Wood-Pawcatuck Watershed Protection Act

Mr. President, today we are debating the proposal of the Senate Democratic leadership to raise taxes on the American people. Pursuit of this tax hike strategy is clearly being instigated by the President's reelection efforts. I suspect that many of my friends on the other side are very uncomfortable with this strategy. I can think of a number of Senate Democrats whose constituents would be surprised to learn their Senator supports tax increases on small businesses, an increase in the alternative minimum tax, and hikes in the death tax.

With the economy still on the ropes, I think they would be surprised to learn their Senators supported a tax hike strategy that might win some votes but at the risk of sparking a recession. That is what the President wants. We will see if that is what he gets. He has pitched his tax hike plan as a way to be fiscally responsible. That could not be further from the truth. One need only look at the treatment of the House budget by my friends on the other side. That budget received more votes than any other budget considered by the Senate, including the phantom budget advanced by the Senate Democratic caucus. The House budget provided $180 billion more in deficit reduction than the President's budget for 2013. The House budget's extra deficit reduction of $180 billion exceeds the differences in deficit impact between the proposal I introduced with my friend and colleague, the Republican leader, and the proposal advanced by my Democratic friends. That is true even if you apply the other side's distorted and misleading accounting of the differences between the two proposals. More on that in a moment.

When we hear our friends on the other side say they must risk going off the fiscal cliff for deficit reduction, consider this: They rejected out-of-hand spending restraints that provided more deficit reduction than is at stake here today.

Not only are the deficit reduction numbers phony, but the President and his Democratic allies in the Senate have repeatedly suggested that they are willing to intentionally drive our economy off what Fed Chairman Ben Bernanke has called the fiscal cliff in order to make a political argument about the top marginal tax rates.

The President thinks he has struck political gold with this argument. He will be able to run for reelection on a platform of raising taxes under the mantle of deficit reduction. Now, this might be politically advantageous, but I doubt it.

I do know that from a fiscal and economic perspective, the President's signature proposal threatens serious damage to our already fragile economy. The President's tax increases on those he deems ``the rich'' in fact represent a massive tax hike on the small businesses that are necessary for economic and job growth. Moreover, until he gets his way on raising taxes on these small businesses, he is threatening every single American taxpayer with a tax hike. Like a petulant child, he is insisting that it is his way or the highway. We have had far too much of that. He will get his way on raising taxes on the small businessmen and entrepreneurs--who find no shelter in today's Democratic coalition of unions, lawyers, and government employees--or he will let

the current tax relief expire, raising taxes on all Americans. This is the antithesis of statesmanship at a time when our economy requires serious direction. It is the political equivalent of a temper tantrum. I expect that American voters will have about as much patience for this as they would a similar fit from their children. The American people want a grownup in the White House, but on tax policy we appear to be dealing with adolescence.

I have said before that the President's proposal is the policy equivalent of Thelma and Louise intentionally driving their convertible off a cliff. The difference is that there is at least some ambiguity left about the fate of Thelma and Louise. If the President gets his way and either raises taxes on small businesses or denies relief to all American taxpayers, there will be no ambiguity about whom to hold responsible when our economy crashes.

When a liberal Democratic President has lost the New York Times, he has lost America. Even the Times understands what is coming if the President continues to put the pedal to the floor and drive us over the fiscal cliff. The Times wrote that ``with the economy having slowed in recent weeks, business leaders and policy makers are growing concerned that the tax increases and government spending cuts set to take effect at year's end have already begun to cause companies to hold back on hiring and investments.''

That is 100 percent right. The election is not for another 3 months, and already the President's lack of direction and the threats emanating from Democratic leadership about letting the tax relief expire are leading businesses to slow down. How can businesses plan for next year and how can they make hiring or investment decisions when they have no idea what their tax rates are going to be? They simply can't. And the President and Senate Democratic leadership, with their delay and confusion about how to extend this tax relief, are doing absolutely nothing to inspire confidence in these job creators.

Rather than address the expiration of the 2001 and 2003 bipartisan tax relief, we have been debating campaign commercials masquerading as serious legislation. Last week the Senate wasted its time on yet another piece of legislation that had absolutely no chance of becoming law and zero prospects for creating jobs. It is worth comparing the puny impact of the bill considered last week to the size of the coming tax hikes--tax hikes so large that the Washington Post has referred to their impending arrival as ``taxmageddon.''

Referring to this chart, look at the impact of the 20-percent credit versus taxmageddon over the next 10 years. The Bring Jobs Home Act would only cost about $87 billion. Taxmageddon is going to cost us $4.538 trillion.

Make no mistake, our small businesses and our economy face an existential threat at the end of 2012. Yet the majority leader schedules votes that generate campaign fodder rather than jobs or lasting economic growth.

Facing a fragile recovery and a weak jobs market, President Obama seems content to sit idly by and allow the scheduled $4.5 trillion tax hike to occur just to make a populist political argument about the need for the so-called rich to pay what he thinks is their fair share. Congress needs to act now in order to prevent this tax hike on America's families, individuals, and job creators.

Look at this chart again--the difference between the Bring Jobs Home Act and taxmageddon. It is clear that they are driving us off the cliff, and they are willing to do it for political reasons.

It is critically important for our economy and the American people that we act now to extend the bipartisan tax relief originally signed into law by President Bush and extended by President Obama back in 2010.

As you can see on the chart, the tax legislation to-do list, nothing was done on tax extenders, although we are willing to work on that with our committee chairman in the Finance Committee; nothing was done on the AMT patch, but we are willing to work on that in the overall scope of things; and nothing was done on death tax reform. In fact, the suggestion by the Democrats is to increase it so that all the small farms--or many of them--will get hammered with taxes, along with a lot of small businesses. Nothing was done to prevent the 2013 tax hikes. No, no, no, no on everything.

This is the most crucial piece of legislation Congress can address this year. If we allow this tax relief to expire as scheduled, almost every Federal income taxpayer in America will see an increase in their rates. Yet that is what our friends on the other side said they are going to do if they don't get their way--like petulant children. Some will see a rate increase of 9 percent. Others will see a rate increase of as much as 87 percent.

Because the vast majority of small businesses are flowthrough business entities, any increase in tax rates for individuals necessarily means that those small businesses will get hit with a tax increase. This tax increase lands on these small business owners even if they do not take one penny out of their business. That is what the Democrats are going to do to them. They are willing to go off the cliff and do this. Our economy simply cannot afford to take on such a fiscal shock.

It was just in 2010 when the President said the economy was so fragile we needed to carry over the 2001 and 2003 tax cuts.

We are in worse shape today than we were in 2010, but unfortunately-- or fortunately--we are in an election year. Unfortunately, the President is playing games with these very serious matters.

Our economy simply cannot afford to take on such a fiscal shock. Economists estimate if these current tax rates are allowed to expire, the economy could contract by approximately 3 percentage points. Considering the first quarter GDP growth was 1.9 percent and that expectations are even lower for the second quarter growth--that will be reported this Friday--going over the fiscal cliff would almost certainly throw us into a recession.

I don't know many economists who would disagree with that. Certainly the Fed doesn't disagree. We are going to go into a recession if the Democrats get their way. We could even slip into recession in the second half of this year, given reluctance of businesses to hire and invest due to fiscal uncertainty.

For the President and others who argue we should raise the top two tax rates in the name of fiscal responsibility, I would just like to point out a few things. The Senate majority leader introduced his tax bill--one that largely mirrors the President's proposal--under the auspices of deficit reduction. It closely adheres to the Democratic talking point that the only thing standing between our deficits and fiscal stability is the current top marginal tax rates. We have heard this argument for a year and a half, with the President and his Democratic allies insisting it is not their out-of-control spending that got us into this mess but the Republicans' refusal to allow for tax hikes on the so-called rich.

That is laughable. This argument sounds nice, but it is belied by the actual facts. According to the Joint Committee on Taxation, an apples- to-apples comparison of the Democrats' tax proposal and the proposal I introduced with my friend the Republican leader shows a difference of $54.5 billion. The Democrats' bill--which raises the top rates and expands the death tax, while patching the AMT for 1 year--is scored at $249.7 billion, and the score of my bill--without the 2013 AMT patch-- is $304.2 billion.

So we have a debt that is fast approaching $16 trillion. Taxes are set to go up by $4.5 trillion, and Senate Democrats are crowing about their fiscal responsibility, threatening to drive the economy off the cliff, over $54.5 billion worth of tax relief? I believe this is called missing the forest for the trees. In order to satisfy their urge to redistribute $54 billion of taxpayer dollars, they are willing to risk a recession and see taxes go up by $4.5 trillion.

The President recently claimed we need to raise the top two tax rates because ``it's a major driver of our deficits.'' The numbers show this is plain and simple nonsense. The real difference between the Democratic and Republican plans is only $54.5 billion--or about 5 percent of the deficit. That represents .34 percent of our national debt. To put it another way: The Democrats' tax hike proposal would only provide enough additional revenue to pay for 5 days of Federal Government spending--5 days of Federal Government spending.

It is also worth noting what exactly the Democrats' refusal to provide 2 years of AMT relief means for their constituents. If Senate Democrats do not patch the AMT in 2013, their AMT will take away over 40 percent of the tax relief they claim to be providing with their bill. This is their prerogative, but I hope the hometown papers in northern Virginia, New Jersey, New York, Florida, and Colorado are paying attention. I hope they are paying close attention to what a lack of AMT relief will mean for middle-income families in those States.

These tax proposals, in the end, have nothing to do with sound tax policy that maximizes economic growth, and they have nothing to do with deficit reduction. They have everything to do with pursuing an antique economic philosophy that is principally concerned with running down the economy's job creators and entrepreneurs.

The explicit tax policy is only the half of it. We learned yesterday from the Congressional Budget Office the true tax bill for ObamaCare is over $1 trillion. We were promised there wouldn't be any tax increases. It is the biggest fiasco I have seen around here in almost the whole time I have been here. In fact, I can't think of anything bigger.

All the new ObamaCare regulations will cost McDonald's franchisees alone more than $400 million in health care costs. The President might think Ray Kroc did not build McDonald's, but this is delusional. He might view the small businessman who took a chance and opened those franchises as not especially smart, not responsible for his own success, but this is a view that could only be embraced by an academic and activist who has no experience in the private sector.

The Joint Committee on Taxation tells us that 53 percent of all flowthrough business income in the United States would be subject to the President's proposed tax hikes. Take that, small business. The President is saying: We don't care about you, I guess. I do, and Republicans certainly do.

The President's proposal would take the marginal tax rate on small businesses from 33 percent and 35 percent to 39.6 percent and 41 percent, respectively. Look at this chart. This is the increase to small business--the top marginal rates. As we can see, it goes up from 33, 35 to 40 and 41 percent. How could that not help but ruin our economy? This is the kind of economic thinking we are putting up with around here, and it is all coming from the White House. Our friends on the other side apparently don't want to take the White House on. It is an increase of 17 to 24 percent on the marginal tax rates for small businesses.

Ernst & Young recently released a study showing these proposed tax hikes--on top of ObamaCare's 3.8 percent tax increase--on dividends, interest and capital gains would reduce our economic output by 1.3 percent. The Ernst & Young study also found that real aftertax wages would fall by 1.8 percent as a result of President Obama's policies.

Not surprisingly, the study noted 54 percent of the entire private sector workforce is employed by flowthrough businesses, such as S corporations and partnerships, the majority of which would see their taxes go up under the President's plan.

That is where the jobs are. What kind of thinking are they willing to accept on the other side of the aisle? It is hard for me to believe. There isn't a person over there I don't care for. It is hard for me to believe they are not willing to stand up to this President and say: Hey, the game is over.

The truth is many of the people targeted by Democrats as wealthy are, in fact, middle-income, small business owners who spent their whole lives building up a business, then selling it and falling into the top bracket just for the year of the sale.

Consider a real-life example provided by the Associated Builders and Contractors. A husband and wife from Pennsylvania who retired to Florida owned an S corporation. In 2009, the couple paid no Federal income tax because they did not have enough taxable income to owe any tax. In 2010, when they sold their business, their adjusted gross income was about $780,000, and they paid $170,000 in taxes. If they had not sold their business in 2010, they would have paid no taxes. So the one-time sale of the business, built up over many years, caused these small business owners to be in one of the two top brackets for just 1 year, after years of building their business and then having to sell it and have this catastrophe fall on them.

Yet the President would have the American people believe this couple is part of some rich elite who are refusing to pay their fair share. That is not all or, as Ron Popiel would say: But wait, there is more.

Last week, before the ink was even dry on the Democratic leader's small business tax hike legislation, the bill was changed to substantially increase--get this--the death tax. Why was that? Because they found there was only $28 billion difference between the Democratic bill and our bill, and they wanted to find a way to get it up to $50 billion, which is, as I said, 5 days of spending around here.

It might be hard to believe, but this proposal is even worse than President Obama's. The proposal by the Democratic leader would impose the death tax on 15 times the number of estates than under current tax policy, according to the Joint Committee on Taxation--the nonpartisan Joint Committee on Taxation. It would increase the number of estates hit by the death tax from 3,600 estates to 55,200. According to the Joint Committee on Taxation, 24 times more farming estates would be hit by the Democrats' death tax proposal.

What is going on over there? These are intelligent people--our friends on the other side. How can they possibly live with this?

According to the Joint Committee on Taxation, 24 times more farming estates would be hit by the Democrats' death tax proposal which they wrote in here. I have to believe they just did it so they could raise the difference between the two bills from $28 billion--3 days' spending by the Federal Government--to a little over $50 billion--5 days' spending. Let's call it 8 days' spending. The number of small businesses hit by this death tax spike would grow by 13 times.

What would that do to the incentives for people to build small businesses, small businesses that could become big businesses and employ thousands of people? This proposal would subject 2,400 percent more farms and 1,300 percent more small businesses to the death tax.

Farmers work all their lives hoping to leave their farm to their children. They will have to sell the farm to be able to pay the death taxes our friends on the other side have written into this bill. They can't be serious. But they are. I would like to be a fly on the wall when some Members of this body go home and attempt to defend their support for a proposal effectively designed to hobble small businesses and family farms.

The President might think it is no big deal. I am sure he has never been on a farm, other than since he has been President. I am not sure he has ever worked with a small business. He has been a community organizer. That is important, but that doesn't necessarily qualify someone for President. After all, according to the President, those farmers and businessmen were not responsible for their success anyway.

I am going to give the President the benefit of the doubt on that one. I think maybe he misspoke. But I sometimes believe, in the President's view, he thinks these folks aren't very smart; they owe it all to the bureaucrats stationed at the Departments of Agriculture and Labor and their helpful investment-creating regulations. We all know about those, don't we? The sweat and tears and sacrifice of the families and individuals who create and run small businesses have nothing on the hard work and commitment of the mid-level bureaucrats who make their success possible.

But my guess is that some Members of this body have a slightly more nuanced understanding of the importance of these farms and businesses to their communities, on both sides of the aisle. They have to.

There is a limit to what this President should ask of my Democratic friends, and he is asking way too much. They should stand up and say, We have had it. We are not going to do this.

It seems clear what the agenda of the Senate should be. We should be focused like hawks on preventing

Taxmageddon. We should be focused on job creation. Yet instead of addressing these important matters, President Obama and his Democratic allies are spinning their wheels trying to raise taxes on politically unpopular groups. Even the Democrats' treasured Keynesian economics says you do not raise taxes in a weak economy if you want to create more jobs.

The President is devoting his entire reelection campaign toward tax hiking in the name of fairness. We have voted twice on proposals to raise taxes on oil and gas companies for no other reason than that Democratic pollsters found the President's base does not like oil and gas companies. Then a few months ago, we voted on the silly Buffett rule. This was not serious tax policy. It was a statutory talking point--and not a very good one at that. Then there was last week's bill on overseas investment that was little more than a campaign advertisement with cosponsors.

The American people are tired of these political stunts. They are tired of the Senate doing nothing. They are tired of the Senate bringing up bills that aren't going to go anywhere. Every minute Democrats spend playing politics is a minute we fail to prevent the largest tax increase in American history. But instead of working to prevent this massive tax hike on small businesses, the President and the congressional Democratic leadership have doubled down on their tax hike strategy.

Believe it or not, while doubling down on their tax hike strategy, our friends on the other side are pushing the canard that the Hatch- McConnell proposal is a tax hike. Yesterday, one of our colleagues--who I won't name, though he named me--said the following:

Republicans claim not to want to raise taxes, but the

Republican tax bill would let very popular lower and middle-

class provisions expire that would cost 25 million Americans

an average of $1,000 each. Under the Republican bill, 12

million families would see an end to the--a smaller child tax

credit. Six million families would lose their earned income

tax credit and 11 million families would lose their American

opportunity tax credit.

A little over 11 years ago, one-fourth of the Democratic caucus supported the bipartisan 2001 relief plan which is the foundation of the policy underlying the Hatch-McConnell bill. At that time, the Joint Committee on Taxation showed that the bill distributed an across-the- board tax cut which made the Tax Code more progressive. The 2003 bill was passed on a narrower bipartisan basis and extended on a broader bipartisan basis in 2004 and 2006--bipartisan. The Joint Committee on Taxation data showed that, against current law, the fiscal cliff my friends are threatening is, not surprisingly, basically the same as it was in 2001, 2003, and 2006.

In other words, the Hatch-McConnell proposal provides across-the- board tax relief benefiting virtually every income tax payer, yielding a tax system that is more progressive than we would face if we went over the fiscal cliff. Let me repeat that.

The Hatch-McConnell proposal provides across-the-board tax relief benefiting virtually every income tax payer, yielding a tax system that is more progressive than what we would face if we went over the fiscal cliff. The Joint Committee on Taxation analysis indicates a similar result today.

To be sure, if you count continuous stimulus checks issued by the government to folks who do not pay income tax as tax cuts, the Democrats' proposal does more of that than the Hatch-McConnell proposal. There is no question about that. But when is it going to end? Is the upper 49 percent going to have to continue to carry everything in this country?

Under Federal budget law, those continuous stimulus checks are counted in the main as spending. I would say to the colleague I referred to a moment ago that if the Democrats want to use that talking point--one at odds with conventional budget accounting--it is a free country. But if Democrats are going to make that strained and tortured charge, then they should also answer for the failure of their bill to patch the AMT for the year they claim to be delivering middle-income tax relief.

Their plan exposes 28 million middle-income families to a stealth tax increase of over $3,500 per family. So while they claim that our bill raises taxes by cutting stimulus spending, they are mum on the massive tax increase on 28 million American families implicated in their own bill. I think we might have a case here of folks in glass houses throwing stones.

Make no mistake, Taxmageddon is coming. The only good news is that Congress can prevent this historic tax increase from happening. As I mentioned, I have a bill I have introduced with Senator McConnell--S. 3413, the Tax Hike Prevention Act of 2012--which will prevent this historic tax increase and will pave the way for tax reform in 2013. That is where my focus will be until Taxmageddon is averted. I hope my colleagues will join me in preventing this looming tax increase from being imposed on the American people.

Forty of my colleagues on the other side of the aisle voted to temporarily extend this tax relief in 2010, recognizing that we were in financial difficulty--we are in worse difficulty today--and they should do so again. At that time, President Obama said it would be foolish to raise taxes during an economic downturn, and he acted accordingly. I respect him for that. But he is not acting that way now. This is an election year.

Our economy remains weak today. In fact, it is weaker in terms of growth in GDP than it was at the end of 2010, and incoming data clearly point to even more slowing in the economy as uncertainty from the fiscal cliff has begun to strangle hiring and investment. My friends on the other side have got to wake up to these facts. The only thing that appears to have changed is that President Obama has apparently chosen the path of class warfare and is pursuing a politics-driven tax agenda.

I remember days in the past when my friends on the other side would rise up against even their own President when it came to good economics. I hope they will again, but it appears that it is not so today. My hope is my colleagues, who have supported this tax relief in the past, will put the President's shortsighted and self-interested partisanship aside and vote on behalf of their constituents in favor of S. 3413 to extend this tax relief to America's families and small businesses.

For the sake of the more than 12.7 million unemployed Americans, my hope is that we act to prevent the President's campaign drive to malign small businesses and raise their taxes, and that it does not get in the way of sound tax policy and job creation. To put us through this for a difference of a little more than $50 billion between the two bills is amazing to me. That amounts to about 5 days of Federal spending. And to do this because the President wants it done? Sometimes it is good for this body to stand up and say, Mr. President, you are going too far.

What have I proposed? I proposed that since it is even worse than 2010, when the President thought it was the wise thing to do in a fragile economy that we put over the 2001, 2003 tax cuts for 1 year--1 year--and that we strike out a new force in this Senate and in the House to do tax reform in that year on a bipartisan basis.

I don't believe that is an unreasonable request, especially under the circumstances that we have seen with the potential of Taxmageddon. I actually believe it would be very wise on the part of all Senators to do exactly that. And wouldn't it be wonderful if we could work together for a change over the next year, knowing that year is devoted to tax reform.

Madam President, I ask unanimous consent to have a letter dated July 25, 2012, from the Associated Builders and Contractors printed in the Record.

Madam President, I yearn for the day when we can see both sides come together and work together--work together in the best interests of the country.

We know this Presidential election is close. We know they are virtually in a tie right now. Let that play itself out, but let's do what is right here. Let's not hammer small business. Let's not have the biggest tax increase in history. Let's not put this country into a recession--and maybe even a depression. It was irresponsible, in my eyes, for any Democrat or any Republican to say that if you don't give us what we want, we are going to allow Thelma and Louise to go off the cliff. And we are Thelma and Louise in this situation.

We can work together on an economic program that hopefully everybody in this body--or at least the vast majority--can support in a bipartisan way.

I hope we can get through this. I am very concerned about our country and very concerned about the way these types of things are being brought up in this election year.

I will make one last comment. The Senate is not being run like the Senate. We are not going according to the regular order. We are not going through the committees. It is pure politics. I expect a little bit of that, but I don't expect everything to be pure politics. When our side isn't even given a chance in many circumstances to bring up amendments in the greatest deliberative body in the world, you can see why there are some bad feelings around here. And it is all being done to protect some Members here rather than doing what is right for the economy and for our country. We have got to wake up and start doing things in a little better fashion around here. I hope we can.

I hope my colleagues on the other side will accept my suggestion here. It is done in good faith. I believe we can dedicate next year to tax reform, and I believe we can get it done if we work together. I believe we can bring this country out of the morass it is in. And I suspect if my colleagues on the other side will support what I have suggested here today, the economy will start to turn around almost immediately. It seems to me it would be to their benefit in this Presidential election year, even though I don't trust what some have done in the past.

Madam President, I yield the floor.

I wish to thank my friend from California for her kindness and for her graciousness in allowing me this little bit of time to make final remarks with regard to this bill that Senator McConnell and I have filed.

We are going to be taking two votes on a critical issue in a few moments. Action on the fiscal cliff is long overdue. Before we vote, I would like to make three points. First, it has been suggested that the Hatch-McConnell bill fails to extend the earned-income tax credit and child tax credit provisions. This is utterly false. The Hatch-McConnell bill extends these provisions as they were originally agreed to in 2001, and that agreement actually doubled the child tax credit. Democrats are complaining that our bill does not extend the stimulus provisions that expanded these provisions even further and made them more refundable.

Democrats sold the stimulus bill as being ``timely, temporary, and targeted.'' Now they are holding up tax relief for nearly every income taxpayer unless these stimulus provisions that are mostly spending through the Tax Code are extended yet again.

Second, the Democratic proposal includes a significant increase in the death tax. The number of death tax filers will increase under their bill by 11 times. This is what they are proposing: 98,300 new filers will now have to fill out estate tax forms, get appraisals, deals with the IRS, and get all this done within 9 months of the death of a loved one. That is the equivalent of one entire midsized American city being forced to deal with the death tax every year.

Third, the Democratic bill is a massive tax increase on small business job creators. It would subject 53 percent of all flowthrough business income in the United States to higher taxes. There is a compromise here.

I ask unanimous consent for an additional 30 seconds, with an equivalent time for the other side.

There is a compromise here; it is the Hatch-McConnell bill. Our economy needs relief, businesses and families need certainty, and all we are proposing is extending current tax law for 1 more year so we can dedicate that year to do tax reform.

By contrast, the Democratic bill offers nothing but more uncertainty and tax increases on job creators. Let's face it, we are talking about 940,000 small businesses that will be drastically affected by this. Many of those provide jobs in our society and will continue to do so if we do not clobber them with the Democratic approach.

Mr. President, in a short time we are going to vote on a tax measure that gives the Senate a very clear choice, and here is the choice: At the end of this year, a whole battery of tax cuts that were enacted into law years ago will expire, on December 31. The question is, What is going to happen next? If we do nothing, a very good thing will happen but also a very bad thing will happen. The good thing is that if the taxes go up on virtually all Americans for 10 years, we will reduce our deficit by $5 trillion--more than any group has been able to suggest or come up with a plan to achieve in any of the meetings in which we have been involved. That is $5 trillion in deficit reduction. It is an amazing reduction. There is another side to the ledger. On the other side of the ledger it says: If we start taxing families now while this economy is in recovery, it is going to slow down the recovery. Well, that is natural. People have less money to spend, and many working families living paycheck to paycheck will face a new hardship they don't have today. They reduced their spending, the economy contracts, and we see this recession hang on with high unemployment and businesses failing.

So it really is a very Faustian choice, a difficult choice--reduce the deficit dramatically, on one hand, by letting all the tax cuts expire but risk going into a deeper recession and maybe repeating what happened a few years ago, which devastated our economy.

The President said: Let's try to strike the right balance. When all of the tax cuts expire on December 31, let's focus on restoring the tax cuts for that portion of American families and workers who need a helping hand to continue. But let's not go all the way. Let's not restore the tax cuts for those in the highest income categories.

So the President says: We can have both. If we follow my plan, we will reduce the budget deficit because we don't give tax cuts to the wealthiest, and we will still help working families, and we will keep the economy moving forward.

He tries to strike that balance. The balance he strikes is that everyone will get a tax cut on the first $250,000 of income, even millionaires, but not beyond that.

The Republicans have a different approach. They will offer an amendment--extend all the tax cuts for everyone to the highest levels of income, well beyond $250,000, not just to the 98 percent of the Americans who make $250,000 or less but 100 percent, everybody. Well, their approach, by extending those tax cuts, will mean no deficit reduction. In fact, their approach would add about $900 billion to the deficit compared to the President's approach. So they are really basically throwing a bucket of red ink on this conversation and saying: We are prepared to add $900 billion to the deficit so that the top 2 percent of wage earners can get a tax break.

That isn't all. The Republican approach, which will be offered by Senator Hatch, the ranking Republican on the Senate Finance Committee, goes a step further. I don't understand this part of it. He wants to extend the tax cuts to the highest income categories, but then he very carefully excises or eliminates some of the basic tax breaks working families use.

Let me be specific. The Hatch-McConnell bill does not extend the earned-income tax credit, child tax credit provisions, and as a result here is what happens: The Hatch provision, which protects the wealthiest in America by saving their tax cut, would increase the tax on 11 million working families in America who currently are able to deduct the college tuition expenses for their kids. So while the wealthiest in America will get a break all the way through with the Hatch-McConnell Republican approach, 11 million American families will find their tax bills going up if they have kids in college.

What kind of message is that? Here the students are struggling to get through school, families are incurring debt, and we create a tax benefit to help those families get through, but the Republicans say: No, we are going to raise the taxes on 11 million working families.

That is not all. They also raise the taxes on 6 million other families, working families with three or more children, by $800 each on a change they refused to make on the earned-income tax credit and then turn around--and I think this is one of the worst--and increase the taxes on families with children. The child tax credit currently in the law allows a break for families with kids, a helping hand, because kids can be expensive. This is part of the Tax Code that helps these families.

So about 25 million American families will see their taxes go up with the Hatch-McConnell Republican tax approach that protects those at the highest level of income categories. I don't think that is sensible.

I have spent a lot of time in the last couple of years talking about this deficit. It is serious. I guess I come from

the Democratic side of the spectrum, the left side of the spectrum. That is what my values reflect, and that is what my voting record reflects. But I will say this: This Democratic Senator understands that deficits are for real. We cannot continue to borrow 40 cents of every dollar we spend, even for the programs I love, let alone the programs I am not so crazy about. So we have to reduce spending, but we can't balance the budget with millions of Americans out of work. We need to get this economy growing, moving forward, and creating jobs.

People who are working and paying taxes make this a strong country and start to solve some of our deficit problems just by virtue of the fact that they are working, paying their taxes, and raising their families. So when it comes to these tax cuts, let me say that I am passionate about making certain working families get the break they need.

Pew Trust did a survey last year. Here is what they asked working families across America: If you had a family emergency and you needed $2,000 in 30 days, could you get it? Could you come up with $2,000 if there was a major car repair or a pretty routine trip to the hospital or to a doctor's office? That can run to $2,000 in a hurry if you have a broken arm. Consider the possibilities. So they asked all the working families how many of them could come up with $2,000 in 30 days. The answer was half of the working families. That means the other half can't. It tells us how close to the edge many people are living.

That is why the President's proposal--the Democratic proposal here-- that gives the tax cuts and tax breaks to the working families makes a difference. Ninety-eight percent of Americans will benefit from the President's approach; 2 percent will pay more. I think 2 percent will pay their fair share.

The Republican approach means, for a person making $1 million in a year--and just some quick math: that is $20,000 a week in income--it would give them a $250,000 annual tax break. Come on. At this moment in time, when we are dealing with the deficit and calling on Congress for more spending cuts and saying we have to get it together as a nation, $250,000 a year in additional tax cuts for millionaires? I don't get it. I don't begrudge them their wealth. This country is based on successful people who have led us in business and so many other endeavors. But I also think those people, when you talk to them, are darned appreciative to live in this country and willing to help it move forward.

Then they make the argument that, well, wait a minute, if we raise taxes on people making $1 million a year, we are going to hit a lot of the ``business creators.'' Well, we looked at that. Ninety-seven percent of small business owners are exempt if we draw the line at $250,000 of income. I will concede that there are professional corporations and S corps, investment fund managers, some accountants, some lawyers, and some doctors who may be job creators. I don't doubt that. But are we really asking a great sacrifice from someone making $1 million a year not to get a tax break to the full extent they did before?

I think what we understand is that if we are going to help the middle-class and working families in America and if we are going to move the economy forward, we need a sensible tax policy.

I happen to be of the school that maybe not all the Democrats agree with. On the Simpson-Bowles Commission, I was the one who said that the only way to deficit reduction is to put everything on the table, including the programs that I think are critically important for America's future.

Medicare makes a difference in the lives of 40 million-plus Americans, and I want it to be there. I know it is going to run out of money in 11 years. Think about that. If we don't do a thing here and if we get caught in political gridlock, the Medicare Program that 40 million-plus Americans depend on is going to run out of money. What excuse are we going to come up with? There is no excuse. We need to sit down, look at this program, make sure that works, and make sure it is affordable for seniors. We have to do it sooner rather than later.

We hear so much about Social Security. Let's get the facts out. For at least the next 22 years, Social Security is going to make every promised payment to every retiree in America, with a cost-of-living adjustment, no questions asked. We can't say that about many, if any, Federal programs. But in the 23rd year, we will be in trouble. We will have a dropoff in revenue in the Social Security trust fund, and the payments would have to be cut about 30 percent.

If you are wealthy in retirement--and some people are--your Social Security check is like a little extra dividend, but for some people, it really determines whether they are going to get by for another month, and a 30-percent cut is unacceptable.

We need to look at Social Security. It doesn't add a penny to the deficit, but the Social Security trust fund needs to be stronger longer. We need a bipartisan approach to this. We did it 50 years ago, and we can do it now. We need to sit down and make sure it works. We shouldn't decide that this is out of bounds. That is something we need to consider.

It won't be voted on today, neither Medicare nor Social Security. We are just dealing with the tax side of this conversation. I happen to believe all of these things need to be discussed. When it comes to taxes, we are pretty basic on that. I want to make sure working families have a tax code that helps them.

Think about this for a second. Last week we had a bill on the floor of the Senate, and here is what it said. Currently the Tax Code creates incentives and rewards American businesses that want to ship jobs overseas. American businesses that want to outsource and ship jobs overseas, the Tax Code says, we will give you a break. They will pay less taxes if they send jobs away. That makes no sense at all. Why would we reward the export of American jobs? Why would we provide for the deductibility of moving expenses and other expenses related to moving their business out of America and hiring people in another country?

So last week Senator Debbie Stabenow of Michigan and Senator Sherrod Brown of Ohio came to the Senate floor and said: Let's eliminate the tax incentive to move jobs overseas, and let's turn it around. Let's create a tax incentive for businesses that want to bring jobs back to America. Sounds right to me, doesn't it, that we are creating jobs in this country and discouraging them from going overseas? In the end, we had all the Democrats voting for it and only 4 out of the 47 Republicans voting for it. That is not enough to break the Republican filibuster.

When we talk about a tax code, I not only want to help working families, I want to provide an incentive and reward for those good, home-based American corporations that are trying to keep good-paying jobs right here in the United States of America. Honest to goodness, if we want to walk into a store, pick up a product, flip it over, and see ``Made in the U.S.A,'' we better wake up.

Currently what is going on is unacceptable. This notion on the Republican side of the aisle that we shouldn't get in the way of business when they want to make their decisions, I may not argue with that premise, but I don't think we ought to incentivize it, subsidize it, provide something in the Tax Code to encourage it, particularly when it costs American jobs. But last week, only 4--4--of the 47 Republicans would join us in that effort, so we came up short. This week, we have to get it right when it comes to our Tax Code in the future and tax cuts for the families across America.

One of the things that has worried me greatly as I consider the challenges facing families is their inability to provide for their kids the way they want to. I think we all know the expenses of raising children. We all know what families face when the kids are off to college and we know some of the challenges they face after college. We have come up with an approach which I think is sensible: a child tax credit for the young kids; a deduction of college education expenses for those who made it to that level of education; and then part of what some call derisively ObamaCare, which says that families can keep their kids on their own family health insurance until those young men and women reach the age of 26. That makes sense. How many young people coming out of college today

struggle to find a job and, if they find one, struggle to find a job with health care benefits?

I can tell my colleagues that many times I would call my daughter or son after they got out of college and ask them about health insurance, and my daughter used to say, Dad, I don't need that now. I will get it later. I feel fine. Well, she never knew and I didn't know what tomorrow would bring.

So if we are going to give peace of mind to families, let's make sure we think along the spectrum, along the continuum. Why would the Republican proposal today want to raise taxes on families with children, raise taxes on some 15 million families across America, including those with kids? If they can find room for a tax break for the wealthiest, shouldn't they be able to include those families with kids? They may not be the wealthiest, but they are, in many cases, the neediest, and they are, in many cases, the most important for our future. Yet the Republican approach--the Hatch approach--is going to raise taxes on middle-income families with children. That is something we should never allow to occur.

Let me say, this should be a simple vote for everyone in the Senate, across the political spectrum. We ought to agree on two things. First, we need to cut taxes for middle-income and working families. Second, we should be responsible stewards of the Federal budget and not leave a mountain of debt for our kids. Giving tax breaks to the wealthiest people and adding $900 billion to our national debt is not responsible.

Let's take this vote and show the American people we stand with them and their values. We stand for cutting middle-class taxes and putting our debt on a sustainable path to recovery.

Mr. President, I yield the floor and suggest the absence of a quorum.

Madam President, I am going to deviate for a moment from my prepared comments. I listened to my good friend and colleague from Utah, Senator Hatch. I respect him greatly. As perhaps the only person who actually runs a small business, I wish to comment on a few things and comment on this important piece of legislation we have in front of us.

Small business is defined not by the SBA, which is 500 and below. When I talk to small businesspeople, they wish they had 500 employees. It would be a dream, but it is not a fact. We have to be careful about the numbers, and there are a lot of numbers being thrown around.

There was the story about the gentleman from Florida who sold his business and paid more taxes. I will be corrected if necessary, but when someone sells their small business, they pay capital gains tax, which is about 15 percent. So when they make more money when they sell their business--I have sold several of my small businesses over the years, and if someone doesn't reinvest, they pay a certain rate, and when they reinvest, they can bypass it through an exchange afforded through the Tax Code.

My friend from Utah sits on the Finance Committee. I am guessing the small businessperson had a pretty good rate, 15 points, which isn't bad. Let me also make sure and be very clear, again, there are a lot of numbers thrown around. The bills are very simple. They both cost money. One costs $930 billion over the next 10 years and one costs $250 billion. The proposal my friend from Utah suggested costs $930 billion over 10 years. That is how the Congressional Budget Office scores these things. We can argue if we agree or disagree. It is amazing on days they like the numbers they agree, on days they don't like the numbers they disagree.

The Congressional Budget Office is the Congressional Budget Office. I don't like the group. I like the people. I think they have a black magic box there and come up with numbers. The fact is, those are the numbers. That is the bipartisan organization that is selected by this body jointly to determine these numbers. We can argue over them after the fact. For example, when this extension that my friend talks about over there that in just 1 more year--how many times have we heard that? I have heard it twice since I have been here. It was a 10-year deal when it was first passed that would bring this relief and this growth and this economy beyond our belief. In the last 3\1/2\ years, I don't know, the economy crashed. It is recovering now and struggling.

When I came here, they said: We need to extend it for just 2 years to help the economy. So we extended it. I voted to extend them all for 2 years. I am not doing that again. We can't afford it. For 2 years, we had this extension that was supposed to boom the economy. We have had a slow-growth economy. The people growing this economy are the small businesspeople. These are the people who have 25 or less employees. They are the real small businesspeople.

As a matter of fact, this bill--and I heard the number. Again, I ask people to listen to the numbers and the twisted commentary that everybody gives on both sides. In Alaska, we say it how it is. Here are the facts, and we saw them in the documents, whatever may be presented to us. Ninety-seven percent of the small businesses in this country will not see a tax increase because they are real small businesspeople.

When we walk out of this building and we go down the street for lunch and see the restaurateurs that are operating, there are not 500 employees. There are 10 or 15 employees. I talked to the owner at the Alaska Growth Company today. He has 15 employees. The largest SBA lender, bigger than Wells Fargo, bigger than Key Bank, bigger than all of them, has 15 employees. That is a small business. Those are the people we are talking about.

I respect my friend. He has been a lawyer all his life. I am not a lawyer. No disrespect to lawyers. I am a small businessperson. That is where I made my living, that is where I make my living, and that is where our family makes our living. Let's make sure it is clear what we are talking about.

When the Senator talked about--I can't remember the exact percentage--but 54 percent of these dollars are passed through. He talked about dollars. Yes, because the 3 percent or the employers who have over 25 or 50 employees have huge revenue streams. The small businesspeople in this economy, 97 percent of them make less than $250,000 net income. That is what we are talking about. I think every small business would love to have net income over $250,000. They strive for it every

day. I know I do in my small business. I hope every day we achieve these numbers. As the public listens carefully to the debate and as the minority leader said earlier today, there is a difference, a clear difference. We cannot afford their bill. The taxpayers cannot afford their bill. It is $930 billion over the next 10 years, plus interest costs. I heard over and over from the other side, 40 percent of what we borrow is--we have to borrow to pay our bills. Forty percent of everything we pay, we have to borrow. Where are they getting the $930 billion? Where is that coming from? It costs money, it costs interest, and we don't have it because over the last decade and a half Democrats and Republicans spent like there was no tomorrow. Tomorrow is here.

We have to determine what our priorities are. Despite the fear tactics being laid out, I support small businesses 100 percent. Many bills I presented and supported over the last 3\1/2\ years were about protecting and growing our small business. Define a real small business. There are people who have to take their credit cards and figure out how to get capital because banks will not give them the money. They have a dream of an opportunity and people look at them and say: How much money do you have in the bank? You can mortgage your two homes or one home or you can put everything up that you have as collateral, plus maybe your first born. I have been through this.

My wife started her small business with a small investment out of her retirement funds, her own funds, and a small $30,000 SBA loan. Just as a side note, I get so frustrated when I hear these ads, everyone is going to exaggerate what they hear and see. I am sure, whatever I say today, in 2 years they will take a couple words and use them against me. I expect that. They will say whatever they want. That is what opponents do in campaigns. It is too bad we can't talk about the issues.

I am not here to defend the President. The President gets to defend himself. That is what he does. I have disagreed with the President more than once. I have disagreed with my national party more than once. His point is when we build a business, there are other elements that help build it.

For my wife's business, it was an SBA loan. I had a vending business. When I had those trucks on the street, those roads were built by a collective group of taxpayers who helped to build those roads. It is a combination of those things. Don't get me wrong. It is the blood, sweat, and tears of small businesses and the people who come up with the dreams and ideas that create these businesses and push it forward.

So I sat here patiently. As I was presiding, I listened. The numbers are simple. One costs more, one costs less. The taxpayers can't afford it. As I said, 2 years ago, I supported the extension because I was told we were going to invest. We were going to grow this economy significantly. We have grown it on the backs of small businesspeople. That is on whom we have grown this economy. That is where the fastest growing population of new employees are coming from.

To my friend on the other side of the aisle, we gave that idea a shot. It didn't perform. I have to say as to Thelma and Louise--a scene I hear about all the time--thank God they were driving an American car. My bet is they landed safely on the other side wherever they went. But the fact is, it was in this body--and I heard the same arguments on the other side: We can't help our auto industry; we can't help them out of what they are struggling with--we took a calculated risk to support those businesses that manufacture and employ people and today they are thriving because this body said we are going to take a risk. Again, Thelma and Louise, thank you for driving an American car.

This is simple. It is about making sure 98 percent of Americans today continue to have tax relief. It is about 97 percent of the businesses continuing to have tax relief--small businesses. It is important that we do this not only for the economy but for these families who are struggling. There are 300,000 families in Alaska alone who will benefit from this relief.

There is a comment that I think Senator Lieberman said earlier, and I recognize his point. His point is we should have real tax reform. I agree and that is why I sponsored a bill with Senator Wyden and Senator Coats on real tax reform. We are moving down the path, but we have to keep doing some things here. We have to do some things that keep the economy moving forward in the right direction.

A typical family of four in Alaska, if not without this relief, will pay another $2,200 a year in taxes. A married couple making $80,000 with one teenager at home and another in college will see their taxes go up by $2,250. A couple earning $130,000 with one child will see their taxes go up $4,000. I could go on and on. We have choices to make, and they are not going to be fun. Those days are gone. They did that in the last decade and a half when they had all kinds of money to spend. We are in a different situation. We have to make choices of whom we invest in to grow this economy.

I will invest in the small business community, the 97 percent that will continue to receive tax relief under this bill and the 98 percent of Middle America who are working every day to try to make ends meet. These are the folks I am focused on.

I recognize my colleagues on the other side want to again see massive tax reform. We have not had it since the early 1980s. I have not been here since then. I know a lot of these guys have been here a long time and sit on the Finance Committee and other committees. Do it. I am all game for amendments on the floor. I am all game for that. We did it on the farm bill. I believe we had 80 amendments. We had a ton of amendments on the Transportation bill. It doesn't bother me one darn bit. Vote on whatever we need to and move on. Let's move this economy forward and keep moving forward on the legislation that is critical.

Let me end on one point. I respect my colleagues on the other side. We agree many times and sometimes we disagree. Today we disagree on this issue. We don't have the money. We have to limit where we can put our resources and target them in the best way we can.

As I said, I voted a couple years ago for this extension on everything and more layoffs occurred in these big companies and certain things happened that didn't show the economy growth. One thing did happen. Small businesses did grow. For the first time in 5 years, home prices reported last week are up. New home starts are up for the first time in many months. Why are those up? Because the small business community and Middle America are starting to put money into those areas. That is important because that will grow this economy and grow it beyond our belief over the next decade, plus.

But for us to say we can still have the train moving at the speed we were moving at before the crash, we can't do it. We can't extend these tax rates for everyone. They want us to give a little, so we are asking the top 2 percent to give a little bit. At the end of the year, my guess is we are not going to extend the payroll tax. We can't afford it, so that means people on the other end will have to give a little bit. As my friend Senator Lieberman said, everyone needs to give a little bit. Yes, we are going to do that.

From my end, I see the give and take and tough decisions that are necessary. That is what we were elected for, and that is why we are here. To keep business as usual and say: Just for 1 more year, we will do tax reform someday, well, that day is here. There is no tomorrow, and we have to make tough calls. So why not give the relief to the real 97 percent of small businesses?

Again, I have to clarify. I have a sub S. I have an LLC. I understand this. One comment my friend said was even if the owner didn't take a dime--I have a small business where I didn't take a dime. My LLC made money. I paid not corporate, but I paid a passthrough through me because I get a sub S, which is a combination of corporations.

The point is everyone needs to give a little to make it happen and make it work. Today we are asking one group to give a little but making sure the bulk of our economy continues to move forward. We want to make sure the 300,000 Alaskans whom I see on a regular basis still get the relief; for the small businesses that are creating jobs and creating a dream where they have to put a max on their charge cards to build the businesses because they can't get capital from the banks, or spending

time cashing out their retirement because they believe in their dreams, that this might be their opportunity, these are the people I want to support.

So, again, I appreciate the time. I wish we had more than what happens when we come down, we speak, we leave; we come down, we speak, we leave. There is no real give-and-take. I wish my friend from Utah was still here. We could have a great conversation about the data he used. But here is one simple point: One costs about $1 trillion, one costs about $150 billion. We can afford the lower cost option which protects 98 percent of the people in this country, giving them relief, and 97 percent of our small businesses.

Thank you, Madam President. I yield the floor.

Madam President, I rise to speak on the need for progrowth tax reform rather than a tax increase.

President Obama has proposed raising taxes. He says that we should raise income taxes on individuals and small businesses, that we should raise capital gains taxes on investments, and that we should raise the estate tax, meaning raise the death tax on American families.

For example, take the estate tax. You have a farmer. Right now, if he wants to pass his farm on to the next generation, for any value over $5 million, he has to pay the estate tax. Generally, families may be able to do that. They may be able to borrow the dollars required and pass the family farm on to the next generation. But under this proposal, that changes. Instead of paying the estate tax on anything over $5 million, now that farm family would have to pay the estate tax on anything over $1 million. So think about a farmer in my home State of North Dakota or maybe in Minnesota or anywhere else throughout the Midwest. How do they pass on that family farm when they are going to have to pay taxes on any value over $1 million? So now they are looking at a situation where they are going to have to sell that farm rather than have their children continue farming an operation that may have been in that family for generations. That is a real problem for our farmers, for small businesses, and for families across this great country, and it certainly is not going to help our economy. In fact, it will hurt our economy.

The President himself has said that we cannot raise taxes in a recession. He has said repeatedly that doing so would hurt the economy and would, in fact, hurt job creation.

So let's review our situation right now. Our situation right now is that we have 8.2 percent unemployment. We have more than 41 months in which unemployment has been above 8 percent. We have 13 million people out of work, and we have another 10 million people who are underemployed. So you are talking about 23 million people in this country who are either unemployed or underemployed.

Middle-class income, since this administration has taken office, has declined on average from approximately $55,000 to $50,000.

Food stamps use. Food stamp recipients have increased from 32 million recipients, when this administration started in office, to 46 million food stamp recipients today.

Home values have dropped on average from $169,000 to $148,000.

Economic growth. Economic growth in this recovery is the weakest of any recovery since World War II. For the last quarter, our growth was 1.9 percent versus the prior quarter--1.9 percent.

Job creation last month: 80,000 jobs. But it takes 150,000 jobs gained every month just to hold even with our population growth, just to start reducing that 8.2-percent unemployment rate.

Those are the facts. They speak for themselves. You can draw your own conclusion.

The President's approach to our economy is making it worse. His failure to join with us in extending the current tax rates and engage in progrowth tax reform rather than raising taxes is sitting on our economy like a big wet blanket. But we can change that, and we can change that right now. We do it by extending the current tax rates, the tax rates that have been in effect for 10 years--not raising them but extending the current tax rates for a year--by engaging in comprehensive, progrowth tax reform, and also, of course, by getting control of our spending. Business investment and economic activity would respond immediately.

Look at the latest information from the Congressional Budget Office. The CBO projects that the economy will contract--will contract--by a 1.3-percent annual rate for the first 6 months of next year if the fiscal cliff is not addressed, meaning the current tax rates, which go up at the end of the year unless we address this, an increase in taxes and the sequestration.

Now, if those things are addressed with the approach we have put forward, instead of an overall one-half percent of growth next year, you are looking at 4.4-percent growth for our economy. Those are the CBO's statistics. Think of the difference--think of the difference-- that would make for those 13 million people who are looking for a job. It just stands to reason because business needs certainty to invest, to grow, and to hire people, not higher taxes. With legal, tax, and regulatory certainty, businesses in this country would invest and grow.

Right now, there is more private capital on the sidelines than at any other time in the history of our country. Private investment capital that businesses would otherwise invest and get this economy growing and get people back to work is sidelined because of the regulatory burden, because of the government spending and the deficit and because of plans like this to raise taxes. It is that situation which is sidelining private investment and private capital. That means slow economic growth. That means higher unemployment. That means more people without jobs. That means less revenue to reduce our deficit and our debt.

So clearly raising taxes is not the way to go. But President Obama says: Now, wait a minute, everybody needs to pay their fair share. Right? You hear him say that all the time: Everyone needs to pay their fair share. Well, of course everyone needs to pay their fair share, but the way to do it is with progrowth tax reform and closing loopholes. That is exactly what we have proposed, not raising taxes on more than 1 million small businesses in this country--the very job creators in this country--as the President has proposed.

Let's take a look at tax rates for just a minute. We talk about this all the time. Let's take look at these tax rates. According to the National Taxpayers Union, for the tax year 2009, the top 5 percent of taxpayers paid almost 60 percent of the taxes. One more time. The top 5 percent of taxpayers paid almost 60 percent of all the income taxes paid. The top 10 percent paid 70 percent of all income taxes, and the top 50 percent paid 98 percent. The top 50 percent of taxpayers paid 98 percent of all income taxes.

So what we are proposing is progrowth tax reform, closing loopholes. Let's extend the current tax rates for 1 year and set up a process to pass comprehensive, progrowth tax reform that lowers rates, that closes loopholes, that is fair, that is simpler, and that will generate revenue from economic growth rather than higher taxes. The reality is that, along with controlling government spending, is the only way we are going to balance our budget, that is the only way we are going to get on top of our deficit and debt, and that is the only way we are going to get these 13 million people back to work. Because that is how this American economy works--when we stimulate that private investment, that entrepreneurial activity of small businesses across this county that has made our economy the envy of the world.

To be successful, this effort has to be bipartisan. We have to join together in a bipartisan way to make it happen. So let's get started. Let's give small businesses in this country the legal, tax, and regulatory certainty, the business climate, the environment they need to encourage private investment and innovation and job creation. That is the

American way. That is the real American success story. We can do it, we need to get started, and we need to make it happen now.

With that, I yield the floor.

That is exactly right. I am pleased to be here with my esteemed colleague from South Dakota as well as my esteemed colleague from Kansas. I wish to commend Senator Coats from Indiana for the strong and important points he made here as part of this discussion on the Senate floor. This vote we will have on the Tax Code and its impact on farming and small businesses across this country is certainly important.

But Senator Coats also made a very important point a few minutes ago; that is, we already have farmers and ranchers--our producers--in a situation where they face difficult times because of the drought. So I join him in calling on our House colleagues to act on the farm bill. I think it is very important we pass a farm bill, as we have in the Senate.

I had an opportunity to work on that farm bill with Senator Thune of South Dakota and others. We passed a good package in the Senate. The House Ag Committee has passed a good farm package as well. We need that to pass the House, get it into conference, and get a farm bill done for our producers. I think that is incredibly important always because good farm policy benefits every American. We have the highest quality, lowest cost food supply in the world thanks to our farmers and ranchers. Particularly now, with our farmers throughout the country looking at this drought, it is very important they know we have a sound farm program in place for now and for the future.

As regards this vote in the Senate today, whether it is the good Senator from Indiana, from Kansas, from South Dakota or others, this is incredibly important. We are looking at a bill that is essentially a plan put forward by President Obama that will raise income taxes, that will raise taxes on capital gains, and that will raise the estate tax.

I was on the floor this morning, as others have been, talking about the impact that those tax increases will have on small business when we have 8.2 percent unemployment. We have had 8 percent unemployment for more than 40 straight months. To a large degree, people are focused on the increase in the income tax and its impact on small business, but the impact from the estate tax--from the death tax--is a big deal, and people need to understand what the ramifications are if that estate tax is increased.

We understand it very well in our States because of the case we are making right here. Look at how this affects our farmers and ranchers. We are talking about going from a situation where when a farmer or rancher, looking to pass on that farm or ranch right now, is taxed, from an estate tax standpoint, on the amount above $5 million and then it is set at a 35-percent rate. But the plan being put forward today-- and being put forward essentially by the President and by the other side of the aisle--would change that to go back to anything over $1 million would be subject to the estate tax and then would be taxed at a 55-percent rate. So just do the math; right?

That is the point the good Senators from South Dakota and Kansas and others have been making. It doesn't work. It just doesn't work. In other words, that family can't borrow enough money to pay off the estate tax and keep the farm because they can't afford to pay back that level of debt. The farming operation will not sustain it. The ranching operation will not sustain it. You can't borrow that much money to try to keep the farm in the family because you can't afford to pay the debt. As a business enterprise, it can't service the debt. So what happens? The only alternative is to sell the farm.

So we have farmers who have been farming for generations--their father, their grandfather, grandmother, mother, relatives all the way back--and now their kids are farming with them. Their children are involved in that farming enterprise, and they want to continue farming, but that is not going to happen because they are not going to be able to afford the estate tax. So this is exactly what we are talking about when we talk about how raising taxes will have a detrimental impact on our economy.

We have talked about this in terms of small business and we have talked about it in terms of the income tax and the ramifications on capital gains tax, but I think this demonstrates how clearly it truly has an impact across this country on all small businesses because I think all of us, from our States and from many other States, know

these farm families. We know this is not just a job or a vocation, it is a way of life, and it is a way of life these families have been counting on.

I wish to make one further point before I turn the floor over to my esteemed colleague; that is, these farm families or any other small business, when we look at the estate tax, we have to keep in mind they are passing assets, but throughout their entire life they have been paying taxes. They have been paying income tax, sales tax, property tax. They have been paying taxes all the way along. So it is not as if they are just handing this stuff on to the next generation without paying taxes because they are not paying a death tax. They have been paying taxes on it all their lives and not just one or two taxes but multiple taxes. So this property has been taxed their entire life. They have worked their entire lives to pay those taxes and would now face a death tax that would force them to sell their business. That is not right.

You know what. It is not right if it is a farm or a ranch or, frankly, any other kind of small business in this country because this country is about small business. That is the backbone of our economy. It is the economy of this country, and that is exactly what we are dealing with.

That is why we put forward an option--and we encourage our colleagues to support this option--that will continue the current tax rates, that will not raise tax rates, and then we will work on extending those current tax rates for 1 year while we engage in progrowth tax reform. We close loopholes and we get more revenue from economic growth, from a growing, more vibrant economy that puts people back to work rather than raising taxes.

With that, I yield the floor for my esteemed colleague from South Dakota.

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

Mr. President, I rise to speak to the issue on the floor before the Senate, the vote we will take later today on two competing plans for our path forward. As the Presiding Officer and I and all of the Members of this Chamber know, our national debt and our deficit are enormous. They are unsustainable. Last week an array of our colleagues on the other side of the aisle came to the Senate floor one after the other to make exactly that point.

Members of both parties agree excessive debt hurts our competitiveness, that it causes interest rates to rise, and it crowds out critical investments in our country's future. My own experience in the private sector and 6 years of tough budget balancing as a county executive in my home State of Delaware taught me how important it is to have responsible budget processes in place to manage our way through difficult financial times, to create opportunity for our communities while still reducing our deficits and debt.

There is no question that high debt levels lead to lower growth in the long run, and it can restrain or starve or strangle the dreams of our communities, our children, for our future. Our deficit and debt is a ticking time bomb, and everyone--Republicans and Democrats, Independents, economists, experts, working families, small business owners, the American people--knows that we want to and have to deal with it. But the key, in my view, is to deal with this problem responsibly and fairly and in a way that reflects America's best.

Our debt is neither a Republican nor a Democratic problem but a shared and structural problem. It took both parties to get us into this mess, and it will take both parties working together to dig us out. Each Member of this body must take responsibility and look at what is best for the next generation not just for winning the next election.

For my part, I am going to continue to fight for balanced and responsible deficit reduction. If the American people can share in the sacrifice in our cities and counties and States all over this country, as they are already doing in my home State of Delaware, then Republicans and Democrats have to show that we too can come together and find a way to compromise.

It is time we recognize a sobering realty: If we are going to plug the hole in national balance sheets, if we are going to avoid the fate of Europe--and it is a big hole in the bottom of America's balance sheet--while still continuing to invest in our future and in the strength and promise and opportunity of our communities, we have to find a more responsible, more fair balance between spending cuts and revenue increases.

We simply cannot achieve the level of savings we need through spending cuts alone. Drastic cuts, dramatic cuts, across-the-board cuts violate our very values and will drive down the possibility of recovery and growth in the future. Spending cuts must be a central part of the solution to our budget problem. But the fact is revenue must also play a meaningful role. We need balance. That is the only way to provide the economic certainty necessary to sustain a recovery and, in my view, the only way to sustain investments that are critical for our future.

Let's be clear about some rhetoric we have heard both out in the country and in this Chamber. The United States does not begrudge success. We, as Democrats, in this Chamber do not resent those who have achieved, who have succeeded. In fact, that is the engine that for generations has drawn people from around the world to this country and has pulled people forward: the hopes and dreams of those who see reason to the work in this country because of the promise of opportunity, the very real history of entrepreneurship, of risk taking, and the very great rewards this country provides those who succeed beyond their wildest dreams through hard work, through innovation, through creativity.

No, we do not resent or reject wealth and success in this Chamber or in this country. In fact, we admire it and want to create the groundwork for a whole new generation of Americans to achieve the successes of the last generation. If we are going to do right by the next generation of Bill Gateses or Warren Buffetts, that requires us to find solutions that make our tax system fairer and to prevent burdening the next generation of Americans with a crushing national debt.

President Lyndon Johnson once said:

It is not just enough to open the gates of opportunity, all

of our citizens have to have the ability to walk through

those gates.

The ability of future Americans to walk through those gates, I believe, requires sustainable investments in our future, in our schools and teachers so our children can compete in the global economy and we can keep improving public education and infrastructure; so our businesses can move their products and ideas as fast as our competitors can on our roads and rails and broadband, in research and development; so America can continue to be a world leader in innovation and scientific breakthroughs.

We all know health care costs are among the greatest drivers of our mounting national deficits and debt. We have two paths forward: One, where we cut and constrain and reduce spending, and another where we invest in basic science and research, where we innovate and where we cure our way out of these challenges. I think this latter way of investing in our schools, our infrastructure, our innovation, and in finding path-breaking cures is more true to the American spirit.

Cuts to essential services and programs are already deep. Although this is not broadly known throughout the country, sacrifices have already been made here, and pennies are already being pinched from programs that, in my view, serve the people who can least afford them.

In my home State of Delaware, due to choices we have made here, we have already seen cuts to critical programs such as heating assistance to low-income families and programs such as the community development block grants. Home programs were cut roughly 30 percent in last year's budget, programs that for so long have supported affordable housing for the disabled, for seniors, and for low-income families.

We must continue to make cuts across the board to move our way toward a sustainable Federal deficit. But cuts alone cannot responsibly make our path forward, and we have seen proposals in the other Chamber that would decimate vital safety net programs such as Medicare and Medicaid, shifting the burden of deficit reduction to our most vulnerable citizens. We need to bring balance back to how we solve these problems. We need to do it in a way that puts a circle of protection around those who are most vulnerable in our society.

In previous generations that served in this Chamber, when they came together and reached the resolutions that solved our country's fiscal problems, in 1983, for example, they put a circle of protection around the most vulnerable Americans. They chose not to slash or cut or eliminate those programs that were focused on the most vulnerable in our society: the disabled, low-income seniors, and children in the earliest stages of life.

I think it is important that we remember those values as we look at the choices we make today and as we come together in the months leading up to the election--and, hopefully, after the election--to craft a solution to our structural problem.

Today on the floor the Senate is considering the other piece of the equation from cuts, revenue. We have a stark choice between us today. We have two plans: a Reid plan and a Hatch plan. We have a Democratic proposal and a Republican proposal. Let me put this in some context that I think has been missing in some of the speeches I have heard on the floor earlier today.

In both cases these are plans that make choices about which of our existing tax cuts, which of the existing tax expenditures we will allow to expire and which we will extend. There is a lot of talk about the coming taxmageddon, about the greatest one-time tax increase in American history. But let's be clear. What we are talking about is tax cuts that were enacted in

2001 and 2003 and other tax cuts that were enacted in 2009, 2010, and whether they should be extended or whether these temporary tax cuts should be allowed to be that and expire.

We have two starkly different plans. In one, the Republican plan, they extend all of the Bush tax cuts, even for the highest income earners, even on the marginal rates of the highest income earners. The Democratic plan extends and does not allow to expire critical tax cuts: the earned-income tax credit, the tuition tax credit, and the child tax credit that 25 million Americans--the working poor, working families with children--rely on to get through this difficult recession.

The Republican plan allows all three of those to expire, and thus, to use their language, raises taxes on 25 million of the working poor. It should be an obscenity for there to be people who are working full time and get poor in this country. This is a country, as I said before, of opportunity; the place to which millions have come over generations from around the world seeking the opportunity of this country.

Yet, today, and especially in this economy, ``working poor'' has real meaning, as the rate of poverty has risen to alarming levels, where one in six is poor today, which is the highest since the 1960s. The economic inequality and lack of opportunity and justice for those who are the poorest is at an alarming rate.

We also have, as I said before, a structural challenge before us, a deficit and debt that we must deal with. So the Democratic plan that is on the floor today, which we will vote on today--on whether this body wants to proceed to take a deciding vote on it--would allow the marginal tax rate above $200,000 for individuals, $250,000 for couples, to return to the Clinton era.

Let's be clear because I think this is often lost. Under the Democratic tax plan, we would continue tax breaks for all Americans who earn income and for all small businesses that are revenue-earning but just on the first $200,000 of individual income or $250,000 of couple income. So even the millionaires and billionaires would continue to get some of the benefit of the tax breaks first enacted in 2001 and 2003. What would be raised is the tax rate on income above $250,000 per couple. So everybody continues to get some tax advantage, but the excessive--the highest reductions in tax burden on the very wealthiest Americans we would allow to expire.

What would the impact be on our deficit and debt? It would be $850 billion over 10 years, which, with the interest savings, is nearly $1 trillion in deficit and debt reduction. These are significant savings. If we ask the wealthiest 2 percent of Americans to take on that burden, to go back to the interest rates on marginal income that they lived through in the Clinton era, what might that do? It will significantly reduce the deficit and debt and make it possible for us to sustain the earned-income tax credit, the tuition tax credit, and the child tax credit, and, frankly, it will reflect our values.

This recession has brought an alarming rise in the rate of poverty. I believe our faith traditions--and we come from a very broad range of faith traditions--speak to us and challenge us to show our values. As the Vice President, who held the seat in Delaware before me, has so often said, his father once said to him: Show me your budget, and I will show you your values.

Psalm 72 teaches us that to defend the cause of the poor and to give deliverance to the needy is one of our highest callings. It is repeated throughout the books of the Torah and the New Testament--in many faith traditions all across this country. To reject this deliverance to the needy, to reject the circle of protection for the neediest in our society and instead say that we will extend ad infinitum the tax breaks for the wealthiest Americans defies American values and our greatest tradition of creating and sustaining opportunity while protecting the most vulnerable among us.

I think our belief in the American dream and our commitment to basic fairness and responsible problem-solving calls us forward to vote for the Reid plan.

This bill is not a substitute for the comprehensive tax reform our Nation truly needs. We need tax reform that simplifies the Tax Code and closes many unsustainable and costly loopholes while lowering rates and broadening the base. In the current political environment, I believe this bill, to which I hope this body will turn, is the best chance we have at retaining these important tax credits and opportunities for the working poor while bringing some sanity to the rates at the highest end and asking those who benefited the most to contribute to solving our problems.

Last week I got a letter from Judith in Talleyville, Delaware, who wrote my office saying this:

Millionaires and billionaires must be asked to pay their

fair share toward economic recovery.

Judith puts her finger on the crux of the issue. If we are going to address our deficit crisis and resolve the hole at the bottom of America's balance sheet in a way that reflects our core values, I believe we must move to and consider and pass the Reid plan in this Senate this day.