Mr. President, I listened with interest to the comments of the Senator from Pennsylvania, and as always he was articulate and thoughtful and made a strong case. I would like to speak to the issue we are going to be addressing over the next…
Mr. President, I listened with interest to the comments of the Senator from Pennsylvania, and as always he was articulate and thoughtful and made a strong case.
I would like to speak to the issue we are going to be addressing over the next few days, the next few weeks, and probably the next few months, not necessarily to be unalterably opposed but to talk about how we can get where we all want to be, which is lower taxes, higher growth, and a stronger U.S. economy.
I think it is important to emphasize at the beginning, just so we all know, what we are talking about the next couple days isn't the budget. As the Senator from Pennsylvania noted, it is really a vehicle for a massive tax cut.
My problem with the tax cut is not necessarily that we are going to have
one, but the question is, How is it structured? Who gets the benefits? How to pay for it?
As the Senator pointed out, we still don't know what the plan is. We have an outline; we have principles; we have bullet points; we have lists, but we don't have a plan. Therefore, it is difficult to analyze.
We do have some particulars that have been released. You don't need to be an economist to understand that if the rate for the lowest taxpayers is being increased and the rate for the highest taxpayers is being decreased, that the overall effect will be loaded toward those at the upper income level.
The only analysis we have from the tax policy foundation, an outside nonpartisan group, is that under the plan, as it has been described by the White House and by Members of Congress, about 80 percent of the benefits of this proposal go to the top 1 percent of wage earners in this country. Eighty percent of the benefits go to the top 1 percent.
It may be that as the details of the plan are more well known and more thoroughly described, we will find it is slightly different than that. One of the things that really bothers me about this budget resolution we are going to be voting on is, it explicitly waives a longtime budget rule that before you can vote on issues such as this, there must be a Congressional Budget Office score 28 hours prior to the vote. It waives that provision. That is not a good sign. That doesn't reassure me that we are going to have a clear idea of what we are voting on.
When you combine the cuts proposed to Medicare and Medicaid, which go into paying for these massive tax cuts, it looks to me like the biggest losers in this whole process will be seniors.
When you look at what we know about the structure of the tax cuts and the fact that there is a one-half trillion-dollar cut in Medicare projected over 10 years and a $1.5 trillion cut in Medicaid, seniors are going to take the most serious hit. Why do I say that? Well, we all know Medicare specifically applies to seniors, so that is pretty easy. If you are cutting Medicare, you are hitting seniors.
Secondly, though, what a lot of people don't realize about Medicaid is that 70 percent of the nursing home beds in America are paid for by Medicaid. By definition, who is in those beds? Seniors. When you cut Medicare and Medicaid, you are going to be impacting seniors.
The provisions of the tax plan, as we know it--and I keep emphasizing ``as we know it'' because we are voting on something today to clear the path for a major tax cut, and we don't know what it is, but it appears it will impact seniors disproportionately.
I want to touch on a couple of other points. One is the argument that the cuts to Medicaid and Medicare aren't really cuts; they are just reductions in growth. Well, that argument applies if you are talking about the NASA budget, for example. If the NASA budget is projected to grow 5 percent a year, and we cut it to 4 percent a year, that is a reduction in growth; that we are going to do one less trip into space or whatever the policy outcome of that cut is.
Medicare and Medicaid are different, however. They have to pay costs in the real world as they come up when necessary. The increased growth that is projected in those two programs is based upon two unalterable facts. One is demographics.
We are getting older, and that means more work, more demands on the medical system. It also is based on medical inflation, which everyone knows in recent years has proven to be higher than the ordinary rate of inflation. This is the best projection we have, but if you project that the current level of medical costs today, 8 years from now or 10 years from now are going to cost what they cost today, plus medical inflation, plus the impact of demographics, people getting older, that is a real cost. If you cut that, fewer people are going to get services. Rural hospitals will close. There will be undeniable impacts on both the economy of our rural regions of the country and real people.
This argument that cuts to Medicare and Medicaid are just a cut in growth--it is not really a cut--is just not true. That may be true in some areas, but it is not true here because these are real costs that are going to be incurred. If the costs go up and fewer dollars are there to meet them, somebody is going to get hurt. These are real cuts to real people.
The other thing I want to touch on is the deficit and debt. I have to say, I am sort of puzzled by this whole process because as I have been here over the past 5 years and as I have lived my life over the past 25 years, the majority party in the Senate has been focused on the debt and on the deficit and the dangers of the debt to our country, to our economy, and how bad it was that we were mortgaging our children's future, and all of a sudden it is no big deal. All of a sudden it is OK to knowingly, consciously, deliberately talk about a $1.5 trillion increase in the debt over the next 10 years. That assumes, by the way, that the cuts to Medicare and Medicaid take place and that other cuts that are in the budget, exemptions and deductions, take place. It could be that the effect on the debt and the deficit will be much greater.
I remember 2 or 3 years ago, when we were in a recession and people were trying to get jobs and we had millions of people unemployed, there was a motion to extend unemployment benefits for 6 months. I can't remember the cost. I think it was $5 or $6 billion. Oh, no, point of order. We can't do that. It will increase the deficit. We are talking about $1.5 trillion that we know of, but that is OK. That is OK.
I think we need to understand this. What this really is, if we pass unfunded tax cuts, they aren't really tax cuts. They are simply a deferral of the tax from us to our kids. We don't have to pay the tax, but the money to be spent is still going to be spent, so the hole gets deeper. We borrow that money, and our kids and our grandchildren are going to have to pay it back with interest. That is called shift and shaft. That is not a tax cut. We are just shifting the tax and shafting our kids. It is as if on your deathbed you call your children over and say: I have some final words for you. The kid leans over, and you say: Here is my credit card bill. I had a wonderful trip to Acapulco. I hope you don't mind paying for it. That is what we are doing. We are indulging ourselves and stealing from the next generation because we are not willing to pay the costs of the programs we all support and think are important.
I think there is another fact that needs to be realized. As we build up this deficit and debt, eventually the bill is going to come due, and because we have used up all of our resources, the only place to go to cut them is going to be Social Security and Medicare because the discretionary budget is essentially going to be all gone.
It is really simple to make the interest rate calculation. We now owe $20 trillion. Seventy-seven percent of our annual GDP we owe. The interest rate calculation is simple: 1 percent, $200 billion a year.
I think it is more a question of when than if. When interest rates return to a more normal level of 5 percent, that is $1 trillion a year in interest, just interest. That happens to be very close to the entire discretionary budget of the U.S. Government--$1.1 trillion--this year, defense and nondefense. We will be paying almost as much in interest as the entire discretionary budget. How are we going to manage that situation? The only way it can be managed is to start talking about Social Security and Medicare.
So this is a long-distance, slow-motion diminution of the value of those programs that are so important to so many Americans, particularly senior Americans.
The final point I wish to touch on relates to the Senator from Pennsylvania basically predicting: Don't worry, these tax cuts will pay for themselves. I have been hearing that all my adult life; I have never seen it work. It didn't work in the middle of the last decade during the Bush tax cuts. All those tax cuts were going to pay for themselves: Don't worry, the stimulus of economic growth will be such that there will be more income, more revenues, and we will, in fact, as the Senator said, reduce the deficit.
The problem is there is no evidence that it has ever worked in the history of mankind. The best economic research I have seen says that maybe the economic growth will offset about 20 percent of the cost of the tax cuts, but 80 percent is going to go straight to the debt. So to make the assumption that
somehow this is all going to pay for itself, I believe, is irresponsible.
I have a modest suggestion for those who are making that argument. Will my colleagues accept a friendly amendment which says that if the growth does not occur, then the taxes--or certain taxes--are automatically retriggered in order to fill the gap? If my colleagues are right, that will never need to happen, but if you are not right, that will protect our kids. I think that is a reasonable solution. I don't think it is going to happen. Why? Because it hasn't happened. It hasn't happened in Kansas. It hasn't happened here. I have never seen it happen.
I have looked at the economic research and, as near as I can tell, there is no data that indicates an automatic correlation between tax cuts and economic growth. I suspect there are tax cuts that can stimulate economic growth; it depends on where they are and what they are. But there is no evidence that is the case regarding tax cuts in general.
So those of our membership who believe this rosy scenario--the temptress, rosy scenario--is going to occur, fine. But if it doesn't, let's put language in the whole tax program which says that insofar as the growth does not occur as projected, the deficit will be maintained at no worse than current levels by automatically triggering tax increases to fill the gap. Then we are being honest. Then we are being honest to the next generation.
I believe there are important areas where tax cuts are necessary in order to make us more competitive, in order to help to grow our economy. However, I don't think what I have heard so far is the answer, and there are many problems with what has been described. I am willing to hold my fire and see what the Finance Committee comes up with and see whether, as the Senator from Pennsylvania said, it will be an open and bipartisan process, with amendments. If that is the case, we, I think, could come up with, on a bipartisan basis, a reasonable tax change--tax cuts, tax reform--that will strengthen our economy without adding to the deficit and without requiring massive cuts to programs such as Medicaid and Medicare that are so important to millions of Americans. It can be done right.
In 1986, it was done right. That was true tax reform. That was the last time we did tax reform. And I think it is very interesting that over the last several months, the language that describes what we are about to do has migrated from ``tax reform'' to ``tax cuts.'' Tax reform means you change the Tax Code, get rid of the inefficiencies, simplify it, take away some exemptions and deductions, lower rates, but we end up revenue neutral and we have a stronger economic base from which to proceed. Tax cuts simply add to the deficit or are based upon unrealistic and, indeed, cruel cuts to people in the future.
I think we have an opportunity to do this right. I think there is more consensus here than perhaps people realize on the question of doing tax reform in a way that will benefit the entire country. I don't think the Members on this side of the aisle are categorically opposed to tax cuts under any circumstances.
When I was the Governor of Maine, we cut taxes--I can't remember, 10 or 15 times--overall by about 15 percent. We cut the income tax. We cut the sales tax. We cut the property tax. So it can be done. That was done on a bipartisan basis with a legislature that went back and forth between Republican and Democratic control. They had this sort of strange Independent Governor, but we made it work. It can be done, and it can be done on a bipartisan basis.
It certainly looks as though this is about to be railroaded. It is about to be shoved down our throats without adequate analysis and without fully understanding it. I deeply hope that is not the case. I hope we learned something from healthcare, that we can do good things when we work together. When we don't, it rarely ends well.
So I understand that the votes are probably there to pass this budget, but the real question will come: What happens next? What does the plan look like? How responsible is it? What kind of assumptions is it based on? What kind of analysis do the Joint Taxation Committee and the Congressional Budget Office provide us on a nonpartisan basis as to what it will really do? Then we can have a real debate. Then we can talk about what is best for America. I think, between the group of us who work here and down the hall, we can find a good solution. But if the solution is thrust upon us, if it is ill-conceived, if it is skewed toward the wealthy, if it balances the budget on the backs of seniors, on Medicare, and Medicaid recipients, if it is based upon unrealistic assumptions about growth, then we are going to harm our country, not help it.
Eventually, if we keep going down the road we are traveling in terms of the national debt, the piper will have to be paid. It may not have to be paid by our generation, but it is going to have to be paid by these young people and by their peers all across America. I don't think that is right. That is not the legacy I came here to leave to my children and grandchildren.
Thank you, Mr. President. I look forward to working with my colleagues to find a path forward that is responsible and responsive to the needs of the American people.
I yield the floor.