Congressional Budget For The United States Government For Fiscal Year
Mr. President, I ask unanimous consent that the order for the quorum call be rescinded. Mr. President, budgets are defining things. They tell the country what direction we would like to go, where we intend to take the country, what kind of…
Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.
Mr. President, budgets are defining things. They tell the country what direction we would like to go, where we intend to take the country, what kind of policies on taxing and spending we have. There are not many ways to hide it. There are ways to attempt to hide it, but when one looks at budgets carefully and studies them, they can begin to see what the priorities are of the majority party, the party that has an obligation to present a budget, as the Republicans did for a number of years and now the Democrats do. It reveals something about their priorities, their direction, where they want to go.
I believe this Nation is a nation conceived in liberty. We believe in entrepreneurship. We believe in freedom. We believe in a smaller government and a more vibrant private sector. That is not like many of our European allies. They are high-tax, high-regulation, high-welfare states. We have many of those qualities and characteristics but not nearly so much as they. We made a conscious decision. That is not our heritage. That is not the way we go. I am proud to say our Nation has had a far greater growth rate consistently over the years than the Europeans. Our unemployment rate is well below the Europeans. They continue to struggle. They have government unions striking all the time. They are trying to make the government fix everything for them.
When the government does everything, then everything that is important is decided by a bunch of politicians. We are not capable of running this economy. We are not capable of running an automobile business, running a farm or any other kind of business. That is not what we are capable of doing. We let the private sector do those things and let them compete and let them see who can produce the best widget at the lowest price with the least defects. That is our heritage. I resist the idea that we can continue to increase regulations, increase taxes, increase spending and make the Government bigger and bigger and bigger and the individual smaller and smaller and smaller. Because when we take from one to give to the Government for the benefit of another, we diminish the freedom of the first. We strengthen the Government, and we diminish the moral autonomy of the person who received the benefit. This is a matter of deep importance philosophically for us. We ought to think it through at the beginning.
Where are we today? When President Bush took office--there is no need to rehash everything--the Nasdaq stock bubble had already burst. When he took office, the Nasdaq had lost half its value. When he took office, the last month of the calendar year, this country had negative growth in GDP. The first quarter President Bush inherited a negative growth GDP. He inherited from his predecessor an economy in serious trouble. There is no doubt about that. On top of that, we had 9/11, 9 months later. So the entire Nation was in a state of shock. He had to make some major decisions. Was he going to start a tax-and-spend jobs program to try to jump start the economy?
He made a commitment consistent with our American heritage to reduce taxes and to allow the private sector to recapture itself, restabilize itself and grow. It has worked to an extraordinary degree. It is something of which we should be proud. We have cut taxes and now revenue is beginning to surge.
We had the 2003 tax cuts, the 2001 tax cuts. In 2004, when the economy began to hit its stride, we had an increase in revenue to the Treasury of 5.5 percent. That is a pretty good number. But the next year, 2005, it hit a 14.6-percent increase in revenue. Then the next year it was almost 12 percent, 11.6. This year they are projecting, based on the first few months of the year, a 9.3-percent increase in revenue. What I am talking about is not statistics. It is not some survey. I am talking about actual dollars going into the Federal till.
Is anybody paying taxes if they are not making money? Are they voluntarily sending more money to Washington than they ought to send? No, they are not doing that. The economy is doing well. People are making money. They are working more. They are getting higher wages. They are doing more overtime. Corporations are making profits instead of having losses. They are paying taxes. When someone sells stock or an item, it has appreciated in value, and he pays capital gains on it. Those are the things that are working because we have the economy moving.
I believe President Bush made a historic, tough decision. We passed that first tax cut in this body by a tie vote. We had to bring in the Vice President to break the tie. That side over there that now has the majority opposed it with every strength in their being. The same was true with the next one in 2003.
I will offer a critical amendment on taxes as this debate goes along. I wish to continue the general trend of my remarks and the dangers that I fear are exhibited here. When we pass a budget, we pretend to pass a 5-year budget. We pass one every year. So what does that mean? If you pass a budget every year and every year you pass a new 5-year budget, it means the only budget year that counts is the one you pass that year. Our colleagues think that spending as a percentage of the gross domestic product might go down in future years. I hope it would. It should, based on the strength of our economy. What about the budget that counts? What about the budget that counts, the one that we are enacting as a part of this process for 2008?
I will show my colleagues what this budget does in terms of spending. In terms of spending, it is going up, actual spending over the last decade. This budget for 2008 before us today, and which we are being asked to ratify, has the highest percentage of GDP being captured by the Federal Government, by the Federal tax gendarmes of anything we have had in a decade. This budget, the one we are passing, the one that counts, ups it. There is no doubt about it. We can talk about future years, and we hope they will be better.
How much time remains?
I will close with one more point. A number of years ago, I understood this when the Republicans did what I considered a budget gimmick of several billion dollars. I began to count up how that added up. This year this budget has about $18 billion in spending over the President's budget, 2 billion of which is a gimmick. I believe it is going to amount to advance funding and will be spent. I believe, without dispute, it is $18 billion over the President's budget. Somebody
might say: This is a large economy. What is $18 billion? That is what I used to hear. I made up a chart that I call ``Every Billion Counts.'' A billion here, a billion there, pretty soon it is real money. Look at this chart.
They say: Well, we only jumped the President by $18 billion. This is in the discretionary accounts. This is the discretionary budget. They jump it just $18 billion in 2008. But what happens to that $18 billion? It goes into the baseline of our Government spending.
It goes into the baseline of our Government spending. So next year, if you try to remove that $18 billion, you know what they will say. They will descend on us in the halls, they will descend on us in this body and say: You are slashing the budget. You are cutting the budget. You can never cut the budget. So it goes into the baseline.
Let's say we just continue at that rate. Let's say next year, they just do another $18 billion. It is not $18 billion going to the debt to our children and grandchildren for them to carry throughout their lifetime; it is $36 billion because you have already got an $18 billion increase from the previous year and then have $18 billion on top of that. The next year, it is $36 billion plus $18 billion, which is $54 billion. The next year, it is $54 billion plus $18 billion, which is $72 billion. If you carry it out 10 years, it is $180 billion extra that year. Then, if you add all that up, what do you come up with? An increase in spending, on that pattern alone, of $986 billion. That, I would say to my colleagues, is the kind of indifference to a billion here and a billion there that gets us surging in our spending.
Finally, in our Budget Committee hearing, I asked the committee staff what the Consumer Price Index is, what the inflation rate is. They told us it is a little over 2 percent. Well, what do we know? We know this budget is going to increase spending in the non-defense discretionary account over 6 percent--three times the cost of living.
They say: Well, a big part of this surge in spending is the war. But we have had a war for the last 4 years, and spending has not gone up a whole lot this year as compared to the last couple years in terms of the war. But what we do know is the non-defense discretionary spending in a time of war ought to be at least contained somewhat. Shouldn't we at least try to keep it to the cost of living? Yet we are going to come in with a budget about three times that amount, maybe more than three times the cost of living in terms of a percentage increase in non- defense spending.
So those are some concerns I have. I believe we are on the road to taxing and spending. I think this budget demonstrates where our colleagues are heading in the Senate. I am going to resist it because we are moving to a point where we will not be able to--Mr. President, I ask unanimous consent to speak 1 additional minute.
Mr. President, I will talk more later, but perhaps the most important thing about this budget--with the points of order that are set in it and the fact that it is increasing spending rather than reducing spending--it is going to block the extension of extremely popular tax reductions that have been in place for a number of years. Then the taxes will go up on families. It will go up for children. For children, the tax credit will go down from $1,000 to $500. The capital gains rate--which actually raises revenues when it is cut--will go up. Other taxes will go back up, such as for dividend income.
That is not the right direction for America. This is not our heritage. We need to contain the growth of spending and not go back to higher taxes.
I thank the Chair and yield the floor.
Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.
Mr. President, I wish to take this opportunity to discuss the matter I alluded to earlier that is a very real concern of mine, which is that the budget that is before us sets us on a direction we should not go. It is a major policy document. It states to the whole Nation how our Democratic colleagues, who now have the majority in the body and who passed this budget out of committee by a single vote majority or a party-line vote, as budgets have been over the last several years--that is not particularly unusual because there is a very real difference in how we approach taxing and spending in America between the parties that are represented in this body. It has been great to see Senator Conrad and Senator Gregg work on these issues. They have done a great job of representing their principal points of view and they have shared their own ideas and battled it out with respect and collegiality. They are very capable leaders of our Budget Committee.
Amendment No. 466
I wish to talk about this subject, and I call up an amendment to S. Con. Res. 21 at this time, and I send it to the desk.
Mr. President, I ask unanimous consent that the reading of the amendment be dispensed with.
Mr. President, our colleagues tell us this budget does not
raise taxes, and in a sense that is a legitimate position for them to take, but in reality, I suggest it is not. I would note the budget we have before us now assumes--assumes, see--$916 billion in additional revenue over the next 5 years. Where do you get $916 billion? It is about a half a trillion more than the President assumed. What could generate $916 billion in additional revenue except a tax increase?
The revenue levels in this budget mirror those numbers prepared by the Congressional Budget Office as part of its budget baseline. The Congressional Budget Office's baseline assumes that President Bush's tax cuts will expire as scheduled under current law, resulting in $916 billion in tax increases. Why does CBO assume they will expire and will not be extended as we have for nearly a decade? Well, that is what accountants do. There is nothing in the law that requires them to be extended, so CBO makes an accounting decision that they assume they will not be extended. The lower rates will not be extended. That means the rates will immediately jump up in a series of important taxes that affect the middle class in America.
But Members of the Senate don't have to assume that. In fact, we ought to assume they are extended, because they are working. They are producing more revenue, economic growth, low unemployment. Alabama's unemployment, my home State, hit 3.3 percent last fall. Isn't that fabulous? We had the lowest drop in unemployment rate on a percentage basis of any State in the Nation in the last several years.
Simply put, the Democratic budget is raising taxes by $916 billion by deciding not to extend the existing tax cuts. Tax rates will then go up and they will receive more money. The $916 billion in tax increases would become the largest tax increase ever, dwarfing President Clinton's record $241 billion tax increase in 1993. But our colleagues don't want to admit that today. They didn't want to admit that in committee when we voted on it last week. They want to have it both ways, if you want to know the truth. They want to spend and not take credit for raising taxes. So now the Democrats say their budget includes a reserve fund that would somehow allow for extensions of existing tax credits without increases in taxes. But this reserve fund is a mere vapor. It is without any substance. It has no funding in it that would allow for tax cuts--it does not allow for the extension of these tax cuts that are in place now and have been in place for years. They would not be acceptable under this reserve fund because they would increase the deficit, of course. That is what CBO will say.
It does not contain any money to pay for the extension. In fact, the Joint Committee on Taxation scores all tax legislation statically, which I disagree with, but that is what they do. It nearly always overestimates the amount of lost revenue whenever you cut taxes, rather than scoring the cost to the Treasury dynamically, which would recognize that many tax cuts actually increase growth and taxable activity, and thus increase Federal revenue. Good tax reductions will seldom fully pay for the full cost they incur in the short run, but usually they do help the economy do better than otherwise would be the case, and bring in more revenues. So it is not a full dollar-for-dollar cost like CBO scores. Thus, spending would have to be reduced substantially to allow under some pay-go idea any tax relief, including even extending the existing tax rates.
Let me ask: When did our colleagues ever execute any spending reductions? They have talked about it. They attacked President Bush mercilessly for spending, spending, spending, they said. President Bush was a reckless spender. He caused all this great deficit. He inherited an economy sinking into recession. He inherited a war and a 9/11 attack. He had to work from those facts and work out of those facts. So they have attacked him mercilessly for his tax reduction policies, which I noted a little earlier increased revenues significantly in recent years.
But I will say this: Under the plan of this budget, under the points of order, one cannot continue those tax reductions without reducing spending the amount that CBO says they cost the Treasury. Now, how are we going to do that? In fact, I will ask, when have our Democratic colleagues ever proposed reducing spending? Look at this budget that is presented this year. It contains virtually no spending cuts, $18 billion in discretionary spending increases, and not one dime saved in the entitlement program. No reform whatsoever in the massive entitlements which now make up over 60 percent of spending in this Government.
Our colleagues are not facing up to that. Thus, I would say to my colleagues with confidence that the plan is clear, their tactics are chosen, and they will say they are not for raising taxes today by this budget. They say this budget does not raise taxes. But I say clearly that is only half true; not much true at all. Because this budget assumes--``assumes'' $916 billion in new revenue, new tax revenue. It assumes we are going to receive $916 billion in new revenue, and where can we figure that? Well, those are the numbers that come from CBO's estimate, that is the Congressional Budget Office which estimates these things--that is what CBO estimates will occur if the existing tax rates are not extended, but allowed to jump back up again to a higher rate.
Second, they have created four new budget points of order against extending the current tax rates. This means that extending low tax rates will require not 50 votes but 60 votes, a supermajority to do that. As I noted when we passed these tax cuts in 2001 and 2003, the votes were razor thin. Now that we have a Democratic majority--not only that, now they have changed the vote total necessary to extend these tax cuts to 60. How are we going to get 60 votes? Well, under these tactics and under the budget points of order fine print contained in the budget, these lower tax rates that are in existence today cannot be extended without ``paying for'' them. How do you pay for them? By cutting spending by the amount CBO scores the loss in revenue. This means reducing spending. The thought that our Democratic majority plans to reduce spending, even though they talked about it this fall in the campaign like they had an intention to do so, the thought that they would have plans to actually contain waste and fraud and reduce spending is really to step through the looking glass, I have to tell you.
How can I say that? Oh, you are just being critical, Sessions. You are just being critical. Let's look at the budget to see what it says. The budget completely ignores President Bush's request to terminate or reduce funding for 141 programs that would save $12 billion in 2008 alone. It doesn't touch any of those programs.
Here is the Chief Executive of the Government of the United States. He recognizes that some of the programs simply don't work well. Out of the 1,000 in existence, he recommended a modest 141 be substantially reduced or terminated. It would save $12 billion in 1 year. Over 5 years, that is $60 billion. What do we see in this budget? Nothing. Zero.
What about the entitlement programs? We are now at $1.5 trillion, $1.6 trillion in entitlements, which is about $900-some-odd billion in discretionary spending. The biggest amount of the budget now is in entitlement, or mandatory spending. We all know that. Did our colleagues propose any steps to contain the growth at over 6 percent a year automatically of mandatory entitlement spending? No. Zero. No cuts in that. No reductions.
Well, there was a little reduction, but they used that to go around and spend it on some other entitlement program. So the net was no reduction in the growth of entitlements, not one step toward making the entitlement programs more solid.
What else? We have to keep this between us all. It is a little bit of a secret. But let me tell you what the budget does. It doesn't cut spending. This budget increases spending by $18 billion in the discretionary account above what President Bush asked for, the man who was being accused by Democratic candidates last year of being a reckless spender. It increases spending.
So you tell me, colleagues, what we are dealing with. I would suggest that elections have consequences; that despite protestations of frugality and criticisms of Bush spending, our Democratic friends have produced a budget that will result in a $916 billion tax increase and $986 billion spending increase, just as I pointed out, with the
$18 billion spending increase over President Bush's proposals, as I mentioned earlier. It adds up over a period of time, goes into the baseline, and surges spending. That is why you have to have restraint and show toughness and responsibility. I will just say that the leopard has not changed its spots.
When we look at it, as a budget, what does it do to our sustained effort to keep our economy vibrant, keep our taxes low, and the growth going and reducing unemployment? I submit that what we have done in the budget is that we have loosed forces that inevitably will put us at a point in time down the road, 1, 2, 3 years, when these tax extensions can't even be carried out. When they can't be extended anymore, these lower tax rates are going to have to go up because we are not going to have a cut in spending. My colleagues are not going to cut spending. They are going to increase spending. They are not going to cut spending.
How are we going to pay for these tax cuts? How can we pay to extend the existing rates? They are going to continue spending. What is going to happen is the tax man is going to get deeper and deeper into the pockets of working American citizens. It includes the marriage penalty, it includes the dividend tax, the capital gains tax, and the child tax credit, and others. So that is the big deal we are dealing with.
I started thinking about this, and I decided what this is, in my own little mind. The way I figure it out, here is the Budget Committee, our Democratic Budget Committee. They passed a budget. The budget, in my mind, amounts to a torpedo heading toward our vibrant, free economy. Our Democratic colleagues say: We haven't sunk the ship. We haven't hit the ship. But the torpedo has already been loosed. It is going to hit the ship because that is what the budget does.
Anyway, I just tell you that the mechanism is at work, and I don't know how we can stop it if we pass this budget. I do have a solution to it, however, and I will talk about that in just a minute.
This is not an academic debate. We are talking about real dollars for real Americans if these tax cuts expire, the lower rates that we have today, and they go back up. The lowest income families in America who pay taxes, those earning less than $15,000 per year, whose tax rates are covered by this temporary extension, will see their tax rates increase 33 percent. I think the $1,000 current per-child tax credit is one of the best things this Congress ever did, and I campaigned on it in 1994. The $500-per-child credit worked so good and was so popular that we added another $500 per child as part of the budget reconciliation process. That is coming to an end. It needs to be extended. So it is going to drop from $1,000 to $500.
The standard deduction for married couples will be cut by $1,700 per year. That is $140 a month for a family. 45 million working families with two children, if those tax reductions are not extended, will pay $3,000 more in taxes per year, which is equivalent to a 5-percent pay cut. And 15 million seniors will see their taxes increase. This is reality, and I am not going to go quietly on it. We need to fight this with all the strength that we have.
The four new points of order that are in this budget make it almost impossible to extend the existing tax cuts, and they are the trouble here. We need to confront those. I have offered an amendment that will deal with it, and I called it up on the floor just a minute ago, but let me mention the four points of order that are included in this budget that make it dead certain, if we continue with those points of order, that we are not going to be able to maintain the current tax rates and that we will see a substantial tax increase on all Americans.
The so-called pay-go rule, which states in part that the Senate cannot consider any revenue legislation that would increase the on- budget deficit in the current fiscal or budget year, the five fiscal years following the current fiscal year, or the 5 years after that-- that is the pay-go rule. Basically, it means you either have to raise taxes to pay for tax extensions or you have to cut spending, and we are not likely to do the latter.
No. 2, a point of order against any legislation that increases long- term deficits.
Well, Joint Tax has already scored these tax reductions as costing the Treasury money. Even though money to the Treasury is going up after we reduce taxes, they scored it as costing the Treasury. Therefore, that point of order would be sustained.
What does a point of order mean? It means that you can object to extending one of these tax cuts, and it would not take a 50-vote majority to extend the tax cut, or 51. It would take 60, a supermajority, because we create a point of order that allows for a larger vote to be required.
No. 3, there is the so-called save-Social-Security-first point of order. This point of order prevents any new tax relief or extension of existing tax relief that would worsen the budget deficit until the President has submitted and the Congress has enacted a bill that would ensure the long-term solvency of Social Security.
The President tried to do that a couple of years ago. He received not a single vote of support in this body. They wouldn't even discuss it. They said it was dead on arrival. Senator Gregg asked that we have in this budget some plans to begin to reform our entitlement programs, including Social Security. What did our colleagues do in the budget? Zero. Now they are going to say: You can't extend your tax cuts, you can't extend the current lower rates of taxes until you fix Social Security. Not only that, it says until the President has submitted, and the Congress has enacted, a bill to fix Social Security.
I certainly think we should do that, but I have to tell you, in my view, I think that is unlikely to occur no matter who is President, no matter how this Congress is made up. We need to do it, and I support it, and I am disappointed we haven't taken any steps whatsoever in this budget to get there.
Finally, there is a point of order against any reconciliation action that would increase the deficit. Reconciliation has been the mechanism that Republicans have used to provide tax relief to the American people. That is how we got it through, by a 50-vote majority, as part of the budget reconciliation process. These were narrow votes. We barely got 51 votes. Under this proposal, under this budget, it is going to require 60 votes.
So if this budget goes through, the four points of order will practically guarantee that all of President Bush's tax cuts will expire. Out the window will go the marriage penalty relief, this penalty that we impose on people who marry--how dumb is that, to tax marriage? That is not a smart thing for the Nation to do. We eliminated most of that, but that will go out the window if we can't extend that tax reduction, along with the $1,000-per-child tax credit, the adoption tax credit, and the estate tax repeal, along with the capital gains reduction.
When we cut capital gains taxes, we didn't lose $5 billion in revenue as CBO said; revenues went up $133 billion.
It also will eliminate the dividend tax deduction. So the 10-percent tax bracket will disappear and marginal rates will increase.
So each of these points of order require 60 votes, and it means that we are facing a problem of a serious nature. We will be drifting more toward the social European model of higher taxes, higher spending, and higher regulation. I do not believe that is what the American people want.
I know there is an idea that through better enforcement against tax fraud we can make up some of this money and that we will increase tax revenue by $100 billion. I wish that could be done. I will support reasonable steps and fair steps to enhance enforcement of our tax laws. But I have to tell you, I met last week with a group of county commissioners from my State, and their No. 1 complaint was that there is some sort of Federal law that has been passed to make them withhold taxes when they pay anybody they deal with so we can close some loophole. And they contend, I don't know how correctly, but they contend it costs more to effectuate the Government's plan than it saves the Government in taxes.
The IRS Commissioner, however, testified before Congress that only $35 billion could be expected to be saved through enhanced enforcement over 5 years.
I am a former Federal prosecutor, a U.S. attorney. I prosecuted a number of
tax fraud cases. I try to pay my taxes. I do the best I can, and I tell you, I think most Americans do. When somebody cheats, they need to be chased down and they need to be prosecuted. It is not right for a rich person to cheat on his taxes while the average Joe is working hard and paying his taxes. So I support that. I am just telling you, there is not a pot of gold out there, as much as we would like to believe there is.
Our colleagues, in writing their budget, just assumed we would get it. They made their budget balance by assuming that we would bring in $100 billion out of tax enforcement. It begins to look like smoke and mirrors, really. The Commissioner says $35 billion is the most we can get. Senator Grassley, former chairman of the Finance Committee, says we can't get that much money. It is not as easy as people say.
To prevent the largest tax increase in history from occurring, just from not having our existing tax rates extended, I am offering an amendment today that would not only exclude any extension of the expiring tax relief from those four new budget points of order but any budget point of order that would threaten that. If my amendment is agreed to, it would therefore take 50 votes to extend the President's current tax breaks that we have passed here in the body and not 60. If we do not do that, the tax collector is going to be jumping back into your pocket. He is going to be taking a lot bigger chunk out of what you make every week. We have to look at the realities of it.
I would say once again, the way this budget is constructed, based on the increased spending our Democratic colleagues propose, we have through this budget loosed a torpedo. How long it takes to hit the ship I don't know--1, 2, 3 years--but it is on the way and it is going to get there and it is inevitable. The bullet has already been launched.
I thank my colleagues on the Budget Committee who worked hard-- Senator Conrad and Senator Judd Gregg. They are both extremely capable. These arguments I am making deal a great deal with philosophy and direction, how we see our Government, how big we want it to be, how much we want it to take from the private sector and the wealth that great private sector generates--how much of it we want it to take. I am very troubled that we are headed down the wrong road, that we are going to increase taxes on middle America, on corporate America, and the net result will be this surging economy may be damaged and, in the long run, we may not receive any tax revenue at all.
I yield the floor.
Will the Senator yield briefly for a question?
I don't think I made it clear, and I think maybe the Senator misspoke because I may have earlier. This eliminating the point of order would only be eliminating points of order that are related-- that could be raised against existing tax relief. Not any new tax cuts. These points of order--I did not seek to change it in that regard.