Madam President, I rise today to express my support for the Deficit Reduction Act of 2005. This bill is an attempt to finally make a dent--even a small one--in the mandatory spending that is threatening to engulf the Federal budget. With…
Madam President, I rise today to express my support for the Deficit Reduction Act of 2005.
This bill is an attempt to finally make a dent--even a small one--in the
mandatory spending that is threatening to engulf the Federal budget.
With mandatory spending currently accounting for over 50 percent of all Federal spending and projected to grow higher--it must be on the table whenever we examine the budget and the deficit.
In addition to serving on the Budget Committee, I also serve on three of the committees that passed language that is now part of the bill that we have before us.
I can tell you that in each of those committees, it took a lot of hard work and a lot of compromise to arrive at the language in this bill.
Difficult compromise means that hardly anyone is 100 percent happy with the final product.
For instance, I am disappointed that the Finance Committee did not include restrictions on intergovernmental transfers in its package.
Intergovernmental transfers are financing schemes that some States use to pull down more Federal Medicaid dollars than they are entitled to.
For example, some States overpay local government health care providers, and then require the providers to return the excess funds to the State.
The Finance Committee missed an important opportunity to curtail these abuses, and I hope we can rectify this as the bill moves through Congress.
There are, however, parts of this bill that I think are of staggering importance to this country.
In particular, I worked with Senator Domenici and others in the Energy Committee to see that ANWR language was included in this reconciliation bill.
As prices continue to rise at the gas pump, and a barrel of oil continues to be high, America needs to increase its domestic supply of energy and reduce our reliance on foreign oil.
Several months ago, I traveled to ANWR and saw firsthand how energy companies will develop it into a viable energy source.
After visiting sites in Alaska, there is no doubt in my mind that we can develop ANWR in a safe and effective manner.
Once developed, ANWR will provide the United States with nearly 1 million barrels of oil a day or 4.5 percent of today's consumption for the next 30 years.
This nearly matches the oil that we import from Saudi Arabia each and every day.
I also want to address the fact that much of the debate here on the senate floor yesterday, and last week in the Budget Committee, was not about this bill that we have before us today.
The ranking member of the Budget Committee wants to talk about a bill that we will likely mark up in the Finance Committee next week--the growth package.
The ranking member and his colleagues are constantly talking about how we can't afford the ``tax cuts'' that the growth package is expected contain.
My answer to that is this: The growth package will not be about tax ``cuts''. It will be about stopping tax increases.
Let me say that again: The growth package will not be cutting taxes; it will be stopping tax increases that will affect American families.
Although my friends on the other side of the aisle may not want to admit it, there are large tax increases on the horizon unless this Congress acts.
I am referring to the tax increases our constituents will feel in their pocketbooks and wallets if we fail to extend current tax law.
The so-called ``tax cuts'' the other side keeps refering to are really nothing more than just keeping current tax law in place.
There are over 40 provisions that American families and employers have come to rely on that will expire at the end of this year if we do nothing.
These are provisions in current law that are important to our constituents and to our economy.
Let's take a look at the items that the Finance Committee, which I serve on, will likely examine soon.
First, there is the alternative minimum tax hold-harmless provision. That one alone will cost about $30 billion to extend for just 1 year.
Madam President, 80,000 Kentuckians face a tax increase if that provision is not extended. And, looking at our neighbors, 235,000 Ohioans and 30,000 West Virginians will also face tax increases if it is allowed to expire.
The R&D tax credit will expire at the end of this year unless we act.
This is an important provision of the Tax Code that spurs innovation and new technologies and one that I and many others here support.
In fact, the bill introduced in the Senate in the last Congress to make this provision permanent had 40 cosponsors, including 22 Senate Democrats.
A lot of other important provisions will also expire if we do not act:
The deduction of tuition expenses--affects 36,000 Kentuckians;
The low-income savers credit--affects 94,000 Kentuckians;
The tax deduction for teachers for their classroom expenses--affects 38,000 Kentucky teachers;
And the low-income savers credit which, in 2003, affected 94,000 low- income Kentucky taxpayers.
These are Kentuckians who do not deserve a tax increase. And I am going to do all within my power to make sure that they do not get one.
But again, our friends on the other side of the aisle will say that I am just telling half the story.
What about the dividends and capital gains 15 percent rate extension, they will ask.
After all, they argue, you Republicans want to extend that and that only helps the rich.
Well, first of all, it is really hard to dispute the positive impact that the 15 percent rates have had on the macro-economy.
Dividends paid by companies in the S&P 500 are up 59 percent since the tax cut was implemented, and capital gains tax revenue to the Federal Government is set to exceed the CBO forecast by $16 billion in fiscal year 2006.
But let's talk about which taxpayers are benefiting from these 15 percent rates.
In my State, 18 percent of taxpayers benefited from the reduced rate on dividend income and 13 percent benefited from the lower rate on capital gains income in 2003.
Again, to look at some of our neighboring States, in West Virginia 17 percent of taxpayers reported dividend income and 11 percent reported capital gains income.
In Ohio, 24 percent reported dividend income and 16 percent reported capital gains income.
This is especially interesting when you consider that both Kentucky and West Viriginia have median incomes below the national average.
And yet a large number of our taxpayers report receiving capital gains and dividend income.
And this does not even count the workers and retirees who hold these assets inside their 401(k)s and other tax-deferred saving vehicles.
The fact is, dividends are important to millions of families.
According to 2002 irs data, nearly two-thirds of the taxpayers reporting dividend income had adjusted gross incomes below $75,000.
And the average dividend received by those with A.G.I.'s below $75,000 was over $1,700.
As we all know, these dividends are very important to the elderly.
Many of our retired folks rely on dividends to supplement their fixed incomes from pensions and Social Security.
While it is true that these lower rates don't sunset until the end of 2008, it is important that we send a message to the economy by extending these rates this year.
Investors and financial markets will grow increasingly uncertain about the future tax treatment of dividends and capital gains as 2008 gets closer, if we have not done our job by making these provisions permanent.
We just cannot risk adding unwanted volatility into the markets and the economy--which continues to grow.
So, again, let me be clear--the proposals that we are talking about extending in the growth package that we will likely see soon are not new tax proposals--this is simply current law.
If we do not extend these provisions we will cause a substantial increase in the tax bills of American families and businesses.
In closing, I wanted to say a word to those who are complaining about the ``cuts'' in spending contained in this deficit reduction package on the floor today.
The facts show that spending has grown rapidly in the last few decades.
In just 3 years, from 2001 to 2004, total Government spending increased by 23 percent--an increase of over $400 billion in just 3 years.
Despite what we might hear today, we have greatly increased spending in a number of areas--including education and veteran's health care, in addition to homeland security.
Let's keep that in mind as complaints are being made about the bill before us today.
I urge my colleagues to pass this bill and I look forward to further debate.