Rep. Campbell Questions Treasury Secretary on New Entitlement Spending, IMF Funding
Posted by Newsletter Reprint on April 19, 2013
This came across the wire a couple of days ago from the office of Congressman John Campbell:
For Immediate Release: April 17, 2013
“In the president’s budget, it shows that this new entitlement, at the end of the 10 year budget window, has a deficit of $5 billion. And, over time, the entitlement will increase while the revenue source will decrease. Isn’t this exactly what got us into the deficit problem we’re in? Aren’t you just replicating it with a new program?”
Washington, DC – At a House Budget Committee hearing on the presidents FY 2014 Budget proposal, Rep. John Campbell (R-CA), a senior Member of the House Budget Committee, questions Treasury Secretary Jacob Lew on how the president expects to use a new cigarette tax that he hopes will discourage smoking to perpetually pay for a new, permanent government program. Moving to the International Monetary Fund (IMF), Campbell asks Secretary Lew if President Obama thinks it is wise to send $63 billion in taxpayer dollars to the IMF when so many domestic programs are currently under pressure due to Sequestration.
Full Transcript of Line of Questioning Between Rep. Campbell and Secretary Lew:
CAMPBELL: Thank you, Mr. Chairman and thank you, Mr. Secretary. The vast majority of people who smoke in America are low and moderate income people. So, the cigarette tax increase in the president’s budget will largely hit low and moderate income people with a tax increase that is in the president’s budget of somewhere between $6.5 billion to $10 billion a year, depending on the year. That’s just fact. But, that’s not what I want to focus on. In the budget you did, the cigarette tax increase funds a new entitlement program. This was done in California, my home state, some time ago. You said you expect the cigarette tax revenues to decline because you hope it will discourage people from smoking. Your budget numbers dont quite reflect that, but let’s presume that’s the case. That has been the case in California. You now have an entitlement created that runs out of money. And, in fact, we have that situation in California where this entitlement will completely run out of money by 2016. Even in the president’s budget, it shows that this new entitlement, at the end of the ten-year budget window, has a deficit of $5 billion. And over time, the entitlement will increase while the revenue source will decrease. Isn’t this exactly what got us into the deficit problem we’re in? Aren’t you just replicating it with a new program?
LEW: Congressman, I think the budget projection shows what we expect the revenue will be. I was earlier in the hearing expressing my hope that we would see a decline in smoking. It’s not what’s reflected in the numbers-
CAMPBELL: But, then the deficit would be even worse.
LEW: If I could just respond to your question. If we get the revenue then we pay for the program. And, that’s within the budget estimate. I have to look at what the last year issue you’re describing is; I wasn’t working on the year to year numbers as Treasury Secretary on the spending side. The benefit of reduced smoking, if it was to occur, would reduce spending dramatically. If you look at what’s driving health care costs in this country, it’s things like smoking and obesity. Either way we’re going to cover the cost. We’re either going to cover it with the revenue or there will be savings because of better health care outcomes.
CAMPBELL: But, not in this new entitlement that’s been created because you show a deficit in the entitlement. So, you have an entitlement that won’t have a funding source.
LEW: We’ve proposed a funding source to cover it through this period. What happens after the period
CAMPBELL: OK, it actually doesn’t. And, I know you haven’t been able to look at every line item. But, it actually doesn’t. By your own numbers, it runs a deficit through most of the 10 year window. Let me ask you about another thing in the budget: The funding for the International Monetary Fund, the IMF. I believe you have $63 billion dollars in there – which on the margin, everything we spend will be borrowed. So, that’s $63 billion which we will borrow in order to increase funding to the International Monetary Fund. And, you also propose to make it a mandatory program – basically, an entitlement. Given the domestic programs under pressure currently, given the deficit that we have, do you, does the president believe that borrowing $63 billion to further fund the IMF is a good use of resources?
LEW: To be clear, the proposal that we’re making on the IMF is to swap what we have contributed to the new agreement to borrow into the IMF. It is really a shifting
CAMPBELL: But, we could get that money back. It really is $63 billion that we will-
LEW: We’ve made that commitment already. We’re proposing just moving it to a different place because it has better effect there. The reality is that the IMF-
CAMPBELL: It is kind of almost in an escrow account now. This would be actually moving it to the IMF, is what you propose. So, you believe this is something we should do and should spend money on even given that the amount of it, $63 billion, is almost the amount of the Sequester?
LEW: I think that when you look at the IMF, it’s complicated because we have assets that back up what we put in the IMF. So, in terms of what the actual exposure is, it’s not quite the same as direct spending. But, I think the important thing about the IMF is the policy. The policy is that we have a veto in the IMF, we have a controlling voice when we need to, we have leverage so that the United States can influence the economic decisions around the world, and it is something that our international leadership depends on.
CAMPBELL: In my last 25 seconds, I believe you also want to make it a mandatory program, effectively making contributions to the IMF an entitlement, to use another word. Why do you want that?
LEW: I’m sorry. Could you repeat?
CAMPBELL: You make it a mandatory program contributions to the IMF. Why?
LEW: It actually could be done either way. It’s an existing funding stream. We are proposing moving it and we’d be open to working with the Congress on doing it in the most expeditious way. And, I would just point out, I think one of the reasons we’re talking about different numbers on the tobacco tax covering the program is that you are looking at budget authority and we are looking at outlays. But, I’d be happy to follow-up.