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THE U.S. SENATE HERE ON C-SPAN2.
AND ALSO THIS HOUR, JUST TO
MENTION, THE PRESIDENT WILL BE
MEETING WITH THE VICE PRESIDENT
AND CONGRESSIONAL LEADERS TO
CONTINUE TALKS ON THE DEBT AND
DEFICIT.
..
ON THE C-SPAN NETWORKS.
YOU CAN FIND CONTINUING COVERAGE
THE
SENATE WILL COME TO ORDER.
THE CHAPLAIN DR. BARRY BLACK
WILL LEAD THE SENATE IN PRAYER.
LET US PRAY.
LORD GOD ALMIGHTY,
UNTO WHOM IN ALL AGES
PEOPLE HAVE LIFTED
UP THEIR HEARTS,
AS WE BEGIN THIS WEEK
WE ARE AWARE THAT AMERICANS
ARE WATCHING ON TELEVISION
THE DAILY BUSINESS
OF THIS CHAMBER.
GRANT OUR SENATORS
WISDOM TO SOLVE
THE COMPLEX ISSUES OF OUR TIME.
INSPIRE THEM TO SEE
THE WISDOM OF COOPERATION.
STRENGTHEN THEIR MINDS
AND BODIES TO ENDURE
LONG HOURS OF LABOR
AND TO BUILD ALLIANCES
ACROSS THE AISLE
THAT WILL LEAD US AND OUR NATION
TO A BETTER TOMORROW.
LET THE STRUGGLES THEY
EXPERIENCE HELP THEM
DEVELOP A MORE ROBUST AND
MEANINGFUL RELATIONSHIP
WITH YOU AND THOSE AROUND THEM.
MAY YOUR SPIRIT BE
ABOVE AND AMONG THEM
THAT IN THESE DAYS OF DESTINY
THEY MAY MAKE
YOUR WAYS THEIR WAYS.
AMEN.
PLEASE
JOIN ME IN RECITING THE PLEDGE
OF ALLEGIANCE TO THE FLAG.
I PLEDGE ALLEGIANCE
OF THE UNITED STATES
TO THE FLAG
OF AMERICA,
AND TO THE REPUBLIC
FOR WHICH IT STANDS,
ONE NATION
UNDER GOD,
INDIVISIBLE,
WITH LIBERTY
AND JUSTICE FOR ALL.
THE
CLERK WILL READ A COMMUNICATION
TO THE SENATE.
WASHINGTON, D.C.,
JULY 11, 2011.
TO THE SENATE:
UNDER THE PROVISIONS OF
RULE 1, PARAGRAPH 3,
OF THE STANDING RULES
OF THE SENATE,
I HEREBY APPOINT
THE HONORABLE CHRISTOPHER ***,
A SENATOR FROM THE STATE OF
DELAWARE, TO PERFORM THE DUTIES
OF THE CHAIR.
SIGNED: DANIEL K. INOUYE,
PRESIDENT PRO TEMPORE.
UNDER THE
PREVIOUS ORDER, THE LEADERSHIP
TIME IS RESERVED.
ALSO UNDER THE PREVIOUS ORDER,
THE SENATE WILL RESUME
CONSIDERATION OF THE MOTION TO
PROCEED TO S. 1323, WHICH THE
CLERK WILL REPORT.
MOTION TO PROCEED TO
CONSIDERATION OF S. 1323, A BILL
TO EXPRESS THE SENSE OF THE
SENATE ON SHARED SACRIFICE AND
RESOLVING THE BUDGET DEFICIT.
UNDER THE
PREVIOUS ORDER, THE TIME UNTIL
5:30 P.M. WILL BE EQUALLY
DIVIDED AND CONTROLLED BETWEEN
THE TWO LEADERS OR THEIR
MR. PRESIDENT.
DESIGNEES.
THE
SENATOR FROM NORTH DAKOTA.
I ASK FURTHER
PROCEEDINGS ON THE QUORUM CALL
BE DISPENSED WITH.
FOLLOWING LEADER REMARKS, THE
SENATE WILL RESUME THE MOTION TO
PROCEED TO S. 1323, A BILL TO
EXPRESS THE SENSE OF THE SENATE
ON SHARED SACRIFICE IN RESOLVING
THE BUDGET DEFICIT, WITH THE
TIME UNTIL 5:30 EQUALLY DIVIDED
BETWEEN THE TWO LEADERS OR THEIR
DESIGNEES.
AT 5:30, THERE WILL BE A ROLL
CALL VOTE ON THE MOTION TO
PROCEED TO S. 1323.
MR. PRESIDENT, I UNDERSTAND THAT
S. 1340 IS AT THE DESK AND DUE
FOR A SECOND READING.
THE CLERK
WILL READ THE TITLE OF THE BILL
FOR THE SECOND TIME.
S. 1340, A BILL TO
CUT, CAP AND BALANCE THE FEDERAL
BUDGET.
I WOULD OBJECT TO
ANY FURTHER PROCEEDINGS WITH
RESPECT TO THE BILL.
THE
OBJECTION IS HEARD.
IT WILL BE PLACED ON THE
CALENDAR UNDER THE PROVISIONS OF
RULE 14.
I THANK THE CHAIR.
MR. PRESIDENT, WE ARE IN THE
MIDST OF A DEFINING DEBATE ON
THE BUDGET OF THE UNITED STATES.
ALL OF US UNDERSTAND WE HAVE A
DEBT THREAT LOOMING OVER THIS
COUNTRY THAT'S AS SIGNIFICANT AS
ANYTHING WE HAVE FACED IN MANY
YEARS.
MR. PRESIDENT, DEMOCRATIC
MEMBERS OF THE SENATE BUDGET
COMMITTEE HAVE WORKED FOR WEEKS
TO DEVICE A BLUEPRINT THAT THEY
THINK HAS MERIT AND THAT
DESERVES TO BE PART OF THE
DEBATE, AND SO, MR. PRESIDENT,
TODAY I AM HERE TO OUTLINE THE
KEY ELEMENTS OF THAT BUDGET
BLUEPRINT.
FIRST OF ALL, I THINK IT'S
CRITICALLY IMPORTANT THAT WE ALL
UNDERSTAND THAT WE ARE AS A
NATION BORROWING 40 CENTS OF
EVERY DOLLAR THAT WE SPEND.
THAT IS NOT A SUSTAINABLE
CIRCUMSTANCE.
ADMIRAL MULLEN, THE CHAIRMAN OF
THE JOINT CHIEFS OF STAFF, HAS
INDICATED THAT OUR NATIONAL DEBT
IS OUR BIGGEST NATIONAL SECURITY
THREAT.
THIS IS THE TOP MILITARY MAN IN
OUR COUNTRY SAYING THE DEBT
THREAT IS THE MOST SERIOUS
NATIONAL SECURITY THREAT.
WHY DOES HE SAY THAT?
FACTS.
WELL, BECAUSE HERE ARE THE
THE DEBT OF THE UNITED STATES,
THE GROSS DEBT, ALL OF THE DEBT
THAT WE OWE IS NOW APPROACHING
100% OF OUR GROSS DOMESTIC
PRODUCT, THE HIGHEST LEVEL IT'S
BEEN SINCE AFTER WORLD WAR II.
THIS CHART SHOWS A THRESHOLD OF
90%, A GROSS DEBT OF 90%.
WHY DID WE DRAW THAT LINE ON
THIS CHART?
BECAUSE, MR. PRESIDENT, THE BEST
EVIDENCE WE HAVE TELLS US WHEN
YOU CROSS THE 90% THRESHOLD ON
THE GROSS DEBT OF ANY NATION,
YOU ARE IN THE DANGER ZONE, YOU
ARE IN THE RED ZONE.
THE DISTINGUISHED ECONOMIST
CARMEN REINHART AND KENNETH
ROGOFF WROTE A BOOK "GROWTH IN A
TIME OF DEBT."
HERE IS THERE CONCLUSION.
WE EXAMINE THE EXPERIENCE OF 44
COUNTRIES SPANNING UP TO TWO
CENTURIES OF DATA ON CENTRAL
GOVERNMENT DEBT, INFLATION AND
GROWTH.
OUR MAIN FINDING IS THAT ACROSS
BOTH ADVANCED COUNTRIES AND
EMERGING MARKETS, HIGH DEBT TO
G.D.P. LEVELS, 90% AND ABOVE,
ARE ASSOCIATED WITH NOTABLY
LOWER GROWTH OUTCOMES.
MR. PRESIDENT, THIS IS A KEY
FACT ALL OF OUR COLLEAGUES NEED
TO KNOW.
WHEN YOUR GROSS DEBT GOES OVER
90% OF YOUR GROSS DOMESTIC
PRODUCT, YOUR FUTURE ECONOMIC
PROSPECTS ARE DIMINISHED.
THAT MEANS FEWER JOBS CREATED,
FEWER -- LESS ECONOMIC
OPPORTUNITY, A NATION THAT IS AT
RISK.
ARE.
MR. PRESIDENT, THAT'S WHERE WE
AND LOOK AT WHAT THE
CONGRESSIONAL BUDGET OFFICE SAYS
IS WHERE WE ARE HEADED.
ON THE CURRENT TRAJECTORY, WE'RE
HEADED FOR A DEBT THAT WILL GO
TO 200% OF THE GROSS DOMESTIC
PRODUCT OF THE COUNTRY.
AND THIS IS NOT THE GROSS DEBT.
THIS IS THE PUBLICLY HELD DEBT,
WHICH IS SMALLER THAN THE GROSS
DEBT.
SO THIS CHART NOW LOOKS AT THE
PUBLICLY HELD DEBT AND SAYS THAT
IS HEADED FOR 200% OF G.D.P.
MR. PRESIDENT, WE CANNOT STAY ON
THIS COURSE.
IT IS CRITICALLY IMPORTANT THAT
WE CHANGE DIRECTION.
FOR EVERY ONE PERCENTAGE POINT
IN INTEREST THAT WE PAY,
PAY, $1.3 TRILLION IS ADDED TO
THE DEBT.
FOR THOSE WHO SAY DON'T WORRY
ABOUT THE DEBT LIMIT, LET'S
REMIND THEM THAT WHAT WILL OCCUR
IF THE UNITED STATES REFUSES TO
PAY THE BILLS THAT IT'S ALREADY
INCURRED IS THAT THE INTEREST
RATES WILL GO UP.
THOSE WHO HAVE LOANED US MONEY,
IF WE RENEGE ON OUR COMMITMENTS
TO PAY THEM, WILL THEN INSIST ON
HIGHER INTEREST RATES, ALL
BORROWERS WILL INSIST ON HIGHER
INTEREST RATES, AND FOR EVERY 1%
INCREASE IN INTEREST, WE WILL
DEBT.
PAY $1.3 TRILLION MORE ON OUR
SO THOSE WHO THINK SOMEHOW BY
NOT EXTENDING THE DEBT LIMIT
WE'RE GOING TO HELP ON THE DEBT,
NO, JUST THE OPPOSITE IS TRUE.
THE DEBT WILL INCREASE AND
INCREASE DRAMATICALLY.
MR. PRESIDENT, HERE ARE THE HARD
FACTS WITH RESPECT TO THE
RELATIONSHIP BETWEEN SPENDING
AND REVENUE OVER THE LAST 60
YEARS IN THIS COUNTRY.
LINE.
THE RED LINE IS THE SPENDING
THE GREEN LINE IS THE REVENUE
LINE.
AND WHAT THIS SHOWS VERY CLEARLY
IS THAT SPENDING IS THE HIGHEST
IT'S BEEN AS A SHARE OF G.D.P.
IN 60 YEARS.
YES, WE HAVE A SPENDING PROBLEM.
BUT IT IS NOT EXCLUSIVELY A
SPENDING PROBLEM, AS SOME ASSERT
ON THIS FLOOR, BECAUSE REVENUE
AS A SHARE OF G.D.P. IS THE
LOWEST IT HAS BEEN IN 60 YEARS.
TO DENY THAT ESSENTIAL FACT IS
TO DENY THE SIGNIFICANT ELEMENTS
OF A COMPROMISE THAT ARE
REQUIRED TO SOLVE THIS PROBLEM.
MR. PRESIDENT, SPENDING IS THE
HIGHEST IT'S BEEN IN 60 YEARS AS
A SHARE OF OUR NATIONAL INCOME.
REVENUE IS THE LOWEST IT HAS
BEEN IN 60 YEARS AS A SHARE OF
OUR NATIONAL INCOME.
BOTH HAVE TO BE ADDRESSED IF
WE'RE GOING TO SOLVE THIS
PROBLEM.
AND FOR THOSE WHO SAY WELL, IT'S
NOT A REVENUE PROBLEM, YES, IT
IS.
THIS IS AN ARTICLE THAT APPEARED
SUNDAY, MAY 1, IN "THE
WASHINGTON POST"."
ON THE WAY TO A SURPLUS, A
A $12 TRILLION U.S. DETOUR."
REMEMBER IN 2001, WE WERE TOLD
WE WERE ON THE WAY TO PAYING OFF
THE DEBT OF THE UNITED STATES.
THIS ARTICLE BY LORI MONTGOMERY
IN "THE WASHINGTON POST" ON MAY
1 INDICATED THE FUNDAMENTAL
REASONS THAT INSTEAD OF PAYING
OFF THE DEBT, WE HAVE A DEBT
THAT IS MUSHROOMING.
THIS ONE PARAGRAPH SAYS IT ALL.
THE BIGGEST CULPRIT BY FAR HAS
BEEN AN EROSION OF TAX REVENUE
TRIGGERED LARGELY BY TWO
RECESSIONS AND MULTIPLE ROUNDS
OF TAX CUTS.
TOGETHER, THE ECONOMY AND THE
TAX BILLS ENACTED UNDER FORMER
PRESIDENT GEORGE W. BUSH AND TO
A LESSER EXTENT BY PRESIDENT
OBAMA WIPED OUT $6.3 TRILLION IN
ANTICIPATED REVENUE.
THAT'S NEARLY HALF OF THE
THE $12.7 TRILLION SWING FROM
PROJECTED SURPLUSES TO REAL
DEBT.
FEDERAL TAX COLLECTIONS NOW
STAND AT THEIR LOWEST LEVEL AS A
PERCENTAGE OF THE ECONOMY IN 60
YEARS.
THE POINT THAT I JUST MADE.
SO, MR. PRESIDENT, WHEN
DEMOCRATS ON THE SENATE BUDGET
COMMITTEE APPROACHED THIS
PROBLEM, WE LOOKED AT IT IN
HISTORICAL PERSPECTIVE.
NOW DID WE GET INTO THIS
PROBLEM?
HALF OF IT IS ON THE REVENUE
SIDE.
AND SO WE CHOSE TO DEAL WITH A
SOLUTION THAT DEALS ON BOTH
SIDES OF THE LEDGER.
YES, TO CUT SPENDING.
ABSOLUTELY THAT MUST BE DONE.
BUT WE ALSO CUT SO-CALLED TAX
EXPENDITURES THAT ARE REALLY
JUST SPENDING BY ANOTHER NAME.
LOOPHOLES, EXCLUSIONS,
DEDUCTIONS, TAX PREFERENCES,
ABUSIVE TAX SHELTERS AND TAX
HAVENS THAT ARE HEMORRHAGING
REVENUE THAT RIGHTFULLY BELONGS
IN THE TREASURY.
PEOPLE AVOIDING WHAT THEY
LEGITIMATELY OWE TO THE UNITED
STATES BY ENGAGING IN ABUSIVE
TAX SHELTERS AND TAX HAVENS THAT
IS COSTING US SUBSTANTIAL
REVENUE, AND WE'LL GET INTO THE
SPECIFICS OF THAT.
THE HOUSE REPUBLICANS CHOSE A
DIFFERENT PATH.
THEY ONLY WANT TO FOCUS ON HALF
THE PROBLEM.
THEY ONLY WANT TO FOCUS ON THE
SPENDING SIDE OF THE EQUATION.
THEY DON'T WANT TO TOUCH THE
REVENUE SIDE OF THE EQUATION.
MR. PRESIDENT, I BELIEVE THAT
JUST DENIES REALITY.
THAT RUNS AWAY FROM THE HARD
REALITY OF HOW DID WE GET IN
THIS SITUATION?
AND AGAIN, WE GOT THERE BY, YES,
SPENDING THAT IS HIGHER THAN IT
HAS BEEN IN 60 YEARS AS A SHARE
OF NATIONAL INCOME, BUT ALSO
REVENUE THAT IS LOWER THAN IT
HAS BEEN AT ANY TIME IN 60
YEARS.
MR. PRESIDENT, IF WE'RE
DISTRUDGEFUL WITH OURSELVES,
WE'RE GOING TO HAVE TO DPEEL
WITH BOTH SIDES OF THIS
EQUATION.
MR. PRESIDENT, THE PLAN THAT
SENATE DEMOCRATS ON THE BUDGET
COMMITTEE HAVE AGREED ON LOOKS
AT A BUDGET FRAMEWORK THAT
INCLUDES ROUGHLY THE SAME AMOUNT
OF DEFICIT REDUCTION AS THE
HOUSE REPUBLICAN PLAN.
IN FACT, WE HAVE SOMEWHAT MORE
DEFICIT REDUCTION THAN DID THEY.
THEY HAVE A PLAN THAT WAS $3.9
TRILLION OF DEFICIT REDUCTION.
OUR PLAN IS $4 TRILLION.
MR. PRESIDENT, THE ACTUAL
DIFFERENCE IS ABOUT $50 BILLION,
BUT BECAUSE OF ROUNDING, IT
TURNS OUT THEY'RE AT $3.9
TRILLION.
WE'RE AT $4 TRILLION.
THE ACTUAL DISICHES ABOUT $50
BILLION MORE IN DEFICIT
REDUCTION -- THE ACTUAL
DIFFERENCE IS ABOUT $50 BILLION
MORE IN DEFICIT REDUCTION.
SO, MR. PRESIDENT, THIS IS WHAT
HAPPENS TO DEFICITS AS A SHARE
OF G.D.P. UNDER THE FRAMEWORK FRAMEWORK
THAT WE'RE OFFERING.
YOU CAN SEE, THIS YEAR THE
DEFICIT IS IS 9.3% OF GROSS
DOMESTIC PRODUCT.
WE BRING IT DOWN VERY STEADILY
UNTIL WE GET DOWN TO 1.3% IN THE
TENTH YEAR.
AND LOWER DEFICIT IN -- A LOWER
DEFICIT IN SIMILAR TERMS AS A
REPUBLICAN PLAN.
SHARE OF G.D.P. THANK THE HOUSE
LET ME REPEAT THAT.
THE SENATE DEMOCRATS ON THE
BUDGET COMMITTEE, OUR PLAN,
REDUCES THE DEFICIT BY THE TENTH
YEAR BY MORE THAN THE
REPUBLICANS IN TOTAL AND IN THE
TENTH YEAR WE HAVE A LOWER
DEFICIT IN DOLLAR TERMS AND A
LOWER DEFICIT AS A SHARE OF
G.D.P.
MR. PRESIDENT, THIS IS WHAT
GROSS DEBT.
HAPPENS TO THE DEBT ITSELF, THE
AS YOU CAN SEE, IT PEAKS OUT AT
100% IN 2011 AND THEN WE BRING
IT DOWN GRADUALLY BUT STEADILY
TO ABOUT 98% BY 2021.
THE KEY IS, INSTEAD OF HAVING
THE DEBT LINE GOING UP, UP, AND
AWAY BURYING THIS COUNTRY UNDER
A MOUNTAIN OF DEBT, WE STABLIZE
THE DEBT AND BEGIN TO BRING IT
DOWN.
SOMETHING THAT EVERY SERIOUS
ECONOMIST HAS SAID IS ABSOLUTELY
ESSENTIAL.
MR. PRESIDENT, IN TERMS OF
SPENDING, I INDICATED CURRENT
SPENDING IS THE HIGHEST IT HAS
BEEN AS A SHARE OF G.D.P. IN 60
YEARS.
OUR PLAN TAKES THAT DOWN FROM
24% OF G.D.P. TO 23% AND THEN
FREEZES IT AT 22% OF G.D.P. FOR
THE REST OF THIS DECADE.
NOW, SOME WILL SAY, THERE GO THE
DEMOCRATS AGAIN, THEY'RE
SPENDING TOO MUCH MONEY.
I WOULD SAY TO THEM, IF WE COULD
GET THE SPENDING DOWN TO THE
LEVELS THAT OBTAINED DURING THE
REAGAN ADMINISTRATION, WOULD BE
ACCEPTABLE, BECAUSE EXACTLY WHAT
WE DO.
UNDER THE PLAN OF SENATE BUDGET
COMMITTEE DEMOCRATS, WE GET
SPENDING DOWN TO THE EXACT SAME
LEVEL THAT PERTAINED TO THE SAME
LEVEL DURING RONALD REAGAN.
G.D.P.
SPENDING AVERAGED 22.1% OF
THAT IS PRECISELY WHAT OUR
SPENDING EQUALS IN THE BUDGET
FRAMEWORK I OUTLINE HERE TODAY.
MR. PRESIDENT, WE INCLUDE EVERY
PART OF THE FEDERAL BUDGET,
INCLUDING THE DEFENSE BUDGET.
JUST AS THE FISCAL COMMISSION
DID, JUST AS EVERY OTHER
BIPARTISAN DEFICIT-REDUCTION
PLAN HAS INCLUDED, WE LOOKED TO
DEFENSE SPENDING FOR SAVINGS,
BECAUSE NO PART OF THE BUDGET
CAN BE OFF THE TABLE IN TERMS OF
A DEFICIT-REDUCTION PLAN.
I WOULD SAY, SEPARATELY, SOCIAL
SECURITY WE DEAL WITH
SEPARATELY, BECAUSE SOCIAL
SECURITY NEED NOT BE, SHOULD NOT
BE PART OF A DEFICIT-REDUCTION
PLAN.
SAVINGS ON SOCIAL SECURITY OUGHT
TO BE FOR THE PURPOSE OF
EXTENDING THE SOLVESCY OF SOCIAL
SECURITY.
BUT IN TERMS OF THOSE PARTS OF
SPENDING THAT ARE CONSIDERED
ON-BUDGET, DEFENSE HAS TO BE
INCLUDED IN ANY SAVINGS.
WHY DO I SAY THAT?
WELL, LOOK WHAT'S HAPPENED SINCE
1997.
SPENDING ON DEFENSE AND WAR HAS
GONE FROM $254 BILLION A YEAR TO
$688 BILLION A YEAR.
EXPLODED.
IT IS A KEY REASON SPENDING HAS
BEFORE THE FISCAL COMMISSION,
SOME OF THE DEFENSE ANALYSTS,
THE BEST DEFENSE ANALYSTS IN THE
COUNTRY CAME BEFORE US AND TOLD
US, 51% OF ALL FEDERAL EMPLOYEES
ARE AT THE DEPARTMENT OF DEFENSE
P.
51% OF ALL FEDERAL EMPLOYEES ARE
AT THE DEPARTMENT OF DEFENSE.
AND THAT DOES NOT COUNT THE
CONTRACTORS.
WHEN I ASKED THESE ANALYSTS,
THERE?
WELL, HOW MANY CONTRACTORS ARE
THEIR RESPONSE WAS, SENATOR, WE
CAN'T TELL YOU.
I SAID, IS THAT A MATTER OF
SECURITY?
IS THAT A MATTER OF CLEARANCES?
NO, SENATOR, WE DON'T KNOW.
I SAID, WELL, WHAT'S THE RANGE?
ABOUT HOW MANY CONTRACTORS ARE
THERE WORKING AT THE DEPARTMENT
OF DEFENSE?
THE ANSWER WAS, SENATOR, 1
MILLION TO 9 MILLION.
BETWEEN 1 MILLION AND 9 MILLION.
WE CAN'T TELL YOU WHICH IS
RIGHT.
I MEAN, WE'VE GOT A SERIOUS
PROBLEM.
-- OF CONTRACTORS WORKING FOR
THE DEPARTMENT OF DEFENSE AND
THE DEPARTMENT OF DEFENSE CAN'T
EVEN TELL YOU HOW MANY
CONTRACTORS THEY'VE GOT WORKING
FOR THEM.
MR. PRESIDENT, WE'VE GOT A
PROBLEM.
THE PREVIOUS SECRETARY OF
DEFENSE, SECRETARY GATES, SAID
THIS.
"... THE BUDGET OF THE PENTAGON
ALMOST DOUBLED DURING THE LAST
DECADE.
BUT OUR CAPABILITIES DIDN'T
PARTICULARLY EXPAND.
A LOT OF THAT MONEY WENT INTO
INFRASTRUCTURE AND OVERHEAD AND,
FRANKLY, I THINK A CULTURE THAT
HAD AN OPEN CHECKBOOK."
MR. PRESIDENT, A LOT OF THAT
MONEY WENT INTO INFRASTRUCTURE
AND OVERHEAD -- OVERHEAD -- AND,
FRANKLY, IT CULTURE THAT HAD AN
OPEN CHECKBOOK.
MR. PRESIDENT, WE CAN'T AFFORD
AN OPEN CHECKBOOK ANYWHERE.
WE'VE GOT TO GO AFTER WASTE,
DEPARTMENT.
FRAUD, AND ABUSE IN EVERY
WE'VE GOT TO GO OVER
INFRASTRUCTURE SPENDING THAT
REALLY DOESN'T CONTRIBUTE TO
IMPROVING OUR DEFENSE.
WE'VE GOT TO GO AFTER OVERHEAD
-- OVERHEAD COSTS THAT HAVE
REALLY RUN AMOK.
MR. PRESIDENT, CHAIRMAN RYAN OF
DEFENSE:
THE HOUSE SAID THIS ABOUT
"THERE ARE A LOT OF SAVINGS YOU
CAN GET IN DEFENSE ... THERE'S A
LOT OF WASTE OVER THERE, FOR
SURE."
AND YET WHEN THEY CAME WITH
THEIR PLAN, THEY CONTINUED THE
PATH OF INCREASING DEFENSE
SPENDING YEAR OVER YEAR WITHOUT
ANY DISCIPLINE.
THIS IS THE PLAN THAT THEY
OUTLINED.
FROM $529 BILLION A YEAR HEADED
FOR $667 BILLION A YEAR.
AND THAT DOESN'T COUNT THE WAR
FUNDING.
MR. PRESIDENT, IN OUR PLAN, WE
HAVE DONE WHAT THE FISCAL
COMMISSION CALLED FOR.
WE HAVE ACHEECHED THE SAME
SAVINGS OUT OF -- WE HAVE
ACHIEVED THE SAME SAVINGS OUT OF
SECURITY AS THE FISCAL
COMMISSION DID.
$886 BILLION OUT OF THE SECURITY
FUNCTION.
NOW, THAT INCLUDES DEFENSE.
OBVIOUSLY DEFENSE IS MOST OF
SECURITY.
BUT IN THE SECURITY CATEGORY,
ALSO FALLS HOMELAND SECURITY,
ALSO IS INCLUDED VETERANS'
SPENDING.
VETERANS' SPENDING, BY THE WAY,
IS ONE PLACE WE DON'T CUT A
NICKEL.
THE VETERANS DESERVE TO HAVE THE
PROMISES THAT WE HAVE MADE TO
THEM KEPT.
AND UNDER OUR BUDGET, EVERY
DOLLAR THAT HAS BEEN PROMISED TO
VETERANS WILL GO TO THEM.
MR. PRESIDENT, THAT DOESN'T MEAN
WE CAN'T SAVE MONEY OUT OF THE
SECURITY SIDE AND THE FISCAL
COMMISSION, WHICH BY THE WAY IS
THE ONLY BIPARTISAN PLAN THAT
HAS COME FROM ANYWHERE -- FIVE
DEMOCRATS, FIVE REPUBLICANS, ONE
INDEPENDENT -- ENDORSED A PLAN
WITH $886 BILLION OF SAVINGS
OVER TEN YEARS OUT OF THE
SECURITY FUNCTION.
AND THE BUDGET BY THE SENATE
BUDGET COMMITTEE DEMOCRATS
ADOPTS THAT FINDING.
MR. PRESIDENT, THE BUDGET THAT
THE SENATE BUDGET COMMITTEE
DEMOCRATS ARE ADVANCING ALSO HAS
GOVERNMENT-WIDE SAVINGS.
WE FREEZE MEMBERS OF CONGRESS
PAY FOR THREE YEARS.
WE FREEZE LEGISLATIVE BRANCH AND
WHITE HOUSE BUDGETS FOR THREE
YEARS.
WE FREEZE CIVILIAN PAY FOR TWO
YEARS.
THAT IS ALREADY -- THAT HAS
ALREADY BEEN ADOPTED, BUT WE
INCLUDE THAT IN OUR BUDGET.
WE REDUCE THE FEDERAL VEHICLE
FLEET BY 20% BECAUSE, FRANKLY,
IN OUR INVESTIGATIONS, WE FIND
IN THIS AREA THAT THERE HAS BEEN
AN EXPLOSION OF VEHICLES IN THE
FEDERAL FLEET, AND I THINK ALL
EYES.
OF US HAVE SEEN IT WITH OUR OWN
THIS IS SOMETHING THAT'S GOT TO
BE TAKEN ON.
WE REDUCE TRAVEL COSTS OF
FEDERAL AGENCIES BY 20%.
WE REDUCE FEDERAL PRINTING COSTS
BY $1 BILLION BY 2015.
AND WE REDUCE THE NUMBER OF
CONTRACTORS THAT WE HAVE
PREVIOUSLY DESCRIBED.
MR. PRESIDENT, THE HOUSE
REPUBLICAN PLAN ON REVENUE IS
REALLY ALMOST IMPOSSIBLE TO
BELIEVE.
IN A CIRCUMSTANCE IN WHICH WE
HAVE RECORD DEBT, IN A
CIRCUMSTANCE IN WHICH THE
REVENUE OF THIS COUNTRY IS THE
LOWEST IT HAS BEEN IN 60 YEARS,
WHAT IS PART OF THEIR ANSWER?
CUT TAXES SOME MORE.
AND CUT THEM FOR THE VERY
WEALTHIEST AMONG US.
CUT THEM ANOTHER $1 TRILLION FOR
THOSE WHO ARE THE MOST FORTUNATE
AMONG US.
MR. PRESIDENT, I'M NOT MAKING
THIS UP.
THIS IS THE HOUSE REPUBLICAN
PLAN.
TAKE A CIRCUMSTANCE IN WHICH WE
HAVE RECORD DEBT, THE LOWEST
REVENUE WE'VE HAD IN 60 YEARS,
AND CUT TAXES FOR THE VERY
WEALTHIEST AMONG US BY ANOTHER
$1 TRILLION.
BY EXTENDING THE TOP RATE CUTS,
BY A $5 MILLION ESTATE TAX
EXEMPTION.
MR. PRESIDENT, THEY ACTUALLY CUT
REVENUES $4.2 TRILLION BELOW THE
C.B.O. BASELINE.
LET ME REPEAT THAT.
THEY ACTUALLY CUT REVENUE IN
THEIR PLAN $4.2 TRILLION BELOW
THE CONGRESSIONAL BUDGET OFFICE
BASELINE.
MR. PRESIDENT, THAT IS
INEXPLICABLE.
MAYBE WE CAN START TO UNDERSTAND
IT WHEN WE LOOK AT WHAT A FORMER
REAGAN ECONOMIC ADVISOR SAID
ABOUT THE HOUSE REPUBLICAN PLAN.
"DISTRIBUTIONALLY, THE RYAN
PLAN" -- THE HOUSE REPUBLICAN
PLAN -- "IS A MONSTROSITY.
THE RICH WOULD RECEIVE HUGE TAX
CUTS WHILE THE SOCIAL SAFETY NET
WOULD BE SHREDDED TO PAY FOR
THEM.
EVEN AS AN OPENING BID TO BEGIN
BUDGET NEGOTIATIONS WITH THE
DEMOCRATS, THE RYAN PLAN CANNOT
BE TAKEN SERIOUSLY.
IT IS LESS OF A WISH LIST THAN A
FAIRY TALE ULTIMATERLY
DISCONNECTED FROM THE REAL
WORLD, BACKED UP BY MAKE-BELIEVE
NUMBERS AND UNREASONABLE
ASSUMPTIONS.
RYAN'S PLAN ISN'T EVEN AN ACT OF
COURAGE; IT'S JUST PANDERING TO
THE TEA PARTY.
A REAL ACT OF COURAGE WOULD HAVE
BEEN FOR HIM TO ADMIT, AS ALL
SERIOUS BUDGET AIFNLGTS KNOW,
THAT REVENUES WILL HAVE TO RISE
WELL ABOVE 19% OF GROSS DOMESTIC
PRODUCT TO STABLIZE THE DEBT."
MR. PRESIDENT, REVENUE TODAY IS
14.5% OF G.D.P.; AGAIN, THE
LOWEST IT'S BEEN IN 60 YEARS.
IF WE LOOK AT THE LAST FIVE
TIMES THE BUDGET HAS BEEN
BALANCED, IN THE LAST 50 YEARS,
HERE'S WHAT WE SEE:
REVENUES HAD TO BE CLOSE TO 20%
OF G.D.P.
THEY WERE 19.7% IN 1969, 19.9%
IN 1998, 19.8% IN 1999, 20.6% IN
THE YEAR 2000, AND 19.5% IN
2001.
THAT'S THE LAST FIVE TIMES THE
BUDGET HAS BEEN BALANCED.
EACH OF THOSE TIMES REVENUE WAS
CLOSE TO 20% OF G.D.P.
NOW IT IS 14.5% OF G.D.P.
ANYONE WHO SERIOUSLY ARGUES THAT
YOU CAN SOLVE THIS PROBLEM JUST
ON THE SPENDING SIDE OF THE
EQUATION IS NOT BEING SERIOUS.
MR. PRESIDENT, THE BUDGET
FRAMEWORK THAT WE OFFER TODAY
HAS REVENUES AT 19.5% OF G.D.P.,
ALMOST EQUIVALENT TO WHAT IT WAS
DURING THE CLINTON YEARS WHEN WE
HAD BALANCED BUDGETS AND IN FACT
STOPPED USING SOCIAL SECURITY
MONEY TO PAY OTHER BILLS.
DURING THE CLINTON YEARS,
REVENUE AVERAGED 19.4% OF G.D.P.
UNDER OUR PLAN, IT AVERAGES
19.5%.
SO REVENUE IS CLEARLY NOT OUT OF
LINE COMPARED TO THE OTHER TIMES
WE'VE BALANCED THE BUDGET AND IN
FACT DURING THE CLINTON YEARS
WHEN WE HAD THE LONGEST ECONOMIC
EXPANSION IN THIS NATION'S
HISTORY.
FOR OUR COLLEAGUES WHO SAY, OH,
YOU CAN'T TOUCH REVENUE OR
YOU'LL KILL THE ECONOMY, YOU'LL
KILL JOB CREATION, REALLY?
HOW ABOUT THE HISTORIC RECORD,
THE HISTORIC RECORD SHOWS VERY
CLEARLY THAT DURING THE CLINTON
YEARS WHEN YOU HAD REVENUE AT
THE SAME LEVEL AS TBHEF THIS
PLAN, YOU HAD THE LONGEST
ECONOMIC EXPANSION IN THIS
NATION'S HISTORY -- 39 QUARTERS,
32 OF THOSE QUARTERS DURING THE
CLINTON YEARS.
--
THE
THE LONGEST PERIOD OF
UNINTERRUPTED ECONOMIC GROWTH IN
THIS NATION'S HISTORY.
AND YOU HAD REVENUE AT THE SAME
LEVEL THAT WE'RE TALKING ABOUT
IN THIS PLAN.
MR. PRESIDENT, FACTS ARE
STUBBORN THINGS.
FACTS ARE STUBBORN THINGS.
A PREVIOUS PRESIDENT SAID THAT.
HE WAS RIGHT.
THE FACT IS, WE HAD THE LONGEST
PERIOD OF UNINTERRUPTED GROWTH
IN OUR ECONOMY DURING A PERIOD
IN WHICH REVENUE WAS AT THE
LEVEL THAT WE ARE PROPOSING IN
THIS BUDGET.
THAT IS A FACT.
MR. PRESIDENT, THE PROPOSALS IN
THE BUDGET FRAMEWORK ALSO SEEK
TO BRING US TAX FAIRNESS.
WE HAVE TAX REFORM THAT
SIMPLIFIES THE TAX CODE, SCALES
BACK TAX LOOPHOLES, PROTECTS THE
MIDDLE CLASS, IMPROVES
PROGRESSIVITY AND FAIRNESS IN
THE CODE, PROMOTES U.S. ECONOMIC
GROWTH AND U.S. COMPETITIVENESS.
BECAUSE WE LOWER THE CORPORATE
RATE.
WE LOWER THE CORPORATE RATE FROM
35% TO 29% TO MAKE AMERICA MORE
COMPETITIVE.
AND WE PRAY FOR IT BY CLOSING
CORPORATE LOOPHOLES.
WE ALSO ADDRESS THE TAX CAP,
OFFSHORE TAX HAVENS AND ABUSIVE
TAX SHELTERS AND ENSURE THAT
CORPORATIONS PAY THEIR FAIR
SHARE.
MR. PRESIDENT, THE SPECIFICS OF
FOLLOWS.
OUR REVENUE PROPOSAL ARE AS
THE TAX CUTS, THE SO-CALLED
BUSH-ERA TAX CUTS, ARE EXTENDED
FOR SINGLES EARNING UP TO
$500,000 A YEAR AND FOR COUPLES
EARNING UP TO A MILLION DOLLARS
A YEAR.
SO, MR. PRESIDENT, 99% OF THE
AMERICAN PEOPLE WILL SEE NO RATE
INCREASE, NONE.
99% OF THE AMERICAN PEOPLE WILL
SEE NO RATE INCREASE.
1% WILL AND THOSE ARE THOSE
SUFFICIENTLY FORTUNATE TO BE
EARNING OVER A MILLION DOLLARS A
YEAR.
THEY'RE THE TOP 1% IN THIS
COUNTRY, AND WE ASK THEM TO GO
BACK TO THE RATES OF THE CLINTON
ERA WITH A TOP RATE OF 39.6%,
CAP GAINS RATE AT 20%, DIVIDENDS
RATE AT 20%.
THOSE ARE THE VERY RATES THAT
PERTAINED WHEN WE HAD THE
LONGEST ECONOMIC EXPANSION IN
OUR NATION'S HISTORY.
FOR THOSE WHO SAY IT'S A JOB
KILLER, THEY'VE GOT TO COME UP
HERE AND EXPLAIN HOW THAT CAN BE
SINCE HISTORY SHOWS SOMETHING
CLAIM.
QUITE DIFFERENT THAN THEIR
MR. PRESIDENT, WE ALSO PROVIDE
FOR ALTERNATIVE MINIMUM TAX
RELIEVERELIEF.
THAT COSTS $1.5 TRILLION.
THAT'S NOT A TAX INCREASE.
WE ARE LOWERING TAXES THAT WOULD
BE IMPOSED BY THE ALTERNATIVE
MINIMUM TAX THAT IS INCREASINGLY
GOBBLING UP MIDDLE-CLASS
TAXPAYERS.
WE'RE PREVENTING THAT FROM
HAPPENING.
IT COSTS $1.5 TRILLION TO FIX SO
WE'RE REPLACING THAT REVENUE
WITH OTHER REVENUE.
I DON'T CONSIDER THAT A TAX
INCREASE.
THAT IS MERELY SUBSTITUTING
REVENUE FOR REVENUE THAT WE ARE
SUBTRACTING TO PREVENT
MIDDLE-CLASS PEOPLE FROM BEING
CAUGHT UP IN THE ALTERNATIVE
MINIMUM TAX.
WE ALSO REFORM THE ESTATE TAX.
GOING BACK TO 2009 LEVELS, WHICH
ARE $3.5 MILLION A PERSON,
$7 MILLION A COUPLE.
THAT MEANS WELL OVER 99.5% OF
ESTATES WOULD BE COMPLETELY
EXEMPT.
MR. PRESIDENT, THAT IS A FAIR
PLAN.
WE ALSO ASSUME NET $2 TRILLION
OF ADDITIONAL FUNDS FROM CLOSING
TAX LOOPHOLES, CUTTING TAX
SUBSIDIES, PROMOTING TAX
FAIRNESS.
THAT IS OVER TEN YEARS.
WE ASSUME THAT TAX PREFERENCES
FOR INDIVIDUALS ARE REDUCED 9%
TO 17% DEPENDING ON THE AMOUNT
OF OFFSHORE TAX HAVENS AND
ABUSIVE TAX SHELTERS THAT ARE
CLOSED.
AND WE ASSUME, AS I INDICATED
EARLIER, THAT THE CORPORATE RATE
IS LOWERED TO 29%, OFFSET BY
REDUCING CORPORATE TAX
EXPENDITURES AND CLOSING
CORPORATE TAX LOOPHOLES,
SPECIFIC POLICIES TO BE
DETERMINED BY THE FINANCE
COMMITTEE, AS THEY ALWAYS ARE.
MR. PRESIDENT, LET ME INDICATE,
WHEN I INDICATE THAT THERE IS A
RANGE FOR REDUCING TAX
EXPENDITURES FROM 9% TO 17%
DEPENDING ON HOW MUCH SAVINGS WE
GET OUT OF OFFSHORE TAX HAVENS,
HERE'S THE MATH.
OVER THE NEXT TEN YEARS, THE TAX
PREFERENCES, OR TAX
EXPENDITURES, AS THEY'RE
SOMETIME CALLED, WILL COST THE
TREASURY $14 TRILLION.
LET ME REPEAT THAT.
THE LOOPHOLES, THE EXCLUSIONS,
THE PREENGSZ IN THE TAX CODE
WILL -- PREFERENCES IN THE TAX
CODE WILL COST THE TREASURY
$14 TRILLION OVER THE NEXT TEN
YEARS.
ON TOP OF THAT, OFFSHORE TAX
HAVENS AND ABUSIVE TAX SHELTERS
WILL COST THE TREASURY ANOTHER
$1.4 TRILLION.
THAT'S ACCORDING TO THE
PERMANENT SUBCOMMITTEE ON
INVESTIGATIONS.
SO, MR. PRESIDENT, IF WE RECOVER
NOTHING FROM TAX HAVENS, TO
REACH OUR REVENUE NUMBERS, YOU'D
HAVE TO REDUCE TAX EXPENDITURES
17%.
BUT ON THE OTHER HAND, IF YOU
RECOVER 80% OF TAX HAVEN LOSSES
AND TAX SHELTER LOSSES, THE
REDUCTION IN TAX EXPENDITURES
WOULD ONLY HAVE TO BE 9%.
17% REDUCTION IN TAX
EXPENDITURES IF YOU GET NO
SAVINGS FROM TAX HAVENS AND TAX
SHELTERS.
A 9% REDUCTION IN TAX
EXPENDITURES IF YOU RECOVER 80%
OF THE LOSSES FROM TAX HAVENS
AND TAX SHELTERS.
PROBABLY THE REALISTIC
EXPECTATION OUGHT TO BE
SOMEWHERE INBETWEEN THOSE
EXTREMES.
MR. PRESIDENT, IF C.B.O. SCORED
THE PROPOSAL BY SENATE BUDGET
COMMITTEE DEMOCRATS, THEY WOULD
NOT SAY THERE'S ANY TAX INCREASE
HERE AT ALL.
LET ME REPEAT THAT.
IF THE CONGRESSIONAL BUDGET
OFFICE SCORED THIS PROPOSAL BY
SENATE BUDGET COMMITTEE
DEMOCRATS, THEY WOULD SAY
THERE'S A $765 BILLION TAX CUT
OVER TEN YEARS.
WELL, HOW CAN THAT BE?
HOW CAN I BE SAYING THERE'S
$2 TRILLION OF ADDITIONAL
REVENUE OVER TEN YEARS AND THE
CONGRESSIONAL BUDGET OFFICE SAYS
IF THEY EVALUATED THIS PLAN BY
SENATE BUDGET COMMITTEE
DEMOCRATS, THEY'D SAY THERE'S A
$765 BILLION TAX CUT?
THE REASON IS SIMPLE.
IN OUR PLAN, WE EXTEND ALL OF
THE MIDDLE-CLASS TAX CUTS.
IN ADDITION, WE ACTUALLY BROADEN
THE MIDDLE-CLASS TAX CUTS SO
THAT NOBODY IS AFFECTED BY A
RATE INCREASE UNLESS THEY'RE A
COUPLE EARNING OVER A MILLION
DOLLARS A YEAR.
WE ALSO PROVIDE THE ALTERNATIVE
MINIMUM TAX RELIEF TO PREVENT
MILLIONS OF MIDDLE-CLASS PEOPLE
FROM BEING AFFECTED BY THAT LAW.
AS I INDICATED EARLIER, THAT
COSTS $1.5 TRILLION OVER THE
NEXT TEN YEARS TO SHIELD
MIDDLE-CLASS TAXPAYERS FROM THAT
LAW.
AND, THIRD, WE PROVIDE ESTATE
TAX REFORM AT THE 2009 LEVELS SO
THAT WELL OVER 99% OF ESTATES
ARE COMPLETELY SHIELDED, ARE
COMPLETELY EXEMPT.
MR. PRESIDENT, AGAIN, WHEN OUR
REPUBLICAN COLLEAGUES SAY, SOME
OF THEM DO, "WELL, YOU CAN'T
HAVE A HIGHER TAX RATE EVEN ON
THOSE EARNING OVER A MILLION
DOLLARS, IT WILL KILL THE
ECONOMY."
REALLY?
HOW ABOUT LOOKING AT FACTS.
HOW ABOUT LOOKING AT THE
HISTORIC RECORD.
HOW ABOUT BEING INFORMED BY WHAT
HAS ACTUALLY HAPPENED BEFORE?
BECAUSE WHEN WE LOOK AT HISTORY,
WE FIND QUITE A DIFFERENT ANSWER
THAN OUR FRIENDS ON THE OTHER
SIDE ARE PROVIDING.
WHAT WE FIND IS, THE LAST TIME
THE TOP RATE FOR THOSE EARNING A
MILLION DOLLARS WAS 39.6%, WE
EXPERIENCED THE LONGEST PERIOD
OF UNINTERRUPTED ECONOMIC GROWTH
IN THE HISTORY OF THE UNITED
STATES.
THAT IS A FACT.
WE HAD 39 QUARTERS OF ECONOMIC
GROWTH FROM 1991-2000.
FOR 32 OF THOSE QUARTERS, BILL
CLINTON WAS THE PRESIDENT OF THE
UNITED STATES.
AND WE HAD A TOP RATE OF 39.6%
ON THOSE COUPLES EARNING OVER A
MILLION DOLLARS A YEAR.
MR. PRESIDENT, OUR FRIENDS
THE OTHER SIDE SAY, "YOU'LL KILL
JOBS."
YOU KNOW WHAT'S FASCINATING?
I REMEMBER THIS DEBATE BACK WHEN
WE PASSED DEFICIT REDUCTION
UNDER PRESIDENT CLINTON.
AND YOU KNOW OUR FRIENDS ON THE
OTHER SIDE SAID THE EXACT SAME
THING THEN.
I REMEMBER I WAS SEATED HERE
LISTENING TO THE REPUBLICAN
LEADER THEN CLAIM THAT IF WE
PASSED THE CLINTON PLAN TO GET
THE DEFICIT DOWN AND BALANCE THE
BUDGET, WE WOULD CRATER THE
ECONOMY.
THOSE WERE THE EXACT WORDS THAT
OUR FRIENDS ON THE OTHER SIDE
USED AT THAT TIME.
THAT IF YOU RAISED RATES ON THE
WEALTHIEST AMONG US, IT WOULD
CRATER THE ECONOMY.
WHAT HAPPENED?
NOT ONLY DID WE NOT CRATER THE
ECONOMY, WE HAD THE LONGEST
PERIOD OF ECONOMIC EXPANSION IN
OUR NATION'S HISTORY AND
24 MILLION JOBS WERE CREATED,
THE BEST RECORD EVER.
THAT'S THE FACTS.
THAT'S WHAT REALLY HAPPENED.
NOT SOME FAIRY TALE HERE ABOUT
WHAT HAPPENS IF YOU GET THE
COUNTRY BACK ON TRACK, IF YOU
MOVE TOWARD BALANCING THE
BUDGET, IF YOU MOVE TOWARD
GETTING THE DEBT DOWN.
BECAUSE THAT IS, IN FACT, WHAT
HAPPENED DURING THE CLINTON
YEARS.
YES, WE HAD THE HIGHEST RATE OF
39.6% ON THOSE EARNING OVER A
MILLION DOLLARS BUT IT DIDN'T
CRATER THE ECONOMY.
NO.
THE ECONOMY GREW, THE LONGEST
ECONOMIC EXPANSION IN THIS
NATION'S HISTORY.
AND, MR. PRESIDENT, 24 MILLION
JOBS WERE CREATED DURING THAT
PERIOD.
THE BEST RECORD EVER.
MR. PRESIDENT, LET'S JUST LOOK
AGAIN AT HISTORY.
THE LAST FIVE TIMES ECONOMIC
GROWTH WAS ABOVE 4% IN THIS
COUNTRY, THE TOP TAX RATE WAS
39.6% ON THOSE EARNING OVER A
MILLION DOLLARS.
FACTS.
FACTS ARE STUBBORN THINGS.
1994, TOP RATE WAS 39.6%.
GROWTH RATE 4.1%.
1997, TOP RATE WAS 39.6%.
ECONOMIC GROWTH WAS 4.5%.
1988, 4.4% ECONOMIC GROWTH.
1999, 4.8% ECONOMIC GROWTH.
2000, 4.1% ECONOMIC GROWTH.
THE STRONGEST ECONOMIC GROWTH
GOING BACK DECADES IN EVERY YEAR
THE TOP RATE ON PEOPLE EARNING
OVER A MILLION DOLLARS WAS 39.6%
39.6%, PRECISELY WHAT WE'RE
PROPOSING IN THIS PLAN.
MR. PRESIDENT, I THINK IT IS
UNDISPUTED BY SERIOUS ECONOMISTS
OF WHATEVER PHILOSOPHICAL STRIPE
THAT THESE TAX EXPENDITURES HAVE
TO BE REINED IN.
WE ARE NOW SPENDING
$1.1 TRILLION A YEAR ON TAX
EXPENDITURES.
SOME OF THE MOST CONSERVATIVE
ECONOMISTS IN THE COUNTRY HAVE
SAID THAT'S JUST SPENDING BY A
DIFFERENT NAME.
MR. PRESIDENT, HERE'S MARTIN
FELDSTEIN, PROFESSOR OF
ECONOMICS AT HARVARD, CHAIRMAN
OF THE COUNCIL OF ECONOMIC
ADVISORS UNDER PRESIDENT REAGAN,
AND HE'S WRITTEN A COLUMN CALLED
"THE TAX EXPENDITURE SOLUTION
FOR OUR NATIONAL DEBT."
HERE'S WHAT HE SAID.
"CUTTING TAX EXPENDITURES IS
REALLY THE BEST WAY TO REDUCE
GOVERNMENT SPENDING."
IT'S CALLED REVENUE BUT IT'S
REALLY SPENDING.
"ELIMINATING TAX EXPENDITURES
DOES NOT INCREASE MARGINAL TAX
RATES OR REDUCE THE REWARD FOR
SAVING, INVESTMENT, OR RISK
TAKING.
IT WOULD ALSO INCREASE OVERALL
ECONOMIC EFFICIENCY BY REMOVING
INCENTIVES THAT DISTORT PRIVATE
SPENDING DECISIONS AND
ELIMINATING OR CONSOLIDATING THE
LARGE NUMBER OF OVERLAPPING
TAX-BASED SUBSIDIES BUT ALSO
GREATLY SIMPLIFY TAX FILING.
IN SHORT, CUTTING TAX
EXPENDITURES IS NOT AT ALL LIKE
OTHER WAYS OF RAISING REVENUE."
THIS IS FROM THE HEAD OF THE
ECONOMIC ADVISORS UNDER
PRESIDENT REAGAN SAYING WE OUGHT
TO CUT TAX EXPENDITURES.
THAT'S EXACTLY WHAT THE SENATE
DEMOCRATIC BUDGET PLAN DOES.
WE CUT TAX EXPENDITURES 9% TO
17% DEPENDING ON HOW MUCH WE ARE
ABLE TO SAVE FROM CLOSING OFF
TAX HAVENS AND
THE ABUSIVE TAX SHELTERS.
IF WE GET NO SAVINGS FROM TAX
HAVENS AND TAX SHELTERS, THEN
WE'D HAVE TO REDUCE TAX
EXPENDITURES 17%.
IF WE'RE ABLE TO REDUCE TAX
HAVENS AND THE OTHER LOOPHOLES,
THE OFFSHORE LOOPHOLES, THE
ABUSIVE TAX SHELTERS, BY 80%,
THEN WE'D BE ABLE TO REDUCE TAX
EXPENDITURES BY 9%.
MR. PRESIDENT, IT'S JUST NOT
MARTIN FELDSTEIN WHO SAID WE
EXPENDITURES.
OUGHT TO GO AFTER THOSE TAX
IT'S ALSO ALAN GREENSPAN, THE
FORMER CHAIRMAN OF THE FEDERAL
RESERVE.
HERE'S WHAT HE SAID.
"I THINK THAT THE REPUBLICANS
OUGHT TO IDENTIFY A VERY
SIGNIFICANT AMOUNT OF SO-CALLED
TAX EXPENDITURES WHICH IN FACT
ARE MISCLASSIFIED.
THEY ARE EXPENDITURES, THEY ARE
OUTLAYS AND MANY ARE SUBSIDIES
AND SUBSIDIES ARE NOT THE TYPE
OF THING THAT YOU WANT FOR AN
EFFICIENT MARKET SYSTEM.
THERE ARE A LOT OF THEM."
MR. PRESIDENT HEALTH CARE
PROPOSING.
REFORMS THAT'S WHAT WE'RE
LET'S GO AFTER THESE SUBSIDIES,
EXCLUSIONS.
THESE SUBSIDIES, THESE
WHILE WE'RE AT IT, LET'S GO
AFTER THESE OFFSHORE TAX HAVENS,
ABUSIVE TAX SHELTERS.
LET'S SHUT THEM DOWN.
IF THERE IS ANY DOUBT ABOUT
WHERE THIS MONEY IS GOING, HERE
IT IS.
26.5% OF TAX EXPENDITURES GO TO
THE TOP 1% IN THIS COUNTRY.
26.5% OF ALL TAX EXPENDITURES GO
TO THE TOP 1%.
SO WHEN WE'RE SAYING YOU MAY
HAVE TO REDUCE TAX EXPENDITURES
17%, YOU COULD DO IT ALL JUST
WITH THE TOP 1%, THOSE EARNING
OVER $1.1 MILLION A YEAR.
BECAUSE THAT'S WHERE THE BENEFIT
IS GOING.
LET ME SHOW YOU IN ANOTHER WAY.
THE TOP 1% IN DOLLAR TERMS, THE
VALUE ON AVERAGE OF TAX
EXPENDITURES FOR THOSE WHO ARE
IN THE TOP 1% IN THIS COUNTRY,
EARNING $1.1 MILLION PER YEAR,
THEY GET ON AVERAGE A BENEFIT
EVERY YEAR FROM TAX EXPENDITURES
OF OVER $205,000.
FOR THOSE WHO ARE IN THE MIDDLE
QUINTILE, THOSE EARNING $39,000
$3,000.
A YEAR, THEIR AVERAGE BENEFIT IS
YOU CAN SEE THAT THE TOP 1% HAVE
A BENEFIT FROM TAX EXPENDITURES
THAT IS 66 TIMES WHAT PEOPLE IN
THE MIDDLE GET.
MR. PRESIDENT, IT IS NOT UNFAIR
TO GO TO THOSE WHO HAVE HAD THE
GREATEST BENEFIT FROM THE
NATIONAL ECONOMY OVER THE LAST
TWO DECADES AND SAY TO THEM, "WE
NEED YOU TO HELP A LITTLE BIT
MORE TO GET OUT OF THIS RUT,
THIS DEBT RUT THAT WE'RE IN."
AND YOU KNOW WHAT?
THAT'S NOT UNFAIR, BECAUSE THEY
HAVE HAD THE GREATEST BENEFIT
OVER THE LAST 15 YEARS.
AND HERE'S SOMETHING THAT SHOWS
IT, I THINK, CONCLUSIVELY.
THIS IS THE EFFECTIVE TAX RAEULT
FOR THE 4 HUNDRED -- RATE FOR
THE 400 WEALTHIEST TAXPAYERS IN
AMERICA.
IN 1992 IT WAS ABOUT 27%.
IN 1995, THE TAX RATE OF THE
WEALTHIEST 400 WAS 30%.
29.9, TO BE EXACT.
LOOK WHAT'S HAPPENED SINCE 1995.
THE EFFECTIVE TAX RATE FOR THE
WEALTHIEST 400 TAXPAYERS IN
AMERICA HAS GONE DOWN TO 16.6%.
THEY HAVE HAD THEIR TAX RATES
CUT ALMOST IN HALF.
OKAY?
ANYBODY ELSE HAD THEIR TAXES CUT
IN HALF?
I DON'T THINK SO.
THE PEOPLE WHO HAVE HAD THEIR
TAXES CUT IN HALF ARE THE
WEALTHIEST AMONG US, SO IT'S NOT
UNREASONABLE TO GO BACK TO THEM
AND SAY, HEY, WAIT A MINUTE,
WE'VE GOT TO GO BACK TO WHAT THE
TAX RATES WERE HERE.
NOT BACK TO AN EFFECTIVE RATE OF
30%, BUT A TOP RATE THAT WE HAD
IN THE CLINTON YEARS WHEN WE HAD
THE LARGEST ECONOMIC AND LONGEST
ECONOMIC IS EXPANSION IN OUR
NATION'S HISTORY.
THAT SEEMS REASONABLE.
MR. PRESIDENT, WE ALSO KNOW IT'S
NOT JUST ON THE INDIVIDUAL SIDE
BUT ON THE CORPORATE SIDE AS
WELL, THIS IS A LITTLE
FIVE-STORY BUILDING DOWN IN THE
CAYMAN ISLANDS.
18,857 COMPANIES SAY THEY'RE
DOING BUSINESS OUT OF THIS
LITTLE BUILDING.
ANYBODY BELIEVE THAT?
ANYBODY BELIEVE 18,857 COMPANIES
ARE DOING BUSINESS OUT OF THIS
LITTLE FIVE-STORY BUILDING DOWN
IN THE CAYMAN ISLANDS?
I WOULD SAY THAT'S THE MOST
EFFICIENT BUILDING IN THE WORLD.
CAN YOU IMAGINE, A LITTLE
FIVE-STORY BUILDING, 18,857
COMPANIES SAY THEY'RE DOING
BUSINESS OUT OF THERE.
THEY GOT MAYBE 100 EMPLOYEES IN
THAT BUILDING.
THOSE ARE THE MOST EFFICIENT
PEOPLE IN THE ENTIRE WORLD.
UNBELIEVABLE WHAT THEY'RE DOING.
YOU KNOW WHAT?
THEY'RE NOT DOING BUSINESS.
THEY'RE DOING MONKEY BUSINESS,
BECAUSE WHAT THEY'RE DOING IS
CHEATING ALL THE REST OF US WHO
PAY WHAT WE OWE.
WHY ARE THEY DOWN IN THE CAYMAN
ISLANDS, 18,857 COMPANIES,
CALLING THAT LITTLE BUILDING
HOME?
BECAUSE THERE ARE NO TAXES DOWN
IN THE CAYMAN ISLANDS, AND
THEY'RE SHOWING THEIR PROFITS IN
SUBSIDIARIES THAT THEY SAY ARE
BUILDING.
OPERATING OUT OF THAT LITTLE
SO THEY CAN AVOID PAYING TAXES
THAT THE VAST MAJORITY OF US PAY
RIGHT HERE IN THE UNITED STATES.
THAT'S OUTRAGEOUS.
THAT'S UNFAIR.
OUR REPUBLICAN FRIENDS SAY, OH,
YOU CAN'T TOUCH THAT.
IT'S A TAX INCREASE IF YOU DO.
REALLY?
THAT'S A TAX INCREASE?
I DON'T THINK SO.
MR. PRESIDENT, OFFSHORE TAX
HAVEN ABUSE IS PROLIFERATING.
IF ANYBODY DOUBTS IT, GO GOOGLE
HAPPENS.
OFFSHORE TAX HAVENS AND SEE WHAT
SEE WHAT HAPPENS IF YOU GOOGLE
OFFSHORE TAX HAVENS.
THE EXPERTS HERE ON THE
PERMANENT SUBCOMMITTEE ON
INVESTIGATIONS HAVE SAID THIS.
EXPERTS ESTIMATED THE TOTAL LOSS
TO THE TREASURY FROM OFFSHORE
TAX EVASION ALONE APPROACHES
$100 BILLION A YEAR INCLUDING
$40 BILLION TO $70 BILLION FROM
INDIVIDUALS, ANOTHER $30 BILLION
FROM CORPORATIONS ENGAGING IN
OFFSHORE TAX EVASION.
ABUSIVE TAX SHELTERS ADD TENS OF
BILLIONS MORE.
MR. PRESIDENT, THE DEMOCRATS ON
THE BUDGET COMMITTEE SAID WE'VE
HAD IT.
WE'RE GOING AFTER THOSE PEOPLE.
WE'RE GOING TO INSIST THAT THEY
PAY THEIR FAIR SHARE JUST LIKE
THE VAST MAJORITY OF AMERICANS
ALREADY DO.
SO WE'RE SAYING WE'RE COMING
AFTER YOU.
YOU'VE GOT A TAX HAVEN.
YOU'RE DOWN IN THE CAYMAN
ISLANDS, WE'RE COMING AFTER YOU.
YOU'VE GOT AN ABUSIVE TAX
SHELTER, WE'RE COMING AFTER YOU.
IT'S NOT FAIR TO ALL THE REST OF
US, WE'RE PAYING WHAT WE OWE.
MR. PRESIDENT.
MR. PRESIDENT, EDUCATION IS THE
FOUNDATION FOR FUTURE ECONOMIC
STRENGTH.
AN EDUCATED POPULATION IS A KEY
SOURCE OF ECONOMIC GROWTH.
BROAD ACCESS TO EDUCATION WAS BY
AND LARGE A MAJOR FACTOR IN THE
UNITED STATES ECONOMIC DOMINANCE
IN THE 20th CENTURY AND IN THE
CREATION OF A BROAD MIDDLE
CLASS.
INDEED, THE AMERICAN DREAM OF
UPWARD MOBILITY BOTH WITHIN AND
ACROSS GENERATIONS HAS BEEN TIED
TO ACCESS TO EDUCATION.
THIS FROM HARVARD ECONOMIST
CLAUDIA GOLDEN AND LAWRENCE
KATZ, "THE FUTURE OF INEQUALITY:
THE OTHER REASON EDUCATION
MATTERS SO MUCH."
MR. PRESIDENT, WHEN WE SEE WHAT
OUR FRIENDS ON THE OTHER SIDE
ARE DOING, THEY'RE CUTTING
EDUCATION 15%.
WE DON'T BELIEVE THAT THAT'S THE
RIGHT PRIORITY FOR THE COUNTRY.
YES, OVERALL SPENDING'S GOT TO
BE CUT.
WE DO CUT SPENDING ALMOST $2
TRILLION IN THE DEMOCRATIC
BLUEPRINT.
ALMOST $2 TRILLION, BUT NOT
EDUCATION.
MR. PRESIDENT, ANOTHER KEY
PRIORITY IS ENERGY.
WE ALL KNOW WHAT'S HAPPENED TO
GAS PRICES.
THEY HAVE SOARED FROM $1.81 A
GALLON IN DECEMBER OF 2008 TO
OVER $3.50 A GALLON BY JULY 4.
I JUST PAID $3.77.
WE ALL KNOW WHAT'S HAPPENED TO
GAS PRICES.
AND MANY OF US BELIEVE A KEY
PRIORITY IS TO REDUCE OUR
DEPENDENCE ON FOREIGN ENERGY.
HOUSE REPUBLICANS HAVE A
DIFFERENT IDEA.
THEY CUT THE PROGRAMS TO REDUCE
OUR DEPENDENCE ON FOREIGN ENERGY
BY 57%.
WE REJECT THAT PROPOSAL.
WE DON'T THINK IT'S IN THE
NATIONAL INTEREST.
ROADS, BRIDGES, AIRPORTS, RAIL.
HERE'S WHAT THE U.S. CHAMBER OF
COMMERCE SAID ABOUT
INFRASTRUCTURE SPENDING.
IF WE DON'T CHANGE COURSE OVER
THE NEXT FIVE YEARS, THE ECONOMY
COULD FOREGO AS MUCH AS $336
BILLION IN LOST ECONOMIC GROWTH
AS TRANSPORTATION NETWORKS
CONTINUE TO DETERIORATE.
I'M WELL AWARE OF THE FISCAL
CONSTRAINTS FACING THIS CONGRESS
AND THE NATION, BUT WE MUST
AVOID CUTTING OFF OUR NOSE TO
SPITE OUR FACE.
WITHOUT PROPER INVESTMENT AND
ATTENTION TO OUR INFRASTRUCTURE,
THE UNITED STATES ECONOMIC
STABILITY, POTENTIAL FOR JOB
GROWTH, GLOBAL COMPETITIVENESS
AND QUALITY OF LIFE ARE ALL AT
RISK.
THAT FROM THOMAS DONOHUE, THE
PRESIDENT AND C.E.O. OF THE U.S.
CHAMBER OF COMMERCE.
MR. PRESIDENT, REPUBLICANS IN
THE HOUSE WEREN'T LISTENING,
BECAUSE THEY PROPOSED CUTTING
TRANSPORTATION FUNDING IN THEIR
BUDGET BY 30%.
WE REJECT THAT CUT AS WELL.
MR. PRESIDENT, IT DOES NOT MAKE
INFRASTRUCTURE.
SENSE TO CUT EDUCATION, CUT
IT DOES NOT MAKE SENSE.
IT WILL ONLY WEAKEN OUR
POSITION.
AND ON HEALTH CARE, THE HOUSE
REPUBLICAN PLAN ENDS MEDICARE AS
WE KNOW IT, REPLACE IT IS WITH A
VOUCHER SYSTEM -- REPLACES IT
WITH A VOUCHER SYSTEM, BLOCK
GRANTS KPHAEUDZ, -- MEDICAID.
IT ENDS THE COUNTERCYCLICAL
NATURE OF THE MEDICAID PRAFPLT
AND IT DEFUNDS HEALTH CARE
REFORM, INCREASING THE NUMBER OF
UNINSURED BY AT LEAST 34 MILLION
PEOPLE IN THIS COUNTRY.
MR. PRESIDENT, THE HOUSE
REPUBLICAN PLAN, THEY'VE SAID IT
SAVES MEDICARE.
I DON'T THINK SO.
I THINK IT KILLS MEDICARE.
WHY DO I SAY THAT?
BECAUSE UNDER TRADITIONAL
MEDICARE, NOW THE BENEFICIARY
PAYS 25%.
SOMEBODY WHO IS ELIGIBLE FOR
MEDICARE PAYS 25% OF THE BILL.
UNDER THE HOUSE REPUBLICAN PLAN,
THEY WOULD PAY 68% OF THE BILL.
HEAD.
THAT JUST STANDS THINGS ON THEIR
INSTEAD OF PEOPLE HAVING
MEDICARE AS A SOCIAL SAFETY NET
WHEN THEY GET TO THEIR SENIOR
YEARS, THEY WOULD HAVE IT PULLED
OUT FROM UNDER THEM.
MR. PRESIDENT, WE HAVE REJECTED
THE HOUSE G.O.P. APPROACH AND
WOULD REMIND OUR COLLEAGUES THAT
WE HAVE HAD LARGE HEALTH CARE
SAVINGS THAT WERE ALREADY
ENACTED LAST YEAR IN HEALTH CARE
REFORM.
THE CONGRESSIONAL BUDGET OFFICE
SAYS THAT WILL SAVE IN THE
SECOND TEN YEARS $1.3 TRILLION.
SO, YES, EVERYTHING'S GOT TO BE
ON THE TABLE, BUT WE JUST TOOK A
BIG RUN AT GETTING OUR HEALTH
CARE COSTS BACK IN LINE.
$1.3 TRILLION IN DEFICIT
SAVINGS, ACCORDING TO C.B.O.
MR. PRESIDENT, IN CONCLUSION,
THE OVERALL -- THE OVERVIEW OF
THE BUDGET FRAMEWORK THAT WE'RE
OFFERING OUR COLLEAGUES FOR
THEIR CONSIDERATION PROVIDES $4
TRILLION IN DEFICIT REDUCTION
OVER TEN YEARS.
IT'S ACTUALLY $5 TRILLION IF
MEASURED ON THE SAME BASIS AS
THE FISCAL COMMISSION.
WE HAVE ADOPTED WHAT WE THINK IS
A MORE PLAUSIBLE BASELINE IN
LIGHT OF THINGS THAT HAVE
HAPPENED SO FAR THIS YEAR.
STABILIZE THE DEBT BY 2014, CUT
THE DEFICIT TO 2.5% OF G.D.P. BY
2015 AND 1.3% BY 2021.
WE HAVE TAX REFORM THAT
SIMPLIFIES THE CODE, THAT CLOSES
LOOPHOLES, THAT GOES AFTER
OFFSHORE TAX HAVENS AND ABUSIVE
TAX SHELTERS AND RESTORES
SHELTERS, WILL REJECT THE HOUSE
G.O.P. PLAN TO END MEDICARE AS
WE KNOW IT.
WE PROTECT EDUCATION, ENERGY AND
INFRASTRUCTURE INVESTMENTS.
WE HAVE BALANCED DEFICIT AND
DEBT-REDUCTION PLANNED.
CUTTING SPENDING BY ABOUT $2
TRILLION.
PROVIDING ADDITIONAL REVENUE BY
ABOUT $2 TRILLION.
AND LET ME CONCLUDE AS I BEGAN
BY SAYING OUR REVENUE PLAN WOULD
BE SCORED BY THE CONGRESSIONAL
BUDGET OFFICE AS BEING A $765
BILLION TAX CUT, BECAUSE WE ARE
REPLACING REVENUE LOST BY
EXTENDING OTHER TAX CUTS.
WE'RE EXTENDING ALL THE
MIDDLE-CLASS TAX CUTS AND
EXPANDING MIDDLE-CLASS TAX CUTS
UP TO THOSE EARNING $1 MILLION A
YEAR.
AND WE ARE FIXING THE
ALTERNATIVE MINIMUM TAX.
THAT COSTS $1.5 BILLION OVER TEN
YEARS.
I DON'T CONSIDER THAT A TAX
INCREASE AT ALL, BECAUSE YOU ARE
REDUCING REVENUE THAT WOULD
OTHERWISE COME INTO THE TREASURY
UNDER THE ALTERNATIVE MINIMUM
TAX, AND I THINK ALMOST ALL OF
US THINK IS UNFAIR, AND
REPLACING IT WITH REVENUE BY
REDUCING TAX EXPENDITURES, WHICH
EVEN THE MOST CONSERVATIVE
ECONOMISTS IN THE COUNTRY SAY
NEEDS TO BE DONE.
MR. PRESIDENT, THAT IS THE
BLUEPRINT THAT SENATE BUDGET
COMMITTEE DEMOCRATS ARE LAYING
BEFORE OUR COLLEAGUES.
WE'RE UNDER NO ILLUSIONS HERE.
WE KNOW THAT THIS IS A YEAR IN
WHICH THE NORMAL PROCESS IS NOT
BEING FOLLOWED.
WE SKWRUPBD STAND THAT THERE
IS -- WE UNDERSTAND THERE IS A
HIGHEST LEVEL.
LEADERSHIP NEGOTIATION AT THE
SO WE UNDERSTAND THIS IS NOT
GOING TO BE DEALT WITH IN THE
NORMAL COURSE OF DOING BUSINESS.
WE UNDERSTAND THERE IS A
LEADERSHIP NEGOTIATION.
BUT WE BELIEVE THERE ARE SOME
IDEAS IN THIS PACKAGE THAT
DESERVE CONSIDERATION AS THOSE
NEGOTIATIONS GO FORWARD.
MR. PRESIDENT, I THANK MY
COLLEAGUES FOR THEIR COURTESY
AND THEIR PATIENCE, AND I LOOK
FORWARD TO THIS CONTINUING
DEBATE AS WE TAKE ON THE DEBT
NATION.
THREAT THAT LOOMS OVER OUR
I THANK THE CHAIR AND YIELD THE
FLOOR.
THE
SENATOR FROM GEORGIA.
MR. PRESIDENT, I
COMMEND THE BUDGET CHAIRMAN ON
HIS CONTRIBUTION TO THIS DEBATE