The freshman republican congressman also spoke about efforts to come to an compromise on immigration and the “regulatory excesses” of Dodd-Frank, the post-Great Recession bank regulatory bill, during opening remarks and a Q-&-A session. Two democratic primary candidates looking to unseat Faso were in the audience and argued against his stances afterwards.
The breakfast was held at the Best Western in Kingston. A couple Anti-Faso protesters were seen outside before the breakfast, but a larger protest outside the hotel did not materialize.
Faso surprised some audience members by bringing up the federal debt — one audience member joked to him afterwards that the debt was one of the things politicians should never talk about.
Each year the government takes in less money than it spends — which was the case 45 out of the last 50 years — the government must issue bonds to make up the deficit. The bonds are bought by American and foreign investors, the Federal Reserve and foreign governments, among others. The U.S. now owes $20.6 trillion in bonds — it’s debt. The United States must pay interest on these bonds, which takes up 6 percent of the federal budget.
“This will be an incredible burden that we are going stick to our children and grandchildren and it is simply not possible to sustain the trajectories we’re on as a country, and this is a bipartisan problem,” Faso said.
Analysis by two separate tax policy institutes suggested the new Republican Tax Bill, which cuts income taxes for a decade and permanently slashes the corporate tax rate from 35 to 21 percent, would increase this debt.
An analysis by the The Tax Policy Center, a non-partisan think tank, showed the tax cuts would increase the U.S. GDP by .8 percent in 2018, and in lesser amounts in later years, but would still increase the federal debt by $1.5 trillion by 2027. The bi-partisan congressional Joint Committee on Taxation predicted the tax bill would increase the debt by $1 trillion in ten years, even with the increased growth.
Faso did not vote for the tax bill, citing the reducing of the deduction for state and local taxes, which would disproportionately affect New Yorkers, with their high property and state income tax relative to other states.
Faso did not argue the tax cuts would eliminate the debt, but said added economic growth from the tax cuts would cut down on the debt, a rosier prediction than from the tax institutes.
“I definitely think with the signs we’re seeing [growth is] going to be in excess of three percent, which is still a lot fast growth, it produces a lot more revenue, a lot more jobs, and that’s a critical component to this whole thing,” he said.
The GDP increased by 2.6 percent year-over-year for the last quarter of 2017, according to the U.S. Department of Commerce.
The government had to address the debt, Faso said, and let the crowd in on what he called a “dirty little secret.”
“We are in a situation today with the federal budget where…68 percent of the federal spending is not under the direct control of Congress,” he said. “We don’t appropriate that money every year…68 cents out of ever dollar is not under the control of the appropriation of Congress. It is Medicare, Medicaid, Social Security and interest on the debt, that is the major driver of the costs going forward.”
“Non-discretionary spending” for social security, Medicaid and other welfare programs is automatically set by how many people are eligible for the programs in any given year, giving the programs a degree of insulation from Congress and the President. Payments on debt interest is also automatic.
However, Congress CAN change the eligibility requirements for welfare programs.
Dave Clegg, one of six democratic primary candidates looking to unseat Faso, was at the dinner as a member of the chamber. After the remarks, he said Faso was setting the stage for cuts to welfare programs to offset the tax cuts.
Republicans did not address the debt during talks about the Tax Bill, Clegg said, but now it was being brought up.
“As soon as they passed the tax bill, the deficit issue’s coming up,” he said. “Now they’re going to want to cut things like Social Security, Medicare, Medicaid, and I think that was planned the whole time. So I think that’s the next move, privatize Social Security, things of that nature, that I think they had in…their back pocket, so this all part of a plan.”
Democratic Primary Candidate Pat Ryan was also at the event, and called Faso’s assertion the tax bill would spur economic growth “classic trickle-down.”
“The forecast of getting a four percent growth is not going to happen when all you’re doing is giving a bunch more money back to big companies and wealthy people,” he said.
The way to stimulate the economy was through government investment, especially in infrastructure, Ryan said, “But this tax bill did the exact opposite, it took that money — we could have invested it — and gave it to people who already had money.”
Faso mentioned an upcoming infrastructure plan President Trump will unveil around the State of the Union address next week, saying he suggested the ability of sovereign wealth funds and foreign pension funds to invest in infrastructure projects as part of the plan.
He blamed the Democrats for the government shutdown last weekend.
“We should never allow a non-financial, non-budget issue to be used [to] hold hostage the funding of the United States Government,” he said, referring to an impasse over immigration reform, especially the status of DACA recipients.
However, he seemed to say some Republicans were just as unwilling to come to a compromise.
“The far left, I think, wants this an issue, and the far right doesn’t want to do anything at all,” he said.
He was part of the “Problem Solver Caucus,” a group of 24 Republican and 24 Democratic House members who were trying to come to a compromise on what he said were the four large immigration issues: the Dreamers, boarder security, family-based or “chain” migration, and the visa lottery system, which he joked was the equivalent of people getting visas because their names were blindly chosen from a bowl.
Faso also spoke out a about Dodd-Frank during the Q-&-A portion, saying it had put a “straightjacket” on small banks, leading to them being consolidated by larger financial institutions.