Pilot's Bill of Rights

Mr. President, I am honored to follow my distinguished colleague from Maryland in this discussion about our priorities as we address the debt limit we are approaching. I think Leader Reid was wise to choose to cancel the scheduled Fourth of July recess so we could continue to work toward an agreement to prevent defaulting by the United States on our government debt and the financial consequences that would ensue here in America and around the world.

As we negotiate an end to this debt limit standoff, we also, obviously, have to address our looming budget deficits and our looming debt, which threaten to cripple our potential for economic growth in years to come. Where we are on this, of course, is that President Clinton put our budget on course to permanent surpluses. We would be a debt-free nation right now if the predictions the nonpartisan Congressional Budget Office had put in place when President Clinton left office had been kept. In fact, there were changes. President Bush and a Republican Congress squandered away those surpluses with unnecessary tax cuts and unwise spending increases. Our multitrillion- dollar deficits have resulted. We must now fix the budget and bring it back into balance.

So where are we in this standoff? Well, we need to cut spending. Democrats and Republicans agree on that. We need to protect ordinary families who enjoy ordinary levels of income from tax increases. Democrats and Republicans agree on that. The disagreement is whether we also need to raise some revenues in other areas to help balance the budget, areas such as oil and gas and ethanol subsidies, closing corporate tax loopholes, and putting an end to high-income tax-dodge schemes.

On that front, I rise in support of Leader Reid's resolution calling for a deficit reduction package that includes a ``more meaningful contribution'' from millionaires and billionaires.

The Republicans are threatening that they would rather let this government default on its obligations than to what they call ``raise revenues'' by requiring the wealthy to pay their fair share. Just last week, Senate Republican leader Mitch McConnell called on President Obama to take any raised revenues ``off the table'' and to balance the budget solely on spending cuts that affect the middle class and lower income families. In an opinion piece on cnn.com, Senator McConnell proclaimed that ``tax hikes can't pass the Congress.''

Well, let's pull the curtain back and take a little glimpse behind it as to whom the Republicans are fighting so hard to protect.

As shown in this picture I have in the Chamber, here is a building in New York City on Park Avenue, the Helmsley Building. Because this building is large enough to have its very own ZIP Code, we know from actual IRS information--not projections, not guesses, not conclusions drawn from rates; from actual paid-in IRS information--that the wealthy and successful individuals and corporations that call this building home paid a 14.7-percent total Federal tax rate in the last year they have done the calculation, 2007. That is lower than the actual tax rate, on average, of the New York City janitor or doorman or security guard who would work in this building. It is upside down. The people who serve the occupants of this building pay a higher tax rate than the occupants of this majestic building. The tax gimmicks that let those occupants pay a lower rate than the people who take care of the doors and the cleaning and the security for them--that is what the Republicans are fighting to protect.

This problem is not just a fluke in the Helmsley Building. Each year, the Internal Revenue Service publishes a report that adds up all the taxes paid by the 400 highest income earning Americans. I spoke earlier this year--several times, actually--on last year's report, which included data from 2007, like the same year as for the Helmsley Building. In that year, these super-high-income earners, making, on average, $\1/3\ billion, approximately--billion with a ``b''--paid a lower tax rate in 2007--the 400 of them did, on average--than an average hospital orderly who is a single payer pushing a cart down the halls of a Rhode Island hospital at night.

In May, the IRS published updated data on the top 400 income earners for 2008. Let's take a look at the status of the top 400 earners in that more recent year. Well, they are down from $\1/3\ billion, on average, to over $\1/4\ billion each. Certainly we can applaud that kind of success in America. That is definitely the American dream come true. But, on average, they paid an average tax rate of 18.2 percent. That is what they actually paid. That is what they put into the IRS. Once you get through all the tax dodges, all the different schemes, all the different deductions, all the different rates, when you actually put the pen to the paper at the bottom line, it is 18.2 percent.

We spent a lot of time around here debating whether the top income tax rate should be 35 percent or 39.6 percent. Folks, that is not what they are paying. The Tax Code is so filled with special provisions that tend to exclusively or disproportionately benefit the wealthy that the highest 400 income earners, earning more than $\1/4\ billion in 1 year, paid an average tax rate of 18.2 percent.

This means that the 400 highest earning individuals in the Nation, in 2008, paid the same effective tax rate as a truckdriver in Rhode Island. According to the Bureau of Labor Statistics, on average, an ordinary truckdriver earns $40,200, which is about the place in the Tax Code, on the way up, where you first hit paying 18.2 percent of your income in taxes.

So what the Republicans are asking as part of the debt limit compromise is that we cut employment and job training support now, at a time of record joblessness, while they continue to fight to make sure that people making a quarter of a billion dollars a year pay lower Federal tax rates than average middle-class families.

Here is another building that has a little story to tell. This is a building called Ugland House. It is over in the Cayman Islands. This building does not look like much. It is pretty nondescript. But over 18,000 corporations claim to be doing business out of this building-- 18,000 out of that little building. Clearly what is going on is that those corporations are hiding through shell companies, phony corporate identities that they and wealthy taxpayers use to hide assets and play tax games with the IRS.

This kind of mischief down in the Cayman Islands and elsewhere through these tax dodges is estimated to cost us as much as $100 billion every year. As part of a debt limit compromise, the Republicans are asking us to cut America's investments in science, cut America's investments in technology at the same time they are fighting to protect corporations that hide in offshore tax havens so that the honest American taxpayer has to pick up the burden for them. That is what they are fighting for when you pull back the curtain.

When all is said and done, everyone, Democrat and Republican, agrees that there needs to be cuts. And everyone, Republican and Democrat, agrees there should be no tax increases on ordinary middle-class families. Those concerns are not at issue. Where is the dispute? What is the blockade? Again, pull back the curtain and you will see that the Republicans are willing to let us as a nation default for the first time in our history on our debt, which would devastate our economy, all to defend tax rates for millionaires and billionaires that are lower than those paid by regular hardworking Americans; all to defend offshore tax havens that are used to evade taxes while ordinary families are expected to pay their taxes; all to defend corporate and special interest tax loopholes, earmarks for the wealthy and well- connected. That is where they have chosen to stand their ground. That is where they have chosen to pick a fight.

As our Nation rushes toward the August 2 deadline and the agreement deadline before August 2 when we must have something in place in order to get the President's signature on a bill by August 2--as we rush toward that, as the world's economy and America's economy are imperiled by the threat of our debt limit not being lifted, what are they fighting for? That is what they are fighting for, for the superprivileged, for the super well-connected, for the tax dodges they take

advantage of, and for the lower rates the superrich pay compared to the rest of all of us. Those are the interests that Republicans are protecting when they reject any revenue increases to bring down our unsustainable deficit. They say it is tax increases they are against. Well, the answer to that should be Americans asking the question back: Tax increases for who? Because if it is tax increases for the guy who is making a quarter of a billion dollars, and is paying a lower tax rate than a truckdriver, that is okay with me. That is a tax dodge we can get rid of. If it is a tax increase for a company that is going to hide in this building in the Cayman Islands to shelter its incomes so that Rhode Island corporations and Oregon corporations, American corporations have to make up the difference--American taxpayers have to make up the difference, and they cannot hide their income down there any longer, that is a tax increase I can live with. I do not think that is what ordinary Americans have in mind when they say we do not want tax increases. They mean we do not want our rates to go up. But ordinary Americans know that our Tax Code is filled, riddled with gimmicks and tricks and loopholes and deductions that have been put in it over the years by lobbyists. They are earmarks, they just happen to be earmarks in the Tax Code. They spend America's money through the Tax Code just as much as if it were an appropriation.

But what is the big difference? The big difference is it takes being a very wealthy individual or a very big corporation to be able to take advantage of those tricks, to be able to hire a lobbyist who can build that trick into the Tax Code, and to have the revenues and the resources to be able to maneuver through the Tax Code in that way. Ordinary Americans do not do that.

You can ask pretty much anybody in Rhode Island, show them the thousands of pages of the Internal Revenue Code and ask them: Who has a special provision in it for you? Nobody does. They are regular Americans. They pay regular taxes. They do things the way they are supposed to be done. The gimmicks and the tricks are all at the upper end, and it is time to clean house, particularly now when we so badly need the revenues to balance our budget.

It is simply inexcusable that our tax system permits billionaires to pay lower tax rates than truckdrivers, that it allows the wealthy to avoid taxes by hiding assets in phony offshore corporations. Even if we had no budget deficit, just being fair, honoring the principle of equality would demand that we address these inexcusable discrepancies that favor the wealthy and the well-connected. Our budget crisis, however, brings real urgency to the problem. So as we continue to work to avoid a debt default by the United States of America and to bring down our budget deficits and to reduce our crippling national debt, I hope Senator McConnell and the Republican Conference will revisit the potential to significantly cut the deficit by addressing tax loopholes, tax gimmicks and, frankly, outright injustice to the ordinary American taxpayer that they are now defending here in the Senate.

I see the distinguished Senator from Alabama arriving.

I yield the floor.

Would the Senator yield for a question?

I don't want to step on your colleagues' time.

One of the things I have been tracking is the share of wealth, income, and taxes at various percentages toward the top. The Senator was good enough to mention that the top 1 percent pays about 28 percent of the taxes, the top 5 percent pays a little over 44 percent of the taxes, and the top 10 percent pays 55.4 percent of the taxes.

But I think in order to get a complete picture, it is also important to note that the top 1 percent controls 24 percent of the income, the top 5 percent controls 39 percent of the income, and the top 10 percent controls 50 percent of the income. If you go to wealth, the top 1 percent controls 33.8 percent of the wealth, the top 5 percent controls 60.4 percent of the wealth, and the top 10 percent controls 71.5 percent of the Nation's wealth.

So if you are in the top 10 percent and you control 71.5 percent of the Nation's wealth, it doesn't seem to be unreasonable that you should be paying 55 percent of the Nation's taxes, particularly if you are taxing based on dollars and not on just number of people.

I don't know if those numbers are wrong. We got them from the Federal Reserve Board, from the IRS, and from the Congressional Budget Office. I think they are accurate. It would appear to show that at the very high end, although these individuals are paying considerable taxes toward our Nation's economy, they are paying considerably less than the amount of wealth they control and not much more than the amount of income they control. In a graduated system of progressive taxation, which we are supposed to have, that is not surprising. In fact, what is surprising is that the top 24 percent of the income only pays 28.3 of the taxes.

I would be delighted to do that. And I might actually throw in the data from the IRS that shows that the top 400 income earners in the country in the most recent period that they have actually gone back and done the calculation paid 18.2 percent total taxes, which is less than I think the average American, certainly the average middle-class American family pays. So there is this reversal at the high end where people actually end up paying less.

Indeed, in one building in New York, the payment for the most recent year was 14.7 percent from the occupants, whereas janitors and doormen and security guards are paying up in the 20-percent ranges. It is not progressive in that sense. It is regressive at the high ends, according to those things. So let's get the information together, and we will have that discussion.

That is why I think the loopholes need to be closed, and I thank the distinguished Senator for the colloquy.

Exhibit 1

[From the National Review Online, July 5, 2011]

Politics vs. Reality

(By Thomas Sowell)

It is hard to understand politics if you are hung up on

reality. Politicians leave reality to others. What matters in

politics is what you can get the voters to believe, whether

it bears any resemblance to reality or not.

Not only among politicians, but also among much of the

media, and even among some of the public, the quest is not

for truth about reality but for talking points that fit a

vision or advance an agenda. Some seem to see it as a

personal contest about who is best at fencing with words.

The current controversy over whether to deal with our

massive national debt by cutting spending, or whether instead

to raise tax rates on ``the rich,'' is a classic example of

talking points versus reality.

Most of those who favor simply raising tax rates on ``the

rich''--or who say that we cannot afford to allow the Bush

``tax cuts for the rich'' to continue--show not the slightest

interest in the history of what has actually happened when

tax rates were raised to high levels on ``the rich,'' as

compared with what has actually happened when there have been

``tax cuts for the rich.''

As far as such people are concerned, those questions have

already been settled by their talking points. Why confuse the

issue by digging into empirical evidence about what has

actually happened when one policy or the other was followed?

The political battles about whether to have high tax rates

on people in high income brackets or to instead have ``tax

cuts for the rich'' have been fought out in at least four

different administrations in the 20th century--under

Presidents Calvin Coolidge, John F. Kennedy, Ronald Reagan,

and George W. Bush.

The empirical facts are there, but they mean nothing if

people don't look at them, and instead rely on talking

points.

The first time this political battle was fought, during the

Coolidge administration,

the tax-cutters won. The data show that ``the rich'' supplied

less tax revenue to the government when the top income tax

rate was 73 percent in 1921 than they supplied after the

income tax rate was reduced to 24 percent in 1925.

Because high tax rates can easily be avoided, both then and

now, ``the rich'' were much less affected by high tax rates

than was the economy and the people who were looking for

jobs. After the Coolidge tax cuts, the increased economic

activity led to unemployment rates that ranged from a high of

4.2 percent to a low of 1.8 percent.

But that is only a fact about reality--and, for many,

reality lacks the appeal of talking points.

The same preference for talking points, and the same lack

of interest in digging into the facts about realities,

prevails today in discussions of whether to have a

government-controlled medical system.

Since there are various countries, such as Canada and

Britain, that have the kind of government-controlled medical

systems that some Americans advocate, you might think that

there would be great interest in the quality of medical care

in these countries.

The data are readily available as to how many weeks or

months people have to wait to see a primary-care physician in

such countries, and how many additional weeks or months they

have to wait after they are referred to a surgeon or other

specialist. There are data on how often their governments

allow patients to receive the latest pharmaceutical drugs, as

compared with how often Americans use such advanced

medications.

But supporters of government medical care show virtually no

interest in such realities. Their big talking point is that

the life expectancy in the United States is not as long as in

those other countries. End of discussion, as far as they are

concerned.

They have no interest in the reality that medical care has

much less effect on death rates from homicide, obesity, and

narcotics addiction than it has on death rates from cancer or

other conditions that doctors can do something about.

Americans survive various cancers better than people anywhere

else. Americans also get to see doctors much sooner for

medical treatment in general.

Talking points trump reality in political discussions of

many other issues, from gun control to rent control. Reality

simply does not have the pizzazz of clever talking points.

Exhibit 2

[From the National Review Online, July 4, 2011]

Entitlement Bandits

(By Michael F. Cannon)

The budget blueprint crafted by Paul Ryan, passed by the

House of Representatives, and voted down by the Senate would

essentially give Medicare enrollees a voucher to purchase

private coverage, and would change the federal government's

contribution to each state's Medicaid program from an

unlimited ``matching'' grant to a fixed ``block'' grant.

These reforms deserve to come back from defeat, because the

only alternatives for saving Medicare or Medicaid would

either dramatically raise tax rates or have the government

ration care to the elderly and disabled. What may be less

widely appreciated, however, is that the Ryan proposal is our

only hope of reducing the crushing levels of fraud in

Medicare and Medicaid.

The three most salient characteristics of Medicare and

Medicaid fraud are: It's brazen, it's ubiquitous, and it's

other people's money, so nobody cares.

Consider some of the fraud schemes discovered in recent

years. In Brooklyn, a dentist billed taxpayers for nearly

1,000 procedures in a single day. A Houston doctor with a

criminal record took her Medicare billings from zero to $11.6

million in one year; federal agents shut down her clinic but

did not charge her with a crime. A high-school dropout, armed

with only a laptop computer, submitted more than 140,000

bogus Medicare claims, collecting $105 million. A health plan

settled a Medicaid-fraud case in Florida for $138 million.

The giant hospital chain Columbia/HCA paid $1.7 billion in

fines and pled guilty to more than a dozen felonies related

to bribing doctors to help it tap Medicare funds and

exaggerating the amount of care delivered to Medicare

patients. In New York, Medicaid spending on the human-growth

hormone Serostim leapt from $7 million to $50 million in

2001; but it turned out that drug traffickers were getting

the drug prescribed as a treatment for AIDS wasting syndrome,

then selling it to bodybuilders. And a study of ten states

uncovered $27 million in Medicare payments to dead patients.

These anecdotes barely scratch the surface. Judging by

official estimates, Medicare and Medicaid lose at least $87

billion per year to fraudulent and otherwise improper

payments, and about 10.5 percent of Medicare spending and 8.4

percent of Medicaid spending was improper in 2009. Fraud

experts say the official numbers are too low. ``Loss rates

due to fraud and abuse could be 10 percent, or 20 percent, or

even 30 percent in some segments,'' explained Malcolm

Sparrow, a mathematician, Harvard professor, and former

police inspector, in congressional testimony. ``The

overpayment-rate studies the government has relied on. .

.have been sadly lacking in rigor, and have therefore

produced comfortingly low and quite misleading estimates.''

In 2005, the New York Times reported that ``James Mehmet, who

retired in 2001 as chief state investigator of Medicaid fraud

and abuse in New York City, said he and his colleagues

believed that at least 10 percent of state Medicaid dollars

were spent on fraudulent claims, while 20 or 30 percent more

were siphoned off by what they termed abuse, meaning

unnecessary spending that might not be criminal.'' And even

these experts ignore other, perfectly legal ways of

exploiting Medicare and Medicaid, such as when a senior hides

and otherwise adjusts his finances so as to appear eligible

for Medicaid, or when a state abuses the fact that the

federal government matches state Medicaid outlays.

Government watchdogs are well aware of the problem. Every

year since 1990, the U.S. Government Accountability Office

has released a list of federal programs it considers at a

high risk for fraud. Medicare appeared on the very first list

and has remained there for 22 straight years. Medicaid

assumed its perch eight years ago.

How can there possibly be so much fraud in Medicare and

Medicaid that even the ``comfortingly low'' estimates have

ten zeros? How can this much fraud persist decade after

decade? How can it be that no one has even tried to measure

the problem accurately, much less take it seriously? The

answers are in the nature of the beast. Medicare and

Medicaid, the two great pillars of Pres. Lyndon Johnson's

``Great Society'' agenda, are monuments to the left-wing

ideals of coerced charity and centralized economic planning.

The staggering levels of fraud in these programs can be

explained by the fact that the politicians, bureaucrats,

patients, and health-care providers who administer and

participate in them are spending other people's money--and

nobody spends other people's money as carefully as he spends

his own. What's more, Medicare and Medicaid are spending

other people's money in vast quantities. Medicare, for

example, is the largest purchaser of medical goods and

services in the world. It will spend $572 billion in 2011.

Each year, it pays 1.2 billion claims to 1.2 million health-

care providers on behalf of 47 million enrollees.

For providers, Medicare is like an ATM: So long as they

punch in the right numbers, out comes the cash. To get an

idea of the potential for fraud, imagine 1.2 million

providers punching 1,000 codes each into their own personal

ATMs. Now imagine trying to monitor all those ATMs.

For example, if a medical-equipment supplier punches in a

code for a power wheelchair, how can the government be sure

the company didn't actually provide a manual wheelchair and

pocket the difference? About $400 million of the

aforementioned fines paid by Columbia/HCA hospitals were for

a similar practice, known as ``upcoding.''

And how does the government know that providers are

withdrawing no more than the law allows? Medicaid sets the

prices it pays for prescription drugs based on the ``average

wholesale price.'' But as the Congressional Budget Office has

explained, the average wholesale price ``is based on

information provided by the manufacturers. Like the sticker

price on a car, it is a price that few purchasers actually

pay.'' Pharmaceutical companies often inflate the average

wholesale price so they can charge Medicaid more. Teva

Pharmaceuticals recently paid $27 million to settle

allegations that it had overcharged Florida's Medicaid

program by inflating its average wholesale prices, and the

Department of Justice has accused Wyeth of doing the same.

Merck recently settled a similar case.

Most ominously, how does the government know that people

punching numbers into the ATMs are health-care providers at

all? In his testimony, Malcolm Sparrow explained how a

hypothetical criminal can make a quick million: ``In order to

bill Medicare, Billy doesn't need to see any patients. He

only needs a computer, some billing software to help match

diagnoses to procedures, and some lists. He buys on the black

market lists of Medicare or Medicaid patient IDs.'' With this

information in hand, Billy strides right up to the ATM, or

several at a time, and starts punching in numbers. ``The rule

for criminals is simple: If you want to steal from Medicare,

or Medicaid, or any other health-care-insurance program,

learn to bill your lies correctly. Then, for the most part,

your claims will be paid in full and on time, without a

hiccup, by a computer, and with no human involvement at

all.'' These schemes are sophisticated, so Billy might hire

people within Medicare and at his bank to help him avoid

detection.

Last year, the feds indicted 44 members of an Armenian

crime syndicate for operating a sprawling Medicare-fraud

scheme. The syndicate had set up 118 phony clinics and billed

Medicare for $35 million. They transferred at least some of

their booty overseas. Who knows what LBJ's Great Society is

funding?

And there are other forms of fraud. An entire cottage

industry of elder-law attorneys has emerged, for instance, to

help well-to-do seniors appear poor on paper so that Medicaid

will pay their nursing-home bills. Medicaid even encourages

the elderly to get sham divorces for the same reason. It's

all perfectly legal. It's still fraud.

Medicaid's matching-grant system also invites fraud. When a

high-income state such as New York spends an additional

dollar on its Medicaid program, it receives a matching dollar

from the federal government--that is, from taxpayers in other

states. Low-income states can receive as much as $3 for every

additional dollar they devote to Medicaid, and without limit.

If they're clever, states can get this money without putting

any of their own on the line. In a ``provider tax'' scam, a

state passes a law to increase Medicaid payments to

hospitals, which triggers matching money from the federal

government. Yet in the very same law, the state increases

taxes on hospitals. If the tax recoups the state's original

outlay, the state has obtained new federal Medicaid funds at

no cost. If the tax recoups more than the original outlay,

the state can use federal Medicaid dollars to pay for bridges

to nowhere. As Vermont began preparations for its Obamacare-

sanctioned single-payer system this year, it used a provider-

tax scam to bilk taxpayers in other states out of $5.2

million. In his book Stop Paying the Crooks, consultant Jim

Frogue chronicles more than half a dozen ways that states

game Medicaid's matching-grant system to defraud the federal

government.

Since 1986, the GAO has published at least 158 reports

about Medicare and Medicaid fraud, and there have been

similar reports by the HHS inspector general and other

government agencies. In 1993, Attorney General Janet Reno

declared health-care fraud America's No 2 crime problem,

after violent crime. Since then, Congress has enacted 194

pages of statutes to combat fraud in these programs, and

countless pages of regulations.

Yet federal and state anti-fraud efforts remain uniformly

lame. Medicare does almost nothing to detect or fight fraud

until the fraudulent payments are already out the door, a

strategy experts deride as ``pay and chase.'' Even then,

Medicare reviews fewer than 5 percent of all claims filed.

Congress doesn't integrate Medicare's myriad databases, which

might help prevent fraud, nor does it regularly review the

efficacy of most of the anti-fraud spending it authorizes.

Many of the abuses noted above, such as those of the Brooklyn

dentist, were discovered not by the government but by curious

reporters poking through Medicaid records. The amateurs at

the New York Times found ``numerous indications of [Medicaid]

fraud and abuse that the state had never looked into,'' but

``only a thin, overburdened security force standing between

[New York's] enormous program and the unending attempts to

steal from it.

The federal government's approach to fraud is sometimes so

inept as to be counterproductive. Sparrow testified that a

defect in the strategy of Billy, our hypothetical criminal,

is that he doesn't know which providers and patients on his

stolen lists are ``dead, deported, or incarcerated.'' But

Medicare's anti-fraud protocols help him solve this problem.

When Medicare catches those claims, it sends Billy a notice

that they have been rejected. ``From Billy's viewpoint,''

Sparrow explained, ``life could not be better. Medicare helps

him `scrub' his lists, making his fake billing scam more

robust and less detectable over time; and meanwhile Medicare

pays all his other claims without blinking an eye or becoming

the least bit suspicious.''

Efforts to prevent fraud typically fail because they impose

costs on legitimate beneficiaries and providers, who, as

voters and campaign donors respectively, have immense sway

over politicians. At a recent congressional hearing, the

Department of Health and Human Services' deputy inspector

general, Gerald T. Roy, recommended that Congress beef up

efforts to prevent illegitimate providers and suppliers from

enrolling in Medicare. But even if Congress took Roy's

advice, it would rescind the new requirements in a heartbeat

when legitimate doctors--who are already threatening to leave

Medicare over its low payment rates--threatened to bolt

because of the additional administrative costs (paperwork,

site visits, etc.).

Politicians routinely subvert anti-fraud measures to

protect their constituents. When the federal government began

poking around a Buffalo school district that billed Medicaid

for speech therapy for 4,434 kids, the New York Times

reported, ``the Justice Department suspended its civil

inquiry after complaints from Senator Charles E. Schumer,

Democrat of New York, and other politicians.'' Medicare

officials, no doubt expressing a sentiment shared by members

of Congress, admit they avoid aggressive anti-fraud measures

that might reduce access to treatment for seniors.

It's not just the politicians. The Legal Aid Society is

pushing back against a federal lawsuit charging that New York

City overbilled Medicaid. Even conservatives fight anti-fraud

measures, albeit in the name of preventing frivolous

litigation, when they oppose expanding whistle-blower

lawsuits, where private citizens who help the government win

a case get to keep some of the penalty.

Sparrow argued that when Medicare receives ``obviously

implausible claims,'' such as from a dead doctor, ``the

system should bite back. . . . A proper fraud response would

do whatever was necessary to rip open and expose the business

practices that produce such fictitious claims. Relevant

methods include surveillance, arrest, or dawn raids.'' Also:

``All other claims from the same source should immediately be

put on hold.''

Some of the implausible claims will be honest mistakes,

such as when a clerk mistakenly punches the wrong patient

number into the ATM. And sometimes the SWAT team will get the

address wrong, or will take action that looks like overkill,

as when the Department of Education raided a California home

because it suspected one of the occupants of financial-aid

fraud. How many times would federal agents have to march a

handcuffed doctor past a stunned waiting room full of

Medicare enrollees before Congress prohibited those measures?

``It seems extraordinary,'' Sparrow said, that the HHS

Office of Inspector General recommends ``weak and inadequate

response[s] . . . to false claims and fake billings'' and

that Medicare ``fail[s] . . . to properly distinguish between

the imperatives of process management and the imperatives of

crime control.'' Extraordinary? How could it be any other

way? Anti-fraud efforts will always be inadequate when

politicians spend other people's money. Apologists for

Medicare and Medicaid will retort that fraud against private

health plans is prevalent as well, but this only drives home

the point: Since employers purchase health insurance for 90

percent of insured non-elderly Americans, workers care less

about health-care fraud, and have a lower tolerance for anti-

fraud measures, than they would if they paid the fraud-laden

premiums themselves.

The fact that Medicare and Medicaid spend other people's

money is why the number of fraud investigators in New York's

Medicaid program can fall by 50 percent even as spending on

the program more than triples. That is why, as Sparrow

explained in an interview with The Nation, ``The stories are

legion of people getting a Medicare explanation of benefits

statement saying, `We've paid for this operation you had in

Colorado,' when those people have never been in Colorado. And

when you complain [to Medicare] about it, nobody seems to

care.''

The Ryan plan offers the only serious hope of reducing

fraud in Medicare and Medicaid. Its Medicare reforms,

especially if they were expanded later, would make it easier

for the federal government to police the program, and its

Medicaid reforms would increase each state's incentive to

curb fraud.

To see how the Ryan plan would reduce Medicare fraud,

imagine that the proposal really were what its critics claim

it is: a full-blown voucher program, with each enrollee

receiving a chunk of cash to spend on medical care, apply

toward health-insurance premiums, or save for the future.

Instead of processing 1.2 billion claims, Medicare would hand

out just 50 million vouchers, with sick and low-income

enrollees receiving larger ones. The number of transactions

Medicare would have to monitor each year would fall by more

than 1 billion.

Social Security offers reason to believe that a program

engaging in fewer (and more uniform) transactions could

dramatically reduce fraud and other improper payments. As a

Medicare-voucher program would, Social Security adjusts the

checks it sends to enrollees according to such variables as

lifetime earnings and disability status. The Social Security

Administration estimates that overpayments account for just

0.37 percent of Social Security spending. Overpayments are

higher in the Supplemental Security Income (SSI) program

(8.4 percent), a much smaller, means-tested program also

administered by the Social Security Administration. But

total overpayments across both programs still come to less

than 1 percent of outlays.

In reality, the Ryan ``voucher'' is much closer to the

current Medicare Advantage program, through which one in four

Medicare enrollees selects a private health plan and the

government makes risk-adjusted payments directly to insurers.

Skeptics will rightly note that, judging by the official

improper-payment rates, Medicare Advantage (14.1 percent) is

in the same ballpark as traditional Medicare (10.5 percent).

Therefore, the Ryan plan should be seen not as a solution to

Medicare fraud in itself, but as a step toward a vastly

simplified, Social Security-like program in which the task of

policing fraud is less daunting.

The Ryan plan would also vastly increase the states'

incentive to curb Medicaid fraud. Just as a state that

increases funding for Medicaid gets matching federal funds, a

state that reduces Medicaid fraud gets to keep only (at most)

half of the money saved. As much as 75 percent of recovered

funds revert back to the federal government. In a report for

the left-wing Center for American Progress, former Obama

adviser Marsha Simon noted that ``states are required to

repay the federal share . . . of any payment errors

identified, even if the money is never collected.'' The fact

that Albany splits New York's 50 percent share of the

spending with municipal governments may explain why the

Empire State is such a hot spot for fraud: No level of

government is responsible for a large enough share of the

cost to do anything about it. The result is that states'

fraud-prevention efforts are only a tiny fraction of what

Washington spends to fight Medicare fraud.

Ryan would replace Medicaid's federal matching grants with

a system of block grants. Under a block-grant system, states

would keep 100 percent of the money they saved by eliminating

fraud. In many states, the incentive to prevent fraud would

quadruple or more. Block grants performed beautifully when

Congress used them to reform welfare in 1996. They can do so

again.

The Ryan plan would not reduce Medicare and Medicaid fraud

to tolerable levels, but neither would any plan that retains

a role for government in providing medical care to the

elderly and disabled. What the Ryan plan would do is reduce

how much the fraudsters--many of whom sport congressional

lapel pins--fleece the American taxpayer. And that is no

small thing.

Madam President, what is the order at this point?

Madam President, I ask unanimous consent that I be able to proceed for 30 minutes.

I thank the Chair.

Madam President, I listened to my colleague just now and I have listened to colleagues over the last weeks and there are a lot of crocodile tears being shed on the floor of the Senate about why we are not doing something, all of which completely ignores the fact that everything we try to do, the folks on that side of the aisle make us take longer and longer and longer than we have ever taken before because they push every single procedural objection possible. Even the most routine thing we try to do on the floor of the Senate requires 60 votes or requires a motion to proceed. The most perfunctory, simple thing requires us to go through every procedural hoop and parliamentary process because they have persistently pursued a strategy aimed at gridlock.

The idea is to make Americans see the dysfunction and then blame it on the party in power and run against them. It is the most cynical, craven, and dangerous policy I have ever seen in the 27 years I have been in the Senate, and I regret it for our country.

There is a reason Democrats are standing, as a matter of principle, against the Ryan budget and against the proposals our Republican friends keep proposing. That is because they are the only party who have consistently stood and said: We are not going to consider everything. We are just going to give you a tiny, little menu, and you have to balance the budget out of spending cuts only. That is all that is in their budget. The only thing in their budget is spending cuts. Twelve percent of the entire budget is all they have put on the table in order to try to do something responsible about the deficit of our country.

We, on the other hand, have consistently said: We will put everything on the table--everything--Medicare, Medicaid, reforms--not benefits. We are not going to cut the benefits on people because we don't have to in order to deal with this problem, but we can reform them. We can certainly be more effective and efficient, and we are prepared to do that. There are a lot of other things we are prepared to do--defense spending, wars, and a whole series of things.

Last week, one of our newest colleagues made a very interesting and I thought revealing observation. The Senator from Delaware, Chris Coons, who balanced budgets in county government, who took cases all the way to the Supreme Court, who has seen decisions made in the business world as well as in the nonprofit world and who is an enormously capable person but new to the Senate, made the observation that some people are actually looking into the language of the 14th amendment and the debt limit in order to learn whether ``there might be some way to save us from ourselves.''

That observation brought home to me how absurd this place must look right now, not just to a new Senator who came here with hopes of getting the business of our Nation done but to the average American, to people who invest in the extraordinary mythology that surrounds this great institution we are all a part of--the greatest deliberative body in the world. We can laugh at that one today. There is an absence of deliberation--a great absence of deliberation--and I think a lot of people are alarmed by the dysfunction they see with respect to this great institution.

It is extraordinary when we have to look at the language of the Constitution to find possible ways to do what Congress and the Senate are supposed to do on their own--take tough votes, look at the tough issues, make tough decisions but, most importantly, do it in the interest of the United States, not in the interest of either party or of some ideology.

Here we are, less than 5 weeks from August 2, the day the U.S. Government will default on its obligations for the first time in its history, and Washington is still playing the same old political game--a dangerous game of chicken--with enormous consequences for our economy and our future in every respect--economic, social, and national security.

I hear this in my travels. Senator McCain and I were in Egypt recently, and we had people turning to us and saying: Hey, how about you guys? Can you get your act together before you are telling everybody else what they ought to be doing with respect to their future?

You are promoting democracy. How is your democracy doing back there in the United States? Working out all right, right now?

Washington is stuck, and it is stuck because we have a few ideologues and some people outside of the U.S. Senate who cower our fellow colleagues with threats of primaries. People are going to run against them if they move off of the orthodoxy of extremism. The result is that nothing is happening. Fear has gripped the Senators who raised their right hand and said: I swear to uphold the Constitution of the United States.

Well, everyone here I think acknowledges that defaulting on our obligations would be disastrous for our country. Everyone here simultaneously says they don't want the default to happen. But here we are with a small minority holding the debt limit hostage to an ideological agenda, saying they will not consider an approach that most observers consider indispensable and reasonable in reaching an equitable solution to our crisis.

Frankly, the consequences of not doing something are not far off in the future. Every day that we are here not getting this decision made, we are

weakening our economy and we are making our government and, through it, our country look helpless and adrift. The fact is that it is already having consequences with respect to business decisions. Capital is holding back. Businesspeople are reluctant to invest, uncertain of what the budget of the United States is going to look like, uncertain of what kinds of signals we are going to send to the marketplace. Certainty. I keep hearing colleagues say we have to send certainty. But when they look at this chaotic debate, what kind of certainty could any businessperson possibly take from what is not happening in Washington today?

Our friends on the other side of the aisle say they want to create jobs, but Moody's chief economist, Mark Zandi, has said that hiring is only going to resume if we can get our act together and settle this debate, and the sooner, the better. At the beginning of the month, Moody's announced that it might downgrade our country's credit rating if Congress isn't able to come to an agreement by the middle of July. That is a week away. If that happens, I promise you our economic recovery is going to halt in its tracks. Maybe some people want that. I hope not. But today investors are looking at the scene here in Congress, and they are wondering if we are ever going to get it together. And the longer we wait to get serious, the higher the interest rates are going to move. That hurts everyone in America. Everyone who owns a home or runs a small business is going to be squeezed while Congress is in this ideological standoff.

I read David Brooks' column this morning in the New York Times, a brilliant column talking about the unreasonableness of taking things off the table in this discussion.

Recently, 235 economists, including 6 Nobel Prize winners, sent a letter to congressional leadership urging them to raise the debt limit immediately. Not doing so, they said, could have a substantial, negative impact on economic growth at a time when the economy looks a bit shaky, and, at worst case, it could push the United States back into recession. So are we going to listen to 235 economists, including 6 Nobel Prize winners, or are we going to be driven by this extremist position that does not allow for reasonable discussion about what ought to be on the table?

I think this is a dangerous and irresponsible moment in our country. Not raising the debt limit would result in a crisis potentially far more severe than the financial crisis of 2008 and 2009. The consequences would include any number of things, from increases in State and local government borrowing costs, increases in corporate borrowing costs, including mortgage interest, declines in equity prices and home values, declines in 401(k)s and other retirement savings, reductions in the willingness of investors here and around the world to invest in the United States, and job losses on a significant scale.

Now, as I have said, I don't believe that is going to happen. But the question is, Are we going to get a deal that hurts America or helps America? If we eat America's seed corn in this deal--by that, I mean don't invest in America's infrastructure, don't invest in education, don't invest in the research and development that is so critical to the creation of new jobs--if all we do is what the other folks in the House said we ought to do by just looking at 12 percent of the budget and cutting spending, if that is all we do, we will eat America's seed corn, and the next generation will pay the price. Without investing in our future, we could face an economic downslide unlike anything we have seen in recent memory.

In 1983, President Reagan wrote:

Denigration of the full faith and credit of the United

States would have substantial effects on the domestic

financial markets and on the value of the dollar in exchange

markets. The Nation can ill afford such a result.

Nearly 30 years later, we are facing that kind of incalculable damage.

The fact is, Chairman Bernanke and Secretary Geithner have already used extraordinary measures to try to keep the Nation from default and keep the economy moving.

Already, Treasury Secretary Geithner has used extraordinary measures to keep our Nation from default. And, these measures have bought us some time to deal with congressional negotiations, but it happens that some Republicans have proven themselves willing to sacrifice our Nation's economy in a misguided attempt to score political points. I know they will protest and say ``we're just trying to solve our debt crisis,'' but the truth is there is more than one way to do that not just their way and particularly not when that way can have disastrous consequences on the economy.

Federal Reserve Chairman Ben Bernanke says failing to raise the debt ceiling on time could cause ``severe disruptions'' in the markets. He said:

We should avoid unnecessary actions or threats that risk

shaking the confidence of investors in the ability and

willingness of the U.S. government to pay its bills.

As of this moment, no one knows for sure how much time our financial markets will give Congress to come up with a solution before severe disruptions could occur. According to a J.P. Morgan analysis, the delay in raising the debt ceiling is likely to negatively impact markets, as investors undertake risk management actions in preparation for a potential Treasury default.

These effects could include immediate liquidity shortages as borrowers attempt to raise additional cash and increase the tenor of their borrowings, large auction concessions especially if Treasury were to postpone an auction, increases in open volatility that cover the June/July period, and general weaker demand for Treasury securities. As time goes on, failure to raise the debt ceiling could touch off a mini- financial panic, perhaps throwing the fragile economy back into recession.

If you don't believe me about moments like this, just look at our history and you don't have to look far. Just look back 3 years to September 2008, when Congress initially voted down Treasury Secretary Paulson's $700 billion plan to provide assistance to financial institutions. Investor confidence was brutally shaken and the Standard & Poor's 500-stock index plunged 8.8 percent that day.

If we do not act and act very soon indeed those who lend us resources will eventually demand higher interest rates. Government borrowing will crowd out private investment. A larger share of our Federal budget will be devoted to interest payments instead of productive investments like education, national security, and programs for our elderly and most vulnerable. Higher borrowing costs for American households and businesses will discourage future private investment, lowering our capital stock, reducing our economic growth and depressing our standard of living.

Mr. President, this isn't half as complicated as some have chosen to make it. We are not as far apart as this debate would imply. We can all agree that deficits are too high. We can all agree that we shouldn't be borrowing 40 cents on every dollar that we spend. We even agree that we need $4 trillion in deficit reduction to put us on a sustainable path.

But in the end, this budget debate can't just be about just cutting spending which is all the Republicans have offered. Our future is at stake--literally. Everyone says that job creation and investments in infrastructure, clean energy, and medical research are essential. We need to give the economy the tools to recover. As Ben Bernanke affirmed just the other day, we can't just cut our way to jobs and recovery. The Americans who sent us here understand that and want investment in our future.

I believe there are better choices that we face. This is not half as complicated as some have chosen to make it. In fact, I don't think we are as far apart in this debate, when you talk to a lot of our reasonable colleagues on the other side of the aisle, as some want to imply. Everybody can agree deficits are too high. We can all agree we shouldn't be borrowing 40 cents on every dollar we spend. We can all agree we need about $4 trillion in deficit reduction to put us on a sustainable path. But in the end, this budget debate cannot be just about cutting spending, even though it must include cutting spending.

Everyone has said that job creation and investments in clean energy, infrastructure, and medical research are essential, and I think we need to do the things that would make our economy move. Let me give an example of this. In America today, we are living off of the investments our parents and our

grandparents made. The Interstate Highway System didn't just sprout up one day; it was a government program investing taxpayer dollars in building a nationwide road system that helped America to grow and be unparalleled in its strength compared to any other nation in the world. That was a President Eisenhower program.

The truth is that today we are falling further and further behind other nations in terms of our investment in the infrastructure of the future. The United States is spending less than 2 percent of its GDP on infrastructure. Compare that. China is spending 9 percent of GDP on infrastructure. Europe is spending 5 percent of GDP on infrastructure. They have trains and airports and other things that work and get people where they want to go faster than our trains.

We are looking at a country now that has about a $2.2 trillion deficit in the infrastructure of our Nation. We have 69,000-plus bridges that are structurally deficient. We need to invest in them so they don't fall down like the bridge in Minnesota. We need to invest in our airport structures so we don't have airport delays or potential of collisions in our aircraft.

According to one study, $1 billion in investment in infrastructure results in 18,000 jobs. So at a time when America is begging for more jobs, why would we not be investing in infrastructure in this country? You go to Germany or Brazil, and they are investing huge amounts in their future, and right now both countries are threatening to leave the United States behind with respect to alternative and clean energy investments of the future.

Millions of Americans know we can do a lot better. Frankly, in the 1980s you couldn't find three more ideologically different people than Tip O'Neill, Bob Dole, and Ronald Reagan, but they put politics aside and they saved Social Security. And they didn't capitulate. They compromised. They found common ground. They did it because they knew America's future was more important than either party.

I often hear my colleagues on the other side of the aisle only talking about the spending problems of the country.

Madam President, may I ask how much time I have used?

I thank the Chair.

I often hear my colleagues talking about the spending problem. What they forget about is we had a surplus we created in the 1990s by making the tough decisions. We invested in the future of our country, and we created 23 million new jobs. And in the 1990s, when we balanced the budget--let's not forget that. Some of us were here and made those tough votes, and we balanced the budget, and we created 23 million jobs. Every income level in America went up--every single income level--and we did it at a time when the total relationship of spending- to-GDP was exactly where many of us believe we ought to take it today, somewhere around 21 or 22 percent.

The fact is that it was President Bush's tax cuts for the wealthiest Americans that we couldn't afford and a war that he refused to pay for in Afghanistan and then Iraq--both wars totaling approximately $2 trillion. The tax cuts and the wars account for approximately $7 trillion in deficits in 2009 and going forward.

The facts are clear. The tax cuts President Bush put in place contributed to the deficit, and the revenues have to be addressed if we are going to go forward and deal with this. Federal revenues today--the money the government takes in--is at its lowest level since 1950. We have had a 60-percent reduction in revenue and a 60-percent increase in expenditures, and right now we are at the lowest level of revenue taken in that we have been at since the 1950s, and they are only about 14 percent of the total GDP. The fact is that the last five times we balanced the budget, those revenues were about 19 or 20 percent of GDP. So here we are at 14 percent, we have balanced the budget five times previously, and the revenues were at about 19.5 to 20 percent of GDP. Doesn't that tell us something?

There is another problem we have. It is right here on my desk. We have a Tax Code. The Tax Code has 8 volumes, over 72,500 pages. This is the Internal Revenue Code, 4,052 pages. I would ask any American, do you have your own page in this Tax Code? How many Americans have their own page in this Tax Code? Well, I have got news for you: 72,500 entities--a lot of businesses--have found a way to get their little break in the Tax Code.

Last month, the Senate, by a vote of 73 to 27, sent a clear signal that we ought to start looking at some of these subsidies. This entire Tax Code is riddled with special deals which lobbyists have worked against the interests of average Americans in most cases. Let me give you a couple of examples.

Section 168 in this Code has a special rule for racehorse depreciation. How many folks in America are worried about their racehorse today and the depreciation on it? But they have a provision in here that allows the depreciation of racehorses to go from 7 years to 3 years, and the difference of 7 years to 3 years costs the average American money. The average American is supporting that because it is a foregone revenue. We are giving away the revenue, and we are giving it back to somebody who doesn't fundamentally need it.

The Tax Code includes a definition of 3-year property. Get this: any horse other than a racehorse which is more than 12 years old at the time it is placed in service. I mean, who writes this stuff? Where does this come from? Not only is that a waste of taxpayer money, it makes the Tax Code more complex, and it requires more regulations and more confusion.

A lot of tax lawyers love these eight volumes, but the average American ought to be furious at these volumes because these volumes are stealing America's opportunities in a host of other choices we could be making, such as education, investment in energy, energy independence, taking care of our veterans--doing a whole bunch of things that are substitutes for some of the choices that are made.

Let me give a couple of other examples. Here is a provision. It is included in one of the regulations.

On April 2000, E acquires a horse to be used in E

thoroughbred racing. On October 1, 2003, F buys the horse

from E and will use the horse in F's horse breeding business.

The use of the horse by E in its racing business prevents the

original use of the horse from commencing with F. Thus F's

purchase price of the horse does not qualify for the

additional first year depreciation deduction.

How ridiculous can it get that we are getting into specific cases like that which run contrary to the common sense of average Americans? One has to be able to afford a lobbyist to be on one of these pages.

Last year, more than $3.5 billion was spent on lobbying in Washington, DC. There are more than 13,000 lobbyists trying to influence the legislation in Washington. Believe me, it works. Look at the last 50 years.

Back in 2004 we passed a bill which the New York Times described as including ``goodies for almost every kind of corporation'' and that ``perhaps the most amazing provision might be called the foreign gambler relief act.''

Under prior law, if a person is lucky and they win big at the horse or dog track, their winnings are subject to a withholding tax. It is kind of logical. But now foreigners do not have to pay tax on their winnings. They found a lobbyist and they got it in the Tax Code and we passed it somehow.

Section 872 of the Tax Code excludes from gross income, ``income derived from wagering transactions in certain parimutuel pools.'' It specifically says, ``gross income derived by a nonresident alien individual from a legal wagering transaction initiated outside the United States in a parimutuel pool with respect to a live horse race or dog race in the United States.''

Until I read this I was not absolutely certain what a parimutuel pool was, but I do know a provision like that does not get in here without lobbying. It comes at the expense of a lot of other choices because the problem is all these breaks--whether it is subsidies for oil or subsidies for gas exploration--which made sense 60 and 70 years ago, but here we are with record profits coming into these companies, $35 billion of profit just for the last quarter, 3 months. Yet they get a break. That break comes at the expense of average folks having the school they deserve, having the road they want to ride on properly, and having decent public transportation. Those are the choices and those are some of the things for which we are fighting.

Not only are lobbyists arguing for tax breaks, highly skilled tax lawyers have a history of finding looping holes for corporations to exploit. We use to have a provision in the Tax Code which was finally eliminated that provided a tax credit for synthetic fuels for coal. I found this process questionable and one company admitted it was profitable just because of this tax credit. Some firms getting this credit were simply spraying newly mined coal with diesel fuel or some other substance. We need to work together to find these type of provisions and remove them.

If there is a loophole, someone will find a way through it. I think we all remember how one oil company was getting a tax credit for co- processing animal fat with biodiesel from biomass. We shut that one down but other loopholes have opened.

Last year, we thought that we had seen the end of the ``black liquor boondoggle.'' Paper mills were using a mixture of diesel fuel and a byproduct of the pulping process as an energy source for the mill. The intended purpose of this credit is to produce motor fuels from biomass. These companies were getting a windfall that was never intended. I am now hearing that some companies are still finding a way to benefit from black liquor. I have also heard that some are trying to benefit from this same credit for alternative fuels by adding cow waste and other waste to diesel fuel. This was not the intended purpose of this provision. In past Congresses, I have introduced line-item veto legislation which included tax benefits. These are abuses that we can all agree to end.

For years, we have been trying to repeal subsidies for major oil companies. Just last month, we failed to eliminate $2 billion a year in tax incentives for oil companies. These incentives are no longer needed. We needed to jointly review the Tax Code and remove the deadwood. Some subsidies are no longer needed. And some are completely necessary. The Tax Code has become riddled with special interests. Over the past 25 years, Congress has introduced billions of dollars of worth of special tax breaks, loopholes and subsidies into the Tax Code-- making total tax expenditures now exceed $1 trillion.

With the future of our country at stake we have to decide if we want to care for our elderly and educate our children or provide tax breaks for those who do not need them. Would we rather invest infrastructure or allow race horse owners a shorter period to depreciate their horse?

As we consider legislation to increase our debt limit, our colleagues in the minority refuse to even discuss eliminating any of the tax expenditures that these lobbyists have helped enact into law. Not one permanent tax expenditures. I guess they prefer to increase the spending cuts that hurt low and moderate-income families.

I think we need to review the $1 trillion in expenditures and decide what is really needed instead of slashing programs which will weaken our economy. It is time for us in Congress to stop falling prey to corporate lobbyists and stand up for our future. To reduce the deficit we need to make hard choices and we should not be afraid of saying ``no.'' If we do not start eliminating tax expenditures, we will not be able to reduce the deficit without gutting Medicare or Medicaid.

We hear a lot about the Ryan budget, but make no mistake: the House passed budget does not eliminate the deficit. It just makes a series of spending cuts to provide tax cuts to those at the very top even greater than the existing 2001/2003 tax cuts.

And Chairman Ryan may call his budget the ``Path to Prosperity,'' but that is not where its path would take our seniors. At least two-thirds of the over $4 trillion in budget cuts come from programs serving those of modest means. To be clear, the House budget is not about reducing the debt. It is about putting in place Republican priorities-- increasing tax cuts for the wealthy and slashing social programs that people depend on.

We should examine all spending and not leave defense spending off the table. For example, we should be cutting programs like the Medium Extended Air Defense System, MEADS, which had a budget request of $406 million for fiscal year 2012 but the Pentagon said was running over schedule and running over cost. Or the F-22 raptor fighter jet, which in 2009 we were able to cut $1,750,000,000 in procurement funds of a plane that was costing too much money and wasn't appropriate for the 21st century wars we are engaged in. We should aggressively go after fraud and abuse, eliminate erroneous payments to health providers, and better coordinate health care for people who receive both Medicare and Medicaid. These dual eligible beneficiaries account for only 15 percent of Medicaid enrollment but constitute nearly 40 percent of Medicaid spending.

Instead of digging more ideological trenches, we should look at the last time we actually achieved a path to fiscal stability. The bipartisan 1990 budget agreement included discretionary caps and revenue increases. It was a real compromise that looked at both sides of our budget equation. And in January of 2001, the Congressional Budget Office projected that the debt would be erased by 2006 and that by 2011, there would be a $2.3 trillion surplus.

Yet somehow, in the years since this real bipartisan success, too many people in this building seem to have forgotten that there are two sides of the budget ledger.

Just look at the balanced budget amendment House and Senate Republican leaders proposed. It caps Federal spending in any fiscal year at a completely unrealistic 18 percent of GDP. It wouldn't just result in unthinkable cuts to Social Security, Medicare, and Medicaid; it would also impose arbitrary limits on the Federal Government's ability to respond to the recession. So the recession could be deepened by increasing the number of unemployed, decreasing business investment, and withholding services needed to jump-start the economy. And yet this same proposal would require a two-thirds vote to increase revenues, making it nearly impossible to eliminate wasteful tax loopholes or unnecessary tax giveaways.

So let's be realistic. We need to set ourselves on a course to rein in deficits and debt. No one disputes it. To do this, the budget negotiations should include a budget enforcement mechanism--and it can't result in a sequestration of spending only; if a budget enforcement mechanism only focuses on spending cuts, we are only addressing part of the problem. It would slash essential programs while ignoring revenues. That is simply not a responsible long-term budget solution, and it would never get bipartisan support.

For an enforcement mechanism to work, both sides should not want the trigger to occur. We shouldn't be hoping for automatic spending tax cuts or increased revenues. A tough budget enforcement mechanism will force us to make difficult choices, both substantively and politically.

It is time to end the polarization over how to resolve our budget crisis. We can't hide behind global spending caps, unrealistic constitutional amendments, or pledges vowing opposition to tax increases. The cuts that would be required to meet the spending targets of a cap would have to be as drastic as or even worse than proposals included in the House-passed budget resolution.

Spending for Social Security, Medicare, and Medicaid are driven by factors beyond the programs' control. Under spending caps, their percentage cuts would be bigger than the percentage cut in discretionary programs and they would be subject to automatic large cuts.

We need to think hard about what is fair in America. The only tax President Obama or we Democrats have talked about is on the wealthiest people. Millionaires. People who earn more than $1 million a year. That is about 7,000-plus lucky families and individuals in the United States. All we are doing is talking about asking those who benefit enormously from the strength of our economy and the strength of our military and all the things we need to do--we are just asking them is it too much to go from 36.9 percent up to 39.6 percent, which is where they were in the year 2000, before President Bush gave them a tax cut we could not pay for.

It is not as if they have done badly these last 10 years. The fact is, more wealth has been accumulated in the hands of the smallest part of America, the top 1 percent, than at any time in America's history. The wealthy are far wealthier than when we had no income tax and when we had the great names

of the 1920s and 1930s and the industrial revolution: Pierponts, Morgans, Carnegies, Mellons, Rockefellers, and so forth. They are much wealthier today. Yet they are paying far less of their share than at any time in modern history.

Here we are with a deficit problem. They are talking about cutting Medicaid. They are talking about cutting Medicare. They are talking about cutting education loans, making it more expensive for kids to go to college--the one thing we desperately need in order to compete with the rest of the world, people who have a college education. I do not hear anybody in America saying make it harder for my kid to go to college, but that is what they are doing in their budget. That is exactly what they are doing. But they stand up adamantly and say: No way will we allow people earning more than $1 million a year to pay anything additional into the system. It is just wrong. It is morally wrong. It is repugnant in this country we are condoning the institutionalization of a larger and larger gap between the haves and the have-nots, between the people who have already gotten their brass rings and the people who are trying to reach it. That is not the American story. I believe we need to fight to have a balanced approach.

President Obama and the Democratic proposals I have seen and we have talked about--and I hope people will hear more about in the next days-- give a tax cut to about 98 percent of America. The only people we are talking about asking to kick in and give us some more revenue are people earning the most.

If a person is earning $500,000 a year, they would not pay any additional tax on their first $250,000. On the next $250,000 all they would pay is $12,000 of additional tax. Let me ask--no, I will say I know this. There is not one business person, there is not one millionaire for whom $12,000 will change one consumer purchase, one decision of investment--not one. All this talk about how it will slow down the economy or hurt America is just bunk. It is not true.

We need to have a real discussion. We need to have a real effort that I think matches the greatness of this institution with this moment. This can be the world's greatest deliberative body, but we need to put all of these issues on the table. We need to debate them openly. We need to have the courage of our convictions and vote up or down and do what is needed to put our country on track because right now we are losing countless investment opportunities, countless job opportunities. If we do not make the right choices we are going to have a very difficult time living up to the promise all of us hope to live up to in our time in this office.

Mr. President, I have heard a lot of talk on the Senate floor, including from the last speaker, and certainly from the President of the United States about shared sacrifice. The White House spin is that the Democrats in the negotiations about extending the debt ceiling have conceded hundreds of billions of dollars in savings and Republicans have conceded nothing and therefore Republicans need to be willing to raise taxes. That is the mantra. That is the spin.

But there are two things wrong with this spin: First, it is wrong as a matter

of fact, as I will point out, and second, it would result in very bad policy. As Senator Rubio said a moment ago, the only thing that should be off the table is bad policy, and certainly anything that would hurt our economy and job creation at this time is bad policy.

First with regard to the assertion from some in the White House that Democrats have made all the concessions and so it is the Republicans' turn--the last speaker, as a matter of fact, said, and I will quote her directly, ``Everybody pays except the rich.'' Well, I would like to point out why that is absolutely not the case.

The negotiations Vice President Biden has presided over have talked about two different kinds of savings: on the discretionary side, which is the budget we deal with every year, and on the mandatory side, which is spending programs such as Medicare, Medicaid, some of TRICARE, some veterans' benefits, Social Security, and things of that sort.

If the savings the White House has attempted to portray as all coming from Democratic concessions refers to the discretionary part of this pie, then I would simply say that is a false statement because we haven't discussed it. What we have talked about is setting a top-line budget number--a so-called 302(a) number in budget parlance--and that is what the Members of the House and Senate would then have to spend. But there has been no discussion of where those savings come from, so it simply would be wrong to say there has been any kind of negotiation about where those savings come from and the Democrats have made all of the concessions. There have been no concessions made by either side, as a matter of fact.

If it is the mandatory side we are talking about, it is true we have had a lot of discussion about savings that can result from changes in the way we operate some of these mandatory programs. Now, we are not talking about any major reform of Medicare or anything of that sort, but if I can just sort of characterize something in a very loose way as waste, fraud, and abuse, there are a lot of savings that can occur in various programs, and there are even some revenue increases that can result from increased fees and that sort of thing that do result in some additional savings overall on the mandatory side.

In terms of the revenue increases, I would point out that between $153 billion and over $200 billion of the money on that side of the ledger actually comes from increased revenues. So when the White House says: Well, revenues have to be on the table, the fact is that revenues have been on the table. We have been talking about increased revenues. We are not talking about increasing taxes. But if the government sells something and gets money from it, that is revenue. If there is a user fee of some kind and we want to raise that to keep up with the times, that is revenue. And if you add up all of the revenues we have agreed to, we Republicans have agreed to between $150 billion and $200 billion. So it is simply false to suggest that we haven't been willing to talk about revenues and that all of the concessions have been on the Democratic side.

We have also had some spending reductions or less rate in the growth of spending in some of these mandatory programs on the table for discussion, and about 60 percent of those, in my calculation, are concessions Republicans have made, and about 40 percent are concessions Democrats have made. My Democratic counterparts would probably argue it is somewhat different, from their point of view, but the fact is both sides have made concessions. And even if you concede they are 50-50, the fact is, therefore, Republicans have made as many concessions in these negotiations as have our Democratic colleagues.

By the way, one reason we have both been willing to make concessions is we agree we are in a dire circumstance here, and we sometimes have to get out of what we call our comfort zone and agree to what in ordinary times we would never agree to but we realize now we have to make some changes. So we are willing to make concessions that ordinarily we wouldn't, and we have, and so have the Democrats. The net result, as I said, I think it is 60-40 on our side, plus all the revenues we have conceded. But if somebody on the other side said: No, it is 50-50, or something on that order, I wouldn't argue. But the fact is, it is false and misleading for the White House to suggest that all of the concessions have been made by the Democrats and none have been made by Republicans. That is simply factually incorrect.

The second thing that is wrong with this spin is that, as Senator Rubio said, bad ideas should be off the table, and it is a bad idea to raise taxes on an economy that is already sick. I mean, the last thing we should be doing is raising taxes, as a result of which job creation would be inhibited. It is the worst medicine for a sick economy.

I asked one of my Democratic colleagues why, since we shouldn't be raising taxes at this point in time, there was such an insistence on his side. His response was: Well, you have to understand, with us, it is kind of theological. Well, maybe it is theological, but I would argue that ideology here has a place to the extent that it is backed up by reality, but ideology that is not backed up by reality has no place in these negotiations. And raising taxes just for the sake of raising taxes, so that somebody can say to their constituency: Well, we did it, we were able to raise taxes, is not a sound way to approach the problem.

Thomas Sowell, one of the most erudite observers of the American scene, wrote, in National Review Online on July 5, a piece he titled ``Politics vs. Reality.'' It goes to this point.

Mr. President, I ask unanimous consent to have printed in the Record this article at the conclusion of my remarks.

The whole point here about raising taxes is this should not be about shared sacrifice. It shouldn't be about sacrifice at all. We are not talking about austerity. We should be talking about prosperity--in other words, the conditions by which everyone can do well, and specifically, how we can create jobs, how we can put Americans back to work, and how our economy can grow.

As I said, the worst medicine for a sick economy is raising taxes, and that is why Republicans oppose tax hikes and not because, for example, I have some interest in protecting some Hollywood movie millionaire. I don't. The person is probably not in my political party. What I have an interest in is protecting America's small businesses so they do not go broke and so they do not have to close up shop because higher taxes were imposed on them. That is exactly what the President's own Small Business Administration Office of Advocacy said would happen with one of the taxes they propose to raise; that is, repealing LIFO, which is an accounting term meaning last in, first out. The SBA Office of Advocacy said repealing LIFO ``would result in a tax increase for small businesses that could ultimately force many small businesses to close.'' That is from the President's own Office of Advocacy for the SBA. That is what I oppose--putting small businesses out of business just because of some theological attachment to raising taxes.

Accountants have talked for a long time about what the best method of accounting is. The IRS has always said LIFO is perfectly acceptable, and about 36 percent of American businesses--primarily retailers and manufacturers--use this accounting technique. It would be fine if we decide to say: Well, we are going to go to a different technique. What would be wrong is to retroactively impose a tax on people who have been using this accounting method as though they have been doing something wrong. They haven't. The IRS has always said LIFO is fine. But it is all about revenue. We need more money to spend, so we are going to retroactively tax 36 percent of American businesses that use this accounting method. That is wrong, and that is why the Small Business Administration Office of Advocacy has said this could put many small businesses out of business. It is why we shouldn't be considering it.

What are the other taxes they propose? Well, one of them is to cap itemized deductions, so you would only be able to deduct either 28 percent or maybe up to 35 percent of your income. Obviously the first effect of this is to make it much more difficult for Americans to contribute to charity, to buy

homes because they wouldn't have the advantage of the mortgage interest deduction, or to pay medical expenses, and so on. As the Wall Street Journal has editorialized, this is just a backdoor way of raising marginal tax rates without actually appearing to do so.

But the biggest problem with this capping of deductions is not that it is going to hurt the millionaires. They are either going to be caught by the AMT or their income is so high they are even going to be paying above AMT rates notwithstanding these limits on deductions. The real people this hurts are the small business owners who pay in the higher bracket. We know that 50 percent of small business income falls in the top two brackets. Businesses have deductions that are the ordinary and necessary part of doing business. All businesses are allowed to take them, both corporate and noncorporate. Why would we eliminate the ability of small businesses to take the same kinds of deductions corporations can take by capping the amount of deductions that could be taken in income reported in the top two brackets?

The final point about this is we know that efforts to tax millionaires and billionaires always end up taxing a lot more people than that. According to the IRS, in 2008 there were only about 319,000 tax returns that showed an income of $1 million or more, but the number of returns falling in the top two brackets--the ones affected by this proposal of the Democrats--numbered more than 3.6 million people. These would be the people who are affected by this proposed increase in taxes.

I would just parenthetically note two others. The last millionaire tax was the alternative minimum tax. It was created in 1969 and targeted against 155 millionaires. Guess how many people it will apply to this year. It will apply to 34.4 million Americans. So when you aim for the millionaires, you end up getting everybody else.

The third tax the Democrats talk about raising is the old favorite: Big Oil. This is so targeted, it only hits five companies in the whole world, five American companies. Never mind that we are punishing American businesses--American oil companies--that are in the same business as other companies all over the world that are not being punished. No, we are going to attack American businesses that, by the way, employ 9.2 million Americans. We are going to say they have to pay higher taxes than other businesses just like them.

There are three particular tax provisions.

Other businesses get to take an R&D tax credit--research and development. Aren't we all for research and development? Yes, but not in the oil and gas industry. And where might they put that research and development money? Well, for example, into ensuring that when they sink a well deep in the Gulf of Mexico, it will be environmentally safe. Nope, you can't deduct that. All other businesses will be able to but not you. What sense does that make? It is bad policy.

How about the usual and necessary business expense, the deduction for writeoffs for business investment? All other companies get to deduct that, but we would say to the oil companies: You don't get that same deduction.

Perhaps most perniciously, we are trying to compete with foreign businesses, so we would say to Americans who earn income abroad: You can deduct against the taxes you would owe here the taxes you pay over there. All of the other world nations get to do that. They would take that away from these particular kinds of companies.

So this is discriminatory, it is job killing but, most of all, it impacts American consumers directly because every dollar of increased taxes is going to find its way into the price we pay at the gas station when we buy gas. Now, whom does that hurt, therefore? Does it hurt some millionaires and billionaires? Who owns the oil companies? Well, a lot of pensions do, a lot of retired teachers and firefighters and so on.

People have to think this through. You are not hitting millionaires and billionaires. I know it sounds like good rhetoric, but when you are hitting American businesses that try to compete around the world and that develop a product we would like not to have to pay four bucks a gallon for, the last thing you want to do is to play politics by saying: Well, for those particular folks, we are going to raise their taxes.

I remember the last time we raised taxes on another millionaire kind of outfit, the yachts. It was a luxury tax that we opposed back in 1990, and it seemed like a good idea, just like this tax they were talking about imposing on airplanes. They didn't actually talk about that in our meeting, so I don't know exactly what it is. But they say it would raise $3 billion over 10 years, which pays for hardly a fraction of the $14 trillion debt we have. Nonetheless, they want to go after private airplanes.

I don't know how many people work in the private airplane manufacturing business. But it was interesting that in 1990 when the luxury boat tax was passed, there were 7,600 jobs lost in the boating industry. Very quickly the people who made the boats, a lot of them up in Massachusetts, decided this wasn't such a hot idea and so they repealed the tax in 1993. By the way, it lost revenue because of the unemployment benefits and lost income tax revenue had to be developed in order to offset the loss in business.

The point of all of this is that when the administration and others talk about shared sacrifice, of making some kind of rich business or rich person pay taxes, you have to think through what the effect is on the American economy and on job creation. The reason Republicans oppose these is not because we love the person who pays the tax so much as we wish for American jobs to be created, or at least not have more jobs lost. And the people who are proposing these tax cuts seem to be absolutely oblivious to the effect their proposals would have on hard- working Americans.

My colleague from Washington State a moment ago said, and I will quote her again: Everybody pays except the rich under Republicans' idea of how things ought to be.

I think I pointed out that is not true. But in case anybody needs a reminder of who pays income taxes in the country: The top 1 percent pays 38 percent of all income taxes. The top 10 percent pays 70 percent. The bottom 40 percent pays no personal income tax.

So is it true that everybody pays except the rich? No. The rich pay by far and away most of the taxes paid in this country, and a lot of people believe that is as it should be. We have a progressive system. The rich can afford to pay more, and so we expect more from them. But let's not demagog the issue and suggest that isn't true. It is true. The rich do pay more, and we have decided in this country that they should. But how much more do you want them to pay? Ninety percent? Ninety-five percent? How about 100 percent? How much revenue do you think we could get from somebody if we said he is going to have to pay 100 percent of what he earns in income taxes? We know there are two rates at which you generate exactly zero revenue: zero and 100.

So when we talk about shared sacrifice, let's put this into perspective and let's realize we are not talking about sacrifice in the sense of trying to hurt people or austerity so much as we are talking about prosperity. And you don't create more prosperity with job-killing taxes.

I want to add one other thing for the record here. There are two publications that note areas in which we could save hundreds of billions of dollars if we were willing to discuss them. When we talk about things that are on the table or off the table, here are two things our Democratic friends have said are not on the table: We will not talk about fraud in the unemployment insurance system or fraud in Medicare and Medicaid. According to these two articles, which I will ask to be put in the Record, there are tens of billions of dollars in each where we could save the taxpayers money, money that is being paid out now to either downright crooks or being paid inappropriately to people who don't qualify.

Since 1986, the GAO has published at least 158 reports about Medicare and Medicaid fraud, for example. In 1993, Attorney General Janet Reno declared health care fraud America's No. 2 crime problem, right behind violent crime. These are off the table, some of our Democratic friends say. Well, we think this is a way in which we can save money without requiring others to have to sacrifice.

Mr. President, I ask unanimous consent to have printed in the Record the

piece by Michael Cannon in the National Review On Line dated July 4, and the piece by Paul Davidson from USA Today dated July 5 at the conclusion of my remarks.

I appreciate my colleagues' indulgence here.

Mr. President, the bottom line is that when we talk about shared sacrifice, we need to appreciate that in the negotiations that have been occurring Republicans have made a lot of concessions, and that the reason we oppose the concession of raising taxes is not because we have some ideological attachment to somebody who makes a lot of money but, rather, because we have an ideological attachment to the American worker who needs a job or who needs his or her job protected. From what we understand, the taxes that have been proposed by our Democratic colleagues would all be job killers. At the time our economy is in the unhealthy state it is, the worst medicine is job-killing taxes.

Mr. President, I would be happy to yield. I am also happy to conclude. I think we are rotating between Democrat and Republican.

Mr. President, I am not sure where the question is in there. But what I would say in response is, with all due respect to my colleague, his numbers are absolutely wrong. I don't have at my fingertips the precise figures, but I can tell you this--by the way, I don't also know what you mean by ``in charge of wealth.'' In terms of who owns wealth or income, the people in the upper brackets pay far more in taxes than the percentage of wealth as a percent of the economy, and I would be happy to supply those figures to my colleague. And there is a difference between income taxes and all other taxes as well, and that chart doesn't suggest which is which.

I would be happy, though, to demonstrate to my colleague that whether you are talking about income taxes or all taxes, the upper income level pays far and away the higher percentage than those in the lower portion, and in taxes they pay more than the percentage of wealth that they create or that they earn.

The bottom line is that I think anybody making the argument that there is not shared contribution to the revenues of the country by the upper income would be making a false argument. I know that is not the argument my colleague is making, because he agrees with the progressive income tax system and has pointed out that it is progressive even by the numbers you have.

But let's do this, because I respect my colleague. I will get the numbers I rely upon, you get the numbers you think you rely upon and the sources of each, and you and I can agree to come to the floor at an appropriate time convenient to us both, and then we can both have the data at our fingertips from which we can make our respective arguments.

Sure. And on that last point, it makes a larger point. When Congress tries to get the millionaires and the billionaires, those are the very people who can adjust their way of earning and of giving and of living so that they end up paying less in taxes. That is why it doesn't much matter what the rate of taxes is at the upper income. They are never going to pay more than a certain percentage, because they can afford the lawyers and the accountants to make sure that they don't pay more. It is the people in the middle income who can't do that, and they end up paying up what the IRS says they owe, and they can't adjust their way of living and giving in order to pay less in the way of taxes. Whatever deductions they get, they get, and they are going to have to live with those.

When we try to hit the upper income with higher rates, it generally doesn't work. That is another reason why we think it is an ineffective way.

Mr. President, I ask unanimous consent that I be permitted to speak.

Mr. President, it is nice to hear asking for a fair budget plan. We haven't had a budget from this administration now in almost 800 days. They have control of the Senate. Yet we haven't seen a budget from this administration.

I get a little tired of the Obama approach toward shared sacrifice. Shared sacrifice is something. It sounds good. But I would prefer the Republican approach to shared prosperity, and that is what I think we are all about.

When we talk about what shared sacrifice is, think about this. It is pretty irrefutable that the bottom 51 percent of all wage earners of all households do not pay income taxes. The top 1 percent of the so- called wealthy pay 38 percent of all income taxes; the top 10 percent are paying 70 percent of all income tax; the top 50 percent pay somewhere near 90 percent of all income taxes; 51 percent don't pay anything.

But Democrats say, well, they pay payroll taxes. Everybody does that because that is Social Security, and they pay about one-third of what they are going to take out over the years in Social Security. On ObamaCare, a family of four earning over $80,000 a year gets subsidies. Think about that. And that is what we call the poor? We wonder why the money doesn't go far enough? When are we going to wake up and realize that the other side just spends and spends and spends. They want to tax and tax and tax so they can spend some more. My gosh. When are we going to wake up in this country and realize they are spending us into oblivion?

I hear how they are so caring for the poor and so forth. The poor need jobs, and they also need to share some of the responsibility. We don't want the very poor people who are in poverty to pay income taxes--but 51 percent of all households? That is going up, by the way, because of our friend down in the White House and his allies.

I wish I didn't like him so much. I would like to be able to let go here. I like him personally, and I want him to be successful, but he is not going to be successful by just taxing the daylights out of everybody around here.

This Congress is currently engaged in as consequential a political debate as this Nation has seen in decades. Whether and what we raise the Nation's debt ceiling is a question that has consumed the markets in the Nation.

I serve the people of Utah and I hear about this issue every day and the sustainability of a government that has grown far beyond any reasonable or constitutional limit and the cost of paying for all this government is foremost on the minds of tax-paying citizens who will be left holding the bag, even when President Obama is back in Hyde Park and Members of Congress no longer serve. The decision to spend less is only for a moment, but the debt incurred to pay for these government programs lasts forever. Fifty-one percent of all households don't pay income taxes.

The Democrats say: Well, they pay payroll taxes. Yes, they do-- everybody does because that is Social Security--and 23 million of them get refundable tax credits that are more than they pay in payroll taxes.

I wish I could report to my constituents that Washington is serious about addressing this spending problem. Unfortunately, in the last week, we seem to have hit a new low. President Obama's contribution last week was a press conference temper tantrum, where he offered policy proposals that might appeal to his leftwing base but will do nothing to avoid our coming national bankruptcy.

Not to be outdone, Democratic leadership in the Senate has offered a nonbinding resolution designed solely to score some cheap political points that will jazz up the activist left through demagogic class warfare against individuals with high incomes. He is going to raise $3 billion over 10 years by taxing jet planes. It would take 1,000 years to reach what we have as a deficit for this year just from that one tax to jack up enough money to pay for just the deficit this year.

Facing a full-blown debt crisis, this is how the Senate Democrats, following the President's lead, have chosen to spend this week, debating a nonbinding resolution. Episodes such as this leave me convinced the only real solution to our Nation's spending problem is a balanced budget constitutional amendment. Only a specific constitutional restraint will force Congress to make the tough decisions necessary to restrain the size of government, restore the integrity of the States, and protect the liberties of the American citizens and taxpayers.

To demonstrate my commitment to restoring constitutional limits on the Federal Government, I have signed the cut, cap, and balance pledge. Along with a growing number of my colleagues in the Senate, Members of the House, grassroots groups, and Presidential candidates, I have committed myself to cutting spending, capping spending, and passing a balanced budget constitutional amendment as a condition for any debt limit increase.

As this debate over how best to address our growing debt and annual deficits continues, I wish to address a technical but critical matter in these negotiations. I am talking about tax expenditures. I am ranking member on the Senate Finance Committee and I know a little bit about these. Over the next few days I am going to discuss

this matter of tax expenditures and debt. Today, I am going to talk in general about what a tax expenditure is and what a tax expenditure is not. I will next turn to the tax policy areas implicated by current tax expenditures.

For instance, home ownership is favored in our tax base with a tax expenditure. There is a deduction for home mortgage interest, a deduction for real property taxes, and an exclusion for income from home sales. These are tax expenditures.

The Tax Code also encourages charitable contributions. Charitable deductions are available to citizens when they give to a nonprofit crisis pregnancy center, when they put money in the basket at church or when they give to their alma mater, just to mention a few charitable donations.

In a third speech, I will attempt to shed some light on a widespread misconception about tax expenditures. That misconception is that tax expenditures disproportionately benefit high income taxpayers. But let's not get ahead of ourselves.

My remarks are remarks about what a tax expenditure is. Unfortunately, my remarks are also largely about Democrats' plans to increase taxes. President Obama and his liberal allies are calling for a balanced approach on a revenue piece to deficit reduction. They want shared sacrifice. I want shared prosperity.

We hear this from the press all the time. New revenues need to be a part of any deal to reduce the deficit. These are simply code words for a tax hike. I guarantee this. If we raise taxes, my friends on the other side will spend every dime of it. That is how they have kept themselves in power. Yet claiming they are helping the poor. Are 51 percent of our households so poor they can't participate in saving this country?

It is clear the professional left is insisting that President Obama include tax increases in any negotiated agreement to raise the debt ceiling. Threading this tax hike needle through an electorate resistant to giving the government more money to spend is no easy task. Although his campaign team talks a big game about the popularity of tax increases, the President's own words suggest otherwise.

Last week, in a shameful display of class warfare, the President did specifically call for some tax increases on the rich. That includes 800,000 small businesses, by the way, where 70 percent of the jobs come from. But that is the exception that proves the rule. By and large, the President avoids the effectual truth of his mission to get rid of tax expenditures--massive tax increases on the middle-class American families, to whom he promised immunity from tax increases when he was running for President. Instead, he and other members of the party of tax increases refer to tax expenditures as spending through the Tax Code. How seriously should we take his rhetoric?

When the President said he wanted to address the Nation's debt by reducing spending through the Tax Code, it proved too much for even Jon Stewart. This is Stewart's analysis of the President's contention that we could reduce the deficit by attacking spending through the Tax Code:

You manage to talk about a tax hike as a spending

reduction. Can we afford that and the royalty checks you are

going to have to send to George Orwell? That's the weirdest

way of ``just say tax hike.'' That's like saying, I am not

going on a diet. I'm going to add the calories to my excluded

food intake.

That was Jon Stewart. He hit the nail on the head. For sure it is easy to make fun. But what the President is trying to do with tax expenditures is no laughing matter.

Liberals talk about tax expenditures as though they were just getting rid of wasteful spending. First, as a legal matter, tax expenditures are not expended. Outlays are checks cut from the Treasury Department and are defined as spending under the Congressional Budget Act. Yet most tax expenditures only lose revenue and do not include an outlay portion. Tax expenditures that only lose revenue contain no spending as defined by the Congressional Budget Act and as scored by the official scorekeepers for Congress, the Joint Committee on Taxation and the Congressional Budget Office.

Second, as a policy matter, when it comes to tax expenditures, one person's loophole is another person's opportunity to save for college and retirement, finance a home, and tithe to your church.

Here is the bottom line. Taking away or reducing tax expenditures is a tax increase, unless a tax cut of an equal or greater amount is enacted.

One crucial myth I would like to dispel is that tax expenditures are spending. This chart, ``Revenue Loss Does Not Equal Spending,'' the Federal Government cannot spend money it never touched and never possessed.

What tax expenditures do is let taxpayers keep more of their own money. The American people are the ones who earn their money through their ideas, their risks, and their labor. Whether we are talking about a successful business owner or a part-time worker just starting out, the money they earn is theirs. It is their money, and only by their consent is the government permitted to take some of it in taxation to pay for certain public goods.

But Democrats have a different view. It is this view--one that is fundamentally at odds with our classical liberal Constitution and our Founders' respect for property rights--that contributes to the confusion over tax expenditures.

Liberals think that all of the money that you earn belongs to the government. You have no independent right to the fruit of your own labors, because only by dint of big government are you ever able to make something of yourself. This view is foreign to most Americans-- Republicans or Democrats. It is a view that Alexander Hamilton and Benjamin Franklin and Abraham Lincoln would take issue with. But this is the political philosophy of the modern left.

So when you hear tax hike proponents come to the Senate floor and say we are giving these businesses and individuals all this money in tax expenditures, they are incorrectly assuming that the government has that money to give in the first place. The government does not have this money to give. That money belongs first to the people that earn it--those businesses and individuals who are the American taxpayers.

There are critical differences between spending and tax expenditures. For one thing, the government never touches the money that a taxpayer keeps due to benefitting from a tax expenditure; whereas, with spending the government actually collects money from taxpayers and then spends it.

Here is a more telling difference. Reducing or eliminating a tax expenditure without lowering rates enough to reach a revenue neutral level will cause the size of the Federal Government to grow, while reducing or eliminating spending causes the size of the Federal Government to shrink.

I am open to looking at eliminating or reducing some tax expenditures as part of comprehensive tax reform but only if tax rates are lowered enough to reach a revenue neutral level. Alternatively, reduction or elimination of tax expenditures could be balanced with new tax cuts that are of equal or greater value to the revenue generated by the eliminated expenditures. But if tax expenditures are reduced or eliminated without tax rates being lowered enough to reach a revenue neutral level, that is a tax increase, plain and simple.

We have made clear that as a matter of law and political theory, tax expenditures are not spending.

Now let's turn to an examination of what they are.

Fortunately, we have definitions available.

The Joint Committee on Taxation generally defines tax expenditures as deliberate departures from generally accepted concepts of net income, usually by way of special exemptions, deductions, credits or exclusions. Therefore, tax expenditures generally arise for individual income taxes and corporate income taxes.

The Treasury Department differs from the Joint Committee on Taxation slightly in how it defines a tax expenditure. For example, the Joint Committee on Taxation labels deferral as a tax expenditure but Treasury does not. But whichever definition one uses, it is clear that the President and the liberal proponents of tax increases are using their own politically motivated dictionary.

Tax expenditures have been erroneously described by many as loopholes. This is deliberately inaccurate.

A loophole is something that Congress did not intend and would generally shut down, at least going forward, once it learned of the loophole. Tax expenditures, by contrast, were generally placed by Congress into the tax code deliberately. For example, the largest tax expenditure is the exclusion for employer-provided health insurance and benefits. The second-largest tax expenditure is the home mortgage interest deduction. We all know why they are there, and they are there for good reason.

Tax expenditures are not loopholes. We are not talking here about some fancy tax scheme that a lawyer or accountant has discovered and now promotes to his clients as a way to game the system. These are broad-based tax incentives that benefit many Americans. The deduction for charitable contributions is not some loophole. It was a deliberate inclusion in the code that acknowledges the need for religious citizens to contribute to their churches.

Even some of the smaller dollar tax expenditures were designed by Congress to go to particular industries or types of taxpayers--for example, the tax expenditure to encourage the purchase of corporate jets that Democrats included in the stimulus and that the President is now criticizing.

Whether you agree with these particular tax expenditures or not, an honest debate requires recognition that they were designed by Congress with economic or social goals in mind and are not inadvertent loopholes.

As a matter of law, policy and constitutional government, I fundamentally disagree with those who are pushing these tax increases as part of a deal to raise the debt ceiling.

Our problem is spending that has grown out of control, not a lack of revenue.

According to CBO's June 2011 long term budget outlook, taxes are already heading higher than they have historically been. From 1971 to 2010, revenues as a percentage of GDP have averaged 18 percent. Since the post-World War II era, from 1946 to 2010, revenues have averaged 17.7 percent of GDP.

Yet CBO also projects that revenues as a percentage of GDP will exceed 20 percent by 2021. Even if all the bipartisan tax relief contained in the 2001 and 2003 tax acts is extended, revenues as a percent of GDP will increase to 18.4 percent.

So I ask the question: With taxes already going higher than where they have historically been, should we raise them even more?

For me, the answer is no.

I know that most Utahns would agree, I believe most people in this country would agree, and I suspect that even most Democrats would as well. They certainly would if President Obama and the liberals who pose as advocates for the middle class came clean about just how high taxes on working families would have to go to pay for the hard core left's preferred level of government. The numbers do not lie.

The deficit is a symptom of out-of-control spending that has grown dramatically in recent years and is reaching crisis levels.

It is not a result of too little in taxes. Democrats can close all the loopholes they want, and it still won't balance the books.

And the Democrats who are talking about the need to close loopholes and eliminate spending through the Tax Code need to be asked which middle class tax relief they want to get rid of as part of their deficit reduction plan.

Do they want to get rid of the charitable deduction or maybe the mortgage interest deduction?

Maybe they want to go after people's 401(k)s or IRAs or 529s.

What is it going to be?

Let me say something here. I am very concerned about where we are going. We have risen this year to 25.3 percent of GDP in spending. The last time we hit that figure was in 1945 at the height of the Second World War, when the government was taking over almost everything to keep us from losing that war. It is certainly over 23 percent right now. What is it going to be?

At a press event tantrum last week, the President answered absolutely none of these questions. He needs to. He needs to get serious about cutting spending.

Mr. President, I suggest the absence of a quorum.

Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.

Mr. President, I ask unanimous consent that the division of time under the quorum call be divided equally.

Madam President, in a moment I am going to propound a unanimous consent request. Before I do, I would like to say what it is on so people will understand the time and effort that has gone into getting legislation passed. I am referring now to S. 3268.

When John Glenn retired from this body, that left me as kind of the last acting commercial pilot. Consequently, I ended up getting a lot more of the complaints and problems within the FAA and the way accusations are made and enforcement actions are taken. I have gone to bat for a lot of these people when I believed there was really a fairness problem.

It was not until I had an experience, a personal experience, that I realized the depth of the problem. It is very hard for people in this room to understand. If you have been, as I have been, a private pilot, commercial pilot, and flight instructor for 55 years, what it would mean to have that license taken away from you if that were merely at the whim of some enforcement officer in the field. I think all of us know--when I was mayor of Tulsa, now and then we had a few police officers who could not handle the authority. It happens all the time. Certainly we hear about it with enforcement actions brought about by the FAA.

What happened to me, and I will share this with you--I think it is very important--I have probably more hours than most airline pilots have and I was still active in aviation. I was flying down to the southern part of Texas, the furthest south part of Texas, way down by Brownsville, to Cameron County Airport. Papa India Lima is the identifier for it. In this effort, with several passengers with me, I was going by the controllers. This is what you do not have to do but I always do for safety purposes. I went through the Corpus Christi approach control. He handed me off to the Valley approach control. I was going into a field that was uncontrolled, so the only control is the Valley approach control. They are watching on a screen, and they have all the information they need to direct you and authorize you to do things. They are looking for traffic and you are squawking, so they know exactly where you are, how high you are, and all the things that are happening. Again, you don't have to do that. On this day in October, a year ago October, I did not have to do it, but I did it anyway.

As I approached--the wind is always out of the south down there. The runway is 1 3--that coordinates with 130 degrees. When I was on about-- I would have to go back and listen again to the voice recorder--about a 2- or 3-mile final to runway 1 3, the controller said: Twin Cessna 115 echo alpha, you are cleared to land runway 1 3.

When you do this, you dirty up your plane so you can land. This happens to be a pretty sophisticated twin-engine plane; you have to let the flaps down and gears down and all that stuff. You get to the point, if you have a full plane, beyond which you cannot go around. When I came in to make a landing, I did not see X on the runway because it was not very prominent, but nevertheless there was one there. But there were some workers on the far east side of the runway. This was a 8,000- or 9,000-foot runway. I only needed 2,000 or 3,000 feet. So I went over the workers and I landed. Immediately they got upset that I landed.

A lot of people, because I am a Member of the U.S. Senate, started calling the New York Times and the Washington Post. They had a wonderful time with this. I started looking at it and talking to the people who do the enforcement action. I have to say they were good, and they were responding to a lot of hysterical people, frankly, who did not like me. So they came with an enforcement action against me which merely was to go around the pattern with a CFI, a flight instructor. So I did this. I am also a flight instructor. I had given him his license, as a matter of fact. I went through this procedure, and everything was fine.

However, the problem was this: I was denied access to the information they were going to use against me. When I told them that I was cleared to land by the controller, it took me, a U.S. Senator, 4 months to get the voice recording to prove I was right.

Second, there is a thing called Notices to Airmen. NOTAMS are supposed to be published every time there is work on a runway. Pilots are supposed to have access to NOTAMS. You look through your resources, as I always do, to see if there are NOTAMS on the runways where I land. When I go back on

weekends, normally I will fly--gosh, I will be at five or six different towns, but I look up the NOTAMS on all the towns. I had done that. There were no NOTAMS on Cameron County Airport. We checked afterward. We could never find any. No one says there were NOTAMS now. So, No. 1, I was clear to land, and No. 2, there were no NOTAMS that were published.

What they could have done--they could have very well done is taken my license away. It doesn't mean much to people who are listening to me right now because you are not pilots, but it means a lot to the 400,000 members of the AOPA who are watching us right now and to the 175,000 general aviation pilots with the EAA, Experimental Aircraft Association, who are watching us right now. They know that they, at the whim of one bureaucrat, could lose their licenses.

Anyway, I came back and drafted legislation. I have to say this was way back a year ago now--July 6 of 2011. I introduced a bill with 25 cosponsors that would do three things:

No. 1, it would let the accused have access to all relevant evidence within 30 days prior to a decision to proceed with an enforcement action.

No. 2, it would allow the accused to have access to the Federal courts. As it is right now, the National Transportation Safety Board-- it goes to them, and they rubberstamp whatever the FAA does. In fiscal year 2010, there were 61 appeals, and of those only 5 were reversed. Of the 24 petitions in 2010 seeking review for emergency determinations, only 1 was granted and 23 were denied. It is a rubberstamp. Everybody knows it. Ask any pilot you can find, and they will tell you that is what it is.

This way, they would have access to the Federal courts. It is not going to happen because I can assure you, that inspector in the field, the enforcement officer in the field is not going to put his reputation on the line knowing that someone is going to be looking at it with a sense of fairness. The district court doesn't have to know anything about piloting an airplane, it is just a fairness issue.

In my case, they would have looked at this and said: Wait, you are cleared to land by the FAA, and there are no NOTAMS published. What did you do wrong?

I did nothing wrong.

They would make sure flight station communications are available to all airmen. They are supposed to be. But if it took me 4 months--and I am a U.S. Senator--to get a voice recording to show I was cleared to land at this airport, what about somebody who is not a Senator? What about somebody who would be intimidated to the point he would lose his license?

The second thing this does is it forces the NOTAMS--Notices to Airmen--to be put in a place where they are visible, a central location.

The third thing. If you talk to the aircraft owners and the pilots association, of all the problems that they get called to their attention, 28 percent of all the requests for assistance received by them relate to the medical certification process. In other words, someone might lose his medical and then find he has corrected any kind of physical problem and wants to get it back, and he gets it back. However, if he happens to live in a different town and there are hundreds of doctors around to do this, there is no uniformity to it.

So it sets up a process or helps facilitate setting up a process by having general aviation, having the FAA, having the NTSB, having anyone who is relevant and interested in this to look at and coordinate the medical certification process.

That is essentially it. I am prepared to go into a lot of detail. I know I now have 66 cosponsors in this body. I could have had a lot more; we quit after we got two-thirds. I think everyone knows that is normally what you do. I do know we may have one objection to this unanimous consent request, but I am going to make it now.

As in legislative session, I ask unanimous consent that the Senate proceed to the immediate consideration of Calendar No. 422, S. 3268, that the bill be read a third time and passed, the motion to reconsider be laid upon the table, and that any statements relating to the bill be printed in the Record.

Let me respond. This in no way has anything to do with safety because we are talking--the first arbitrator is the FAA. That is not what this is about at all. When we have had a chance to talk, as we have to almost all the Senators in this body, we have talked about safety. We bounced that off many people. We had a hearing at Oshkosh about safety. I had the air traffic controllers support me on this. They are the ones concerned with safety.

I would say I don't agree with the argument, but I respect the Senator from West Virginia.

Madam President, I think it would be redundant for me to go back and repeat what I said before. The Senator from Texas talked about the X on the runway. I made it very clear by the time you can see the X on the runway when you are cleared to land and you have a sophisticated plane that is full of passengers, there is a point beyond which you can't go in terms of your plane is dirtied up making a go- around. Obviously it wasn't necessary because I had 7,000 empty feet to come around, but that is not important because that is not the issue.

I recognize and respect Senator Hutchison in the fact that she was on the NTSB, and I know that obviously is meaningful to her, as it is to Senator Rockefeller.

What we are dealing with here is we have a committee--and I have a lot of respect for the committee for which Senator Rockefeller is the chairman and Senator Hutchison is the ranking member, and this committee is the committee of jurisdiction.

Now, what did I do? I introduced this bill a year ago. I talked about it. We had 25 cosponsors at that time. We had endorsements from all over the country. We had the National Air Traffic Controllers Association come in. We sent out ``Dear Colleagues'' to talk to people. Again, we sent a letter to the Commerce Committee that Senator Hutchison was on at that time requesting a hearing. We had 32 cosponsors signing that letter, requesting a hearing, some of which were on the Commerce Committee. Nothing happened.

On September 20, as the months go by, we made more requests. We talked about this, and every time they said we are going to be doing this. You finally get to the point where you have to go ahead and get it done. And that is why we have a rule XIV. I am not a Parliamentarian, and I don't know exactly how things work.

I remember I had experience with this when I worked in the House of Representatives, that when something is bogged up in a committee we had what is called the discharge petition reform of 1994. It was considered by the Wall Street Journal, or perhaps Business Daily, as the single greatest reform in the history of the U.S. House of Representatives. It addressed this same thing. It is a way of bottling up bills in committees so they could never have hearings and never be able to get on the floor for a vote. That discharge petition reform became a reality, and now the light is shining and everything is great.

But when you have been trying to get a hearing before a committee for a year and you have 66 cosponsors, you have to resort to whatever is out there available to you for a remedy. That remedy happens to be rule XIV. Rule XIV will allow me to do this, and with the two people holding the bill up, Senator Rockefeller and Senator Hutchison, I will have no choice but to file cloture and to go ahead and get a vote on this bill, recognizing it takes a supermajority when you file cloture. So I would do that.

I didn't think I would get into this or need to enter it into the Record. I have an article which I will find here and will submit for the Record. I think it is very important. It goes into detailed documentary cases where they have been unable to get fairness through this system.

How many cases would ultimately go to the district court? I think very few. The idea that there is going to be an opportunity for a pilot to take what he is accused of to the district court to see it in a sense of fairness has nothing to do with how many pilots are sitting on that district court. It is a sense of fairness, and that is what they deal with. The people in the district court system don't have expertise in all of these areas, but they can look at fairness. And I can tell you in my case, if they had looked at that and said, wait a minute, the FAA has cleared him to land and there are no NOTAMs published, he didn't do anything wrong. It finally gets to the point--and I have been very patient. I have waited a whole year for this and finally I have come to the point where I have flat given up, so I decided that we are going to have to do it this way since it is clearly the will of the Senate to pass this legislation.

So, with that, I have some things I want to have printed in the Record. First of all, I have the sequence of events, the request that we made of the Commerce Committee to hear this legislation.

I have an article that was in Pilot magazine by John Yodice, who is considered to be the single foremost legal authority in this area.

Madam President, I ask unanimous consent to have both items printed in the Record.

He talks about the decision of the current NTSB calls into question its fairness and impartiality in pilot appeals. And he talks about all the notices that have gone out and the problems they have had with this.

Of the 100,000 pilots who are interested in this today--actually, well over that--but just those who are involved in this process right now, they have had documented cases where the fairness is not there. This would offer fairness, and that is all we are asking, just to be treated as fairly as every other citizen in the United States.

I yield the floor.

First of all, I am not aware that I was offered a hearing. But let me make sure I have in the Record, and I ask unanimous consent to have printed in the Record a letter dated September 15, 2011, which was 9 months ago, signed by 32 Members of this Senate, including the occupier of the chair right now, the Senator from West Virginia.

Mr. President, I don't think anyone is going to say we haven't done everything we could to go through the committee process to get a hearing. I just flat gave up. That is why we have this rule.

I will be looking forward to taking the next steps. I know there are a lot of people out there who want to have this type of justice afforded the pilots of the United States of America, the same as every other citizen enjoys.

With that, I appreciate the patience of my colleagues, because I know we have other business, and I yield the floor.