Congress’ Latest Scam

Congress’ Latest Scam

This is an outrage — one you’re unlikely to hear about from anyone but me.

Congress has just shafted you in the worst way possible … via the “rider” process (hint: you’re the horse). Let me explain by way of metaphor.

Let’s say you’re in the process of buying a house. You love the new place and you’re confident the deal will go through, so you’ve sold your existing home. But the seller is a canny and unprincipled fellow. He knows you need to move in soon. So at the last minute he inserts new clauses in the sale contract: He won’t fix the roof first. He’s taking the appliances. Oh, and he’s discovered a crack in the foundation — that’s your problem, too.

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Congress has just done something like that. As is the case every year, they need to pass a last-minute “omnibus” spending and tax-adjustment bill since they can’t be bothered to do their jobs the rest of the year.

And as they do every year, they’ve slipped in some last-minute amendments that would never pass under normal circumstances…

Congress: Government by Blackmail

When my dad Bob Bauman was in Congress, the federal government’s budget process worked as follows:

First, the House passed an advisory “budget resolution.” Various House oversight committees, like Commerce and Armed Forces, then worked up their part of the budget. Each committee passed an appropriations bill to the floor of the House, where it was debated and approved. The Senate then weighed in; any changes were resolved in a conference with the House. Together, these bills were the federal budget.

The last time Congress actually passed every individual budget bill was for the 2002 fiscal year. The last time the House passed a budget resolution was in 2009. The Senate has gone for years without doing either.

Without a budget resolution, the House and Senate improvise like a mediocre jazz band. Critical steps in the process simply don’t happen, especially for large or controversial spending areas. But money still gets spent.

If a budget isn’t in place by the start of the fiscal year on October 1, the government shuts down. Congress avoids this by passing a short-term budget at current spending levels called a “continuing resolution.” This gives lawmakers more time either to write individual budget bills, or to wrap them together in an “omnibus bill” covering all 12 major appropriations areas.

In recent years, these omnibus budget bills have been packed with “riders” — unrelated policy provisions that otherwise wouldn’t be signed into law on their own. They are essentially a form of blackmail: Pass us or you’re not gonna get a budget, and everything stops.

A Storm of Riders

The House just passed the inevitable omnibus bill for 2016, which now goes to the Senate. Let’s get a taste of what it contains. Keep a bucket handy; you might get sick.

  • The bill approves the worst parts of the Cybersecurity Information Sharing Act (CISA), which failed to pass earlier this year under a storm of opposition from privacy advocates. It forces companies to hand over customer data to the government, and strips out safeguards that would have limited use of this data to genuine cybersecurity issues. It now gives it to the departments of Commerce, Defense (which oversees the CIA), Energy, Justice (the FBI), the Treasury (which oversees the IRS) and the Office of the Director of National Intelligence (which oversees the NSA).
  • The omnibus includes a rider preventing the IRS from cracking down on the political activities of 501 (c)(4) nonprofit groups — the infamous “super PACs.” These are supposed to “promote social welfare,” but they are actually campaign slush funds that protect donors’ identities. This bill also blocks the Securities and Exchange Commission (SEC) from requiring publicly owned companies to disclose their political giving.
  • Maybe that’s why the omnibus also gives away nearly $700 billion in tax breaks to influential donor industries like rum distillers, Hollywood studios, racehorse owners and NASCAR — revenue that was factored into previous attempts to keep the deficit in check.
  • The agreement delays three Obamacare taxes — on medical-device manufacturers, on expensive employer-sponsored health plans (aka the Cadillac Tax) and a tax on health-insurance plans.
  • Big western ranchers won repeal of country of origin labels on beef and pork products, so they could avoid tariffs from Canada and Mexico.
  • The bill forbids Puerto Rico to declare Chapter 9 bankruptcy to restructure its $70 billion in outstanding debt.

A Bright Side?

At least the omnibus requests that the Capitol Police allow sledding on Capitol Hill, which was banned for “security reasons” early in 2015. I was such a sledder in my youth (try the hill on the southwest corner of the Capitol — it’s the best).

As much as I love a good sled ride, that doesn’t balance out the following: Your shopping habits, financial details and Lord knows what else are about to be handed over to every government bureaucrat in Washington. Our corporate overlords can continue to exert control over our government in secret. Obamacare will contribute more to the federal deficit, which will balloon even further. Your steaks and pork chops could come from Mars, for all you’ll know. Puerto Rico will go into severe crisis as it struggles to repay its Wall Street creditors.

In the words of a holiday favorite murdered by every mediocre jazz band … Merry Christmas, Baby.

Kind regards,

Ted Bauman
Offshore and Asset Protection Editor

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