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How does Congress spend your money?  Let me count the ways.

By Congresswoman Virginia Foxx

In 1965 the average household sent around $11,000 in taxes (in today’s dollars) to Washington.  Today that average household pays double that amount.  What is behind Washington’s hunger for your money?

There are many elements.  First of all, Congress passed a number of costly pieces of legislation last year.  The stimulus package weighed in at about $800 billion.  Then the budget bill increased government spending to the highest level since World War II.  As a result non-defense spending rose 12 percent in just one year.

Next, Congress passed the costliest bill of all—a health care scheme that will increase the cost of health care and put bureaucrats in charge of many aspects of our health care system.  Finally, in the waning hours of 2009 Congress okayed a $290 billion increase in the national debt, meaning we now pay more than $1 billion a day in interest on the national debt.

It was an expensive year for taxpayers.  And yet government spending does not tell the whole story.  Alongside these many spending increases there marches an army of stealth taxes that rarely make headlines, but that quietly siphon dollars from almost every American.  

These stealth taxes are known as unfunded mandates in government-speak.  An unfunded mandate is basically a rule created by Congress or a federal agency that forces people or organizations to bear some kind of costly burden without compensation.  The net effect of unfunded mandates is to tamp down job creation and push up taxes on the state and local level. 

For example, the health care bill before Congress will force states to add millions of people to their Medicaid programs.  This program currently costs about $10 billion in North Carolina, a third of which is typically paid by North Carolina taxpayers.  If the health care bill becomes law North Carolina taxpayers will foot the bill for approximately 44 percent more people in the Medicaid program.  This will inevitably mean new state tax increases.  That’s the essence of a federal stealth tax.

Stealth taxes hurt business too.  A study by the Small Business Administration found that federal regulations cost businesses $1.1 trillion every year.  The burden of these stealth taxes is especially heavy for the small businesses that serve as the engines for job creation in America.   The same study found that federal regulations cost employers with fewer than 20 employees an astronomical $7,647 per employee every year.

Is the picture coming into focus?  Local governments and small businesses who are struggling in this recession need relief from Washington’s barrage of mandates and rules.  One of the simplest ways to give them relief would be to roll back some of the outdated or ineffective unfunded mandates that are weighing down state and local budgets and crushing the hiring capacity of small businesses. 

Imagine if such a “deregulatory stimulus” could slice off just a small percentage of that $1.1 trillion burden.  That would mean tens or even hundreds of billions of savings that would relieve local government budgets and free employers to start hiring again.  This is a sensible alternative to the endless federal spending that passes for economic stimulus today.

There are other simple ways to curtail the negative impact of these stealth taxes. Sometimes politicians’ “good ideas” go awry and need to be unwound.  That’s why I’m a member of the congressional Sunset Caucus.  It’s a group dedicated to retiring failed and underperforming rules or programs by attaching expiration dates to laws. 

Putting an expiration date, or sunset date, on new mandates or costly programs would do two beneficial things.  First, sunset provisions would help drive down the cost of government.  Secondly, sunsets force Congress to reconsider programs and rules every five years or so to see if they’ve served their purpose or if they only wasted money or caused headaches for taxpayers.  After all, if a program or regulation is so valuable, it should be able to withstand a periodic debate about its merits. 

Another way to tackle unfunded mandates is to publicize their cost before they become law.  That’s why I’ve authored H.R. 2255, which is a bipartisan bill to accomplish this goal by throwing light on the hidden costs of unfunded mandates.  It’s called the Unfunded Mandates Information and Transparency Act and it is strongly supported by the nonpartisan National Council of State Legislatures.  It would help ensure the public is made aware of the costs of new laws and regulations before they go into effect. 

It’s a new year and hope springs eternal.  Given a strong dose of common sense, Congress may yet realize that spending record amounts of your money is not the way to promote economic growth.  Instead, clearing away the accumulation of the stealth taxes we call unfunded mandates is a budget-friendly way to ignite job creation while also helping state and local governments avoid hiking taxes.