President Joe Biden on Monday announced a proposed federal budget for fiscal year 2023 that includes a wish list of leftist policy proposals as well as an unprecedented tax on unrealized gains.
To Rep. Kevin Hern, R-Okla., Biden’s budget fails to help Americans deal with exploding inflation and doubles down on the deficit spending that got America into this mess in the first place.
“The Biden budget is horrendous. It increases spending by some $75 trillion over the next decade,” Hern says. “It increases taxes by $55 trillion. We got $55 trillion in taxes. So you do the math, and that’s $20 trillion in additional debt over the next decade on top of our $31 trillion now.”
“So by his own budget, it never balances, and we have over $50 trillion in debt in 10 years,” the Oklahoma Republican says on “The Daily Signal Podcast.”
Worse still, that increase in debt compounds horrific inflation.
“Inflation is a taxation on everyone. It knows no party. It knows no economic status of a family,” Hern says. “But what it does do, it hurts everybody, more on the lower end of the income scale than it does some on the upper end.”
Hern and his GOP colleagues offer an alternative, a plan to lower the deficit and unleash the American economy.
“Our goal is to remind the Americans what the conservative values of the Republican Party are about being fiscally responsible, limited government, keeping more money in your pocket so that you can spend in your communities where we don’t have to reallocate it from the federal government,” he says.
Hern joins the show to discuss Biden’s budget and the GOP alternative.
We also cover these stories:
- Senate Minority Leader Mitch McConnell defends Supreme Court Justice Clarence Thomas from attacks by the left.
- Sen. Susan Collins, R-Maine, says she will vote to confirm Judge Ketanji Brown Jackson’s nomination to the Supreme Court.
- Disney holds a staff meeting to discuss Florida’s new law prohibiting the teaching of gender identity to young students, with senior executives outlining their own LGBTQ agenda.
Listen to the podcast below or read the lightly edited transcript:
Douglas Blair: My guest today is Congressman Kevin Hern, who represents Oklahoma’s 1st Congressional District. Congressman, welcome to the show.
Rep. Kevin Hern: Doug, it’s great to be with you.
Blair: All right. So, the budget. President [Joe] Biden recently released his 2023 federal budget. To start, what do you think of it? What are your thoughts on what he did?
Hern: Well, if you believe what [House Speaker] Nancy Pelosi says and what Joe Biden has said, that’s your value statement: Show us your budget and we’ll show you what our values are. And … the question we should ask, as all Americans, can America and Americans afford this kind of a budget?
The Biden budget is horrendous. It increases spending by some $75 trillion over the next decade. It increases taxes by $55 trillion. We got $55 trillion in taxes. So you do the math and that’s $20 trillion in additional debt over the next decade on top of our $31 trillion now. So by his own budget, it never balances, and we have over $50 trillion in debt in 10 years.
Blair: One of the things that Americans are struggling with right now is inflation. And on your website, you even address this, where you wrote that, “Inflation is the No. 1 issue facing our country. Instead of addressing this problem, Biden’s budget proposal only increases the economic pressures that are suffocating American families.” How does that budget really impact inflation?
Hern: Well, what it does, it continues the problem we have that drove inflation, which is the spending that we don’t need. We have literally 11, 12 million job openings and 5 million people looking for jobs. We need to quit paying people to stay home. We need to encourage people to get back to work.
We saw this under President [Donald] Trump. When you encourage people to get into jobs, there’s a natural free market. This capitalist idea of wage is growing. We saw this prior to COVID. We need to return to that.
Our economy could roar. Right now it’s artificially roaring because we’ve pumped so many trillions of dollars in there. Businesses are screaming. I spent 35 years in business prior to coming to Congress three years ago. And I hear from business people all over the country, not just Oklahoma, “We need more people in these jobs. We want less government involved in our business.”
Blair: So they’re saying that they need less regulation. They need less government involvement to get their engines roaring again?
Hern: Less taxation. The Biden administration is talking about allowing the tax reductions to expire for small businesses and Americans at large. And that’s going to be problematic in three years. He needs that spending to offset, to get down to $20 trillion in additional debt. And so some $2 trillion in deficits annually over the next decade.
Blair: That’s interesting. Are you saying that small business owners are thinking about the debt? This is something that’s front of mind for them?
Hern: Well, if you’re in business—as I was, again, for 35 years before coming in—you understand the impact of debt and interest costs. You can’t ignore it, even if you’re in the federal government.
The individual Americans out there, businesses, even all of our states for the most part have to balance their budgets. The only place that we see crazy spending and total disregard for the American taxpayer dollars is the United States government.
And as one of the members told me today, if we were all boards of directors, we’d all be fired. It’s incredible how disrespectful we are as Americans to our American taxpayer dollars. We’ve got to do better.
I’ve been critical of Republicans and Democrats alike. That’s why last year passed the only budget in Congress. We’re going to do so again this year. When I say pass it, we pull it out of the Republican Study Committee and it balanced in a little over five and a half years. We’ll do so again at the end of April. We’ll have our budget released. It will be the only budget done in Congress, all of Congress. And we’re not even in charge.
And so the Democrats need to be leaders. Just a few minutes ago, a poll came out showing the total disgust of leadership in America by the people.
Blair: Now, I want to get to your budget. It’s an interesting proposal and I’m very fascinated to dive into it. But first of all, I want to discuss also what the alternative is in Biden’s budget, which, it advances a kind of laundry list of radical leftist policies. How do you see that impacting Americans if this budget is accepted the way it is?
Hern: Well, again, it’s his value statement. He said this upfront. And it completely ignores inflation by spending, again, $75 trillion over the next decade. When you look at what it does for tax policy, he wants to continue to take taxes.
He wants to create a new type of tax, not an income tax. He wants to call it an income tax, but it’s not. The wealth tax. He wants to destroy this entrepreneurship out there to grow. We know that when the federal government gets its nose under the tent, it wants to tax more. So it’ll have to be a constitution, no amendment to make that happen.
Secondly, it completely ignores national defense and national security. When you look at the southern border, right now we’re fighting this battle on Title 42, getting rid of that so that more Mexicans can come into America and others from around the 160 countries in the world. It completely ignores that.
It completely ignores what we had just a year and a half ago, which was energy dominance around the world. Clean burning American energy from Oklahoma, Texas, and others going around the world. And so when you look at this, he wants to create a dependency on dictators like Iran and Venezuela, as opposed to working with people from Oklahoma and Texas.
Blair: Now, you lead the Republican Study Committee’s Budget and Spending Task Force. And as we talked a little bit about, you are planning on releasing a Republican budget as an alternative to the Biden budget. What can Americans expect to see in that budget?
Hern: Well, first of all, the Republican Study Committee makes up about 75% of the Republican Conference. So it’s about 160 members of the Republican Party, the largest caucus in all of Congress on either end of the Capitol, obviously.
And our goal is to remind the Americans what the conservative values of the Republican Party are about—being fiscally responsible, limited government, keeping more money in your pocket so that you can spend in your communities, where we don’t have to reallocate it from the federal government. We think that’s the best place to do it.
We also know that part of the budget that we deal with every year in Congress is continually declining to down around 30%. It’ll be around 20% in 10 years from now.
Most of it is going out to mandatory spending. And that’s in Medicare, Social Security, Medicaid payments, and other forms of social assistance payments. It continues to grow exponentially. We’ve got to deal with this. We’ve got to deal with it now. We do.
President Biden, he kept defense spending less than inflation. So basically, we’re going backward. Yet he increased social spending, the very area of our budget that’s a problem. He increased it 5 percentage points higher than inflation.
So we’re going in the wrong direction. This budget, it’s a destination to nowhere. It doesn’t even balance. We’ve got to get back to a balanced budget, which is what our budget does. And we’ll do again this year.
Blair: So you’re trying to balance the budget by bringing back fiscal conservatism and all these things that seem to have been abandoned by the federal government?
Hern: Well, if you also look at Biden’s budget, it takes out the Hyde Amendment, which is a nonstarter for even some Democrats out there.
When you look at our budget, what it does is it says, OK, here are bills. We have some 140 member bills that have been put forth already, that have already been written. We associate those bills with different areas of the budget. And then we take and score those for a value and look at the top-line revenues, taxation, if you will. And then also look at the underlying spending part of that.
And we get to a zero deficit situation, something we have seen in our lifetime back in ’97, ’98, ’99, 2000, when then a Republican-led House and a Republican-led Senate had to work with then-[President] Bill Clinton to get something done. And it worked. So we know it can be done. It just takes intestinal fortitude by members of Congress to do so.
Blair: Which is difficult sometimes.
Hern: It’s lacking. I will put it that way.
Blair: For sure. So one of the things that I think is fascinating is we’ve talked a lot about inflation during this conversation. It’s one of the top issues facing Americans right now. People’s pocketbooks are being completely walloped by this inflation. How does your budget impact inflation? How does your budget attack it?
Hern: Well, it gets back to being responsible in spending. Here’s what every American, they don’t necessarily know what the definition of inflation is. That’s kind of a lose sometimes. But what they do know is that everything they’re purchasing today costs more.
Food costs more, gas costs more, baby formula costs more. So it’s everything. If you go look buying fertilizer for our farms, they’re doing our planting season now, it’s double what it was last year. All of this is going to continue to drive costs. Home costs are higher. Automobile costs are higher.
So we’re talking about securing our southern border, bringing manufacturing, getting control of our imports so that we can do better with that. And all these things are in the budget and they’re actually tangible, something you can read. It’s online. You can look at it.
It’s reclaiming America’s future. It’s something we believe we have to do now. Because here’s the thing with inflation, inflation is a taxation on everyone. It knows no party. It knows no economic status of a family. But what it does do, it hurts everybody, more on the lower end of the income scale than it does some on the upper end.
Blair: Does your budget talk about the deficit in any way, shape, or form?
Hern: It does. Again, we get to zero deficits. That’s balanced in the budget. You can’t pay down a debt. This is not complicated for anybody that’s listening out there and everybody. It’s no different than your own budget. You can’t start paying off your debt until you stop spending more in a year than you take in.
So we neutralize that deficit and then get it to a point where … we got to get there, flatten it out, and then allow the [gross domestic product], the income of America to grow. And then we can start seeing the percentage of debt to GDP starting to decline. Right now we’re over 120% of debt to GDP.
And a lot of people want to talk about Ronald Reagan days when he was building the defense back up after the malaise days of Jimmy Carter. The debt to GDP under Ronald Reagan was 40%. We’re 300% higher than that now. And everybody since then, Democrats and Republicans, have been just as guilty. We’ve got to restore our fiscal responsibility and accountability to the American taxpayer.
Blair: Does that involve lowering taxes for Americans? I know a lot of Americans are curious if they’re going to still be paying very high taxes as a result of this deficit.
Hern: What it does is it codifies the Tax Cuts and Jobs Act from 2017, makes those permanent for small businesses and individuals across America, where before in 2017, 84% of Americans got some tax cut, anywhere from $1,100 to $4,000 per family across America.
It took our small businesses and put them in parity with large corporations. Kept our corporations in a competitive environment with 21% tax rates. Puts us kind of in the middle tier of around the world, which is important.
It also looks at our international tax, an area I’ve been working in a lot to make sure that we’re competitive with multinational companies around the world, that we can compete on the global scale, because right now we’re getting crushed by China. And we don’t want to open up an environment where it’s better to do business from China than it is from America. And we address all these issues in that budget.
Blair: Excellent. I know we’ve been talking a lot about some of these things that we want to see—a lower deficit, lower taxes, more competitive industry for Americans—but what are some of the specific policy proposals that you’re putting into this budget to make those things happen?
Hern: Well, again, we take 140 different member bills that have been put forth in the last year. We’re adding about another 25 or 30 this year on top of that. But issues like addressing critical race theory in schools and putting parents back in control of their children’s education.
Our budget looks at where we’re going to be at not just tomorrow or this year, but 25 years from now. Are we going to restore America to a very competitive place in the world, where we’re not dependent upon energy for our survival?
Because if you take what’s happening today and you think about where the Biden administration and the Democrats want to take us to, where we’re completely dependent upon China for our rare earth minerals to make batteries and make solar panels and to make windmill blades, and we think what China could do to us when they wake up one day and say, “Listen, we’re not going to send you any more of those,” then they control our destiny.
And the Biden administration needs to quit living in the moment and start looking for the future of America. And that’s what’s really important for all of us to recognize. We want to be around another 247 years, 246 years so that we’re in survival mode then. It never fails. Every great civilization usually collapses in about 250 years. And we’re going to see that happen if we don’t get control of our debt.
Blair: So this budget is more focused toward the future as well.
Hern: It is. It restores freedom back into people, into their households so that they’re being able to educate their children without being declared terrorists, as we saw in Virginia, and we saw the outcome there. And I think Americans are waking up to what’s going on with this administration.
We address all of these things. We address not increasing the Department of Education, but looking at how we can put more money in schools at the state level so that we make sure education is local, not out of Washington, D.C., where it’s been a complete failure.
We’re falling behind. Some 30 years ago we were a leader in education around the world. Now we’re at best in the top 25.
And we’ve got to do a lot of things. We’ve got to restore our military to where it was prior to President Trump coming in and continue that path because we see these threats around the world in places like we’re seeing in Russia and Ukraine and Iran and North Korea. And also, what we’re going to see continue out throughout the Middle East.
Blair: I’m glad you brought up Ukraine, because looking at last year’s budget, you included several focuses, one of which was providing for the common defense. Given the events that we’re seeing in Ukraine with the Russians right now, is that still a priority in this year’s budget?
Hern: Yeah, I think it’s always interesting when we think that we’re moving on to some futuristic cybersecurity war, those cyber wars we hear about a lot. We also talk a lot about star wars, if you will, things coming out of outer space.
We still have the traditional war, where we’re shooting missiles, whether it be at tanks or in helicopters. And what we know is that we depleted pretty much all of our Stinger missiles that we had. Like nine years’ worth of production we depleted in about four years because we never thought we would see this kind of a ground war happen. So we have to ramp those back up.
So we still have to fight wars on three fronts, our great power competition with China and with Russia, and then some would argue even North Korea. But also, we have our traditional terrorist-type war we have out there.
And then we have this new futuristic war we’re having to deal with, what’s going to go on with who’s going to control outer space? And we saw this under President Trump with Space Force. That’s going to require us to continue to spend money in that arena and that’s going to be the new frontier for warfare.
And so all of these things we have to do to protect the homeland.
We don’t see a lot of people trying to steal their way into China or Iran or Russia. They’re coming to America and people want to harm us. It’s their goal in life to destroy America. And we got to do everything we can to project power around the world to prevent that from happening.
Blair: Does your budget include provisions for things like futuristic warfare, including [artificial intelligence], space warfare?
Hern: It does. For instance, research and development. We want research and development to be done in America, not somewhere in Europe or even in China or India.
We had out of the Tax Cuts and Jobs Act an immediate dispensing for research and development. And that, as of Jan. 1, has changed now, and it’s now amortized over five years. Will definitely restrict the research and development that’s done in the United States of America. So that intellectual property won’t be here. It’ll be somewhere else in the world, which is problematic for our tax base.
So all of these things kind of fit together. … If you’re a multinational company, if you’re in Europe and the intellectual property is in the United States, you’re paying your taxes back here. But if it’s in Europe, we never see that tax base.
So a lot of these things have a lot to do with the future of how we fund a lot of our initiatives. And there’s a lot of comments about, do we do enough for our social safety networks? We have some 90 programs in America that spends almost a trillion dollars a year to help those who need help with a hand up.
Blair: There is a concern with the way that the president’s budget is structured toward defense spending and nondefense spending. Do you see that as a large issue with that budget?
Hern: It is. I mean, if you just go back to 2011 … obviously, long before I got here, but the indecisiveness of Congress and the administration, the Obama administration, to come together and work on figuring out how to balance the budget, and some immediate triggers went in place with sequestration that ended January of last year. And you look at the trajectory of where our defense spending would’ve been, we would’ve been at somewhere around a $920 billion this year versus the $760 billion that we’re at.
Those programs are very expensive. It takes a long time to develop them. And what happens a lot of times when the spending remains flat or declining is you tend to patch up old technology while the rest of the world like China and Russia are continuing to be on the cutting edge of new technologies, like hypersonics that we’re seeing that can have the potential of wiping out our aircraft carriers, [which] we’re spending a ton of money on, $13 billion, $14 billion a piece. We have 11, soon to be 13.
So we have a lot. These things are all big spends and it takes a lot of projection down the road, a decade from now, to see what we’re going to be. And again, President Biden’s budget is some $75 billion, on the 2024 budget that we’re currently working on, he’s $75 billion below. We’re just a natural inflationary increases over last year. These are all problematic for our national security.
Blair: Now, I want to go back to something you mentioned earlier, that you were a business owner. You owned a number of McDonald’s franchisees. What can you tell us about how your budget would impact business owners, like you were in the past, now that they’re suffering from inflation and the deficit and all of these other problems from this budget?
Hern: I’m probably best known for my 35 years at McDonald’s, but also 20 years in banking, manufacturing, real estate development, technology companies. So I’ve seen it across some multitude of companies. And the reason that’s important is because you have a spread of risk and you see some industries doing better certain years.
So you look at all of this, one of the things that’s important, and it’s a commonality between all businesses, regardless of size, whether you’re a one-person shop or 1,000 or 100,000, is you can’t project on uncertainty. You like to see certainty.
And one of the places that’s the most uncertain in America is our tax code. And it’s now changing every two, three years. That makes it very difficult when you’re competing and have the opportunity to go abroad, where tax codes have been in place for some 10, 15, 20 years and you have certainty.
Why not go move your headquarters there and do business elsewhere in the world, as opposed to staying here, where you have an administration that says you’re evil and you’re causing all the inflation problems? It’s not the decisions they’re making, meaning the administration. It’s businesses are taking advantage of all of Americans.
And when you have a White House that says businesses that take the increased supply chain costs and pass those along in the form of higher prices is both unfair and absurd, that tells you how little this administration truly understands business.
Blair: As we wrap here, Congressman, I’m curious, in your opinion, what does a good conservative budget look like?
Hern: Well, first of all, I’ve sort of eschewed this whole idea of liberal and conservative when it comes to budgets. I think Americans get tired of seeing budgets being politicized. They just want to know that if they send their dollars to Washington, D.C., for them to be spent, that it is for a greater cause. It’s for something that couldn’t be done as an individual.
As an example, in Oklahoma, I can’t build aircraft carriers. That’s what the federal government is for, for strong national defense. But I can take care of people that need help.
And so getting back to where the Founders really wanted this country to be, and that takes separating the powers to the state and to the local communities and what the federal government should do well, which is a strong national defense and commerce for around the world. That’s important.
So I think when you look at that, every American wants to know their dollars are spent wisely and that we balance our budget and that we pay our debts, just like every single American has to do every single day.
And I think we set a bad example in Washington, D.C., when we have rampant spending and when we have debt that’s out of control. We send the message to all Americans that debt doesn’t matter, your obligations don’t matter, and that you don’t have to be responsible or accountable to anyone.
And I think we should be the beacon of accountability and responsibility. And that’s what the budget I did last year does. That’s what it will do this year as well.
Blair: That was Congressman Kevin Hern, who represents Oklahoma’s 1st Congressional District. Congressman, I very much appreciate your time.
Hern: Thank you, Doug.
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