Interview by The County Times
There is a lot of discussion between the two Presidential candidates about tax policy. One candidate is proposing to increase the corporate tax, which would make it difficult for businesses in St. Marys County to modernize facilities, and create jobs. What is your feeling about federal tax policy going forward?
Hoyer: What Sen. Barack Obama has said is that in the tax program that we adopted in 2001-2003 the majority of the cut went to those who were pretty well off, while a relatively small amount was cut from those making under $250,000. Obamas plan is we have a huge deficit and this administration has been the most fiscally irresponsible administration in our history perhaps. We are going run up close to $2 trillion dollars in operating deficits under this administration. Someone has got to pay that bill. The people who are going broke cant pay that bill. We can either have our kids pay it which is what were doing and as you know Im pretty angry about that I think its an irresponsible, immoral policy that weve been pursuing. Republicans cut taxes deeply and doubled the percentage of increase in spending over the Clinton administration, 3 1/2 % increase on an annual basis 7% during the first six years when Democrats were not playing any roll, Republicans in the house, Republicans in the senate and Republican administrations. Ive been there 28 years and this relates to the tax policy of paying for things we buy. Im a big proponent of paying for things that you buy. If you dont want to pay for them you shouldnt buy them. So Obama is saying look weve got to pay our bills. Who do you look to too pay bills, those who are making more? They will be paying fewer taxes under Obamas plan than they were paying under Ronald Reagan.
Bailey: There is so much lack of information and miss information that has been put out rather on the national scene or in the media. In the last four fiscal years, which brings us under Democratic and Republican leadership in congress, weve got a 46% increase in federal revenues. Now we are having a bigger deficit than we had four years ago even with a 46% increase in federal revenues. We are worse off now than we were before, this issue has risen to level of threatening our national security because of deficit spending. Deficit spending makes us weaker world wide and at home. It drives the cost of our consumer goods up. I think that taxes are to high, spending is to high, youve got two types of taxes youve got direct taxes and inflation tax because your buying power doesnt go as far. We have to start by balancing the budget so that you can put things on a solid basis. I would not raise any taxes I am for balancing the budget by cutting spending. They are talking about a trilliondollar deficit this year next year and the following year. That will have a devastating effect on our quality of life, on the purchasing power of a dollar and a whole lot of other things. Start by balancing the budget, cutting out waste and fraud and things that government should not be spending money on. Then take half that savings and apply it to the national debt and take the other half and apply it to tax relief by raising the personal exemption. Weve got the second highest business tax in the world.
Do you believe we can reach a balanced federal budget? Would getting there require tax increases, cuts in spending, or both? Should earmarks be eliminated and if there are cuts in federal spending, would that including cut in military spending, and how would that effect this district?
Hoyer: John McCain talks about an earmark that is a distraction. $17 billion in a $ 2.7 trillion dollar budget, $17 billion are earmarks. Were we are spending a lot of money is social security, Medicare and Medicade thats what were going to have to look at; yes were going to look at defense. The good news about what we do here in Southern Maryland is we do a lot of research, development, test and evaluation that has to be done no matter how big defense spending is or what weapon system your purchasing. Whether youre in Indian Head, St. Inigoes or Pax we are advantaged by having a core responsibility.
Bailey: Earmarks are unconstitutional. Its a violation of the constitution. I would not vote for an unbalanced budget. I would balance it by cutting spending not by raising taxes. The deficit has exploded in the last four years. There are things we can do locally or individually that are better than what the federal government can do for us. Yes, we can balance the budget the state of Maryland does it every year. Of course last time they did it by raising taxes but they increased the spending, they made new programs that cost $600 million. As far as the military, we need to be strong economically, militarily and look at national defense. Our military budget is equal to all the other countries in the world. We can balance the budget without touching the military spending. I think our economy and our bases would be well protected under Bailey representation.
Looking back at the past several conflicts this nation has engaged in, troop occupation has played a large roll, with nations such as China and Iran emerging militarily, what types of conflicts must this nation prepare for in the future?
Hoyer: The military is configured historically for a cold war confrontation between two super powers. We dont find ourselves in that military context at this time we find ourselves in a context of urban warfare. Obviously the Navy is more critical in this world than it used to be because it operates on ships. We dont have to ask anybodys permission to put our ships in the Atlantic Ocean or the Pacific or the Indian Ocean. So nobody really perceives putting large land forces, millions of people, arrayed against another large military force. The only possible place that might exist and its hard to believe that we would mobilize sufficient is if China and North Korea did what they did in the 1950s. Vietnam was large numbers of people there but it wasnt like the European battlefield it was more of a guerilla warfare that the North Vietnamese fought. So Im saying that its not the world of WWII, its not the world were we think the Soviet Union is going to attack us with nuclear weapons, although nuclear weapons continue to pose a threat, we have to provide for that threat, dont miss understand what Im saying Ive been a very strong supporter of the Military establishment since 1981 when I went to congress long before I came down here contrary to the assertion of some.
Bailey: We need to have a clear vision and an honest discussion before we go forward. One of the things that disappoint me about our congressional leaders is that the way things have been done is that they seem to be more focus on posturing for partisan advantage rather than doing whats right for the American people. We need to be strong in multiple areas to protect our national security. China is holding a huge amount of our debt and weve seen times in our history where different military things were effected by who was holding our debt. We have approximately 40,000 troops in Korea, approximately 50,000 in Japan that are paid for by American taxpayer. The average cost per troop is about $100,000. I dont know that we need to have troops in as many places as we do, paid for by American tax dollars in order to promote our national interest and give us security. If places feel that its to their advantage to have troops there then its the opportunity for them to pay to have them there. We can look at ways to do things in a better efficient way. I think there are things we can do to make us a smaller target. Foreign polices in the past have not served us well.
Do you support a pullout time frame in Iraq, and what should our military strategy be in Afghanistan?
Hoyer: I supported the authority to remove Saddam Hussain. I thought removing Saddam Hussain was something that the world should have done. And the world should have done it because we imposed upon Saddam Hussain conditions in 1991 in order for him to stay in power or wed remove him. The United Nations said over the next 12 years he hadnt complied with those conditions. So I thought it was appropriate. I told Secretary of State Condoleezza Rice who was then the National Security Advisory that I thought they were using the wrong rational, they either lied or were extraordinarily incompetent asserting that Saddam Hussain had something to do with 9-11, no one other than the President believes that; report after report has said that they had no tie. The rational that I think the administration should have used and the would have had more creditability is, we imposed conditions on him, hes violated those conditions after we imposed those conditions for the safety of the region in violations of those the safety of the region is at risk so we went in. We sent far to few troops. We sent 550,000 troops to kick Saddam Hussain out of Kuwait, one mission only kick him out of Kuwait. We sent 180,000 troops in initially. It was an incompetent execution of a foreign policy that I initially supported but the question that generated this long answer was yes we ought to redeploy our troops. Afghanistan is going south on us, because the administration took their eye off the ball Osama Bin Laden is somewhere in a cave now luckily for us McCain knows where he is and how to get him I wish hed tell the rest of us. Its a shame he hasnt told the Administration perhaps we would have gotten him. So yes I think we need to redeploy within a time frame. Only Mc-Cain thinks we dont need to redeploy.
Bailey: We dont need 535 generals running our military. Congress has a part to play but they should have played that part with a full discussion at the front end with clear objectives. I think we need to have that discussion still. Its a little late in the process but better late than never, a discussion about what is victory, what do we want to accomplish and how are we going to get there. I do not support permanent bases in Iraq that was not the understanding. I agree with what was said in the beginning that we shouldnt be there one day longer than we need to be. I think we need to agree to what those objectives are. The problem is that it didnt start out being well defined and it changed as time went on. At one point we as the American people were told that when the security forces reached a certain level that it would be time for us to come home, now weve reached that level they say when its stable. But we need to define what is stable. Congress needs to step up to the plate and support whatever it is they are going to support and then turn it over to the executive branch to execute. We do need to bring our troops home from Iraq and not have permanent bases and we need to discuss that publicly and make a decision and go with it. I would hate to see us have troops in Iraq like we did in Korea for 40 years.
As for Afghanistan we need to decide what our strategy is there and decide that collectively.
Everyone has been affected by the economic down turn, we hear Obama blame President Bush, McCain seems to spread the blame. What should the Bush Administration have done differently? Or is the private sector to blame? Does Congress hold any responsibility for this crisis?
Hoyer: I think everyone has some responsibility private sector, public sector, administration, and congress. There is plenty to go around. Clinton was savaged for raising taxes, they said it was going to destroy the economy blow the deficit sky high and unemployment would have swollen. None of that happened, in fact you had the best economic times youve lived through in the 90s in part as a result of the economic program that we adopted but in major part because of the information technology explosion which is really why we did so well but we created a concept where venture capitalist were pretty confident that their capital wasnt going to be at risk. Federal government deficit went down four years in a row, surplus for the last four years of the Clinton administration, no administration in my lifetime had four surpluses years. So when you ask whos responsible I say again weve been extraordinarily irresponsible. No worry about the debts we are incurring. We in effect took the referees off the field. Thats why McCain says Cox should be fired from SCC. Because McCain says as you know there was no oversight. We came in Jan 07 as head of congress, in 4 months we passed a regulatory bill on Fannie Mae and Freddie Mac in April 07, which put more regulations on Fannie Mae and more constraints on Fannie Mae it went to the Senate and unfortunately languished in the Senate for a year. We finally did pass it and the President signed it but not until Sept. 08. The Republicans passed a bill in 06, which upped the regulation on Fannie Mae, and the administration opposed it. The administration opposed it not because they were opposed to the regulation but because they didnt want to privatize Fannie Mae. People thinking that debt didnt matter is what led us to this whether its individual, business, or government.
Bailey: Absolutely Congress creates a crisis and blames the other party and then they ask us to hire them for two more years to fix the problem they created. I think its unfortunate that the Bush administration in the first six years did not veto a single bill. The American people and myself included saw these things coming, those no money down mortgages. Congress took off the whole month of August with pay, cost the taxpayers $14,000 a piece, then come back and quickly pass something that punishes the American taxpayers and rewards those who are the guilty party. Then they go on vacation until next year. Is Congress to blame? Absolutely. The President signs or sometimes vetos a legislative bill passed by the Congress, the President doesnt pass legislation, and there is way too much blame on both sides. Congress is so out of touch that they didnt see this problem coming. Since all bills start with Congress they deserve a massive share of the responsibility. They should be in Washington right now fixing things.
Do you believe the mortgage lending practices of Fannie Mae and Freddie Mac, practices supported by groups such as Acorn and folks in Congress such as Barney Frank, Chairman of the House Financial Services Committee, promoting home ownership for everyone, promoting the idea of the American dream for everyone, and lowering the lending standards so people who couldnt afford these homes were able to get them anyway, fueled this economic crisis?
Hoyer: Let me tell you youve got a lot of people giving loans to people and then either dont securitize it or pass them off to Fannie Mae or Freddie Mac and they didnt care. These werent Fannie Mae people, these were individual people who gave loans to people who couldnt possible pay them back and they didnt care. They would give a loan and not care if it got paid back because they would have it no more than a day. Im either going to bundle it and sell it as a bond or sell it to Fannie Mae or somebody else and Im not going to worry if that guy can pay it back. And Im going to tell him Ill give you zero percent interest for the next thirty days and you dont need a down payment. They made their 2 or 3 points right up front and then were gone. It had nothing to do with Barney Frank, nothing to do with government, it had to do with people making big profits and getting a lot of money in their pockets. They were not worried about the risk because they would not hold the risk. Debt didnt matter
Bailey: When you drive the cost of a home up by government policy by meddling with the market, by strong arming Fannie Mae and Freddie Mac, that doesnt help. You are better off letting them do it themselves. Fannie Mae and Freddie Mac were taken over by the government and they held congressional meetings after they took them over. And they asked the new executives running it if they were still making sub prime loans and they said yes, so if that was part of the problem we certainly havent learned from the problem. I think that the whole Fannie Mae, Freddie Mac thing is the prime example of Congress doing the wrong thing, at the wrong time, possibly for the right reason. The American dream is to be able to afford a house, a car, food in the cupboards and sound money will make that more available for all people. Artificial stimulation of our economy works in the opposite direction. The American people are a lot smarter than some centralized top down government buarcaracy that tries to make a one shoe fit all kind of approach.
Shouldnt there have been more Congressional oversight?
Hoyer: Absolutely, when we came in we did it in the housing act that we passed. Not in 01,02,03,04,05. We were not in charge. The Bush administration was totally in charge of all the regulators. McCain says SEC Chairman Chris Coxs should have been fired. Why did he say that? Because he wasnt overseeing what the stock market was doing, the debt that was incurring and the phony balance sheets they were reporting. Why did they do this? To keep the stock prices high because people were being paid not on the success of the company but on the price of the stock. Thats what happened to Enron.
Bailey: Thats one of those questions thats not a yes or no. You have to keep the scales level you have to realize that you have equilibrium you cant have a government run something and have no controls. When you have people pushing them to make mortgages and you have CEOs who are making money based on how many mortgages they are making no matter if they are going to last or not thats not regulation thats manipulation. The government has a purpose and that purpose is to make sure that one group or entity cannot abuse another and protect them from this. We have to use the authority Congress has wisely.
Do you think the $700 billion bail out will work?
Hoyer: I hope so, we all hope so but I dont know. And I dont think anybody knows. Secretary of the Treasury Henry Paulson hopes so. We have a huge challenge. We are going to have to look at stimulus packages for individuals. $700 billion is to try to stabilize and give confidence not to the stock markets as much to the credit markets. The real problem today is the credit markets. Paulson asked for $700 billion to buy bad paper. We amended the bill substantially and said, no, we want the taxpayer to be able to take equity in these companies. So that your not just taking paper your saying to these companies if we give you dollars were going to take back preferred or equity interest. Hopefully these companies will recover and their values are going to increase over time and the taxpayer will take some of the profit as well as some of the risk. That is happening in Europe now. You have to put capital into these cash poor companies. There is panic in the stock market now and all over the world.
Bailey: The $700 billion bail out is in my lifetime the absolute worst example of Congressional acts since Ive been on this earth. On Sept. 29th they voted down the bail out and some said its a Wall Street bail out and it punishes the taxpayer and we cant do that. So the Senate adds $150 billion of unnecessary pork to it to buy votes. The only thing that changed on the bail out is they raised FDIC insurance from $100,000 to $250,000, which was probably a good idea. But the insulting thing was they said now this is for Main Street, the first one was for Wall Street but this is for Main Street and they passed it. I dont think anyone I know was fooled by that change in title. They even said when they debated it that they had to get it done because their calendar said they should be on break. What the bill did do is it privatized profits and penalized the taxpayers. The bail out bill was wrong. If they really felt something had to be done what they should have done was they should have come back into session. Im a businessman I understand economics. I think the bail out rewarded a small group of people and punished the taxpayer.
Do you have concerns that this bailout plan will fuel inflation and what can we do to avoid that?
Hoyer: Im concerned about it because we have been pursuing a fiscally irresponsible policy that has piled debt upon debt. Its the difference of a $62.9 billion net surplus after 8 years and a $1.6 to$ 2 trillion deficit after eight years that this administration has run up. Not with my support. The value of the dollar has gone down in this decade and has been stretched. Now in terms of inflation its hard to believe at this point in time that we could have stagflation but we could have stagflation now giving the down turn in the economy.
Bailey: I have had concerns about the devaluation of a dollar due to the deficit spending. But my bigger concern is that the actions of congress is pushing us towards is stagflation where you get the worst of both worlds. Congress needs to get their heads on straight. The purpose of the bailout was to return things to the way they were before the bubble. In other words to inflate the value of the dollar and inflate the economy. If everything work it would bring housing prices back to the level they were. They ask what if it doesnt work. They said its got to work.
The House recently passed legislation that would take away peoples right to vote by secret ballot during labor organizing campaigns. This legislation would no longer protect the privacy of workers; instead workers would have to vote publicly so everyone would know how he or she voted. The legislation passed failed in the Senate where Democrats dont have the 60% majority needed to get the bill passed. Senator Obama has promised to get this legislation passed if elected President, do you support this legislation?
Hoyer: I voted for it. Im a strong believer in the rights men and women who are working to organize and bargain collectively. We have now the greatest disparity between corporate leaders and workers. We have the greatest disparity in the world as a matter of fact. And as labors clout has diminished that disparity has increased to the extent that you destroy the middle class. The difference between workers and executives in Japan is about one-tenth of that here in the United States. One of the problems has been is that its very difficult to get a labor election in organizations now days. I believe the right of an employee to bargain collectively need to be protected. The National Labor Relations Board has not been functioning well, it has been somewhat lethargic. The result is a bill, which says, ok if youve got 51% of the employees sign up and say they want to be a union you got the cards there and you submit them to the NLRB and they could be certified absent an election, its sort of like an absentee ballot.
Bailey: I think that the right of people to have secret ballot is a part of our society and should be strongly maintained and the government needs to quit pandering to special interest groups. Congressman Hoyer received the second most of any congressional candidate in this nation in the first two quarters almost 6 million dollars about 2.7 in the first quarter and over 3 million in the second. Almost 87% of that came from outside of the state. Hes also spent 6 million in the first two quarters of this year. Unfortunately sometimes in the past races have gone to the highest better. I think the American people with the help of the Internet; media are fed up with all these backroom deals I would have voted against that bill. I will support a persons right of association.