November 7, 2014

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Over the last four years, the House has served as an outpost in Washington for the people’s priorities. With a renewed majority, we renew that mission, and pledge to focus on good-paying jobs and an economy strong enough to help keep the American Dream alive and well.

To do this, we need a plan, and in conversations with people in my district and around the country, I have identified five things we need to do to harness America’s energy boom and reset the foundation of our economy:

• Fix our tax code so that we can bring jobs home and families can plan for the future.

• Solve our spending problem so that our children can pursue their aspirations withconfidence.

• Reform our legal system to better protect victims and consumers while giving confidence toinnovators and manufacturers.

• Reform our regulatory system to make it more practical and productive for workers andsmall business owners.

• Improve our children’s education to eliminate the barriers that keep students frombecoming the best-prepared workers and leaders.

This document lays out a roadmap for establishing these pillars of growth and opportunity. As you’ll see, the House has already done much of the groundwork, but of course, we have miles to go. After all, we’re talking about dealing with some of our country’s most pressing challenges.

If we push ourselves and show real leadership in the trenches, I know we will get there together.

John A. Boehner November 2014

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TABLE OF CONTENTS

Foreword by Speaker Newt Gingrich 4

The Foundation: America’s Energy Boom 6

Point One: Fixing Our Tax Code 9

Point Two: Solving Our Spending Problem 13

Point Three: Reforming Our Legal System 15

Point Four: Reforming Our Regulatory System 18

Point Five: Improving Our Children’s Education 21

APPENDIX: The Full Five Points Speech 24

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FOREWORD By Speaker Newt Gingrich Speaker of the House John Boehner gave an important speech at the American Enterprise Institute. He offered the American people in simple language the five things we need to do to reset our country’s economic foundation. It was exactly the kind of realistic, positive vision for governing in the 21st century that Americans have been waiting to hear from either party. Speaker Boehner began with what the House Republicans have accomplished in the last four years, despite Democrats controlling both the Senate and the presidency. Some of their record may surprise you. Republicans cut total federal spending for two straight years–the first time that’s happened in half a century. They guaranteed that 98 percent of Americans would not see permanent income tax hikes. And they pushed through free trade agreements with South Korea, Colombia and Panama. These are historic accomplishments. They have real meaning for the lives of millions of Americans. And they create room for future economic growth. Speaker Boehner argued that the real growth in the last few years, however, has come not from government but from an opportunity in American energy–the revolution in energy production that is transforming towns across the country and creating good jobs in places where there have been too few. Thanks to almost unbelievable advances in engineering and technology, the United States is now the world’s leading producer of both oil and natural gas. That energy boom, he said, means the U.S. should be one of the best places in the world to make just about anything, with more growth, more jobs, and lower prices. It is a “once-in-a-generation opportunity to reset our economy from the bottom up.” Taking advantage of this opportunity will require leadership with the wisdom to do five crucial things, the Speaker said. First, we have to fix the tortuous tax code that punishes companies for doing business here and carves out dozens of special loopholes for the wealthiest Americans while the middle class struggles to get by. Everyone would be better off with a simpler, fairer, and flatter tax code. Second, we have to fix the spending problem and move toward a balanced budget. This means cutting waste and strengthening Medicare and Social Security for current retirees and the next generation as well.

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Third, we have to fix the legal system that makes it impossible for doctors, hospitals, and other businesspeople to do their daily work without fear of getting sued. The cost of litigation here is far higher than in other countries, and we’re all paying the price. Fourth, we have to tame the sprawling, bureaucratic regulatory state that makes it painful and expensive to do business in the U.S. The bureaucracy has gotten completely out of control. And finally, Speaker Boehner argued that we have to fix our education system, which has been failing to teach our children for two generations and denying opportunity to millions of students who are trapped in schools where they don’t have a chance. We can go a long way toward resetting the system if we give parents and students a choice about which schools are best for them. If we do these five things, Speaker Boehner argued, “we can reset the foundation of our economy for the next two or three generations.” This was a sincere, heartfelt speech from a leader of the Republican Party who has an optimistic vision for the future.

NOTE: Reprinted from GingrichProductions.com

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THE FOUNDATION: AMERICA’S ENERGY BOOM America’s economy has its challenges, but our energy boom continues to be a real bright spot. Bureau of Labor Statistics data shows that most of the top-producing states have lower unemployment than the national average. “Between 2010 and 2015,” America’s Natural Gas Alliance notes, “the top ten states producing unconventional natural gas - Arkansas, Colorado, Louisiana, Michigan, Ohio, Oklahoma, Texas, Utah, Wyoming and Pennsylvania - will experience a compound annual job growth rate of nearly 8 percent.” The New York Times has pointed to Ohio as an example, specifically “the once-moribund downtowns of Northeast Ohio cities,” including Youngstown and Canton. One local expert told the paper, “Both Youngstown and Canton are places which experienced nothing but disinvestment for 40 years… they’re not ghost towns anymore.” Yet, for all its potential, this boom is confined to state and private lands. From 2009 to 2013, oil production on non-federal lands increased 61 percent while falling six percent on federal lands. Natural gas production has fallen along similar lines: a 33 percent increase on non-federal lands, but a 28 percent drop on federal lands. Bringing the state and private boom to the federal level would help create jobs and facilitate broader growth. The construction of the Keystone XL pipeline alone could support roughly 42,100 jobs and $2 billion in earnings throughout the country. We shouldn’t stop there. America’s energy boom has the potential to not only grow our economy, but reset its foundation, starting with manufacturing. For example, according to the New Orleans Times-Picayune, “with the most recent U.S. energy boom promising to bring thousands of jobs and more than $65 billion in planned projects in Louisiana over the next decade, one study says the state needs to aggressively pursue related industries and build on its existing infrastructure if it wants those investments to have a lasting impact.” This is the kind of approach we need to take as a country.

SOLUTIONS

We can start to maximize this energy boom by (1) building the infrastructure that connects the boom to consumers and companies alike, (2) pushing for federal lands to contribute to increased domestic energy production, and (3) stopping regulations that undermine this renaissance.

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The House of Representatives has already begun to act on examples of these policies, including: H.R. 3 | Northern Route Approval Act | Rep. Lee Terry (R-NE) Approves the Keystone pipeline and eliminates legal and regulatory barriers that could delay its construction for years. H.R. 6 | The Domestic Prosperity and Global Freedom Act | Rep. Cory Gardner (R-CO) Expedites the approval of liquefied natural gas (LNG) export applications. Just the construction involved in supporting LNG exports would, according to one study, create anywhere from 2,000 to 40,000 jobs between now and 2018. H.R. 1582 | Energy Consumers Relief Act | Rep. Bill Cassidy (R-LA) Subjects the EPA to common-sense oversight of future ozone regulations. These EPA rules could lead to 2.9 million fewer jobs per year on average through 2040. H.R. 1900 | Natural Gas Pipeline Permitting Reform Act | Rep. Mike Pompeo (R-KS) Accelerates the development of critical energy infrastructure. As an example, the construction of 351 delayed energy projects could have boosted the economy by $1.1 trillion and created 1.9 million jobs annually during the construction phase. H.R. 2641 | Responsibly and Professionally Invigorating Development Act | Rep. Tom Marino (R-PA) Expedites the approval for new energy projects that will help lower costs and create jobs. H.R. 2728 | Protecting States’ Rights to Promote American Energy Security Act | Rep. Bill Flores (R-TX) Prohibits Washington from overriding states that have been safely and successfully regulating hydraulic fracturing on federal land. A new study has found that the hydraulic fracturing boom “shaved up to $0.94 per gallon from fuel prices in 2013.” H.R. 2824 | Preventing Government Waste & Protecting Coal Mining Jobs in America | Rep. Bill Johnson (R-OH) Prevents the government from imposing excessive regulations on coal-fired energy. The administration’s proposed rewrite of coal production regulation could cost at least 7,000 jobs and hurt the economies of at least 22 states.

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H.R. 3826 | Electricity Security and Affordability Act | Rep. Ed Whitfield (R-KY) Prevents a new de facto national energy tax from taking effect. These new rules could, in addition to causing double-digit percentage electricity rate increases in most states, close 45,000 megawatts of coal production. H.R. 4899 | Lowering Gas Prices to Fuel an America That Works Act | Rep. Doc Hastings (R-WA) Promotes onshore and offshore energy production. This measure’s offshore provisions alone, according to an economist at Louisiana State University, could create 250,000 short-term jobs during exploration and development, and 1.2 million long-term jobs.

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“America is experiencing an oil and gas revolution. It is one of the most positive developments in the U.S. economy since 2008. This revolution is supporting well over two million jobs, has lowered energy prices and contributed to economic growth, is making the United States much more competitive in the world economy, and enhances the overall position of the United States globally.”

- Daniel Yergin, Energy Expert and Pulitzer Prize winning author of The Prize and The Quest

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“America has enjoyed the benefits of an energy boom that has surprised economists, shocked the end-of-oil doomsayers, surprised Saudi Arabia and Russia, and surprised Washington D.C.’s pundits. The entire boom came from and is being driven by the work, risk taking, investment and entrepreneurship of thousands, not a handful of small and mid-sized businesses, and it is stimulating the biggest manufacturing resurgence in modern history. This has happened without specific new government programs or policies, new incentives, or any kind of special favors. In fact, it has happened in the face of regulatory and political headwinds. Imagine what would happen – how much more could be done – if Washington actually helped? America can get a lot more yet, more economic growth, more geopolitical benefits for our nation and our allies, and more jobs in dozens of states and not just in the oil and gas fields, but far beyond, should we provide incentives to accelerate new technologies, and remove the regulatory and tax barriers that slow their deployment by America’s small and mid-sized entrepreneurs.”

Mark Mills Senior Fellow of The Manhattan Institute

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POINT ONE: FIXING OUR TAX CODE

When the playing field is level, America’s workers can outwork and outhustle anyone. That’s why fixing our tax code is critical to bringing jobs home. Since the mid-1980s, when our code was last updated, the average corporate tax rate of our competitors has fallen by nearly 35 percent. As a result, the United States now has the highest corporate tax rate in the industrialized world. The Tax Foundation ranks our system as one of the least competitive, ahead of only Portugal and France. By failing to keep pace, the United States has lost growth. According to Ernst & Young, GDP last year was up to two percent less on account of the high corporate rate. That rate stands to go up, resulting in as much as $345 billion in lost output each year. Meanwhile, the tax incentives that do help spur job creation are temporary. Congress has gotten in the habit of requiring annual votes on parts of the tax code that in all reality are permanent. This uncertainty reduces their potential benefits as businesses can’t plan ahead. For example, the Research & Development tax credit has been a regular part of the tax code since 1981. Instead of making it permanent, Congress has chosen to extend the R&D tax credit more than a dozen times. “Uncertainty here is the enemy,” Joe Harpaz writes in Forbes, “and having the innovation credit up in the air is a double whammy for businesses that are already dealing with a highly unpredictable marketplace.” With all the uncertainty, filling out the tax code can feel like a full-time job in and of itself. The average taxpayer has to spend 13 hours preparing their returns. It’s not hard to figure out why. For example, there are currently 15 different education tax breaks with a corresponding 90 pages of IRS instructions. While big companies have the resources to navigate the code and push for loopholes, middle-class families remain overtaxed.

SOLUTIONS Here are examples of ways we could fix our tax code to bring jobs home, make our country a more attractive place to start and grow a business, and make it easier for families to do everything from buy a home to save for college and retirement:

• Lower and simplify the rates paid by individuals and pass-through businesses. • Modernize the taxation of companies doing business abroad. • Lower the corporate tax rate.

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• Simplify the tax code for families and businesses, so families can do their own taxes and businesses can plan for the future, and neither can wonder if someone else is getting a better deal.

• Simplify the maze of credits and deductions families use for things like education and retirement planning.

• Reform the IRS to make it more accountable to taxpayers and less susceptible to bureaucratic abuse.

On February 26, 2014, Ways & Means Committee Chairman Dave Camp (R-MI) released a discussion draft for tax reform that addresses these priorities. The nonpartisan Joint Committee on Taxation estimates that Chairman Camp’s proposal would create 1.8 million private-sector jobs over the next 10 years, and his plan sets the stage for further action on reform. In addition, the House has acted on the following bipartisan proposals: H.R. 3393 | Student and Family Tax Simplification Act | Rep. Diane Black (R-TN) Permanently reforms and consolidates the complicated maze of high education tax incentives into a single American Opportunity Tax Credit. H.R. 4457 | America's Small Business Tax Relief Act of 2014 | Rep. Pat Tiberi (R-OH) Permanently allows small businesses to deduct the up-front cost of purchasing new equipment and property. HR. 4718 | Rep. Pat Tiberi (R-OH) Makes permanent 50 percent bonus depreciation. H.R. 4719 | America Gives More Act | Rep. Tom Reed (R-NY) Makes permanent and simplifies charitable provisions of the tax code.

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“Many tax and budget reforms know no ideological or party boundaries. While legitimate debates transpire on degrees of progressivity or size of government, no one favors the unequal justice, inefficiency, and complexity we see in our tax code today.”

- Eugene Steuerle Institute Fellow and Richard B. Fisher Chair, The Urban Institute

“Bold tax reform modeled after that accomplished by JFK and Ronald Reagan is needed to spark booming economic growth. The current recovery is underperforming Reagan’s by nearly $2 trillion – and labor force participation is at a near-record low. This sluggishness is a direct result of sky-high taxes on investments and businesses. Those with capital are hesitant to invest it and often times are moving it elsewhere on the planet where it’s more welcome. It’s time to encourage investment and risk taking by making our tax code more competitive.”

- Stephen Moore Chief Economist, The Heritage Foundation

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POINT TWO: SOLVING OUR SPENDING PROBLEM

At a time when middle-class families are being squeezed, Washington continues to spend money we don’t have. The result: rapidly increasing debt that is hurting our economy and burdening future generations. For 53 of the last 60 years, the federal government has spent more than it’s taken in. Though deficits have fallen, the nation’s debt is rapidly increasing. “Arguably the most important metric of a country’s fiscal health is its debt-to-GDP ratio,” according to the Committee for a Responsible Federal Budget, and by that measure, our debt has grown rapidly, from 35 percent in 2007 to 74 percent in 2014. The only other period when it’s been so high is around World War II. The Congressional Budget Office (CBO) projects that debt will remain on “an upward path relative to the size of the economy,” calling this “a trend that could not be sustained indefinitely.” What’s more, all this borrowing “would draw money away from private investment in productive capital in the long term,” with the result being “a smaller stock of capital and lower output and income than would otherwise be the case, all else being equal.” In a study of advanced economies, economists found that “high levels of public debt have been associated with lower growth” and “higher long-term real interest rates, which in turn has negative implications for investment as well as for consumption of durables and other interest-sensitive sectors, such as housing.” This debt is driven by unsustainable entitlement programs. Looking at our health care programs, CBO says that “aging is the key driver of spending over the long-term,” with more than 10,000 Baby Boomers retiring each day. Absent legislation, in 2016, the Social Security Disability Insurance trust fund will not be able to pay full benefits. Further, the Old Age, Survivors and Disability Insurance (OASDI) trust fund will not be able to pay full benefits in 2033. Medicare is also a picture of unsustainability: for example, a married couple – both age 66, both with average earnings – will receive more than double the amount of benefits than they contribute in Medicare payroll taxes over their lifetimes.  

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SOLUTIONS Keeping our Pledge to America, the Republican majority has worked to cut government spending by $2.1 trillion over 10 years. To lead by example, we’ve cut the cost of running the House by nearly 14 percent. We’ve also passed three budget reform bills to make it easier to measure the scope of the problem before us. Still, to truly reset the foundation of our economy, we need to address what’s driving our debt. By sustaining entitlement programs for our children, we can secure their ability to invest in their futures and pursue their aspirations. That’s why, on April 10, 2014, the House passed H. Con. Res. 96, a balanced budget resolution that contains examples of solutions to strengthen our entitlement programs: “This budget protects and strengthens Medicare for current and future generations. It also requires the President and Congress to work together to develop a solution for Social Security. This budget recognizes that the federal government must keep its word to current and future seniors. And to do that, it must reform these programs.”      

“The projected spending explosion is the debt problem, but it is more. Without real reforms the safety net programs will only be a promise to betray the seniors and least affluent of the future. With unchecked spending, the economy will falter and tax reform will not be durable. Ever-greater spending and debt is a violation of our moral obligation to the next generations. Real leadership on spending reforms is a fair and pro-growth step toward a better future.”

-Douglas Holtz-Eakin President of the American Action Forum,

Former Director of the Congressional Budget Office

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POINT THREE: REFORMING OUR LEGAL SYSTEM  There may be some developed countries with worse tax codes than ours, but we have no peer when it comes to having the world’s costliest liability system. An Institute for Legal Reform study found that our liability costs are more than 2.5 times the average level of Eurozone economies, and nearly half of those costs “are a result of its legal environment or factors statistically explained by the legal environment.” This is not just an abstract factor that makes it harder for us to compete. Excessive litigation is a stealth tax driving up the cost of everything we buy. Consider that small businesses, which typically can’t afford teams of lawyers, shell out more than $100 billion per year for liability costs. According to a Chamber of Commerce study, they have to absorb 81 percent of liability costs while taking in only 22 percent of business revenue. How do they manage? In a bipartisan survey, roughly seven out of ten small business owners said that being sued – or just the potential for being sued – “translates to increased costs that would make businesses like theirs hold back on hiring, cut back on existing employees’ benefits, and pass costs on to their customers.” Excessive permitting and litigation often lead to a loss of income and jobs. For example, an Energy & Commerce Committee policy paper detailed how, between 2005 and 2008, Shell Oil, among other companies, purchased leases in the Beaufort and Chukchi Seas off the coast of Alaska. These leases have the potential to support approximately 63,500 jobs annually through 2050. Yet, because of bureaucratic permitting delays and litigation brought by environmental groups, these projects have yet to get underway. Medical liability fears lead doctors to practice defensive medicine, which increases premiums and health care costs. One study found that defensive medicine costs $45.6 billion annually, “accounting for more than 80 percent of the $55.6 billion total yearly cost of the medical liability system.” Ten percent of health care costs are attributed to “too much care in the form of defensive medicine and associated legal costs.” The system isn’t just costly, it’s inefficient: victims aren’t being compensated, lawyers are. Because of excessive legal fees, victims generally receive less than half of their own settlements. In addition, “increasing litigation delays effectively reduce compensation as inflationary pressures reduce the value of damage awards.”

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SOLUTIONS

By (1) boosting transparency and restoring fairness, (2) enacting real medical malpractice reform, and (3) addressing excessive regulations, we can reform our legal system to better protect victims and consumers while boosting the confidence of innovators and manufacturers. Here are examples of solutions the House has acted on to date:

H.R. 982 | Furthering Asbestos Claim Transparency Act | Rep. Blake Farenthold (R-TX) Promotes transparency in the asbestos bankruptcy trust system, reduces fraud and enhances victims’ recoveries. According to the House Judiciary Committee, the measure would “increase the ability of legitimate victims to obtain maximum recoveries for their injuries and illnesses.”

H.R. 2655 | Lawsuit Abuse Reduction Act | Rep. Lamar Smith (R-TX) Reduces excessive litigation while preserving the right to file legitimate suits. It also provides a path for victims of frivolous lawsuits to receive full compensation.

H.R. 2804 | Achieving Less Excess in Regulation & Requiring Transparency Act | Rep. George Holding (R-NC) Includes reforms requiring greater transparency, rights for regulated entities and the public, judicial scrutiny, and flexibility to rein in existing consent decrees.

H.R. 3309 | Innovation Act | Rep. Bob Goodlatte (R-VA) Combats abusive patent litigation. Among other things, the Innovation Act “requires plaintiffs to disclose who the owner of a patent is before litigation, so that it is clear who the real parties behind the litigation are.”

In the 112th Congress, the House passed H.R. 5, medical malpractice reform that sought to ensure patients could recover full economic damages while setting a statute of limitations and limiting attorney’s fees based on the establishment of a sliding scale.

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“A sue-for-anything society corrodes freedom and stifles productive activity. That's why it is critical, as Speaker Boehner proposes, to restore justice as a beacon of fairness, not a tool for self-interest and extortion.”

- Philip K. Howard Author and Founder of Common Good

“We’re pleased that the Speaker is taking on excessive litigation and the abusive legal practices that are taking a heavy toll on our economy, businesses, and workers. We are looking forward to working with him and the rest of the 114th Congress to pass common sense reforms to our out-of-balance legal system.”

- Thomas J. Donohue U.S. Chamber of Commerce President and CEO

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POINT FOUR: REFORMING OUR REGULATORY SYSTEM

Like lawsuits, regulations often begin as a nuisance, another headache to spend time on, but as they keep piling up, they become a drain on businesses and our economy as a whole.

In the first five years of the Obama administration, 157 major federal regulations were issued – more than 2.5 times the amount issued during the first five years of the previous administration. Another 125 major regulations are in the works, many of which are tied to Dodd-Frank – a law that hurts small businesses while failing to end ‘too big to fail’ as promised.

Right now, we have the worst of both worlds: more regulations and less scrutiny. Looking at a recent seven-year period, the Government Accountability Office found that 35 percent of major rules were issued without the opportunity for public comment. The GAO also found a lack of responsiveness: in the case of one ObamaCare regulation, 4,627 comments were received, but no responses were issued.

Regulatory costs disproportionately hit small manufacturers, which incur regulatory costs of $34,671 per employee per year – more than three times that of the average American company.

As is the case with lawsuits, costs are then passed directly on to consumers. American Action Forum research found that “36 regulations issued during the Obama Administration will increase consumer prices by more than $11,000.” For example, regulations will increase the cost of household products – including fluorescent lamps, microwaves, air conditioners, and dishwashers – by up to $1,600.

Our energy boom is a perfect example of failed federal regulatory policy: oil and natural gas resources do not know federal versus state boundaries, but it takes 10 times as long for the federal government to issue a permit as it does the states. As a result, oil and gas production is going up sharply on state lands and down on federal lands.

ObamaCare is an epicenter of red tape. In its first four years, ObamaCare’s effect on small businesses amounts to $1.9 billion in regulatory costs and 11.3 million hours of compliance. This amounts to a “regulatory tax” of three to five percent. Again, this is the cost of just one law’s regulations.

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SOLUTIONS

By (1) implementing a system to review and eliminate excessive regulations, (2) streamlining the permitting process, (3) ensuring public and congressional input, and (4) limiting the ‘sue and settle’ process, we can bring jobs home, give the public more of a voice, and make America a more attractive place to invest. The House has acted on examples of these policies, including:

H.R. 367 | Regulations from the Executive in Need of Scrutiny (REINS) Act | Todd Young (R-IN) Reshapes federal regulatory policy by making approval of every major new rule contingent on an up-or-down vote in both houses of Congress.

H.R. 2122 | Regulatory Accountability Act | Rep. Todd Young (R-IN) Requires federal agencies to choose the lowest cost rulemaking alternative that meets statutory objectives.

H.R. 2641 | Responsibly and Professionally Invigorating Development Act | Rep. Tom Marino (R-PA) Streamlines the regulatory process by, among other things, setting reasonable deadlines for bureaucratic reviews and establishing a 180-day statute of limitations for lawsuits challenging permitting decisions. The bill also empowers agencies to manage environmental reviews efficiently, avoiding waste and duplication.

H.R. 2804 | Achieving Less Excess in Regulation and Requiring Transparency Act | Rep. George Holding (R-NC) Includes reforms requiring agencies to account for the costs of new regulations on small businesses and find flexible ways to reduce them. This bill also addresses the problem of “sue and settle” regulations that are issued after agencies and special interest groups enter into legal settlements, thereby circumventing the legislative process.

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“Manufacturers need a regulatory system that is consistent, balanced and fair. Today's system, however, is unnecessarily complex and inefficient-and it does not maximize the health and safety of our people, or job creators' ability to grow the economy. With a combined $2 trillion cost to our economy, Congress has an obligation to taxpayers to require the costs of regulations to be weighed against actual benefits, rather than against speculative or imaginary gains. The process for streamlining and developing regulations must be transparent and collaborative, involving American businesses and other stakeholders, to ensure effective compliance and to strengthen the benefits regulations seek to yield for everyone. With real solutions on regulatory reform, we can protect the American people, sustain the manufacturing comeback and power economic prosperity for all.”

- Jay Timmons President & CEO, National Association of Manufacturers

“From capital access, affordable health coverage and workforce flexibility, to permitting, federal contracting, broadband deployment and filing taxes -- federal regulators are largely out-of-touch and do not consider the potential economic damage of their actions. New business formation, job creation and investment have been inhibited as a result of the cumulative and growing regulatory burden. In the energy sector, for example, where small businesses are driving America's renaissance, outdated thinking and regulatory processes are holding back innovation and quality job growth. Regulatory accountability and transparency are desperately needed, and the reforms presented by Speaker Boehner provide a balanced and modern strategy toward constructing a system that works for America's entrepreneurs and their workforce.”

- Karen Kerrigan President & CEO, Center for Regulatory Solutions

and the Small Business & Entrepreneurship Council

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POINT FIVE: IMPROVING OUR CHILDREN’S EDUCATION

America’s ability to compete is tied to our ability to educate our young people. Unfortunately, less than half of America’s students are proficient in reading and math. According to the results of the Nation’s Report Card, only 38 percent of 12th graders performed at or above proficient in reading and 26 percent performed at or above proficient in math. These results were unchanged from 2009.

It is no surprise, then, that employers find graduates are unprepared for our labor market. According to a report from the nation’s leading human resource officers, “graduates are generally ill-equipped to function adequately in today’s high technology work environment and they require considerable additional training … in basic competencies.” In fact, 72 percent of employers found new workers with a high school diploma deficient in writing, and 54 percent find them deficient in math.

All told, nearly six million young Americans are neither in school nor working. “We risk really having this lost generation of workers,” Elisabeth Jacobs, senior director for policy and academic programs at the Washington Center for Equitable Growth, said earlier this year. “And what that means in terms of the economy's ability to innovate and compete, when you've kind of wasted the talents of some substantial portion of a generation … it's alarming.”

SOLUTIONS

Earlier this year, President Obama signed into law H.R. 803, a workforce development law based on Rep. Virginia Foxx’s (R-NC) SKILLS Act. This bill will help our workers develop the skills they need to take on good-paying jobs. Just as closing that skills gap is important, so is closing the gap that keeps students from getting the best possible education and becoming the most prepared workers:

Reforming our K-12 education system. The House has passed H.R. 5, which would eliminate barriers to progress by, among other things, (1) revamping teacher evaluations to ensure the best teachers stay in the classroom; (2) putting state and local education leaders in control of how money is used in the classroom; and (3) taking steps to give parents more options for their children’s education.

Making education more accessible and affordable. From early childhood education to college, the cost of education continues to rise across the board. In July, the House passed three bipartisan bills to address the cost of college: H.R. 3136, H.R. 4983, and H.R. 4984. The House has also passed H.R. 3393, which would make it easier for families to utilize tax credits to save and pay for college.

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Expanding successful charter school programs. The House has passed H.R. 10, which would allow 42 states and the District of Columbia to apply for grants to build and expand high performing charter schools. Today there are more than 6,000 charter schools, serving more than 2.5 million students, with one million students on waitlists. By modernizing the current Charter School Program, which has broad public and grassroots support, states would be able to create, expand and replicate innovative public charter schools to meet the growing demand.

The House has also reauthorized the popular and successful D.C. Opportunity Scholarship Program, a landmark school choice initiative that has allowed thousands of low-income families to choose the best learning environment for their children.

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“The best way to give young Americans an opportunity to participate in our high-tech economy is to make sure they get a strong education. I'm encouraged that Speaker Boehner is committed to making that happen.”

- Michael Petrilli President of the Thomas B. Fordham Institute

“We applaud Speaker Boehner for offering substantive and innovative measures that will empower parents and lead to improved educational outcomes for children, regardless of their zip code. Too many of our children are struggling and remain trapped in underperforming schools. Strengthening and expanding educational options for America’s families is a vital component of fulfilling our nation’s commitment to provide every child with a quality education.”

– American Federation for Children

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“Speaker Boehner’s five points sketch out a promising way forward on education. Especially after years of fumbling federal micro-management by the Obama administration, his vision of a more disciplined and humble federal role is welcome indeed. It’s time to focus on reducing regulation and making clear that the U.S. Department of Education shouldn’t be telling states how to evaluate teachers or improve struggling schools. The Speaker’s agenda does just that. At the same time, Congress can and should work to make it easier for states to allow parents to choose their children’s schools and for educators to solve problems in new ways without fear of being stymied by federal bureaucrats. If the Speaker’s speech is a blueprint of what’s ahead on education, I’m excited for the next two years.”

- Rick Hess Resident Scholar and Director of Education Policy Studies

of the American Enterprise Institute

“Providing our nation’s students with a high-quality education is the cornerstone of a strong and vibrant economy. We are pleased the House has taken up legislation to reform our K-12 education system and advance the work of public charter schools. In order for America to compete in today’s global economy, we must close existing achievement gaps and give low-income and working class families access to a great education.”

- Nina Rees President and CEO

National Alliance for Public Charter Schools

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APPENDIX: THE FULL FIVE POINTS SPEECH Remarks by House Speaker John Boehner (R-OH) As Prepared For Delivery American Enterprise Institute, Washington, DC September 18, 2014 I’m honored to be back at AEI. I last spoke here shortly before being elected Speaker of the House – a job I love but, looking back on it…I never expected to be doing this. I always figured I’d be in the House for about ten years, then go back to Ohio and run my business or do something else. But I’m still here and still on this journey for the same reason many of you are. Each of us was fortunate in that we had a chance to succeed, to realize our potential. And our work isn’t finished until we pass that same chance on to our children. I have some ideas for how we can do that, and today I’d like to share them with you. Let me start by picking up where I left off during my last visit. That day, I talked about how we would run the House differently than it had been in the past under Democrats and Republicans. And today I can report that the people’s House is more open and more transparent: For the first time, legislative data is posted online in XML and in bulk. House proceedings and committee hearings are streamed online. You can even bring your iPad to the floor (if you must.) Earmarks – which once crashed into our coffers 10,000 at a time – are gone. The cost of House operations has been reduced by 13.8 percent. And we’ve considered 33 bills under an open process. There were zero open rules in the last Congress under the previous majority.

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So we’re on the right track, and much of the credit goes to the people in the institution who do the heavy lifting. All of this is about delivering what my friend Newt Gingrich calls a “21st century citizen-directed government,” one that is smaller, less costly, and more accountable to the people we serve. And it’s why, despite being the minority party in Washington,

Republicans have gotten some important things done. We cut total federal spending for two years in a row. That hadn’t happened since the Korean War. Completed major free trade agreements with Colombia, Panama, and South Korea. Made it easier to pay for college by tying student loan rates to the markets instead of politics. Improved our job training system so more people can gain high-quality skills. And we protected 98 percent of Americans from permanent tax increases. There’s a lot more we can do, and our focus continues to be on what we call ‘American Solutions’ to help get people back to work, lower costs at home, and restore opportunity for all. To that end, we’ve passed more than 350 bills that are pending in the United States Senate, including dozens to help create good-paying jobs and plant the seeds of economic growth. As we speak, the House is considering a big energy bill, and with good reason. We’ve got an energy boom going on in this country. Oil and gas production is soaring everywhere from Colorado and North Dakota, to Texas and Louisiana, to the Youngstown corridor of Ohio, Pennsylvania, and West Virginia.

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This boom is driving real growth. In Youngstown, for example, unemployment is nearly half of what it was four years ago. This is a big deal. Except Americans don’t hear much about this boom, and that’s because it’s happening entirely on state and private lands, where the federal government has no say whatsoever. We take this approach to the national level – by doing things like approving the Keystone XL pipeline and opening more areas for exploration – and that’ll really get our economy humming. But let’s not stop there. I want us to think bigger than just moving the numbers. In my view, America’s energy boom presents a once-in-a-generation opportunity to reset our economy from the bottom up. Here’s what I mean. North America is on track to be energy independent in the next five years or so. This is going to mean more growth, yes, but it’s also going to mean lower prices. We’re already paying anywhere from 30 to 50 percent less for electricity than many European countries. This disparity is going to grow, and as it grows, more manufacturers are going to look at moving their factories here. They’ll have to. You can’t produce anything without energy, especially electricity. Now, that’s what they’ll look at doing, but will they follow through? That’s our job, to make sure that happens. The problem is, Washington’s approach is so top-down, and the bureaucracy so lumbering, that the government is keeping us from where we need to be. Look at the state of things: flat wages, higher prices, a six-year slog to regain the jobs lost during the recession, and millions still asking, ‘where are the jobs?’ So we can do this the Washington way, move around some dirt, see what happens.

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Or we can lay a solid foundation for growth and mobility. Not pick one thing over the other, but do all we can to reap the benefits of this boom. Bring these good-paying jobs home, get our workers off the sidelines. Build a culture of hard work and responsibility around them. Make America the best place to work, save and invest. It can be done. And there are five things that I think we need to do to make it happen. First thing is, fix our tax code. You’ve heard a lot lately about corporate inversions. Well, inversions are really just visible symptoms of a much deeper problem: our tax code is terrible. No one understands it, certainly not the IRS. People pay an accountant hundreds of dollars in the hopes of paying less to the feds. They have to, because over the years thousands of changes have been made to the tax code, largely for the benefit of the well-connected, who happily take their share while the middle class remains overtaxed. So all this talk about inversions is just making the problem smaller. It’s fussing over a divot when the road is loaded with potholes. Let’s fix the whole tax code. Make it pro-growth and pro-family. Bring down the rates for every American, clear out all the loopholes, allow people to do their taxes on two – yes, two – sheets of paper. (See, I can already feel the blood pressure in the room dropping.) We do this, we get rid of one of the biggest reasons jobs go overseas, and make it easier for families to do everything from build a house to save for college. Second, we have to solve our spending problem. For 53 of the last 60 years, we’ve spent more money than we’ve brought in. This is where people get on me for comparing apples to oranges, but hear me out. Would you do this in your home? No. Could you do this in your business and live to tell? No way. And we can’t do it as a country either. Not just because it’s bad for our economy. It is stealing from our kids and grandkids, robbing them of benefits they’ll never see and leaving them with burdens that are nearly impossible to repay.

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The question isn’t what’s driving this debt – it’s who. It’s Baby Boomers like me retiring at the rate of 10,000 a day, 70,000 a week, more than 3.5 million every year. And this is only year four of this 20-year demographic bubble in which Baby Boomers are retiring. Our entitlement programs weren’t designed to deal with all of us retiring at once, and they certainly weren’t designed for us to live to well past 80. But we don’t need to throw these programs away. We need to put them on a more sustainable path, which we can do without making radical changes. Third, we have to reform our legal system. We’ve gotten to a point in America where litigation has become a first resort instead of a last. The costs are staggering: Americans are spending more per person on litigation than just about any other country, and it’s not even close. Our liability costs are more than 2.5 times the average level of Eurozone economies. Not something to be proud of. These costs don’t just show up in higher premiums. Doctors have to charge more. Businesses have to charge more. It’s a stealth tax driving up the cost of all our goods and services. Our system isn’t just costly; it’s inefficient. According to one study, victims are generally receiving less than half of every dollar paid out by defendants. There has to be a better way. I’m all for taking care of people who have been injured, but we ought to establish reasonable limits on lawsuits and compensation. Fourth, we have to rein in our regulatory system. The way the federal government hands down regulations is coercive, combative, and very expensive. Take the Dodd-Frank law, with its 849 pages and $21.8 billion in compliance costs. The whole point of all this, we were told, was to end the bailouts, end ‘too big to fail.’ Well, not only has it failed to do that, but those compliance costs are indiscriminately hitting small community banks and credit unions. For those smaller banks, their bread-and-butter is lending to entrepreneurs and small businesses. But now, you’ve got more uncertainty and more money going into compliance. And what happens?

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The cost of borrowing goes up, and access to credit goes down. It’s the last thing Main Street needs right now. Other countries have a more pragmatic process, where you focus on what’s truly necessary and feasible. The result is, you have fewer regulations, and the ones you have are more important and more easily implemented. Now, even if we were to do all four of these things, we still wouldn’t be maximizing our potential. So, the fifth thing is, we have to improve our education system. Aside from Arthur Brooks, you won’t meet a more glass-half-full guy than me. But these are, what I consider, some depressing figures: Last year, about one out of every five students didn’t graduate high school. One in five. And among those who do graduate, one in five need remedial courses in college. And that’s because, according to the Nation’s Report Card, only 38 percent of 12th-graders performed at or above proficient in reading, and only 26 percent performed at or above proficient in math. We are not educating enough of our kids – it’s that simple Now, one thing No Child Left Behind did was require every state to adopt standards and assessments of progress. That means we can track whether children are learning. That’s the good news. The bad news is that we know too many children still aren’t learning. And many aren’t learning because they’re sentenced to attend a struggling school. That’s why we created the first federally-funded private school choice initiative in America, the D.C. Opportunity Scholarship Program. And I’ll tell you what: it is succeeding beyond even our highest expectations. 97 percent graduating from high school. A 92 percent approval rating among parents. Why wouldn’t we go ahead and start expanding this initiative to the rest of the country? Let’s give more poor children and their parents a chance to find the better schools they need and deserve.

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So those are the five things. We do these five things in a meaningful way, we can reset the foundation of our economy for the next two or three generations. Provide a reliable stream of good-paying jobs. More stability and security, straight on through retirement. And more opportunities for every American to get ahead, not just get by. Ladies and gentlemen, there’s one more reason to do this – just as, if not more important than the rest. When fall comes around, I’m reminded of how, after the First and Second World Wars, many cities and universities built memorial stadiums in honor of the fallen. One of the classics is the Navy-Marine Corps Memorial Stadium in Annapolis. If you’ve never been, on the façade that surrounds the football field, the great battles are listed: Guadalcanal, Midway, Sicily, Iwo Jima. The story goes that a William & Mary player once looked at all the names and said, “Man, these guys have a tough schedule!” Well, America has a tough schedule in front of us. We cannot avoid that. Nor should we try. America is not merely obligated to lead. We are again called to lead. And we are driven to serve in the same spirit in which our parents and grandparents built those living memorials – with humility and a desire to leave something that outlasts us. For what lies ahead the world needs a strong America, and that means we need a strong economy. One in which all our people can strive to fulfill their God-given potential…and show there is no greater enterprise than free enterprise, and that we will never settle for the safe route. We will lead for freedom in every sense of that word. Today I have tried to lay out a path to do this that speaks to both parties and to all Americans. Because I trust in them. I know they can do anything. And I know their labors will justify our faith.

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