Columns

House Freedom Caucus Founder Says He Has Key to Budget Gridlock

Image Courtesy of Shutterstock

WASHINGTON — Rep. Jim Jordan (R-Ohio) on Thursday introduced legislation that he describes as the key to unlocking the House of Representatives’ inability to pass a budget.

The bill, HR 2832, would mean major reform for the American welfare system, requiring a spending limit on means-tested welfare programs. The legislation, according to bill language, would include work requirements for able-bodied adults and ensure that individuals get off welfare programs, potentially freeing up some $400 billion in revenue.

“It is treating taxpayers with respect that they deserve by requiring able-bodied people to work and not live off the taxpayers’ dollar forever,” Jordan said Friday at the Heritage Foundation, where he was joined by colleagues from the House Freedom Caucus. “We think that is the key to unlocking this roadblock that we’re in, this box that we’re in that I don’t see any other way out of to get a budget agreement.”

Jordan said that the House Freedom Caucus can tolerate a larger budget number if welfare reform is included in the tax bill. He and Caucus Chairman Mark Meadows (R-N.C.) discussed a cut-cap-and-balance concept for tax reform, in which government spending is capped in relation to GDP.

Meadows described the country’s anemic GDP growth, which is hovering around 2 percent, while the federal government is growing at a rate of 4.8 percent. He suggested lawmakers try to reach consensus on a government spending cap at 2.5 percent, which he said would result in GDP growth of 3 percent.

“What a novel idea is that?” Meadows said. “It’s about fiscal restraint.”

Jordan said 3 percent GDP growth should be the target, but the U.S. can’t reach that target without a proper workforce, which starts with welfare reform.

The lawmakers, joined by Reps. Warren Davidson (R-Ohio) and Dave Bratt (R-Va.), were asked what the impact will be on tax reform potential if the Senate is unable to pass their version of the House Obamacare repeal bill.

“Our job is real straightforward: Do what you told the voters you were going to do. So we told the voters that we’re going to repeal and replace Obamacare,” Jordan said. “The bill we sent over didn’t accomplish that, but it was a step in the right direction. We hope that they get it done as soon as possible, not just because it’s good for tax reform, but because that’s what we told the voters we were going to do.”

Davidson said that the House needs tax reform to match the Dodd-Frank reform that just passed in the House. On Thursday, the House approved the Financial Choice Act, which would repeal much of the legislation the Obama administration passed in 2010 in the wake of the 2008 financial crisis. Davidson added that it will be important to link the tax code to average household take-home, which has stagnated.

Jordan said take-home pay and a tax code design that fosters growth are the two principles that should drive the policy discussion. He argued that a border adjustment tax — a proposed value-added tax imposed on imports that’s meant to disincentivize corporations from seeking offshore profits – is not in line with those principles. Proponents of the BAT have described it as “revenue neutrality,” but Jordan said that’s a fancy way of saying the tax burden should stay the same. That concept, he said, always results in a good deal for the well-connected, while the middle class gets shafted.

“When did Republicans get this idea that we have to do revenue neutral tax policy — makes absolutely no sense,” he said. “Letting families keep more of their money is not a cost to government.”

The BAT is an issue that the House Freedom Caucus remains divided over, but Meadows said he hopes that House Republicans can align in the coming weeks on core tax policy principles, as the tax discussion ramps up.

“We believe that time is of the essence, and by that, we need to get tax reform done sooner than later and by that, we should have a real proposal that we start debating before we leave the end of July,” he said.