CSE’s Plan for the 108th Congress

The start of the new year and the 108th Congress are an opportunity to outline Citizens for a Sound Economy’s legislative agenda for this session. Congress faces many issues (extending unemployment reinsurance, passing a continuing resolution to fund the government until the 11 outstanding appropriations bills are passed, reorganizing Senate committees, working on judicial nominations, etc.), but fundamental tax, Social Security, welfare, civil justice reforms and energy legislation that decreases our nation’s reliance on foreign sources of oil, are legislative priorities that must be addressed today.

The first step for fundamental tax reform this year is to pass President Bush’s economic growth and jobs creation plan. President Bush in a recent speech echoed what many economists have stated for years, that Congress should immediately eliminate the double taxation of dividends on individual income. This move will correct a bias in our tax code that allots preferential treatment for one form of investment vehicle over another, and it would put an end to an unfair tax that punishes individual investors who decide to purchase dividend-paying equities. Moreover, the President’s plan would accelerate the rate cuts scheduled for 2004 and 2006 retroactively to January 1, 2003, which would benefit all taxpayers by quickly putting more cash in their pockets.

CSE supports the President’s plan, but more needs to be done, such as making the tax cuts permanent. By doing this, it would provide a degree of financial certainty and promote consumer and investor confidence. Subsequently, by assuring a predictable tax code, we can continue to reform the system that is now 17,000 pages and 55 million words long. Other reform measures include eliminating the marriage penalty and the Death tax.

Social Security reform was a key issue in the 2000 Presidential race and in the 2002 Congressional election. American’s know that the system is in dire need of reform. The nation’s demographic situation portends bankruptcy if we fail to enact costly, but necessary and bold reform measures. Social Security will begin spending more on benefits than it collects in taxes in just thirteen years, and will continue to run cash deficits as far as the eye can see.

Reforming the system would allow Americans to invest a portion of their payroll taxes in numerous and relatively safe investment vehicles (bonds, cds) or whatever private accounts they desire so that they can take ownership of their future. Personal Retirement Accounts can create real wealth that can be passed down to future generations.

Reform must not stop there. Congress should set in motion legislation that limits trial lawyers’ ability to use our civil justice system as a way to line their pockets; they have placed their own special interests before that of citizens with honest and real grievances. Today, more than 15 million civil cases are brought before state courts, and the direct costs of the tort system on the U.S. economy is nearly $180 billion annually. Major American industries are finding themselves on the wrong side of trial lawyers. The situation has become so dismal, physicians specializing in obstetrics, emergency care, etc., are leaving hospitals and states because the costs of insurance to cover the astronomical lawsuits trial lawyers bring forth are untenable.

In 2002, legislators failed to reauthorize the 1996 Temporary Assistance to Needy Families welfare reform bill, which has proven to be extremely successful. For instance, welfare caseloads have been cut in half and the poverty rate of single mothers, who make up the majority of welfare recipients, has been cut by a third. Reauthorization of the bill is due and, unfortunately, some have proposed measures that would reverse the gains made since 1996. Weakening work requirements would only harm welfare recipients and recreate the cycle of dependency that plagued the program for so long. Instead, Congress should seek to strengthen work requirements so that welfare recipients can build the critical skills needed for financial stability.

Finally, CSE will continue its efforts to pass a comprehensive energy bill that would diminish our reliance on foreign sources of oil. The House of Representatives of the107th Congress passed legislation that would have allowed domestic exploration of oil and increased our energy independence; however, the Senate failed to do likewise. It is imperative that Congress act to pass meaningful legislation.