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GAS REVOLT
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GAS REVOLT

BY John McCaslin

Boston had their tea party. It was only a matter of time before Washingtonians began taking to the streets to voice their displeasure with the high price of a gallon of gasoline. For instance, bureaucrats leaving the headquarters of the Environmental Protection Agency last week were handed pink slips, or a "Notice of Termination" on pink paper, as they headed down into the subway. The notice read: "To: All EPA Bureaucrats "From: The American Taxpayer

01/01/2003
R.J. Reynolds protests Dole assessment plan
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R.J. Reynolds protests Dole assessment plan

WINSTON-SALEM - The largest cigarette maker in North Carolina says its disagrees with a proposal by Sen. Elizabeth Dole, R-N.C., to charge cigarette companies an assessment to pay for a proposed buyout of federal tobacco quota. A buyout could pump at least $4 billion into the state's rural economy, but officials at R.J. Reynolds Tobacco Co. say the assessment breaks the spirit of Dole's pledge not to support tax increases. "This appears to be a classic bait and switch," said Tommy Payne, the senior vice president for external relations at Reynolds.

01/01/2003
Bush Chooses Reagan-Era Republican for UNESCO
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Bush Chooses Reagan-Era Republican for UNESCO

BY Jim Lobe

Published on Thursday, October 2, 2003 by OneWorld.net WASHINGTON -- The enthusiasm of internationalists over the return of the United States to the UN Educational, Scientific and Cultural Organization (UNESCO) after almost 20 years' boycott may be dampened by President Bush's choice to be the next ambassador at the Paris-based agency.

01/01/2003
Kulongoski reflects on first year
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Kulongoski reflects on first year

BY BRAD CAIN, Associated Press writer

SALEM, Ore. -- In his first year in office, Democratic Gov. Ted Kulongoski antagonized his labor allies with a strong push to reduce pension benefits of public employees and freeze state worker salaries. At the same time, Kulongoski worked with legislators including Republicans to crank out a budget deal and pass bills aimed at giving a boost to the state's economy.

01/01/2003
Don't Negotiate With Yourself
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Press Release

Don't Negotiate With Yourself

© 2002 Copley News Service, 12/31/2002 I was really disappointed to read in the Wall Street Journal last week that some officials inside the Bush administration are attempting to convince the president neither to accelerate the 2001 income-tax rate reductions nor to shorten the period of time that companies must wait to write off investment in new plant and equipment. Both of these changes to the president’s economic growth and jobs package would unduly weaken it.

12/31/2002
2002: Auto Insurance Choice and Competition Dwindles, Consumers Suffer, According to the Coalition for Auto Insurance Co…
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2002: Auto Insurance Choice and Competition Dwindles, Consumers Suffer, According to the Coalition for Auto Insurance Co…

For New Jerseyans seeking auto insurance coverage, 2002 will likely be known as the worst year in state history for auto insurance choice and competition. "Drivers are facing the ugly truth about auto insurance in New Jersey," said John Friedman, chairman of the Coalition for Auto Insurance Competition. "Excessive regulation and political interference is forcing auto insurers to flee New Jersey, leaving drivers with little choice and few options." More than twenty-five auto insurers have left New Jersey during the last ten years. In 2002, seven auto insurers either left or announced plans to stop doing business in New Jersey: - January: Harleysville Insurance Company agrees to pay Palisades Safety and Insurance Association and Palisades Insurance Company $4.7 million to take the 16,000 vehicles Harleysville insures. - June: State officials approve State Farm Indemnity's request to withdraw from New Jersey. - September: State Farm Indemnity starts non-renewing 96,000 New Jersey auto policies as part of its withdrawal. - September: Twin City Fire Insurance Company, part of Hartford Financial Services, agrees to pay Palisades Safety & Insurance Association and Palisades Insurance Company $9.2 million to take the 24,000 vehicles Twin City insures in New Jersey. - September: Great American Insurance Company agrees to pay Palisades Safety & Insurance Association and Palisades Insurance Company $7.0 million to take the 24,000 vehicles Great American insurers in New Jersey. - December: The Robert Plan shuts its New Jersey business, non-renewing its last 20,000 vehicles through a Department of Banking and Insurance-ordered "solvent run-off" precipitated by the company's hazardous financial condition. - December: Central Mutual Insurance Company announces it is leaving New Jersey. - December: Merchants Insurance Group announces it is leaving New Jersey. Each month, the owners of more than 4,000 vehicles learn that their auto insurance coverage is not being renewed, forcing these policyholders to search for replacement coverage in a market bereft of sufficient choice and competition. The Coalition points to the state's excessive regulation of auto insurance as the culprit behind the lack of sufficient auto insurance choice and competition. "Without swift action by state lawmakers, consumers will likely face fewer choices in 2003 as excessive regulations and political influence continues to take its toll," said Friedman. "Drivers need a regulatory system that promotes competition, encourages companies to sell auto insurance in New Jersey, and creates a stable market that offers more choices for consumers." "Until reforms are made that promote greater consumer choice and industry competition, insurers will continue to lack the incentive to grow and invest capital in New Jersey, leaving drivers in a lurch," said Friedman. The latest figures show New Jersey has 47 percent fewer companies selling auto insurance than Illinois and more than a third fewer than neighboring New York and Pennsylvania. More than twenty auto insurance companies have left New Jersey in the past ten years, and two have left in the last year. The Coalition has been working to educate New Jersey drivers and policy makers to stem the state's unprecedented auto insurance crisis precipitated by the deterioration of the financial health of New Jersey's auto insurance industry. The group is calling for passage and enactment of the New Jersey Auto Insurance Competition and Choice Act (A-2625 and S-1999), which outlines reforms that will attract more auto insurers to New Jersey by permitting companies to use industry-accepted standard underwriting methods already used in nearly every state. "While 2002 has been a bad year for auto insurance consumers, 2003 does offer hope for meaningful reform," said Friedman. "Governor McGreevey has acknowledged the problem and promised to present his own proposal in January to stimulate auto insurance choice and competition," The Coalition welcomes the participation of consumers, businesses, and associations who seek to work together to bring about meaningful and responsible auto insurance reform. Members include the National Association of Independent Insurers, Insurance Council of New Jersey, American Insurance Association, New Jersey Chamber of Commerce, Independent Insurance Agents of New Jersey, Citizens for a Sound Economy, National Association of Mutual Insurance Companies, New Jersey Association of REALTORS, Professional Insurance Agents of New Jersey, New Jersey Food Council, New Jersey Retail Merchants Association, NJ SEED (Society for Environmental, Economic Development), Somerset County Chamber of Commerce and the Commerce and Industry Association of New Jersey. CONTACT: Coalition for Auto Insurance Competition Ernie Landante, 973/799-0200 www.njcaic.org URL: http://www.businesswire.com

12/30/2002
Economists Call for Pro-Growth Tax Cuts
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Press Release

Economists Call for Pro-Growth Tax Cuts

It may be a very happy new year for taxpayers, as momentum is building on Capitol Hill for another round of tax cuts in early 2003. The case for a new package of pro-growth tax relief was made by Dr. Daniel Mitchell, of the Heritage Foundation, and Dr. Wayne Brough, of Citizens for a Sound Economy. The economists met recently with Congressional legislative staff and the media for a CSE Policy Watch forum on Capitol Hill. Dr. Mitchell focused on two elements of the current debate:

12/30/2002
Tax Cut Proposals Pile Up, Awaiting New Congress
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Tax Cut Proposals Pile Up, Awaiting New Congress

BY BILL WALSH

President Bush and lawmakers in both parties are busy compiling their wish lists for the new year, and there is no shortage of ideas for reducing, repealing or phasing out various taxes. It isn't that the federal treasury is suddenly overflowing. In fact, the Congressional Budget Office says the federal budget ran a deficit of $157.7 billion for the fiscal year ending Sept. 30. And if the nation goes to war with Iraq, the federal balance sheet is expected to dip further into the red. Most of the would-be tax cuts are dressed up as "economic stimulus" measures designed to spur business and consumer spending and rev up the economy. Proponents argue that a robust economy eventually will bring ample revenue back to the federal government. Among the likely Republican initiatives are: accelerating the start date of the phased-in $1.35 trillion tax cuts that were passed in 2001; providing business tax relief in the form of more generous expensing for small businesses and additional depreciation on capital purchases; and reducing or eliminating the tax on corporate dividends. Bush is expected to outline a tax relief package in his State of the Union address Jan. 28, and he has made no secret of his desire also to make permanent the tax cut package Congress passed last year. But skeptics, notably congressional Democrats, question how much the economy will be stimulated by such things as permanently eliminating the tax on multimillion-dollar estates. Bush argues that the 2011 expiration date of the tax cuts creates economic uncertainty. "People need a stable environment in order to create jobs," he contends. It wouldn't be cheap, though. Congressional sources say the White House is aiming for a tax cut package totaling $300 billion over the next decade. Since Republicans reclaimed the Senate in the midterm elections in November, Bush can look forward to the convening in January of a Congress that is more receptive than ever to his shift away from the Clinton-era focus on debt reduction as a means of national economic stability. No one has any illusions that Bush isn't also looking forward to 2004, when he stands for re-election. The fate of his president father, whose political fortunes tanked with the national economy, is undoubtedly on his mind. In recent weeks he has hired a new economic team whose job it will be to sell tax cuts to Congress and the American people. "If we pass something this spring or summer, it would provide some relief to the economy by 2004, which would provide some relief going into the election campaign," says Jeff Lemieux, a tax analyst at the centrist Progressive Policy Institute. But not everyone is enthusiastic about Congress tinkering with the economy. Federal Reserve Board Chairman Alan Greenspan has said that making the 2001 tax cuts permanent wouldn't offer much short-term voltage to economic growth, and he cast doubt on the ability of Congress to steer the economy. Instead, Greenspan has counseled caution, saying the economy is merely in a "soft patch" on the way to recovery. Business groups and many Republican lawmakers see it differently and predict Congress will move ahead with a tax cut package anyway. "I don't think Alan Greenspan would say we are in a robust economy or this is a typical recovery," says Rep. Jim McCrery, R-La., a member of the tax-writing House Ways and Means Committee. "I wouldn't hesitate to cut taxes because Alan Greenspan doesn't think we should. The good news is that Republicans and Democrats see the need for further tax cuts as a way to stimulate the economy." The two parties share some common ground when it comes to tax relief. Popular in both parties are proposals to let small businesses deduct a larger amount of their capital expenses from their taxable income and allowing businesses of all sizes to depreciate a heftier share of their capital outlays. By giving businesses investment tax relief, the thinking goes, they will spend more money on new computers, machinery and other big-ticket items spending that will boost the economy. In general, though, Democrats are girding for battle over a critical point in the tax cut debate: Who gets the relief? Popular among Democrats is a temporary elimination of the 12.4 percent Social Security payroll tax that workers and businesses split. Known as a payroll tax "holiday," the idea would be to put cash in consumers' pockets immediately, so their spending could spur the economy. The idea has a diverse following, including the Business Roundtable, Sen. Pete Domenici, R-N.M., and Sen. John Kerry, D-Mass. Critics acknowledge that it would put money in people's pockets, but they aren't convinced it would be spent. When consumers received government tax rebates last year, many of them paid off credit card debt or put the money into savings; neither of those things provides much stimulation for the economy. Some suggest a payroll tax holiday could be geared to low-income wage earners, who would be more likely to spend the extra take-home pay. When Congress returns, Democrats also are intent on providing some assistance to unemployed workers and are touting quick action as a form of economic stimulus. Bush has embraced an extension of unemployment benefits, and some House Republicans are also receptive to the idea, but there is no consensus yet on the issue. Neither party expects to monopolize a tax cut package. Both recognize that to get the necessary votes, the largess will have to be spread around. The National Association of Manufacturers, for instance, is pushing business tax breaks worth about $150 billion, leaving what they say is "room for competing ideas." Wayne Brough, chief economist for the business-friendly Citizens for a Sound Economy, says that despite Republican control of both the White House and Congress, accommodation of Democratic proposals is a political necessity in order to get any package passed. "Especially after a year of business scandals, it will be hard to say you are just cutting taxes for business," Brough says. "When you put the package together, you want something in there for everyone."

12/30/2002
Support for cutting payroll tax broadens
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Support for cutting payroll tax broadens

BY Paul Barton

WASHINGTON - A lot of politicians are starting to worry about the little guy when it comes to cutting taxes. A fresh round of tax cuts to stimulate the economy is expected to be one of the first tasks when the 108th Congress convenes in January. A growing number of voices on both the right and the left are insisting that the package include a reduction in payroll taxes, such as those taken out of every paycheck to finance Social Security and Medicare.

12/29/2002
Support for cutting payroll tax broadens
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Support for cutting payroll tax broadens

BY PAUL BARTON

WASHINGTON - A lot of politicians are starting to worry about the little guy when it comes to cutting taxes. A fresh round of tax cuts to stimulate the economy is expected to be one of the first tasks when the 108th Congress convenes in January. A growing number of voices on both the right and the left are insisting that the package include a reduction in payroll taxes, such as those taken out of every paycheck to finance Social Security and Medicare. Most American workers pay more in payroll taxes than they do in income taxes. And that's especially true for low-income workers. In fact, about 30 percent of the work force pays payroll taxes but ends up owing no income taxes, Congress' Joint Committee on Taxation reported. Because they pay little or no income tax, these same workers were left out of the $ 1.3 trillion tax cut package passed last year. That's why advocates contend a payroll-tax reduction would be the most effective measure Congress could pass to stimulate the economy: The middle- and lower-income workers who would benefit the most would be the most likely to put their money back into the economy through spending. "It's as good a way as any to put money in the hands of those most affected by the downturn in the economy" said William Dickens, an economic analyst at the Brookings Institution, a Washington think tank. Democratic presidential candidate John Kerry, a senator from Massachusetts, thinks so too. "Unlike most so-called stimulus plans, a payroll tax [reduction ] would help every working American," Kerry said in an opinion-editorial piece published recently in the Boston Globe. Every worker pays 6.2 percent in Social Security taxes and 1.45 percent in Medicare taxes on wages up to $ 84,900. Employers make matching tax payments. Together, the taxes equal 15.3 percent of wages and bring in almost $ 700 billion a year. Kerry is calling for a oneyear suspension of payroll taxes on the first $ 10,000 in income. Such a payroll tax "holiday" would give each worker an extra $ 765. Sen. Bob Graham of Florida, another possible Democratic presidential candidate, has seconded the idea. And another Democrat, Sen. Mary Landrieu of Louisiana, survived a tough re-election challenge this year by calling for payroll tax cuts as well. Conservatives also have gotten into the act. Conservative editor William Kristol recently told the National Journal, a public policy magazine, that a cut in payroll taxes is politically necessary for the Bush administration to pass any larger program of tax cuts that focuses on issues such as income tax brackets and stock dividends. Otherwise, the administration will face new charges that it caters only to the rich. Former Republican Rep. Jack Kemp told the National Journal that cutting payroll taxes needs to be done because, "It's not for Wall Street; it's for Main Street." The Club for Growth, a Washington-based conservative group that advocates aggressive tax-cutting, wants more than a one-year reduction. The group is calling for a 1 percent reduction in the combined Social Security and Medicare payroll tax rate lasting at least five years or until unemployment falls below 4 percent. Such a move would put an estimated $ 35 billion a year into workers' pockets. But employers also would benefit and have incentive to hire more workers. "That's a pretty hefty kick in the pants for the economy," economist Stephen Moore, head of the group, said. In contrast, a one-time payroll tax cut would not encourage employers to hire more, say critics of Kerry's plan. With so many endorsing a cut in payroll taxes, the Bush administration is rethinking its previous opposition to the idea. "The politics of this look to be playing out," said Eric Engen, tax expert at the American Enterprise Institute, a Washingtonbased think tank. But cutting payroll taxes raises a host of issues related to the always politically sensitive Social Security and Medicare programs, not the least of which is cost. Kerry's plan, which would be a type of tax rebate for workers, would involve a onetime cost of an estimated $ 100 billion to $ 129 billion. The Massachusetts senator says the money can come from slowing down income tax cuts slated to take effect later this decade. That way, neither Social Security or Medicare would be harmed, he added. But others question where that money would come from without hurting other programs. "I'm rather bemused by the debate," said Robert McIntyre, head of Citizens for Tax Justice, a liberal research and advocacy group in Washington. And Kerry's idea of using general revenues to compensate for a reduction in Social Security and Medicare taxes threatens to cross a line that many are wary of, added Engen, the American Enterprise Institute analyst. For years, he said, Social Security experts have preached the necessity of not mingling entitlement financing and general revenues. If Social Security is seen as supported by general revenues, rather than through payroll taxes, he said, it could lose some of its political support. "Social Security would be viewed as welfare," Engen said. Sen. Blanche Lincoln of Arkansas, a Democrat and member of the Senate Finance Committee, said she would want to carefully examine proposals for altering Social Security and Medicare programs. "We don't want to jeopardize what the elderly are depending on," she said, adding that Social Security and Medicare financing is "intricately designed." But Lincoln said she definitely wants to look at options that would help lower-income Americans. "We have to really think it out," she said. Others say it won't hurt to cut payroll taxes because the longterm financing of both programs will have to be reworked anyway. If they aren't, Social Security and Medicare will "eat the whole [federal] budget" by 2050, Engen said. Similarly, Citizens for a Sound Economy, another Washington-based conservative group that advocates tax cuts, said it is foolish to let long-term concerns about Social Security and Medicare financing stand in the way of small payroll tax reductions. "A payroll tax cut may exacerbate Social Security's current $ 3.2 trillion unfunded liability, but the entire system is in such dire financial straits that a payroll tax cut at this stage would be akin to cutting half an hour off the Titanic's voyage," Jason Thomas, staff economist, said in a paper prepared by the group. This story was originally published on Sunday, December 29, 2002.

12/29/2002

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