The view from the House majority leader

Rep. Steny Hoyer has strong criticism for the Iraq war and sees potential political fallout from economic turbulence.

Monitor Breakfast

Washington - The uncertainty that economics can introduce into politics was a key theme at a Monitor-sponsored breakfast with House majority leader Steny Hoyer (D) of Maryland.

The second-ranking House Democrat was asked about the political impact if recent economic turbulence – a falling dollar, rising oil prices, and a slumping housing industry – led to a major downturn in election year 2008. After the breakfast, Federal Reserve Chairman Ben Bernanke appeared on Capitol Hill and said economic growth would slow noticeably later this year and early in 2008.

The majority leader began with a shot at the Bush administration for "the fiscal irresponsibility about which we have been talking for the past six years." He continued, "So I am concerned. I think it is inevitable if the economy doesn't perform as the administration says it will perform.... There will be a consequence at the ballot [box] because people will say you haven't done what you said you were going to do and we are hurting."

Another area where economics is injecting uncertainty into political life is the current congressional effort to fix the alternative minimum tax (AMT). The tax was originally aimed at wealthy individuals who previously managed to escape federal income taxes. But since the AMT was not indexed for inflation, this year it is slated to hit 23 million taxpayers, up from 4 million in 2006. About a third of those who would pay the tax make under $100,000 annually. The cost of an annual patch to the AMT has risen to $51 billion.

When Democrats took control of Congress, they pledged to adhere to a pay-as-you-go rule, which requires tax relief to be funded either by cutting government spending or increasing taxes elsewhere.

The other option to cover the cost of an AMT fix is to ignore "pay-go" and borrow the money.

Representative Hoyer was adamant that borrowing should not happen. "I will not vote for an AMT [fix] that is not paid for. Speaker [Nancy] Pelosi has made it very clear we will not support an AMT fix that is not paid for. It simply passes along to our children the responsibility of funding what we are buying today," he said.

He called the borrowing approach to fixing the AMT a "fiscally irresponsible and morally reprehensible policy."

But the Democratic leader noted that, despite his strong stand, there was some doubt as to how the House would decide the matter. "The votes are probably on the floor of the House of Representatives to pass an AMT that is not paid.... I think all the Republicans might vote for that as they have in the past," Hoyer said. He left unsaid the fact that passage would require Democratic votes as well.

The outlook for pay-go also remains uncertain in the Senate, where several Democrats are opposed to a plan to help raise the funds to fix the AMT by boosting taxes on hedge funds. "Whether the votes are on the Senate floor to pay for things, we will see," Hoyer said.

He was much less tentative about the impact the immigration issue will have in the 2008 elections. "Immigration, frankly, will be an issue that will be used, and is being used ... to fan fears of the public, fan their anxiety, and fan, frankly, their fear of people coming into our country," he said.

A self-described "severe critic" of the war in Iraq, Hoyer told reporters that it is "perhaps the most seriously flawed implementation of a foreign policy in my lifetime and maybe in our history.... Republicans always criticized Clinton for mission creep. This mission has ... raced to expansion in terms of our goals. And I think as a result, the American people have been badly served, the nation has been badly served, our armed forces have been weakened, our readiness is at one of its lowest levels ever. We have no deployable unit in the United States at this time judged by the Army to be fully deployable."

Hoyer was asked about polls showing voters have a low opinion of Congress, in part because it has not acted more effectively to end the war in Iraq. He responded, "The United States is a big ship, and it is hard to turn a big ship. It is particularly, extraordinarily hard when the big ship's captain is at the wheel and doesn't want to change course. So it is tough."

But the Democratic leader argued that Congress had made significant changes. "Very frankly, the election of November '06 made a huge difference. Alberto Gonzales would still be the attorney general of the United States but for the election of November '06. Oversight hearings of Iraq would not have occurred.... People would still be making $5.15 an hour," Hoyer said.