the good news that the unemployment rate dipped to 8.3 percent in January, you may not have seen the Congressional Budget Office (CBO) report this week that predicted the budget deficit will remain over $1 trillion this year and the national unemployment rate will actually rise to 8.9 percent by the end of year and to 9.2 percent in 2013.  Both of these forecasts are much dimmer than those in CBO's last report in August.  

“You can read more on the deficit projections below, but the number that jumped out of the CBO’s annual Budget and Economic Outlook related to the staggering amount of money the government will soon be taking out of our economy in the form of higher taxes, fees and penalties!  CBO projects that the federal government’s ‘take’ will increase by more than 30 percent between 2012 and 2014!

“The reason: ‘recent or scheduled expirations of tax provisions, such as those that lower income tax rates and limit the reach of the alternative minimum tax (AMT), and the imposition of new taxes, fees, and penalties that are scheduled to go into effect.’

“From just 2012 to 2014, the increase in federal tax and other revenues from $2.523 trillion to $3.313 trillion equals $790 billion—or 31.3 percent!

“Historically, federal revenues have averaged “about 18 percent of our Gross Domestic Product (output of our economy).  It’s been that way for the past 40 years.  So, in the next two years federal tax revenues will rise from a level that is below the modern historical average to a level that is well above it.

“As a percentage of size of our entire economy, federal tax revenues were 15.4 percent in fiscal 2011, and will be 16.3 percent in 2012, 18.8 percent in 2013, and 20.0 percent in fiscal 2014.

“Let’s be clear: if the federal government takes these revenues, they will not be available in the ‘real economy’ where job creators and entrepreneurs are trying to invest and expand their businesses. 

“Here’s the frightening takeaway from CBO’s report: if the government takes 30 percent more revenues out of an economy that is already running dangerously high budget deficits, you have a recipe for a downward economic spiral very similar to struggling European nations! 

“I recognize that this CBO calculation is just a ‘snapshot’ of America’s economic and fiscal condition today.  But it should serve as yet another warning that no nation can spend, tax, bail out, or borrow its way back to prosperity. 

“We must change course.  It’s time for Washington to tighten its belt, just as so many New Jersey families and small businesses have tightened theirs.

“And with a projected $1 trillion deficit and a $15 trillion national debt, there is much belt-tightening required!

                                      Rodney Frelinghuysen

Recommended Reading:  Wednesday Wall Street Journal editorial on the CBO deficit projections, “Five Trillion and Change.”

Tightening Congress’ Belt

With Rodney’s support, the House this week approved a new bill that would freeze the salaries of Members of Congress and Congressional staffers for another year. The legislation also continues a pay freeze for federal employees and is consistent with House of Representatives’ efforts to curtail government spending.

Virtually nobody collecting a federal paycheck has seen a pay boost in recent years. President Obama froze the salaries of top White House staffers and political officials after taking office in 2009. On Capitol Hill, lawmakers and their staffs have not had a cost-of-living raise in four of the past six years.

Recommended Reading: Lucian Pugliaresi, writing in the Tuesday Wall Street Journal, “Keystone Can Help the Gulf—and the Northeast U.S. refiners could make great use of Canadian oil, if only Washington would let them.”

The CLASS Act (Poster Child of Bad Policy) Repealed

The House this week voted to repeal the so-called CLASS Act – the segment of Obamacare that sought to create a brand new government entitlement program for long-term care payments.

The program was doomed from the start.  Since participation is voluntary, the Obama Administration never figured out a way to guarantee the program would be fiscally sound for 75 years without massive taxpayer bailouts.   

“Like many other parts of Obamacare, the Administration never provided any evidence that CLASS could ever be self-sustaining - not before enactment and certainly not since the President signed it into law,” Rodney said.  “In many ways it mirrored the Obamacare healthcare takeover itself – many promises, but at what cost??”

The former director of the Congressional Budget Office proclaimed that the CLASS Act was “the poster child for President Barack Obama’s health care reform: bad policy, deceptive budgeting and stealth government expansion. It’s time to make it go away.”

Recommended Reading:  President Obama’s health care “reform”: forcing hospital consolidation, mergers and possible sales.  Read the Star-Ledger’s story “Moody’s predicts more N.J. hospitals will merge, seek buyers” here.

Honoring Excellence in Parsippany

Rodney was speaking about jobs, careers and service on Monday night at the Sheraton Parsippany as he helped the Parsippany Area Chamber of Commerce honor business leaders and volunteers.  He saluted both the honorees and the efforts of the Chamber.

"President Robert Peluso and Executive Director Craig Schlosser and many of you have been on the ground working in your own ways to help people find jobs and opportunity," he said. 

"People have been out of work six months, 12 months, 18 months, two years," he said. "Lives have been disrupted, men and women. Livelihoods and incomes have been affected."

Rodney told the audience that the economy will only improve if everyone -Democrats and Republicans - work together.  He commended the PACC for bringing people and businesses together to work for economic growth.

The PACC Honorees:

Business Leader of the Year Award
Mary Adelman, Small Business Development Center of Northwest New Jersey

Outstanding Public Service Award
Dan Dembek, PACC
Matthew Pierone, Gourmet Cafe

Board Member of the Year
Frank L. Cahill, Galleria Associates

Community Growth Award
Care One at Morris Assisted Living
Parsippany Soccer Club

Community Spirit Award
Wendy Flanagan, Brand4Market
John Chaplin, Wireless Depot of Lake Hiawatha

Economic Development Award
Lisa Koch-Fraser, Paychex

To read coverage of the event, click here.

Free File Your Federal Taxes

Taxpayers with a 2010 Gross Adjusted Income of $57,000 or less can take advantage of free tax preparation services available through the IRS Free File program. Since its inception in 2003, IRS Free File has offered 70 percent of taxpayers free access to leading commercial tax preparation software.

Qualified taxpayers may visit www.IRS.gov/freefile to prepare, complete and e-file their federal tax returns at no cost.This service is made possible through a partnership between the IRS and the Free File Alliance, a coalition of industry-leading tax software companies

“IRS Free File provides free access to tax preparation software so you can easily prepare and e-file your federal taxes online at no cost,” said Rodney. “Just visit IRS.gov and click on the Free File icon to get started. You can even get a refund in as few as 10 days.”

To begin, taxpayers should visit the IRS Free File website - www.irs.gov/freefile.  Users will find a list of Free File Alliance member companies and may either choose the one that fits their needs or utilize the “help me find a company” tool. After selecting a tax software company, users will be transferred to the company's website to prepare, complete and electronically file their federal income tax returns.

Recommended Reading: The Wall Street Journal editorial, “Admiral Obama, A Diminished Navy Can’t Meet Its Multiple Global  Missions.”  Read the editorial here.