Floor Statements

Mr. President, today I recognize Brendan Smith, an intern in my Washington, DC, office, for all of the hard work he has done for me, my staff, and the State of South Dakota over the past several weeks.

Brendan is a graduate of Lyman High School in Presho, SD. Currently, he is attending South Dakota School of Mines and Technology where he is majoring in chemical engineering. He is a hard worker who has been dedicated to getting the most out of his internship experience.

I extend my sincere thanks and appreciation to Brendan for all of the fine work he has done and wish him continued success in the years to come.

Mr. President, today I recognize James Whitcher, an intern in my Washington, DC, office, for all of the hard work he has done for me, my staff, and the State of South Dakota over the past several weeks.

James is a graduate of Hot Springs High School in Hot Springs, SD. Currently, he is attending the University of Mary in Bismarck, ND, where he is majoring in athletic training. He is a hard worker who has been dedicated to getting the most out of his internship experience.

I extend my sincere thanks and appreciation to James for all of the fine work he has done and wish him continued success in the years to come.

Mr. President, today I wish to recognize the 50th anniversary of construction of the Oahe Dam.

In December 1944, President Franklin D. Roosevelt approved the Flood Control Act. This set into motion the construction of several dams across South Dakota. Construction on the Oahe Dam commenced in 1948 and was completed in 1962. In August of 1962, President John F. Kennedy dedicated the dam located in central South Dakota on the Missouri River. The dam was a massive endeavor for the U.S. Army Corps of Engineers, standing 245 feet tall with an earth fill volume of 92 million cubic yards and a concrete fill volume of 1,122,000 yards. The reservoir stretches 231 miles to Bismarck, ND. The Oahe Dam is the 14th largest manmade reservoir in the world.

Oahe Dam is beneficial not only to South Dakota but throughout the Midwest. The powerplant on the dam is the largest producer of energy on the Missouri River. North Dakota, South Dakota, Nebraska, Minnesota, and Montana receive power produced by the Oahe Dam. Local farmers and ranchers benefit from the irrigation that is provided from the reservoir.

I would like to recognize the efforts of all those who have contributed to the construction and maintenance of the Oahe Dam. It has become one of South Dakota's greatest resources.

Mr. President, today I wish to recognize the 75th anniversary of Grossenburg Implement. The company was founded during the Great Depression in 1937 by Charles Jacob Grossenburg in Tripp County, SD. The demand for two-cylinder tractors during World War II led to the company's success and prosperity. Since then, Grossenburg Implement has stayed true to their mission statement ``to provide the best product at a reasonable price and with the highest level of service.'' Along with products from John Deere, Grossenburg sold Oldsmobile and Cadillac automobiles. Throughout the years, the Grossenburg family remained dedicated to quality service and continued success.

Charlie, son of Barry and Marilyn Grossenburg, represents the fourth generation of the family business and is now the vice president. In 1998, Grossenburg Implement continued its success by adding a combine shop in Winner and subsequently an overhead crane to the shop in 2005. In 2009, the company also celebrated the opening of another combine shop in Pierre. Most recently in 2012, the company expanded their business by purchasing Northeast Equipment, Inc. in Nebraska. Today, the company has grown from one store to a projected $150 million company.

I would like to congratulate the Grossenburg family and the employees of Grossenburg Implement for 75 years of success and wish them a prosperous future.

Mr. President, if I might respond to my colleagues from Mississippi and from Indiana, the Senator from Mississippi is absolutely right. The proposal we will vote on as presented by the Democrats today would allow the death tax exemption to go back to $1 million, that is the pre-2001 level, and apply a 55-percent tax rate on top of that.

To give you an example of how that might work in a State such as mine, I represent South Dakota. The average size farm in my State is a little under 1,400 acres.

And if you look at the average value per acre of land and multiply it by the size of the average farm, you are talking about an average farm of between $2 million and $2.5 million in value. You could be talking about--and this is average, and we have a lot of farms that will be impacted more significantly than this. But you will be subjecting about $1.5 million of that farm's value to a 55-percent tax rate; and 84 percent of the value of farm assets, according to USDA, is in real estate. They are land rich but cash poor.

What happens? When the IRS comes calling after somebody passes away and says: Your farm is worth this amount, we are going to assess a 55- percent tax, they will say: We cannot pay that. We have it in land but not cash. So they have to sell land, assets, and equipment to pay the IRS. Here we are trying to promote the intergenerational transfer of farms and ranches as part of the tradition and backbone of our economy, and this is the absolute opposite of what we ought to be encouraging. We want policies that encourage the situation that family farms and ranches stay in the family.

Having a confiscatory tax like this that would apply a 55-percent tax to assets above $1 million will have a crushing impact on farms and ranches in my State and, I submit, to other States.

If I might say to my colleague from Mississippi and to the Senator from Indiana, to put this into perspective, the proposal in the Democratic bill, which would take the exemption back down to $1 million and raise the top rate to 55 percent, would apply to 24 times the numbers of farms and ranches as does current law. In other words, it increases by 24 times the number of family farms and ranches that would be impacted by the estate tax relative to where we are under current law.

As the Senator from Mississippi pointed out, lots of mom-and-pop businesses--13 times the number of small businesses--would now be subject to the death tax as is the case with current law. So if we look at the impact of this, certainly on farm and ranch country--and I see that Senator Moran is here, who represents a lot of farmers and ranchers very much like those in my State of South Dakota--this is profoundly impactful. It would have a very negative impact on farm and ranch country--and I also argue, as the Senator from Mississippi pointed out--and on a lot of mom-and-pop small businesses.

Mr. President, I think we have about one-half hour left; is that correct?

Mr. President, I ask unanimous consent that I be able to enter into a colloquy with my colleagues for the remainder of that time.

Mr. President, I first want to thank the Senator from Indiana for his very astute observations about the impact of these taxes on hard-working men and women in this country. I would say to my colleague from North Dakota, who is now here, and the Senator from Kansas--both of whom represent very rural States--this is not an issue that is inconsequential. A lot of people think people who have $1 million in assets are rich. But as I said earlier, in most farm and ranch operations, 80 percent of the value of that is in real estate. So they may be land rich but cash poor.

When we talk about imposing a tax of this size on hard-working farmers and ranchers in this country, we are getting at the very heart, as the Senator from Kansas pointed out, of their ability to transfer that farm or ranch operation to the next generation. That is what is at stake.

The Senator from North Dakota is here, and the farmland in North Dakota is similar to what we have in South Dakota, except they have energy. They found oil in a few places in North Dakota, which drives those land values up even higher. We would like to see some of that in South Dakota, but in either of the Dakotas or in Kansas we have seen land values going up in the past few years and it takes a bigger operation to make it work to survive in modern agriculture. So the size of these operations, in many cases, exceeds by multiples the million- dollar exemption that would be allowed by the Democratic proposal, and everything above that, as was said, would be taxed at 55 percent, which would be absolutely disastrous for American agriculture today, and that is on top of the other taxes.

This proposal also raises taxes on about 1 million small businesses that employ about 25 percent of the American workforce. It raises taxes on capital gains and dividends and then it puts this death tax back into place with the million-dollar exemption. As I said earlier, if we look at the number of people who would be subject to and covered by the death tax today, this proposal would increase those people subject to whom the death tax would apply by 24 times--a 2,400-percent increase in the number of people who would be subject to the death tax, according to the Joint Committee on Taxation. That is the group that studies these issues and that looks at the impact of tax policy. According to the Joint Committee on Taxation, 24 times more farmers and ranchers would be subject to the death tax than are subject to it today and 13 times more small businesses. That is the scale of the proposal the Democrats have put forward.

I would say to my colleague from North Dakota, my neighbor, that I assume, as he talks to farmers and ranchers in his State, he gets the same sort of feedback I do in visiting with people in South Dakota; that is, they are very concerned about what would be a huge tax increase, so to speak, when someone passes on and tries to pass that operation on to the next generation.

I appreciate the remarks of my colleague from North Dakota who understands this issue very well, representing a State that is composed largely of family farms and ranches and small businesses. It is similar to my State of South Dakota, similar to Senator Moran's State of Kansas. We share not only a lot of commonalities in terms of how we make our living but also in the kind of hard-working people who are the backbone, as my colleague said, of our country.

There is a work ethic among people involved in working the land, people who are involved in agriculture, that we hope gets rewarded. One of the ways that gets rewarded is when someone works very hard all their life--and that is very true in agriculture. There are very few jobs in agriculture that are easy. It is a hard way to make a living. The men and women who are involved in production agriculture have, in my view, among the best work ethic in the country, and we want to see that hard work rewarded. One of the ways we hope that gets rewarded is when it comes time to pass that operation on, to allow that operation to be handed off to the next generation so they, too, can benefit from that hard work and build that enterprise and grow the family farm in a way that is good for our economy generally and certainly good for the economy in places such as North Dakota, South Dakota, and Kansas.

That is why a proposal such as this is so devastating, because you are subjecting 24 times more farms and ranches in this country to the death tax than are currently exposed to it under current law.

This is a dramatic increase in the number of folks who would be impacted by the death tax--obviously a significant increase in the amount people are going to be forced to pay when the time comes. I think at a time when we are facing unemployment now for 41 consecutive months over 8 percent, some 23 million Americans either unemployed or underemployed, and some Americans have been unemployed for a longer period of time, one thing we don't need in the middle of this kind of economy is a big fat tax increase.

That is what the Democratic proposal does--not just on the estate tax but also the marginal income tax rates going up on small businesses on January 1. There will be almost 1 million businesses impacted by higher rates, which employ 25 percent of the workforce in this country, as well as increasing taxes on investment, on capital gains, and dividends.

A big fat tax increase in the middle of a very fragile economy is the wrong prescription. I would hope, as the Senator from North Dakota suggested, that our colleagues on both sides will support the alternative we will put forward which will extend the rates for all Americans, so not any American is faced with higher taxes come January 1 of this year. I think it would be devastating for our economy to do that. Certainly it would be devastating to the family farms and ranches in places such as the Midwest.

I know my colleague from Kansas understands very well, because he represents the same kind of people we do in the Dakotas. They are hard working. All they want to know is that they have an opportunity to be able to benefit from that hard work and hopefully pass it on to the next generation when the time comes.

I thank the Senator from Kansas. I too look forward to working with him on fundamental tax reform, because that is what we need to do to get the economy turning around. I think you will see tremendous economic growth. I think you would see our economy unleashed if we would reform our Tax Code in a way that broadens the tax base and lowers the rates. The Senator from Kansas talked about the fair tax-- certainly another proposal out there that many people support. But in any event, we do need a fundamental tax reform. And it would be nice if, when we do that, we do away with the death tax completely.

With that being said, what is being proposed here today, as we have all pointed out, is something that in many cases in places such as Kansas and South Dakota--and our colleague, the Senator from Wyoming, Senator Barrasso, is now here, who represents a rural State, a State where you have a lot of folks with big expanses of land. There are many people in agriculture who are land rich and cash poor.

The Senator from Kansas pointed out that when you have an operation that exceeds that $1 million threshold that is being proposed in the Democratic tax plan and then everything above that in terms of the value of your assets is taxed at that top marginal rate of 55 percent, then you are in many cases having to sell pieces of your operation in order to pay the IRS--or, worse yet, going to the bank to borrow money, in which case you may not be able to repay it.

But this creates all kinds of problems for people who are involved in the day-to-day production of agriculture when it comes to keeping that operation in the family.

I appreciate the observations of the Senator from Kansas and his insights based upon his experience and the people he represents. I too look forward to the day when we are debating fundamental tax reform. But until that comes, we shouldn't be raising taxes. We shouldn't be raising taxes in this type of an economy where we have as many people unemployed as we do, we have sluggish economic growth. And we certainly shouldn't be punishing family farmers and ranchers and small business people with what is a punitive death tax proposal coming out of the Democrats in the plan we are about to vote on at 4:00.

I yield to my colleague from Wyoming who is here, again, representing a State much like mine and much like the Senator from Kansas, who has a lot of people who would be impacted by this Draconian tax.

Mr. President, today I wish to recognize Derek Miles of Tea, SD, who will compete in the 2012 Summer Olympic Games taking place in London, England. This will be his third consecutive trip to the Summer Olympic Games. Derek has a long history of success as a pole vaulter, including three U.S. National Championships, 10 years ranked in the top 10 in the U.S.--4 of which he has been ranked No. 1, and 6 years ranked in the top five in the world.

Derek is currently working as an assistant pole vault and jumps coach at the University of South Dakota where he graduated from in 1996 as a four-time NCAA Division II All-American with a bachelor's degree in history. Derek also earned his master's in athletic administration at the University of South Dakota in 1998 and was inducted into the Henry Heider Coyote Sports Hall of Fame in 2006. In addition to his personal accomplishments, Derek has coached multiple conference champions and organized the Miles Pole Vault Summit bringing the world's best pole vaulters to Vermillion, SD, in 2007.

Derek should be very proud of all his accomplishments. On behalf of the State of South Dakota, I am pleased to say congratulations on another Olympic qualification. We are very proud and wish you the best of luck.

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

Mr. President, I rise today to talk about the need to extend the current tax rates and to reject the tens of billions of dollars in higher taxes the President and Senate Democrats want to impose next year. I believe the upcoming vote or votes will be some of the most important votes the Senate holds this year.

As early as tomorrow, we will hopefully vote on tax plans that represent two competing philosophies. One plan, introduced by Majority Leader Reid and supported by Senate Democrats and the President, proposes higher taxes on American entrepreneurs, investors, and small business owners.

The Democratic plan represents the philosophy that if only the government could raise enough money, Congress could somehow spend our way to prosperity. It is a viewpoint that holds that the Federal Government can spend hard-working American tax dollars better than they can. Rather than leaving the money in the private economy where it can be invested or spent by private citizens, this view holds that the government should instead bring these dollars here to Washington, DC, to redistribute them through the Federal bureaucracy. This philosophy was probably best articulated by the President recently when he said, ``If you've got a business--you didn't build that. Someone else made that happen.'' In other words, no one is extraordinary by virtue of their hard work and accomplishments. When someone works hard and succeeds, we should not celebrate that person as an example to others, we should instead take from him or her in order--again, as the President said--to ``spread the wealth,'' to quote another of his lines.

I am hopeful that the tax-and-spend philosophy of the Reid tax plan, however, will not be our only option. I hope we will also have the opportunity to vote on legislation introduced recently by Senator Hatch and Minority Leader McConnell. This plan takes a very different approach by following the view that now is not the time to raise anyone's taxes. This view holds that our American free enterprise system works best when government gets out of the way, leaving Americans free to pursue their hopes and dreams. One way we can leave Americans free to pursue their dreams is by not raising their taxes next year. And we especially should not raise taxes when Americans are struggling to get by.

Ironically, the view that we should extend current tax policy at a time when the economy is weak was articulated, interestingly enough, by the President just 2 years ago when he signed an extension of all of the tax rates. At that time, President Obama said that raising taxes would have ``been a blow to our economy just as we're climbing out of a recession.'' Interestingly enough, real GDP growth when he made that statement was around 3.1 percent. That was the average when the President made the statement that if we raised taxes, it would have ``been a blow to our economy.'' Well, real GDP growth this year is on a pace to average 2 percent and possibly less. Those numbers are consistently being revised and being revised downward. If it did not make sense to raise taxes when our economy was recovering, why does it make sense now to raise taxes as our economy is slowing? How does it make sense to raise taxes in an environment where over 23 million Americans are out of work or underemployed, when the unemployment rate has been stuck at over 8 percent now for 41 consecutive months?

The votes tomorrow are incredibly important--not because either plan is likely to become law immediately but because Americans deserve to know where their Senators stand when they go to vote this November. Do you stand for stable tax rates that encourage work and investment or do you stand for increasing taxes on the very businesses we rely on for job creation? Do you stand for a free enterprise system that rewards hard work and innovation or do you stand for making it more difficult for small businesses to grow and succeed? These are the important choices that will have a real impact on hard-working Americans and on our economy at large.

Consider the Reid tax plan. According to the Joint Committee on Taxation, this plan will impose a tax increase on nearly 1 million business owners. Proponents of this increase are going to argue that it will only affect a small segment of our economy. Yet the Joint Tax Committee estimates that the President's tax increase in the Reid plan will hit more than 50 percent of all income earned by businesses that pay their taxes at individual rates. These are so-called passthrough businesses, and they apply to S corporations, partnerships, sole proprietorships, and LLCs. They are the ones who are going to see their cost of business go up next year for no other reason than the desire by the Senate Democrats to ``tax the rich.''

Small businesses, which accounted for two-thirds of the net new jobs over the last decade, will be particularly impacted by these tax increases. According to a survey of small businesses by the National Federation of Independent Business, 75 percent of small businesses are organized as passthrough businesses. NFIB also found that the businesses most likely to be hit by the Reid tax increases are those businesses employing between 20 and 250 employees. According to the U.S. census, the data that they collect, these businesses employ more than 25 percent of the workforce. So the million small businesses that, according to the Joint Committee on Taxation, will see their taxes go up under this proposal employ 25 percent of the American workforce and account for over 50 percent of all passthrough income. So you are going to see taxes go up dramatically on over 50 percent of passthrough income and on small businesses that employ 25 percent of the American workforce.

Does that make sense in this economy? It should be no wonder that the political party advocating this kind of tax policy has also presided over the weakest economic recovery literally since the end of World War

I thank the Senator from New Hampshire for yielding on that point--more important, for the great work she is doing as a member of the Armed Services Committee. She has been a very active member of that committee and a strong and clear voice for New Hampshire and for America's national security interests.

I might also add that we serve together on the Budget Committee, where really this should have originated. Unfortunately, since we did not pass a budget, it is very hard to have a plan for how to proceed with spending the taxpayers' money, and this is what you end up with.

Because we have this process put in place where, if action is not taken to avoid it, we have an across-the-board sequester that would occur at the first of next year--half of which would come out of the defense budget--we need to be able to find out exactly how these cuts would be implemented.

The thing we do not know is how the administration plans to implement this. I think that is what the transparency act that passed in the House of Representatives is designed to get at. By the way, it was an overwhelming vote, 414 to 2. The House of Representatives, in an overwhelmingly bipartisan way, weighed in on the issue about whether the administration ought to spell out in clear detail to the Congress and the American people how it intends to implement its sequestration plan.

I might say, it is going to be very difficult for us as Members of the Congress to come up with an alternative replacement plan if we do not know what their plan is for implementation. We know half the reductions are going to come out of defense--at least that is the plan--the other half out of nondiscretionary spending. It is clear this would have a profound impact on the defense budget on top of the $\1/2\ trillion in cuts as part of the Budget Control Act last summer.

I say to my colleague from New Hampshire, she has very clearly and well laid out the impacts--as have been delineated and described by many of our service chiefs, by many of our military leaders in this country--what those impacts would be on our national security, on our readiness. Also, I think she has elaborated extremely well about the economic impact, what it is going to mean in terms of jobs in our economy.

For a moment, I want to come back to this fundamental point because I believe it is one that should not be missed by people who are following this debate; that is, if the Budget Committee and the Senate had done their work in the first place and passed a budget, we would not be where we are today--if we had actually passed a budget.

The Senator from New Hampshire--I think this is her second year on the Budget Committee. Even before she got here, we had not passed a budget. I got on the Budget Committee in this last session of Congress, so it has been 2 years since I have been on the committee, but it is a committee without a purpose, without a mission. If you are not going to pass a budget, I am not sure why you want to have a budget committee.

The other thing that is interesting about this is that we are not going to pass any appropriations bills. Not only not a budget, but in the Appropriations Committee here in the Senate are usually 12 bills that come across the floor. The majority leader said he is not going to bring appropriations bills to the floor.

I think the House of Representatives passed nine appropriations bills. They passed a budget. The Appropriations Committee here in the Senate has been moving and passing appropriations bills out of committee, but the leader of the Senate has said we are not going to move appropriations bills this year.

We did not move a budget. We are not moving appropriation bills. So what you end up with is a budget control act like what we passed last summer that takes these Draconian whacks out of the defense budget and puts America's national security interests at risk and in great peril.

I ask my colleague from New Hampshire, who, as I said, is a member, along with me, of the Senate Budget Committee, might this situation have been avoided had the Senate done its work as it is supposed to do in an orderly way, followed the law, actually passed a budget, actually worked on getting appropriations bills on the floor of the Senate? Might we have avoided what is before us; that is, these devastating, disastrous, and what some have described as catastrophic cuts in our defense budget? It seems to me at least that is where you end up when you do not do your work in the first place.

To my colleague from New Hampshire, I simply ask her, as a member of the Budget Committee, might we not be in a different situation if we had passed a budget now for 3 years?

I think the Budget Control Act, which passed last summer, created this process, and led us to sequestration, which is where we are today. This is a function and a clear outcome of having not passed a budget. It is ironic in many respects because, as the Senator from New Hampshire has pointed out, the first fundamental responsibility we have as Members of Congress is to tell the American people--the taxpayers who pay the bills for this government--how we are going to spend their money. This is now the third year in a row that the Senate has failed to do that.

Again, I might simply add that the House of Representatives did do a budget, has been passing appropriation bills, has been following the law in accordance with what has been the practice around here up until the last 3 years of actually working on a budget. When we are borrowing 40 cents out of every dollar we spend, it would strike me that it would be important we go through an exercise and figure out how we are going to start whittling away at the deficit and get the debt at a more manageable level and how we are going to spend the American taxpayers' dollars.

As the Senator from New Hampshire pointed out--again, I don't think we can emphasize this enough. Last summer we already called for $1/2 trillion in defense cuts, and that was half of the amount of reductions that were made last summer. It was about $1 trillion, a little over that, overall in spending cuts last summer. Those were immediate spending cuts, half of which came out of defense; $487 billion was already taken out of the defense budget.

So what we are talking about now is another $1/2 trillion over the next 10 years on top of that $1/2 trillion. In other words, $1/2 trillion out of the national security budget. The President's own Secretary of Defense has said it would lead to the smallest ground force since 1940, since before World War II, and the smallest fleet of ships since 1915, almost a century, and the smallest tactical Air Force we have had literally in the history of the Air Force. That is what we are talking about. That is the dimension of the problem we are referring to. It completely impairs our ability to project power in many of these critical areas of the world.

The world is a dangerous place, and it is not getting any less dangerous. It is getting literally more dangerous, according to the headlines, every single day. Our ability to project power in the Middle East, Asia, and all the areas of the world we need to keep an eye on will be in serious jeopardy.

I want to make a serious observation about that, and it is important to me. My State of South Dakota is home to a bomber base. One of the key ways our Nation projects power is through the use of the bomber fleet. Our bomber fleet is aging. Nearly half of the fleet was built before the Cuban missile crisis of 1962, if you can imagine that. So it is highly important we modernize our bomber fleet and Secretary Panetta has stated that the development of the next-generation bomber would be delayed by sequestration until well toward the middle of this century. So we are talking about dramatic reductions in our ground forces, Navy, and Air Force. All the assets we use to protect this country and defend America's interests around the world would be at great risk if this sequestration goes into effect.

As the Senator from New Hampshire has appropriately pointed out, the No. 1 priority we have is to defend this country. If we don't get national security right, the rest of this conversation, including all the other things we talked about, is secondary to defending and protecting America and the American people.

This is a very serious debate, and I would come back to the question the Senator from New Hampshire posed in the first place, and that is yesterday the House of Representatives passed by a 414-to-2 vote a piece of legislation that would require the administration to tell us how they intend to implement these cuts by program, project, and activity level. That way we know with some detailed specificity how these proposed cuts are going to take effect, and that would allow us to come up with an alternative plan and perhaps be able to replace and substitute other cuts elsewhere in the budget for what are going to be disastrous cuts in the defense budget.

I introduced companion legislation here in the Senate very similar to what the House passed yesterday. I hope the Senate will pick up the House bill and move it and pass it so we can get the administration and the President to engage in this discussion about what they intend to do in terms of implementing sequestration. Then perhaps they can work with us to avoid the catastrophe we are referring to and talking about. This has been documented and validated by all of our military leadership and would be a very serious and dangerous reduction in America's national security resources and in our ability to keep our country ready and able to defend America and America's interests around the world.

I appreciate so much the leadership of the Senator from New Hampshire on this issue. I know the Senator has been very active in trying to get the administration to provide more information with regard to what the impact should be on the defense budget as a member of the Armed Services Committee.

I also think they ought to furnish all the information on these cuts not only on the defense part but the nonnational security part of the budget. Defense represents 20 percent of all Federal spending, but we are going to get half of the cuts. The proportionality of this is a real issue, in my view. That happened last summer. Half of the cuts made last summer came out of defense even though it is only 20 percent of Federal spending. Half of the cuts in this sequestration would come out of the defense budget, even though it represents 20 percent of all Federal spending.

I would hope, as my colleagues here in the Senate continue to hear from people around the country who are impacted by this--not only our military leadership but also those whose jobs are going to be impacted by this--that there will be a new sense of urgency, a new intensity to try to resolve this issue, and that is to get the administration to show how they intend to implement sequestration.

I look forward to working with my colleague from New Hampshire to make that happen. I hope our colleagues on the other side, the Democratic leadership, will agree to moving that legislation.

Mr. President, today I recognize Tyler Dutton, a legal intern in my Washington, DC, office, for all the hard work he has done for me, my staff, and the State of South Dakota over the past several weeks.

Tyler is a graduate of South Dakota State University in Brookings, SD. Currently, he is attending Emory University Law School in Atlanta, GA. He is a hard worker who has been dedicated to getting the most out of his internship experience.

I would like to extend my sincere thanks and appreciation to Tyler for all the fine work he has done and wish him continued success in the years to come.

Mr. President, I would say to my colleagues who are here on the floor that this is a defining moment for our country. The most basic responsibility and the most important priority we have as Americans is to defend the country. If we don't get national security right, the rest is conversation. We can talk about all these other things in the budget--we can talk about all the other priorities the country has, all of which are important--but if we fail to defend the United States of America, we have failed the citizens of this country. It is the No. 1 priority we have. It is the most important responsibility and obligation we have as public servants here in the Senate--to make sure we are taking the steps necessary to keep this country strong and secure from threats both here at home and abroad.

What happened--and how we got to where we are today--goes back to the fact that we haven't passed a budget for 3 years in the Senate. I need to remind my colleagues why we are where we are today. The reason we are here is because for 3 consecutive years now the Democratic majority in the Senate has not done the most fundamental responsibility we have, which is to pass a budget that addresses our national security interests. What did we end up with? We ended up last summer with the Budget Control Act--something cobbled together at the eleventh hour to avoid a deadline on raising the debt limit--and we put in place a process where a supercommittee would look at ways to define long-term savings so we could avoid the sequester. But the sequester was put in place as a result of the Budget Control Act, which was put in place because the Senate hasn't passed a budget now for 3 straight years. That is why we are where we are.

Having said that, we need to fix the problem. And the problem is we have defense cuts that are going to cut very deeply into our national security interests, and we even have the Secretary of Defense coming out and saying these cuts would be devastating. The President's own Secretary of Defense has made a statement to that effect. With sequestration, we would have the smallest ground force since 1940, the smallest number of ships since 1915, and the smallest tactical Air Force literally in the history of the Air Force. That is the dimension of the problem we are talking about, as has been described by the experts who are supposed to know these things. As I said, the President's own Defense Secretary has made these sorts of statements.

One of the problems we have, of course, is we don't even know what the full impact of the sequester will be because the administration hasn't put a plan forward. So we are awaiting that plan. Today the House of Representatives voted 414 to 2 to require the administration to at least submit to Congress and to the American people how they intend to implement sequestration so we can at least have a better idea about what these impacts will be, where are they going to make the cuts, by account, so we can examine that and come up with a plan, hopefully, to replace those deep unbalanced cuts in the defense budget with reductions elsewhere in the budget. But we don't know that because we can't get the administration to put forward the plan we need to move forward with our proposals here in order to do away with what we think will be a very dangerous cut to America's national security.

I hope the Senate will do something to address that. We can start by taking up the bill passed in the House, pass it here in the Senate, and require the administration to put forward a plan about how they are going to implement the sequester.

As has already been pointed out by the Senator from Alabama and others, we are talking about basically a 50-percent cut in the defense budget--or 50 percent of the cuts coming out of the defense budget on top of $487 billion in cuts that were already approved last year. So we are talking about another huge amount of reduction, up to about another $\1/2\ trillion on top of what already is $\1/2\ trillion in cuts that came last year.

Remember, the defense budget, as has been pointed out, only represents 20 percent of all Federal spending, so we are going to take half the cuts out of 20 percent of the budget. Where is the proportionality in that? And as the Senator from Alabama has highlighted, what we have done essentially is we have shielded many areas of the budget. So a lot of the things some of our colleagues on the other side of the aisle don't want to see cut are protected from this. Yet we are going to make huge, steep, Draconian, and dangerous cuts in America's national military and national security budget.

I would hope we can at least act on what the House of Representatives did earlier today by a 414-to-2 vote, pick up that legislation, and require the administration to tell us how they are going to implement these reductions. Then let's go to work on a bipartisan basis and try to come up with a plan whereby we can avoid what will be a disaster, as has been described by every national security expert out there, for our national security interests.

We live in a dangerous world. We can't avoid that. The United States of America is looked to for leadership around the world. We have to continue to ensure we can protect this country and America's interests around the world. In order to do that, we have to make sure our military is resourced in a way that enables them to protect our interests. We cannot continue to go forward with this sequester, which would dramatically and in a very dangerous way harm those national security interests.

That is correct.

That is correct.

The Senator from Alabama is correct. That is one of the remarkable things about this. The Commander in Chief, of course, is tasked with the responsibility of being just that, the Commander in Chief. Yet when it comes to the national security interests that we have and to at least spelling out how he would implement

what we believe are going to be some disastrous cuts to the defense budget, he is not even informing us about what his ideas are with respect to that so we can react to that. More importantly, he doesn't seem to be the least bit interested in addressing this.

There is a huge silence coming out of the White House--the Senator from Alabama is absolutely correct--and it has to change if we are going to be able to fix this. It starts by at least him presenting a plan, and the Senator from Alabama and I have introduced legislation in the Senate that would require that, much like what passed in the House today, and that is where it all starts.

I don't think the Senator from Alabama is wrong at all. In fact, that is what much of the news stories that have been printed in the last few days and reporting on the subject have said. Some of our colleagues on the other side have essentially concluded this is leverage--leverage for them to get higher taxes.

It strikes me, at least, that there is a tremendous risk associated with allowing the country to go over a fiscal cliff--which includes not only these Draconian cuts to the defense budget but also tax increases that would occur on January 1, to go over the fiscal cliff, risk plunging the country into a recession, raise the unemployment rate which is already at historically high levels, all to prove a point about raising taxes. But that appears to be--at least by the reporting. There was a story in the Washington Post over the weekend that said: Democrats threaten going over the fiscal cliff basically to get higher taxes out of Republicans.

That, to me, seems like a terrible trade to make, to risk the country going into a recession, to risk these tremendous cuts in our national security priorities, just simply so they can get higher taxes.

Mr. President, today I wish to recognize Garden City, SD. The town of Garden City will commemorate the 125th anniversary of its founding this year.

Located in Clark County, Garden City was first settled in 1882. However, it was not until 1887 that the Chicago, Milwaukee & St. Paul Railroad line was built and sparked the official establishment of the town. By the end of 1887, Garden City had a post office, a railroad depot, and a grocery and hardware business. In the years that followed, Garden City became an agricultural center for the area, especially for potatoes. The first potato crop in the Garden City area was planted in the early 1900s. By the 1940s, half a million bushels of potatoes were being harvested from the area each year.

South Dakotans living in the Garden City area have a proud tradition of hard work and remain committed to their strong heritage and traditions. Though many things have changed in the last 125 years, the quality of character of Garden City residents has remained something of which the town should be very proud.

Garden City has been a tight-knit community for the past 125 years, and I am confident that it will continue to serve as an example of South Dakota values and hospitality. I would like to offer my congratulations to the citizens of Garden City on this landmark occasion and wish them prosperity in the years to come.

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

Mr. President, one of the foremost threats to our economy is the fiscal cliff. This is an issue my Republican colleagues and I have been talking about for several months now, calling for more transparency in the sequestration that will occur at the end of the year, a replacement of the defense sequester, and actions to prevent a massive tax increase on the American people.

Senate Democrats--who have only recently acknowledged the looming fiscal cliff--are now threatening to go over the cliff unless Republicans agree to increasing taxes on America's small businesses during this difficult economic period.

Think about that. Senate Democrats are willing to put our economy at serious risk and our national security in jeopardy unless Republicans agree to a massive tax increase on America's small businesses.

The headline from a news story in the Washington Post from over the weekend says, ``Democrats Threaten To Go Over Fiscal Cliff If GOP Fails To Raise Taxes.'' They quote, ``Senior Democrats say they are prepared to weather a fiscal event that could plunge the nation back into recession,'' if the New Year arrives without an acceptable compromise-- which they have defined to be a major tax increase on small businesses in this country.

Think about the impact of that and what that means to people across this country. We have had now, for the last 3 years, a complete failure in the Senate to produce a budget. We are now faced with this fiscal cliff which consists of the sequestration, the across-the-board cuts that would occur early next year if nothing is done to prevent them, the tax hikes, and we are going to reach the debt limit, all threatening our economy in an already anemic recovery.

It is hard to overstate the magnitude of the tax increases that are going to hit our economy starting next year if we don't act. Over the next 10 years, this tax increase would result in nearly $4.5 trillion in new taxes on American families and entrepreneurs. What does that mean to the average family in this country? The Heritage Foundation recently published a study that estimated the tax increase per tax return in every State. For example, for my State of South Dakota the Heritage Foundation estimates that the average tax increase per tax return would be $3,187 in the year 2013.

I would say to my colleagues on the other side of the aisle, many of whom I think generally believe in Keynesian economics, that the average family in South Dakota could do more to stimulate our economy and create new employment by keeping their $3,187 and spending it as they see fit, not as Washington sees fit to spend it on their behalf.

Taxmageddon is a very apt description that has been applied to this fiscal cliff when you consider the impact of these tax increases not just on individual families but on our entire economy. Until recently we could just speculate about the impact of these tax increases on our fragile economy, but the magnitude of the damage was in dispute. Not anymore. Last month, the Congressional Budget Office gave us the most definitive estimate yet of the impact of the nearly $\1/2\ trillion of tax increases that would hit in 2013 when combined with the more than $100 billion of spending cuts that would occur under the sequester I mentioned earlier.

The Congressional Budget Office projects the combination of the massive tax increases and the sequester will result in real GDP growth in calendar year 2013 of only one-half of 1 percent. Think about that, one-half of 1 percent. We are right now growing somewhere--they think-- in the range of 1.9 percent or 2 percent this year. But next year, the real GDP growth would amount to only \1/2\ percent. And the picture is even bleaker if you consider that CBO projects that the economy will actually have a decrease in GDP of 1.3 percent in the first half of 2013.

So you have the Congressional Budget Office saying that over the entire year of 2013, the likelihood is we will grow at one-half a percentage point if we don't address the fiscal cliff. But in the first half of next year, we actually see a decrease of 1.3 percent of economic growth. According to CBO, a reduction of 1.3 percent of economic growth in the first half of next year would ``probably be judged to be a recession.'' That is according to the Congressional Budget Office, which is the nonpartisan authoritative referee we use to evaluate the impact of the spending and debt tax issues.

This morning, the Chairman of the Federal Reserve Board of Governors, Ben Bernanke, testified before the Senate Banking Committee, and he said:

Fiscal decisions should take into account the fragility of

the recovery. That recovery could be endangered by the

confluence of tax increases and spending reductions that will

take effect early next year if no legislative action is

taken. The Congressional Budget Office has estimated that if

the full range of tax increases and spending cuts were

allowed to take effect--a scenario widely referred to as the

fiscal cliff--a shallow recession would occur early next

year. . . .

That is according to the Chairman of the Federal Reserve Board of Governors Ben Bernanke in his testimony as recently as this morning. He talked about a shallow recession occurring next year and the endangerment of the recovery that is under way if we have this confluence of events happen at the end of the year.

He went on to say:

These estimates do not incorporate the additional negative

effects likely to result from public uncertainty about how

these matters will be resolved.

In other words, the economic uncertainty that is associated with all these things happening at the end of the year are impacting the economy today as people are looking at how they are going to make investment decisions, and that our economy is likely to experience negative effects from that public uncertainty above and beyond the direct impacts that CBO has incorporated into its analysis.

So let's be very clear about what the fiscal cliff means. We are not talking about a slight slowdown of a few tenths of a percent. What we are facing is the difference between positive growth on the one hand-- which will mean more jobs and higher incomes--and a potential recession on the other hand. We can, and must, provide Americans some certainty as to what their taxes are going to be next year.

The House of Representatives has already agreed to hold a vote to extend all of the existing tax rates before the August recess in order to avert the fiscal cliff. They are going to act on this sometime before we go out in August to extend all of the rates before the end of the year so there is certainty for those who are making economic decisions.

Unfortunately, thus far the Senate and the Senate Democratic leadership has only agreed to hold a vote on a plan to raise taxes on nearly 1 million small businesses. This tax increase on individuals earning more than $200,000 a year and families making more than $250,000 a year will raise taxes on more than half of all income in America earned by S corporations, sole proprietorships, LLCs, partnerships, and other passthrough businesses that pay their taxes at the individual rates.

A point of clarification: That applies to a lot of mom-and-pop businesses in this country. We are talking about that restaurant owner, that electrician, many of whom are organized in the fashion in which their income flows through their individual tax return and they pay at the individual tax rate. The Joint Committee on Taxation has estimated that the number of businesses that would be impacted by that is 940,000. So almost 1 million small businesses would see their taxes go up as a result of the fiscal cliff and tax rates expiring at the end of the year for those individuals who are making more

than $200,000 and families making more than $250,000 a year.

According to the National Federation of Independent Business, the small businesses most likely to be hit by the Democratic tax increase employ 25 percent of the total workforce. So we are talking not just about the small businesses that are going to be faced with higher taxes, but we are also talking about a huge portion of the American workforce in this country. Twenty-five percent of the employees in this country work for those small businesses that, according to the Joint Committee on Taxation, will see their taxes go up as a result of the President's proposal.

We essentially have in front of us three choices:

We can let all the tax rates expire, which we know is going to plunge our economy back into a recession; we can do what our Democratic colleagues want to do, which is to raise taxes on successful small businesses and entrepreneurs, slowing our economy even further and risking--according to the Congressional Budget Office and the Chairman of the Federal Reserve Board--a recession; or, we could do what the House of Representatives will soon pass and what I would suggest, and that is we can prevent a tax increase from hitting anyone and give the lackluster economic recovery at least a chance to gain some steam.

That is what we ought to do. We ought to do what the House of Representatives is going to do, and that is to extend the rates for a year so that people in this country have some certainty as to what their tax rate is going to be at the end of the year.

I hope my colleagues here in the Senate--and the Senate Democrats in particular--will realize the severity of the fiscal cliff, and come to the table to prevent this massive tax increase and the unbalanced and troubling cuts that will occur to our national security if we don't take steps to avert this fiscal cliff.

We have to prevent the dangerous cuts to our national defense that are scheduled to go into effect under sequestration by finding savings elsewhere in the budget. In order to do that, we need a detailed plan from the administration as to how they plan to implement the sequester.

Members of Congress on both sides of the aisle have called for more transparency on the sequester from this administration, but they have so far failed to produce a plan. That is simply unacceptable. I will continue to work to see that a requirement be enacted so the administration will finally be transparent with the American people and give all Members of Congress a clear idea as to where the cuts are going to be applied.

Our economy is weak. We know that growth in the first quarter was a mere 1.9 percent. Expectations for the second quarter have been downgraded. We have witnessed now for 41 straight months unemployment above 8 percent. We have 23 million Americans who are either unemployed or underemployed and 5.4 million Americans who have been unemployed for a long period of time.

We have a weak economy. The amazing thing about this debate is that 2 years ago the President of the United States said that raising taxes would strike a blow to the economy. That was at a time when we had 3.1 percent economic growth. We now have, as I said, according to the estimates, 1.9 percent economic growth for the first quarter of this year, and expectations for the second quarter have already been downgraded. So with 41 straight months of unemployment above 8 percent, 23 million Americans underemployed or unemployed, and the weakest recovery literally since the end of World War II, now is not the time to raise taxes.

Who in their right mind would think it would make any sense at all to raise taxes when you have an economy that is growing at such an anemic rate, particularly given the fact that 2 years ago, when we had more robust economic growth, the President said at that time that it would strike a blow to our economy if we raised taxes. Here we are with economic conditions that are much worse, circumstances that have deteriorated since then, and he is proposing a tax increase on 1 million small businesses that will have a ripple effect all across our economy and hurt job creation at a time we cannot afford that.

There was another study, an analysis that came out today done by Ernst & Young in which they analyzed the tax hikes that would occur on small business next year and came to the conclusion that it would cost 700,000 jobs in our economy, that it would cost us 1.3 percent of economic growth--which is again consistent with what the Congressional Budget Office has said--and that it would reduce wages to people in this country by 2 percent.

So you now have the Ernst & Young study out there which suggests that not only does this impact the small businesses out there that are going to see their taxes go up, but it puts at risk and in jeopardy jobs for hard-working Americans and a wage base that would actually shrink if, in fact, we drive the car over this fiscal cliff.

We cannot afford to do that. It is irresponsible to have people out there saying that they are so anxious to prove some point or to win some argument on raising taxes that they are willing to see this country run the risk of plunging into a recession and raising the number of people who are unemployed in this country. It really is.

I have to say that when I saw some of the remarks and some of these stories and some of the reporting about statements that are being made by our colleagues on the other side and Members of their staff with regard to the fiscal cliff and the willingness on the part of many of our colleagues to suggest that this country could go through and endure even more difficult economic times than what we are already experiencing, even higher unemployment than what we are already seeing, it was really pretty remarkable and truly unfortunate.

I hope folks will walk back from that position, walk back from those remarks, and enter into a discussion about how we might be able to provide the necessary economic certainty for our job creators and our small businesses, how we can get people back to work, how we can grow and expand this economy.

Frankly, extending the tax rate should only be the first part, the short-term solution. The long-term solution is to get tax reform, comprehensive tax reform. People on both sides of the aisle agree with that. If we could enter into a discussion about how we could reform our Tax Code in such a way that it broadens the tax base, lowers the rates, does away with loopholes and deductions, coupled with entitlement reform--that we all agree has to be dealt with or we are going to continue to see the country on a fiscal trajectory that is completely unsustainable over time, is going to lead to the situation we see many European countries dealing with today--that is what we ought to be focused on.

We ought to be providing certainty to our businesses, extending rates at least for now until such time hopefully next year when we all agree we need to sit down and solve this tax mess we have in this country, this Tax Code that has become way too complicated, and come up with something that is more simple, more clear, more fair, and something that makes us more competitive in the global marketplace. Right now, we are losing to a lot of countries around the world simply because we have a tax code that makes American businesses noncompetitive in the international marketplace.

Tax reform, entitlement reform, a comprehensive energy policy, regulatory reform--it is not that hard to fix this if we have the will, the political will to do it. But we cannot start by saying to small businesses in this country that we are going to raise your taxes next year, run the risk of plunging the country into a recession and increasing the number of people in this country who are unemployed.

That is the exact wrong prescription. We ought to be providing certainty, extending the rates, and getting into a discussion and hopefully action on legislation that would reform the American Tax Code to make us more competitive in the world, do away with the costly, overreaching, excessive, and burdensome regulations that are making it more difficult and more expensive to do business in this country; an energy plan that makes sense, that relies upon American sources of energy; and a spending plan, a budget--something the Senate has not done now for 3 years, an actual budget. Lo and behold, go figure that we could actually

do a budget in this country that puts us on a more sustainable fiscal path by reforming entitlement programs, that will actually save Social Security and Medicare for future generations of Americans. That is the long-term prescription for what ails America. But certainly in the short term it makes matters much, much worse when we talk about piling a tax increase on the very people we are looking to, to create jobs and get this economy back on track.

I hope this Congress will come to its senses about this and that we will vote down any proposal that would raise taxes on hard-working small businesses and entrepreneurs in this country and instead give them the certainty they need for the months ahead, until such time as we can deal with the issue of tax reform.

I yield the floor. I suggest the absence of a quorum.

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

Madam President, before too long here we are going to be voting. We are going to have three votes, I think, on whether we are going to move forward on a tax bill. I frankly think there are things in the underlying bill that is before us today that would do some good. The bonus depreciation provision is something many of us have supported in the past. We think that is good tax policy with regard to encouraging small businesses to invest, by giving them a quicker way to write off those capital investments. So there are some things in the underlying bill that make some sense.

But the whole exercise we are going through here is a charade for a couple of reasons. One, you cannot originate revenue measures in the Senate. That is something that has to happen in the House of Representatives. So anything that comes out of here, if it were to pass, would be blue-slipped by the House of Representatives. You have a constitutional issue to deal with here in the first place.

Secondly, you have a procedure, a process set up whereby there is not an opportunity for us to offer amendments. We put a tax bill on the floor, a piece of legislation, a vehicle that ought to be open to amendment. There are many of us with ideas about things that we think would promote economic growth and create jobs in our economy, but we are not going to have the opportunity to offer those amendments.

Frankly, a tax debate is something that many of us welcome. We think that talking about taxes is certainly something that, if you are someone who is concerned about the economy, if you are someone who is concerned about getting Americans back to work, certainly talking about the Tax Code and its impact on our economy is a very relevant debate. Frankly, we ought to be headed toward a reform of our Tax Code which today is way too complicated and, frankly, it needs to be overhauled.

But in the interim, we have coming up now on January 1 of next year a bunch of tax provisions, current tax policy, that expires. In anticipation of that, we have a lot of businesses that are very concerned. There is uncertainty out there among job creators in our economy about what is going to happen on January 1, and is Congress going to act to put off these tax increases that will occur on January 1 or are they going to allow them go into effect, in which case many businesses would be dramatically impacted by having higher tax burdens, making it more difficult for them to create jobs.

I do not think there is anybody out there, those who study economics, even those of us who do not, just as a matter of common sense, on a very practical level, who would think that raising taxes on people who create jobs, on small businesses, would be something that would be good in an economy that you are trying to get back on its feet, trying to get to recover.

In fact, the President of the United States in 2010 said it would be a blow to our economy if tax rates went up on small businesses. Well, that was back at a time when economic growth was a little over 3 percent. Here we are 2 years later. Economic growth is much slower. We are growing at a more sluggish rate, about 2 percent. There is a concern that even that is going to slow down as we approach the end of the year.

And yet we have this threat hanging out there on the horizon, looming, of higher taxes on small businesses, the very people we rely upon to get Americans back to work, to create jobs, and to get this economy growing again.

What we ought to be thinking about is what can we do to promote economic growth. We ought to be thinking about what are those tax policies we can put in place. I hope that will be the purpose of tax reform when we get there. I hope that is soon as well. As I said before, I think tax reform is critical if we are going to see economic growth and if we are going to do away with the complex Tax Code we have today and replace it with something that makes much more sense, it is more clear, more simple, more fair for American businesses and people across this country who are filing their tax returns every year.

But we ought to be looking at what can we do to promote economic growth. All of our tax policy ought to be oriented around getting this economy growing and expanding again, because in so many ways that helps address many of the other problems we are confronting. We have this huge out-of-control debt problem. Obviously it needs to be addressed through spending reductions, trying to make government more efficient, smaller, more limited, rather than the government we have seen here the last few years that continues to grow as a percentage of our economy. The government as a percentage of our economy today is at the highest level we have seen literally since the end of World War II. We are at about--24 or 25 percent of our entire GDP now is represented by Federal spending. So we have got to get government under control, which means we have got to address some of the drivers of Federal spending, including Medicare, Medicaid, Social Security. That means these entitlement programs so many people rely upon, in order to save them, have to be reformed. If we are going to get them on a sustainable fiscal path, if we are going to make sure they are there for future generations, we have got to reform our entitlement programs and get the government spending back at a more reasonable level, more consistent with what we have seen historically, which is about 20 to 21 percent of our entire economy.

So it starts there. But then you have to couple the reductions in government spending with economic growth. The way ultimately that we get to where we need to be as a Nation is we have to get the economy growing and expanding again. It is counterintuitive to me and to most Americans, I think, to suggest that the way to do that would be to raise taxes on the very people you are looking to to create jobs and to grow this economy. Those are our small businesses. So when the President came out earlier this week and suggested we ought to allow the tax rates to expire for people who make more than $250,000, what he was talking about, according to the Joint Committee on Taxation, was almost 1 million small businesses, almost 1 million small businesses, if we do not take steps to avert it on January 1. They are going to see their taxes go up. Those small businesses I am referring to employ 25 percent of the American workforce. Most of them are small businesses organized as subchapter S corporations, LLCs, which means their income flows through to their individual tax returns and they pay at the individual rate level.

So as a consequence, when you start raising taxes for people above $250,000, you are hitting 1 million--almost 1 million, I should say--of those small businesses that are going to be faced with higher tax burdens and higher tax liabilities. That to me is completely counterintuitive to what we ought to be thinking if we are interested in getting the economy growing again. We should not be making it more difficult, more expensive for small businesses to create jobs, we ought to be looking at what we can do to lessen the burden on our small businesses and to keep that tax burden, that regulatory burden, at a level that does not create impediments and barriers to them going out and investing and creating jobs.

The President's proposal is exactly the opposite of what we should be doing. And 53 percent of the income I mentioned--these companies that are organized, small businesses as S corporations, LLCs--53 percent of that income would be faced with a higher tax

burden come January 1 unless we take steps to avert it. What the President proposed essentially was allowing taxes to go up on those very small businesses.

So I hope not only will we turn down the President's proposal, but that we will be thinking about what we can be doing to simplify the Tax Code, that would lower rates businesses in this country pay, and provide incentives for them to get people back to work. Again, by that I mean policies that promote economic growth.

There are so many things we ought to be doing that we are not doing now that I think would provide the necessary policies to encourage and enable small businesses to grow their business, make those investments, and put people back to work. There are a number of things that our small businesses face that are not directly related to the Tax Code but indirectly related: regulatory burdens and more agencies spending time on more regulations making it difficult and more expensive to create jobs.

Regulatory reform ought to be part of an agenda here. If we are serious about policies that will grow the economy, we ought to deal with the overreaching regulations that create excessive burdens for the small businesses and couple that with tax reform.

One of the burdens we have placed on small businesses of late is the ObamaCare legislation we passed a few years ago. There has been some debate about the question of whether the individual mandate is a penalty or a tax. We know one thing: It is a cost that will be borne by a lot of people across this country. We also have the mandate or requirements imposed upon small business--employer mandates that will increase the cost of our small businesses--the cost of doing business for them out there.

All of these things that have been put in place drive up the cost of doing business, make it more difficult and expensive to create jobs in this country--rather than looking at what we can do to make it less expensive and less difficult to create jobs.

Regarding the health care bill, we talked about the individual mandate and who is impacted. By the way, according to the Joint Committee on Taxation, 77 percent of the people who would be impacted by the individual mandate tax are people who make less than $120,000 a year. The President promised, when he was running for office, he would not raise taxes on anybody who makes less than $250,000 a year. Clearly, one of the many broken promises in the health care bill was the individual mandate and its impact on the very people on whom he said he would not raise taxes--middle-income Americans who make less than $120,000 a year. According to the Joint Committee on Taxation, 77 percent of those people would see higher taxes.

It is a significant amount of tax, $54 billion over the next 10 years. If you think about the amount of revenue raised by the individual mandate tax, it is actually more in revenue than would have been raised by the so-called Buffet tax designed to get millionaires in this country to pay more in taxes. So we are levying a tax on middle- income Americans that actually is going to exceed in revenue the amount raised by the so-called tax on millionaires. It is ironic, but that is exactly what the ObamaCare bill will do.

In addition to that there are a series of other taxes that are imposed on people across this country. Many of them strike at middle- income Americans. There are about $250 billion in taxes that are imposed on our economy that will be passed on, in many cases, to consumers, and the impact is to raise the cost of health care. Taxes on health insurance plans, taxes on pharmaceuticals, taxes on medical devices, self-insured health plans--a whole range of taxes that are included in the ObamaCare legislation, are going to hit middle-income Americans squarely in the face. Not only do we have the individual mandate tax but all these others that are included in the ObamaCare legislation that will hit working people across this country.

Look at all the burdens associated with those taxes and the regulations that are coming out of many of the agencies in our government now, and all you see, if you are a small business, is a higher cost of doing business, more uncertainty about what is going to happen in the future, and it is just that much more difficult when it comes to making determinations about growing your business or starting a new business and creating the jobs that are so important to our economy.

When we talk about the economic circumstances that we are in today, everybody focuses on the unemployment rate, of course. We have now had more than 8 percent unemployment for 41 straight months. We have 23 million Americans who are either jobless or underemployed in our economy. And 5.4 million Americans have been unemployed for a long period of time. We have the weakest recovery, literally, since the end of World War II.

Yet what is the prescription that the President and many of his allies in Congress have for that? Higher taxes. It is higher taxes on the people who create jobs. Can you think of anything that makes less sense if you are really interested in economic growth and creating jobs? That is absolutely the opposite of what we ought to be doing. We should not be raising taxes on those 1 million small businesses-- subjecting them and the 25 percent of the workforce who work for them to the possibility that there will be higher taxes. Their jobs can be in jeopardy.

We ought to look for ways to provide certainty, and we should extend the existing rates so small businesses out there trying to make decisions about what they are going to do in the future can know for sure what the rules are, but, more importantly, also know that their taxes will not go up on January 1.

There is a Congressional Budget Office analysis out there which suggests that come January 1, when we hit the so-called fiscal cliff, which includes the increase in the tax rates as well as the sequester on spending that was put into place as part of the Budget Control Act, that if nothing is done to avert that fiscal cliff, in the first 6 months of next year we will see up to 1.3 percent less economic growth. But just as important, not only is that a factor we deal with next year, it is also something that impacts us right now, today, because the CBO also found it could cost a half point of economic growth this year, right now. It is because of this uncertainty, because of the specter of tax rates going up on small businesses come January 1 of next year.

What we ought to be doing instead of talking about what we are going to do or raising taxes on small businesses in this economy is looking to extend the rates that exist today so those rates don't go up, giving businesses certainty, and then following up on that next year with tax reform which broadens the tax base, lowers rates, gets us more competitive in the global marketplace, and is more clear, more simple and fair for American businesses.

Until that happens, the very worst we could be doing now, in my opinion, is raising taxes, for all of the reasons I just mentioned. It creates uncertainty, obviously, and raises the cost of doing business in this country. It hits the very people we are hoping are going to lead us out of this economic malaise we are in today.

Again, I also say with regard to this issue, the issue of taxes is so important to businesses. The issue of regulations is so important to businesses. Those are things, if we are serious about an agenda to get Americans back to work, we ought to be focused on.

That is why we ought to be repealing ObamaCare. That $248 billion in taxes--that is not the total amount of taxes; it is over $500 billion in taxes that will be imposed as a result of ObamaCare. These are the taxes that hit middle-income Americans, according to the Joint Economic Committee. Not only do we have the $248 billion or $250 billion that hits middle-income Americans, we have an additional 3.8 percent tax on unearned income that would hit high-end earners, as well as a new Medicare tax on high-end earners. We have so many taxes coming at this economy now it is hard to fathom.

That should not be complicated by doubling down with our small businesses and essentially telling them that come January they are going to see their rates go up. For the people paying the 35-percent rate today, it would go up to 39.6 percent. Capital gains will go up from 15 to 20 percent. Dividend rates are going up from 15 to 39.6 percent. This is a very real issue, a real-time issue. It is having an impact

on the economy today. We should do everything we can to avoid that.

I hope when we are through with what is a charade, and we have the votes on this bill--which, as I said, because the revenue measures don't originate in the Senate; they originate in the House, they would be blue-slipped if it passed here because this is a process where Republicans are not allowed to offer amendments. This is a tax vehicle on the Senate floor. But in the terms we use in the Senate, the majority leader has ``filled the amendment tree,'' making it virtually impossible for Republicans to offer amendments that we would like to see debated and voted on.

When this charade is completed, I hope the majority leader will decide we need to have a debate about taxes and what we can do to promote economic growth, a debate on whether we are going to extend the rates that will expire January 1, meaning higher taxes for nearly 1 million small businesses to whom we are looking to get us out of this recession and get Americans back to work. I hope that will be the debate and vote we will ultimately have when this particular political exercise is completed today.

I yield the floor.

Mr. President, are we in morning business?

Mr. President, when Congress began debating health care in 2009, the goal was to lower the cost of care and give Americans the care they need from a doctor they choose.

Americans were promised that if they liked the insurance they had and the doctor they had, they would be able to keep the plan and to continue to see the doctor they liked. Americans were promised that the negotiations would be transparent and televised on C-SPAN. Americans were promised the bill wouldn't add a dime to the deficit, and that it would lower the cost of care. Americans were promised their premiums would go down by $2,500. Americans were promised this President would not raise taxes on families with incomes below $250,000.

Instead, Congress passed a massive governmental takeover of the health care industry. In the last 2 years, we have seen that Americans can't keep the insurance they had, continue to see the doctor they like, and are paying more for health care now than they would have if this administration had not pushed through the massive 2,700-page bill. The law adds billions to the deficit. And at the end of the day, Americans will find they are left holding a bag full of empty, broken promises.

Today I want to focus on the broken promises of taxes. The President pledged not to raise taxes on individuals making less than $200,000 and families making less than $250,000 per year.

Yet the new individual mandate tax--which the Supreme Court affirmed as a tax increase--will raise $54 billion in new taxes, largely on middle- income Americans between 2015 and 2022.

In fact, according to the Congressional Budget Office, 77 percent of those projected to pay the tax in 2016 will be those earning less than $120,000 per year. Americans earning less than $120,000 clearly meet the President's definition as middle income.

The Congressional Budget Office projections confirm that at least three out of every four Americans subjected to the new individual mandate tax will be the same middle-income taxpayers President Obama promised would not see their taxes raised by one dime.

In fact, when asked by George Stephanopoulos of ``ABC News'' in September of 2009 if the President rejected the notion that the individual mandate was a tax, the President stated, ``I absolutely reject that notion.'' The President wasn't equivocal and he didn't leave any room for interpretation.

So let's be clear. This President and the Democratic leaders here in Congress sold ObamaCare as if it did not contain significant new tax increases on the middle class. Yet what they now know what they were selling was an incredible bait and switch. They were in fact enacting $54 billion in new individual mandate taxes primarily on the middle class by calling it something else.

I would note that this tax increase is larger than the ``Buffett rule'' tax increase the President has spent much of the year promoting.

The Supreme Court ruled that the individual mandate is not constitutional under either the Commerce Clause or the Necessary and Proper Clause of the Constitution. So there are only two options: Either the individual mandate is a tax--and it happens to be a tax that falls hardest on the middle class--or it is unconstitutional.

It is estimated that average tax on an American subject to this new tax increase will be about $1,100 per year. And after paying this tax, these Americans still won't have health insurance.

We should not forget that the national health insurance tax is not the only tax increase in ObamaCare affecting individuals. Starting next year, individuals will be able to save less money, taxfree, in Flexible Spending Accounts to pay for their own healthcare expenses. Currently, there is no statutory limit on FSA contributions, though many FSAs set their own limits. Starting next year, ObamaCare will cap the amount Americans can save in a Flexible Savings Account at only $2,500 per year, and ObamaCare will limit tax deductions for those with the largest health care needs by reducing the medical expense deduction from expenses above 7.5 percent of adjusted gross income to expenses above 10 percent of adjusted gross income. So at the very time ObamaCare is driving up health care costs, it is also making it more difficult for American families to pay for their own healthcare needs.

These tax increases don't even take into account the new 3.8-percent tax increase on investment income or the almost 1-percent Medicare surtax that will be imposed on higher income Americans starting in 2013, making it more expensive for small business owners to hire new workers or otherwise invest in our economy.

These taxes on individuals are in addition to the ObamaCare taxes on businesses, such as the new medical device tax or the tanning tax. We know these taxes on businesses will ultimately be passed through to consumers of health care, driving health care prices even higher.

In fact, of the $552 billion in new taxes included in ObamaCare, according to the Joint Committee on Taxation and the Congressional Budget Office, the Joint Economic Committee has estimated that roughly $250 billion is tax increases that will hit the middle class either directly or through the health care products they consume.

In addition to this new national health insurance tax of $1,100 a year and other increases in ObamaCare, Americans will see that health care costs will continue to rise.

Despite the President's promise that his health care plan would reduce insurance premiums, premiums have increased by over $2,200 since Obama took office, according to the Kaiser Family Foundation. And according to the President's own Actuary at the Centers for Medicare and Medicaid Services in a report from this month on national health expenditure projections, premiums under the new health care law will rise faster than if we had done nothing at all. I want to quote from that report.

In 2014, growth in private health insurance premiums is

expected to accelerate to 7.9 percent, or 4.1 percentage

points higher than in the absence of health reform.

Think about what is actually being said here. The cost of health insurance would have gone up a lot less per year had we done nothing than what we did with this bill, which is to increase those expenditures for health care by about 7.9 percent.

Americans are going to be stuck paying higher costs for health insurance medical devices due to the tax on these sectors that this bill imposes.

Americans know firsthand that we are going to continue to struggle with an economy that is not performing well. The unemployment rate remains above 8 percent for 41 consecutive months. On the immediate horizon the American people stare down an enormous tax increase, from a health reform law they didn't want and still don't want.

Americans are also seeing this law has impacted our economy. According to a recent poll, 48 percent of businesses that are not currently hiring list the potential cost of health care regulations as a reason for not seeking new employees. And according to the Congressional Budget Office, ObamaCare will mean 800,000 fewer jobs over the next decade. The last 3 years have made it very clear that ObamaCare is making our economy worse by driving up costs and discouraging job creation.

Moving forward, Congress needs to start by repealing ObamaCare. We need to repeal ObamaCare and enact commonsense, step-by-step reforms that protect Americans' access from the care they need, from the doctor they choose, at a lower cost.

Republicans will not repeat the Democrats' mistakes. We will not rush to pass a massive bill the American people don't support. We need to do this the right way: No backroom deals or 2,700-page bills that no one has read.

This President owes it to Americans to admit his broken promises, and to work with Republicans to put in place real health care reforms that will actually help lower health insurance costs for individuals and families and ensure that Americans can get the care they need when they need it.

The taxes I have mentioned in the health care law are going to add up to a massive tax increase on average ordinary Americans. All the analyses that have been done by the Joint Committee on Taxation, the Congressional Budget Office, and the Joint Economic Committee come to that very same conclusion.

This is a tax that is going to hit middle-class Americans, notwithstanding the President's promise that he wouldn't raise taxes on those making less than $200,000 a year. Seventy-five percent of that tax burden from that individual mandate tax--which is $54 billion--will hit those making less than $120,000 per year.

So the whole idea of promises made and promises broken I think is the narrative that has attached itself to this health care reform law. I submit that the Congress and the President need to work together to repeal this law and to work in a constructive way to put in place commonsense, step-by-step reforms that actually will drive the cost of health care down for Americans, because that is the one thing that Americans, as they look at the health care economy today, want to see. They want to know their costs are going to go down rather than up, and they continue to see these increases in premiums year over year and that continues to affect our economy.

The mandates that are imposed upon employers in this health care law as well are going to lead to fewer jobs. That is the outcome of this health care law. It is higher costs for Americans, and it is going to mean fewer jobs for American workers.

Coupled with that, we have seen as recently as yesterday the President saying he now wants to raise taxes on those small businesses in our country.

The tax he has proposed on those making more than $250,000 a year, interestingly enough, hits 940,000 small business owners. Fifty-three percent of the passthrough income would face higher taxes as a result of the proposal he made yesterday. The people who run those businesses employ 25 percent of the American workforce. So we are talking about huge new burdens on our economy at a time when we absolutely cannot afford it: 41 consecutive months of 8-percent or higher unemployment; 23 million Americans either unemployed or underemployed; 5.4 million Americans who have been unemployed for a long period of time; and the weakest recovery literally since the end of World War II. Those are the economic circumstances we find ourselves in today, and now we have proposals coming out of the White House, in addition to the burdens imposed by ObamaCare, that would lead to higher taxes on the very people we look to to get us out of this economic circumstance, and that is our small businesses and entrepreneurs, all of whom are going to be faced with higher taxes because of the President's proposals.

We can do better for the American people. We can get this economy growing again with commonsense health care reforms, commonsense tax reforms, regulatory reforms that lower the cost and the burden of doing business in this country, a comprehensive energy policy that will make sure we are developing our own energy sources in this country, and getting Federal spending under control.

We need a smaller Federal Government and a bigger, more robust private economy. You cannot do that by continually piling more taxes and more regulations and more mandates and more requirements on the very people who create jobs. The American people deserve better and we can do better.

Mr. President, I yield the floor.

Mr. President, today I wish to honor six brave airmen with the North Carolina Air National Guard who died or were seriously injured while fighting South Dakota's White Draw Fire.

Lt. Col. Paul Mikeal, Maj. Joseph McCormick, Maj. Ryan David, and Senior Master Sgt. Robert Cannon were killed July 1 when their C-130 firefighting plane crashed near Edgemont, SD, as they battled a large forest fire in the Black Hills. Two crewmembers survived the crash but were left in critical condition.

Men and women in our armed forces put their lives on the line every day for

their fellow servicemembers and for all Americans. They serve in the hope that these daily sacrifices will ensure a safer and more prosperous United States. Their actions are not in vain nor forgotten, and members of our armed services are continually in our thoughts and prayers.

Airmen fighting these fires are necessarily exposed to dangerous conditions in order for firefighters on the ground to have the chance to contain these wildfires. The importance of these domestic actions by the Air National Guard cannot be overstated. They are fighting to save our homes, our businesses, and our communities from devastating fires, often flying in very dangerous terrain.

The names of the fallen airmen will be added to a memorial at the unit's headquarters and their service likewise praised. Great Americans such as these continue to answer the call whenever and wherever they are needed. Our hearts go out to the families and friends of Paul, Joseph, Ryan, and Robert, and I ask my colleagues to join me in commemorating the lives of these men.