Floor Statements

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 President, I ask unanimous consent that the order for the quorum call be rescinded.

Mr. President, occasionally, political people say things they probably wish they hadn't said because they are quite foolish.

It is with great disappointment that I focus on something our President recently said. I do so not out of disrespect for him but because what was said is so fundamentally wrong that it deserves to be put out into the public for discussion and, frankly, to get some response from the President if he wishes to do that.

According to the National Journal, an article by Rebecca Kaplan, from July 21, the President said this:

I think what's absolutely true is that core commitments

that we make to the most vulnerable have to be maintained. A

lot of the spending cuts that we are making should be around

areas like defense spending, as opposed to food stamps.

We are in a great debate about how we should figure out a way to end our deficit spending, get our debt under control. We have to raise the debt ceiling here in a few days. We have had a

lot of discussion about the best way to do that. Most people approach the problem by saying: What are the core functions of government, the most important things that are critical to America? You build a budget from that point up. As every family does, you finally get to some things that are good to have, if you can, but sometimes you cannot afford them or not in the same way you have been paying--maybe not going to a movie or going out to dinner.

I think most people would believe that when we all take our oath of office to defend the country, probably the first obligation the Federal Government has is to defend the people, provide for our national security. If we are not able to provide for our national security, there is not much point in trying to protect anything else. That is why the defense of the United States has always been pretty well supported in a bipartisan way, by people in both political parties, in times of peace and in times of war. That is not to say there haven't been debates about defense spending, and whether defense spending sometimes can be cut but, rather, to at least acknowledge that if any function of the government is a core function or, as the President said, ``core commitments,'' it surely ought to be providing for the defense of the American people.

We have also decided over the years that there are ways in which we can help to take care of American citizens who have trouble meeting their own needs. We start with people who are very sick and infirm, or elderly, and we have programs such as Social Security, Medicare, and the Medicaid Program for those economically less fortunate. Over the years, we have developed programs to provide other benefits to American citizens. We provide some housing benefits. We provide what is called food stamps. There is another name for it in the agriculture budget: ``Nutrition assistance.'' It is known as food stamps for people having trouble making ends meet. The government will actually provide them an ability to buy at the grocery store what they need to eat. That is important.

America got along without food stamps for the first couple centuries of its existence. Certainly a lot of people endured hardship. When a country is wealthy enough to be able to afford to do things for its people, it is certainly an appropriate thing to do. That is certainly the category of food stamps.

But I find it remarkable that the President would conflate the obligations of the government for national security and a program such as the nutritional assistance program the way he has. To describe one as a core commitment of the country--food stamps--and to say the rest of it we can go talk about making cuts that should be around areas of defense spending as opposed to food stamps--I am not trying to pick on food stamps, but the President is the Commander in Chief. He, among all Americans, is responsible for our national security. And for him to suggest that food stamps is a core mission of the government and that national security is less than that, so that if we need to make cuts we should take them from national defense, I find remarkable.

Are food stamps close to what is the core of the American people? As I said, we got along without food stamps for a long time. Churches and families and others took care of folks. When the government was wealthy enough to be able to help folks with food stamps, we decided to do it. We have all been supporters of programs that provide that kind of assistance. But when you have to begin trimming expenses--and, by the way, I am not suggesting there is a proposal here on the table to trim food stamps. What I am saying is that what you don't do is to say there is one thing we are going to protect above all else, and that is food stamps, and we can, instead, get our savings from the defense budget. We have already effectuated enormous savings from the defense budget over the last 3 years.

I thought it might be useful to quote a few things that our most recent Secretary of Defense said. He is retired now. For the last 3 years, he acted as Secretary of Defense, and now he has been out of that job for the last couple of weeks. But at the end of his term as Secretary of Defense, he gave several speeches, and in each one of those he stressed the commitment of the United States not only to the security of the American people but to peace around the world and reminded us there is evil in the world. There are always those who would do us harm. And unless there is somebody in the world--a country such as the United States--willing to stand up to these despots, these troublemakers, we are likely to end up with trouble on our own shores sooner or later. He cautioned, therefore, against further reductions in defense spending, as the President has said.

On several occasions, Secretary Gates said defense had already had cut as much as was advisable. So the question is, Why should we automatically be assuming it is easy to cut another $400 billion out of defense, for example; that our key mission here is to protect the core mission, as the President put it, such as food stamps?

I am going to select a few things Secretary Gates has said and then I will ask to have printed in the Record a couple of the pieces.

On May 24, Secretary Gates made some remarks to the American Enterprise Institute, and here is a sampling of what he said. In this first quote he is talking about the inventory of military weapons in our arsenal:

The current inventory is getting old and worn down from

Iraq and Afghanistan. Some equipment can be refurbished with

life-extension programs, but there is no getting around the

fact that others must be replaced. When it comes to our

military modernization accounts, the proverbial ``low hanging

fruit''--those weapons and other programs considered most

questionable--have not only been plucked, they have been

stomped and crushed. What remains are much-needed

capabilities--relating to air superiority and mobility, long-

range strike, nuclear deterrence, maritime access, space and

cyber warfare, ground forces, intelligence, surveillance and

reconnaissance--that our nation's civilian and military

leadership deem absolutely critical.

He gave examples of a new tanker. He noted the ones we have are twice as old as many of the pilots who are flying them. A new generation strike fighter, the F-35. He said we have to build more ships. The size of the Navy has sunk to the lowest number since prior to World War II. The Army and Marines are doing the bulk of our fighting on the ground. Their combat vehicles and helicopters are worn down after a decade of war. He points out that, at some point, we have to replace our aging ballistic missile submarines, and he calls that a program that illustrates the modernization dilemmas we face.

He said this--again at the speech he gave at AEI:

So as we move forward, unless our country's political

leadership envisions a dramatically diminished global

security war for the United States, it is vitally important

to protect the military modernization accounts--in absolute

terms, and as a share of the defense budget.

Let me quote once more from his speech at AEI, and then I wish to move to some remarks he made at some commencement addresses.

One thing Secretary Gates noted is that when we decide we want to reduce defense spending, we have to remember our potential enemies always have a vote. We can assume certain things are of a low probability to happen around the globe, but we can't always be sure that some despot isn't going to try to create trouble somewhere. Here is how he concluded this speech to AEI:

If we are going to reduce the resources and the size of the

U.S. military, people need to make conscious choices about

what the implications are for the security of the country, as

well as for the variety of military operations we have around

the world if lower priority missions are scaled back or

eliminated. They need to understand what it could mean for a

smaller pool of troops and their families if America is

forced into a protracted land war again--yes, the kind no

defense secretary should recommend any time soon, but one we

may not be able to avoid. To shirk this discussion of risks

and consequences--and the hard decisions that must follow--I

would regard as managerial cowardice.

Then he said this:

In closing, while I have spent a good deal of time on

programmatic particulars, the tough choices ahead are really

about the kind of role the American people--accustomed to

unquestioned military dominance for the past two decades--

want their country to play in the world.

That is a serious and sobering reminder by the Secretary of Defense that the American people expect the leaders of the country to understand that when we need our military, it is

there, it is capable; that we are being fair with people we have put into harm's way; and that we have given them the very best training and equipment possible.

By the way, my colleague from Arizona, John McCain, has visited Iraq, Afghanistan, and other places where our military men and women have been fighting for many years. One of the thoughts that always strikes me most about his observations when he returns is the quality of our fighting force--the quality of their equipment and their training. They are, clearly, the best military force ever fielded.

We expect that. We have come to expect it. But it doesn't happen automatically. It requires stewardship, and we here in the Congress, as well as the Presidents, are stewards of our national security and all of those who provide it. That is a lesson we can't forget, even in the context of a deficit and debt debate where we are trying desperately to find more ways we can achieve savings.

When Secretary Gates spoke to the Notre Dame graduates on May 22, here are a few of the things he said:

The lessons of history tell us we must not diminish our

ability or our determination to deal with the threats and the

challenges on the horizon, because ultimately they will need

to be confronted. If history--and religion--teach us

anything, it is that there will always be evil in the world,

people bent on aggression, oppression, satisfying their greed

for wealth and power and territory, or determined to impose

an ideology based on the subjugation of others and the denial

of liberty to men and women.

He continued:

. . . make no mistake, the ultimate guarantee against the

success of aggressors, dictators, and terrorists in the 21st

century, as in the 20th, is hard power--the size, strength,

and global reach of the United States military.

He also discussed what we are doing around the world, and he said this:

All of these things happen mostly out of sight and out of

mind to the average American, and thus are taken for granted.

But they all depend on a properly armed, trained and funded

American military, which cannot be taken for granted.

He concluded those remarks by saying:

Throughout this process we should keep in mind historian

Donald Kagan's observation that the preservation of peace

depends upon those states seeking that goal having both

the preponderant power and the will to accept the burdens

and responsibilities required to achieve it. And we must

not forget what Winston Churchill once said, that ``the

price of greatness is responsibility . . . and the people

of the United States cannot escape world responsibility.''

Another way of saying this was one of Ronald Reagan's famous sayings--that the best way to preserve peace was to have strength. ``Peace through strength.'' That is, when you become weaker, you tempt the despots around the world to see whether they can gain some territory or some advantage, and to make trouble. You are then playing catchup, having to fight a problem that could have been avoided, perhaps, if that despot knew you had the strength and will to defeat him if he had made any kind of aggressive move. Having the ability to deter is at least as important as the ability to win if the fight occurs because you can avoid a lot of trouble, expense, casualties, and problems if you deter aggression in the first place.

At North Dakota State University, in another commencement speech on May 14, Secretary Gates said this:

. . . while I don't foresee a repeat of the Cold War days--

when we faced off against another military superpower--I

believe there is a growing competition underway for global

leadership and influence.

It was part of the same message he had spoken of earlier about the importance to be prepared and why we should not just look to the defense budget for savings; that we had to keep our priorities in mind. One of those priorities was our role and responsibility around the world, confirming again what he said, which was:

If the political leadership of this country decides that it

must reduce the investment in defense by hundreds of billions

of dollars, then I don't think we can afford to have anything

that is off the table.

It would seem to me that would include something such as food stamps. Again, what Secretary Gates said was that ``defense had already cut as much as was advisable.''

All right. I get back to my original point. Maybe I am making too much of a casual observation of the President here, but when the President of the United States describes a core commitment as food stamps and says that, instead, the cuts we are making should be around areas such as defense spending, it tells me the President has his priorities turned around, that they are wrong. His first responsibility is to the American people as Commander in Chief, and our first responsibility in the Congress is exactly the same--for the security of our country.

We are not going to be a strong country if we are bankrupt. One of the key components to a strong defense is a strong economy so we can generate the wealth we need to produce the kind of military equipment and to field the kind of forces we need to protect our interests. That is why we are focusing so much on the deficit, on spending, and the like. But when we talk about areas that need to be cut, let's remember what the former Secretary of Defense said--defense has been cut enough already. If we are going to keep our commitments around the world, we have to prioritize our spending. I submit that putting food stamps on a higher level of commitment than the national security of the United States is to grossly misplace our priorities. So I hope the President and others within the House and the Senate, in getting about the serious business of finding where we can make cuts--and we surely have to do that--will help to prioritize those things that are absolutely critical and essential to the core of the United States; and those things where, if we have the wealth to do them, we definitely should; and where we can make cuts, we need to; but that the end result of that equation, those tradeoffs, will mean the first priority is the security of the United States.

As we make our decisions here going forward, I will be speaking more about the areas in which we have already slashed defense spending and the areas in which, as Secretary Gates noted, defense spending is going to have to be enhanced if we are going to have the kind of force the American people have come to rely upon.

Mr. President, I ask unanimous consent to have printed in the Record two publications. One is from the Weekly Standard, dated July 18, by Max Boot; and the other is a piece by Jamie Fly, posted on July 8 on National Review Online.

Mr. President, I suggest the absence of a quorum.

Mr. President, I wish to speak on behalf of the resolution before us--the so-called cut, cap, and balance resolution--and explain briefly why it represents a better approach to resolving the financial crisis our country is faced with than the alternative, which seems to be myopically focused on raising taxes, as if our problem in this country were taxes. Our problem is spending. That is why the reference to cutting spending, capping future spending, and ensuring that we never go back to our errant ways by passing a balanced budget amendment to the Constitution, which would forever prevent us from getting into the same position we are in now where we have to keep coming back to increase the Nation's debt ceiling. That is why the emphasis on spending.

Some of our friends on the other side of the aisle, and certainly the President of the United States, say: I will not agree to anything unless you raise taxes.

Why are Republicans so opposed to the President's approach? Why are we focused on reducing spending rather than raising taxes? Why is it important? First of all, because spending is the problem, not taxes. Spending in this country, under President Obama, has gone from the historic level of about 20 percent of our gross domestic product to now 25 percent in just 3 short years. That is a historic growth in spending. We have never been this high. Under the Obama budget, as far as the eye can see, we are going to be above the historic levels--never below, I believe, 23 percent of the gross domestic product and, as far as I can see, very close to that 25 percent. Spending is the problem.

Some will say: Well, the government has collected less income taxes in the last couple of years.

That is true, but it isn't because tax rates have changed. We have had the same tax rates for the last decade. They have been constant. The only reason there is less revenue coming into the Treasury right now--the so-called tax take of the government--is because the economy is in the tank. People are unemployed. They are not working. They are not making as much money. Businesses are not making as much money, so they are not paying as much in taxes.

So what is the answer? To raise tax rates and try to squeeze more blood out of this turnip, to try to get more out of a sick economy? No. The answer, of course, is to try to get the economy well again so people are working, they make more money, businesses make money, they all pay more in taxes, and then we will be back at the historic levels of tax-take by the Federal Government, and presumably the folks who say taxes are the problem will then be satisfied.

But how do we grow the economy? How do we get it well? We know one thing for sure not to do; that is, impose taxes on an already weak economy. The President himself, last December when we reached agreement between the Congress and the President on extending all of the current tax rates, made that exact point. He said:

To raise taxes at this time when the economy is weak would

be the worst thing for economic growth and job creation.

He was right. He was right then. If anything, our economy is in worse shape now. Now we are at 9.2 percent unemployment. We continue to stagnate. If we have a sick economy, the last thing we want to do is impose more taxes on that economy.

One of our colleagues here in the Senate, our colleague from the State in which I was born, the Cornhusker State of Nebraska, Ben Nelson, said:

Raising taxes at a time when our economy remains fragile

takes us in the wrong direction. If we start with plans to

raise taxes, pretty soon spending cuts will fall by the

wayside.

I couldn't agree with him more.

I think there is some bipartisan consensus--though certainly I recognize many Democrats would like to raise taxes, but I think economists and most Americans appreciate that when the problem is spending, when spending has gone up so dramatically, the answer is to reduce the spending, get it back down at a minimum to where it was, and not raise taxes.

The second reason we are focused on the spending side and why we therefore support the cutting of spending, the capping of that spending, and making sure we have the constraint of a constitutional amendment to restrain us from our impulses in the future is because it never fails that tax hikes always hit more than the people at whom we are aiming. It doesn't hit just the millionaires and billionaires; it hits a lot of other people.

When the alternative minimum tax was created, the idea was to make sure that--and I could be a little wrong on the number--I think it was 125 millionaires couldn't use deductions and credits to get out of paying their taxes. We were going to create an alternative minimum tax. They would have to pay some tax even if they had lots of credits and deductions they could take. Well, 2 years ago it was going to hit 23 million Americans, and I think this year it is something like 32 million. Again, I could be a little bit wrong on the number, but let's just say between 20 million and 30 million people. So we started out with about 125, and now that tax hits well over 20 million and I think over 30 million households a year. Why wouldn't we want to do something about that? We do every year. We pass what we call a patch so that it doesn't affect those people because we never intended it to affect them in the first place. We aimed at the millionaires, and we hit over 20 million other Americans.

The same thing would happen here. How many millionaire and billionaire households are there that report income of above $1 million? The answer is 319,000. Out of the whole United States, there are 319,000. How many people would actually pay the increased tax in the upper two brackets where these people are located? Well, that number turns out to be 3.6 million people right now. What will it be in 20 years? We will probably be up to the 20 and 30 million category again.

The point is, we aim at 300,000 people, and we end up hitting 10 times that many people--3.6 million people. That is how many people there are in the top two brackets that the President's proposals would hit.

There is another unintended consequence. It doesn't just hit the millionaires and billionaires, it hits small business owners. Small businesses create two-thirds of all of the jobs coming out of an economic downturn such as we have had, out of a recession. Small businesses usually--or at least 50 percent of small business income-- let's put it that way--is reported in these top two income tax brackets. We have an individual person, and he is not a corporation, so he reports his income

taxes in one of the two top income tax brackets. What happens when we raise the tax on that 50 percent of the folks, the small business folks? Are they more likely to hire or are they more likely to just sit on their hands? Obviously, the answer is they are not going to hire more people.

Earlier this week, I quoted from several small business folks who, of course, said precisely that. The experts all agree on this issue. When we raise taxes on the top two rates, we hit a lot of small businesses.

One of the taxes the President proposed raising--as a matter of fact, his own Small Business Administration did a study and reported that tax ``could ultimately force many small businesses to close.'' So we aim at the millionaire and the billionaire, and we end up hitting small businesses. By the way, since this Small Business Administration report has been in the news, I have noticed the administration is not talking about this particular tax anymore. Well, that is fine, but the reality is that the others they are talking about would also hit small businesses and force many of them to close.

Who else gets hit by this tax on millionaires and billionaires? We have some experience. Back in 1990, we thought we would impose a luxury tax on millionaires and billionaires. We were going to tax things such as yachts and jewelry and luxury items, and so on. Well, that lasted a little less than 3 years when all the people who made the yachts marched on Washington and said: Hey, you just put us out of business, and we repealed that tax. I think it was over 9,000 people who were put out of business.

It is interesting that the same proposition translates to today. What was one of the provisions in the stimulus bill? Now, the stimulus bill was opposed by all but I think two Republicans, and all the Democrats supported it. Well, it was the tax treatment for corporate jets. Republicans didn't support this special tax treatment for corporate jets, but the President did. It was in his stimulus bill because it was thought it would help to create or save jobs.

Accelerated depreciation, which is the tax treatment here, was beneficial to the people who make these airplanes--more beneficial from a tax standpoint--and it might well be that jobs were either created or saved as a result of that. But that tax provision that was so important to creating or saving jobs when the stimulus bill was passed now all of a sudden is something that is evil because presumably people who fly in business jets are people to be attacked, to be demagogued.

We have heard the President of the United States talk about this. He talks about the special tax loophole for corporate jets. Well, it is his tax loophole, and he put it in there because he thought it would create or save jobs. Now, who is it going to hurt? The business guys will still fly on their corporate jets; it is just that the jets will cost more money, but probably fewer people will be working, making those planes. Is that good policy or bad policy? I am all for having that debate. I am not going to defend the corporate jets; I will defend the people who make them. But let's have that debate in the context of tax reform, which we have all said we are for doing, so that if we decide it is good policy to eliminate that accelerated depreciation provision, we do that and then we apply the savings to reducing tax rates overall, which is exactly what the President said we should do.

In his State of the Union speech, he pointed out that America is not competitive with the rest of the world. We have the highest corporate tax rate in the world, and he said we have to get it down. What we ought to do is eliminate loopholes in the Tax Code and then, with the savings, reduce overall corporate rates, so instead of paying 35 percent, our corporations would pay maybe 20 or 25 percent, which is still above the world average of developed countries, but at least we would be more competitive.

So what is the right policy? Should we be demagoguing corporate jets or should we think through the policy? We might just be hurting regular Americans, and maybe we should think twice about the kind of political language we are using.

Even oil and gas--we have to tax the big oil companies. Everybody knows we put the tax on, and the next thing we know we are paying more tax when we fill up our car at the local service station. So we should think through whom we are really going to hit with these taxes on millionaires and billionaires and big corporations.

Even the death tax--the death tax is part of the taxes the President would like to have rates go up on, to go back to the 45-percent rate. That is almost half--45 percent--of the estates. Now, a lot of these estates are small businesses, farms, ranches, and a lot of times they have to sell all or part of the business or the farm or the ranch in order to pay the estate tax. So who are we really hurting when we do this?

I have a friend who had a small printing business in Phoenix. He was one of the largest charitable givers in our community, a fine, wonderful man. His name was Jerry Wisotsky. He created the business from nothing, moved out from New York City, and had over 200 employees when he died. He had Boys & Girls Clubs named after him. He and his family contributed as much money to charity in Phoenix as anybody I know. Well, they had to sell the business because the estate taxes were eating them up. The out-of-State company that bought the business didn't contribute to the local community. They didn't contribute to charity. Who got hurt when we imposed that estate tax, that death tax on Jerry's family?

So let's just stop and think. One reason we don't want to focus on taxes and we would rather focus on spending is because a lot of times, when we focus on millionaires and billionaires, we end up hurting a lot of other people instead.

The third reason and, frankly, the most important from an economic standpoint, of course, is the fact that tax hikes kill job creation and economic growth, and I alluded to this in the second point I made. Fifty-four percent of all of our jobs are from small businesses, and when we hurt small businesses' ability to hire people, obviously we are hurting families, we are creating more unemployment, and we are preventing the economy from rebounding.

I mentioned the fact that the top two brackets of our income-tax code is where at least half of all of the small business income is reported and taxes are paid. That is one of the areas where the administration wants to increase taxes. Why would we do this when, as the Small Business Administration says, it would force many small businesses or could force many small businesses to close? It doesn't make sense. That is why we are focused on cutting spending, capping that spending over time, and ensuring those caps stay in place through a balanced budget amendment.

I think the American people have an understanding of this. There have been a lot of polls quoted lately. I just wish to refer to one, which is only a week old. It is the Rasmussen poll from last Thursday. The question was asked whether there should be a tax hike included in any legislation to raise the debt ceiling--a pretty straightforward question. Rasmussen is a very reputable pollster. This was just 1 week ago. Most voters said no. Only 34 percent thought a tax hike should be included. Fifty-five percent disagreed, said it should not. Among those affiliated with neither political party--the so-called Independents--35 percent favored it and 51 percent--a majority--opposed including a tax hike in the legislation to raise the debt ceiling.

So we are with the American people on this issue. It isn't necessary. Taxes aren't the problem. It affects a lot more people than they ever think it will. Finally, if we want to really hurt economic growth, if we want to really kill job creation, then just pile more taxes on to the economy. It doesn't make sense. That is why we are so insistent on supporting legislation that would cut spending rather than raise taxes.

I yield the floor.

The following Senator is necessarily absent: the Senator from Arkansas (Mr. Boozman).

The following Senator is necessarily absent: the Senator from Arkansas (Mr. Boozman).

The following Senator is necessarily absent: the Senator from Arkansas (Mr. Boozman).

Madam President, first, let me reassure my friend and colleague, the leader of the Senate, that it is our view that the debt ceiling will be extended, and Leader McConnell wanted to make that crystal clear in his discussions with Leader Reid, so the two of them could work together on a plan that the Senate could pass and send over to the House, to ensure that our debt ceiling would be increased and, thus, assure the markets they need not be concerned about that fact. As I have said many times, Republicans are not going to be the ones who would throw us into default.

Yesterday, I spoke on the floor about the reason Republicans are opposed to raising taxes. The President himself, last December, said raising taxes in a time of economic downturn would be a mistake, the wrong thing to do. We are still in that economic downturn. In fact, things are worse now than they were then. It is similar to a doctor treating a patient. When we diagnose what is wrong, we deal with what is wrong. We don't try to fix something else. Our problem is spending; it is not taxes. That is why we need to focus on spending rather than taxes. At the conclusion of my remarks, I will ask unanimous consent to put an op-ed from the Wall Street Journal into the Record. It is written by Michael Boskin, who makes the point very clearly that our problem is spending, not taxes, and that we should be focused on reducing spending growth, especially in entitlements. He is a professor of economics at Stanford University and senior fellow at the Hoover Institution and he chaired the Council of Economic Advisers for the first President Bush. I will refer to that in a moment.

Yesterday, I said there were three reasons why Republicans were not willing to raise taxes at this time. The first was that the problem, as I said, is spending, not taxes. Spending has increased under President Obama from 20 percent of GDP--the historic average--to 25 percent in just 3 years. That has been the reason we have had a deficit of $l.5 trillion each of those years, and we will see deficits in that order of magnitude for as far as the eye can see.

The second reason not to raise taxes is that when we talk about whom the taxes actually apply to, it turns out they don't just apply to millionaires and billionaires. I pointed out that there were 319,000 households that reported over $1 million in income tax. Again, that is 319,000. But the tax the President is talking about would apply to 3.6 million taxpayers--more than 10 times that many. So the point is, frequently, Democrats like to aim at the rich--the so-called millionaires and billionaires--and they end up hitting a whole lot of other folks who aren't in that category of millionaire and billionaire. It has happened before with the alternative minimum tax, which was originally to apply to 125 people, I think, and now it hits between 20 million and 30 million households. That is the second reason.

I might add, by the way, my friend, the majority leader, said a moment ago there is nothing wrong with taxing yachts or airplanes and that he would, in fact, rather have an airplane than a yacht. I remember the experience we had with that. We were going to hit the millionaires. In 1990, we raised the tax on yachts and other luxury items. All the people who made boats in Maine, Massachusetts, and other States lost their jobs. I think it was something over 9,000 jobs that were lost in the boat building industry. Congress quickly repealed that. Within 3 years, we had to repeal that big luxury tax. We weren't hitting millionaires and billionaires; we were hitting the people who actually made the yachts.

Right after 9/11, Congress passed an accelerated depreciation provision for the general aviation industry. The idea there was to make sure 9/11 didn't hit that industry too hard and jobs would be saved. In the President's stimulus bill, that accelerated depreciation provision for business jets was reauthorized. That is the thing we are talking about here, when we talk about business jets.

The President has said business jets should not receive that kind of tax treatment. The people who he said would be benefited by the stimulus package with jobs created or saved are the people who will lose their jobs if that particular tax treatment is taken away.

Maybe we should look at that. I am not against looking at that tax treatment. If we should look at it and decide it is not appropriate, maybe people will lose their jobs, but we may want to get rid of it; we should use whatever reduction there is in that to create lower rates for corporations across the board, as the President indicated, because then we can be more competitive with corporations abroad that have much lower corporate tax rates than the United States.

That gets me to the third reason we should not raise tax rates: because it will kill jobs, hurt the economy. If we want to put people back to work, we cannot impose more regulatory or tax burdens on the very businesses that create the jobs. Two-thirds of the jobs coming out of a recession are created by small businesses. Fifty percent of the income of the small businesses is reported in these top two income tax brackets that would be affected by the President's proposal to raise taxes. They would be hit by this and, as a result, they would not hire as many people.

There are a couple items from today's paper that I will use to illustrate the point. From the Phoenix Business Journal, it says: ``U.S. small businesses out of gas on job creation.'' They point out:

Small-business owners continue to be pessimistic about the

economy. . . . New jobs are not to be found on Main Street .

. . Economic uncertainty was cited as the biggest obstacle to

hiring. . . .

One of America's more colorful entrepreneurs, Steve Wynn, in Nevada, who is one of the majority leader's constituents, a self-described Democrat, says that ``this administration is the greatest wet blanket to business and progress and job creation in my lifetime.'' He says in his report to his company shareholders on the company's quarterly conference call that ``my customers and the companies that provide the vitality for the hospitality and restaurant industry in the United States of America, they are frightened of this administration, and it makes you slow down and not invest your money.'' He goes on.

I have talked to Mr. Wynn. He is very concerned about the regulatory and tax burdens being imposed upon not just his industry but across the board. That is what is inhibiting economic growth.

One of the taxes proposed by the administration was evaluated by this administration's Small Business Administration, the Office of Advocacy of the SBA. They said:

It could ultimately force many small businesses to close.

Why would the administration propose a tax increase on, in this case, retailers and manufacturers, primarily, that could ultimately force small businesses to close, according to the administration's own SBA? It doesn't make sense.

For all three reasons, we should not be raising taxes. The President was right last December, and the reason is because spending is the problem, not taxes; that we end up aiming at the millionaires and billionaires, but we hit a broader swathe of our economy; and, third, because it would kill job creation and inhibit economic growth to enable us to get out of this recession.

The final point I would make here relates to that. It is the Wall Street Journal op-ed of July 18 by Michael Boskin.

Madam President, I ask unanimous consent to have printed in the Record this op-ed piece at the conclusion of my remarks.

The point he makes here--and I will quote a couple of points--is regarding the President's demand that we raise taxes, and he says, ``His timing couldn't be worse.'' Let me quote from this.

Two problems arise when marginal tax rates are raised.

First, as college students learn in Econ 101, higher marginal

rates cause real economic harm. The combined marginal rate

from all taxes is a vital metric, since it heavily influences

incentives in the economy--workers and employers, savers and

investors base decisions on after-tax returns. Thus tax rates

need to be kept as low as possible, on the broadest possible

base, consistent with financing necessary government

spending.

The second point he makes is that as tax rates rise, the tax base shrinks, and ultimately you have a much smaller group of people paying at those very highest levels. He goes on to point out some examples of somebody in the upper brackets in the State of California, which is a high-tax State. When you add in the California taxes, the payroll taxes to fund ObamaCare, ultimately the President's idea of uncapping Social Security payroll taxes, the combined marginal rates would rise to a stunning 58.4 percent. Then, if you added in the requirements to pay for the additional costs of the excess spending the administration has proposed, the taxes could drive the combined marginal rate to more than 70 percent by 2035 and 80 percent by 2050. I mean, there is a point at which people will stop working for that next marginal dollar because most of it goes to Uncle Sam.

He also takes the example of a teacher in California earning $60,000, and when you add in all those other things, the marginal rate goes to an astounding 71 percent. He says:

At the margin, virtually everyone would be working

primarily for the government, reduced to a minority partner

in their own labor.

I will quote one of his conclusions and then conclude.

Higher tax rates are the major reason why European per-

capita income, according to the Organization for Economic

Cooperation and Development, is about 30 percent lower than

in the United States.

The point is that imposing more taxes on the economy not only inhibits job creation, but it reduces productivity because Americans stop working that extra hour or that extra day since most of what they earn is going to be given to Uncle Sam. That is part of the problem and one of the reasons the European standard of living is 30 percent lower than here in the United States. Do we want to get to where Europe is? I think the answer is no.

So we have to deal with extending the debt ceiling. We should try to reduce spending so that we don't have this future cloud hanging over our head and, frankly, to prevent having to come back to increasing the debt limit every few months or years. But the way to do that is not by raising taxes, which will not raise the revenues--it will inhibit economic growth--but, rather, by focusing on the real problem, which is spending, which has increased from 20 to 25 percent of GDP in just 3 years, and getting spending under control.

I mentioned yesterday, for example, that the President had taken a lot of things off the table. My friend the majority leader said a moment ago that the President has decided he is willing to compromise about reducing spending. I don't think he is. I have been sitting in on those negotiations. I haven't seen that.

We proposed three things--just three things--that wouldn't touch beneficiaries: Medicare, Medicaid, and uninsured benefits going to people who aren't supposed to get them, or overpayments. You can save over $100 billion a year by simply not paying people what the law says they shouldn't receive, just stopping the overpayments, or paying people who aren't eligible for one of those three services. You are not touching anybody who is currently eligible for Medicare, Medicaid, or uninsured benefits. You are not touching them. They receive their full benefits. But let's simply watch out for taxpayer dollars.

The problem is, it is like renting a car. Has anybody here ever washed a rental car? When you rent a car and you go home, is washing it the first thing you do? If it gets a little dirty, do you wash it before you turn it back in? No. This is someone else's money, and people aren't watching it. It is taxpayer money that is now administered by the Federal Government through Medicare, Medicaid, and unemployed insurance, and the reality is that people aren't trying to stop the waste, fraud, and abuse.

All that is taken off the table. No, the administration says, we don't want to talk about that because we don't want people who receive those benefits to have to sacrifice. Well, the people who are receiving the benefits aren't sacrificing. The taxpayers are the ones who are sacrificing by contributing money to the government that is then wasting.

There is plenty of reform out there to stop wasteful Washington spending. If the administration would be willing to do those things, then I think we could find enough savings so that we wouldn't have to even be talking about tax increases, which for the three reasons I mentioned are so harmful to our society, to our families, to our businesses, and to our economy.

So I hope we will continue this debate on the so-called cut, cap, and balance legislation that does require cutting spending, constraining it over time, and ensuring that over the long term--over the next 5, 10, 15, 20 years--these savings don't all evaporate because we go back to our big spending ways. At least a balanced budget amendment would prevent us from doing that. So I fully support the legislation that will be brought forward. I presume it will pass the House of Representatives this evening, and I am looking forward to the debate here in the Senate so that we can try to adopt that same legislation.

Exhibit 1

[From the Wall Street Journal, July 18, 2011]

Get Ready for a 70% Marginal Tax Rate

(By Michael J. Boskin)

President Obama has been using the debt-ceiling debate and

bipartisan calls for deficit reduction to demand higher

taxes. With unemployment stuck at 9.2% and a vigorous

economic ``recovery'' appearing more and more elusive, his

timing couldn't be worse.

Two problems arise when marginal tax rates are raised.

First, as college students learn in Econ 101, higher marginal

rates cause real economic harm. The combined marginal rate

from all taxes is a vital metric, since it heavily influences

incentives in the economy--workers and employers, savers and

investors base decisions on after-tax returns. Thus tax rates

need to be kept as low as possible, on the broadest possible

base, consistent with financing necessary government

spending.

Second, as tax rates rise, the tax base shrinks and

ultimately, as Art Laffer has long argued, tax rates can

become so prohibitive that raising them further reduces

revenue--not to mention damaging the economy. That is where

U.S. tax rates are headed if we do not control spending soon.

The current top federal rate of 35% is scheduled to rise to

39.6% in 2013 (plus one-to-two points from the phaseout of

itemized deductions for singles making above $200,000 and

couples earning above $250,000). The payroll tax is 12.4% for

Social Security (capped at $106,000), and 2.9% for Medicare

(no income cap). While the payroll tax is theoretically split

between employers and employees, the employers' share is

ultimately shifted to workers in the form of lower wages.

But there are also state income taxes that need to be kept

in mind. They contribute to the burden. The top state

personal rate in California, for example, is now about 10.5%.

Thus the marginal tax rate paid on wages combining all these

taxes is 44.1%. (This is a net figure because state income

taxes paid are deducted from federal income.)

So, for a family in high-cost California taxed at the top

federal rate, the expiration of the Bush tax cuts in 2013,

the 0.9% increase in payroll taxes to fund ObamaCare, and the

president's proposal to eventually uncap Social Security

payroll taxes would lift its combined marginal tax rate to a

stunning 58.4%.

But wait, things get worse. As Milton Friedman taught

decades ago, the true burden on taxpayers today is government

spending; government borrowing requires future interest

payments out of future taxes. To cover the Congressional

Budget Office projection of Mr. Obama's $841 billion deficit

in 2016 requires a 31.7% increase in all income tax rates

(and that's assuming the Social Security income cap is

removed). This raises the top rate to 52.2% and brings the

total combined marginal tax rate to 68.8%. Government, in

short, would take over two-thirds of any incremental earning.

Many Democrats demand no changes to Social Security and

Medicare spending. But these programs are projected to run

ever-growing deficits totaling tens of trillions of dollars

in coming decades, primarily from rising real benefits per

beneficiary. To cover these projected deficits would require

continually higher income and payroll taxes for Social

Security and Medicare on all taxpayers that would drive the

combined marginal tax rate on labor income to more than 70%

by 2035 and 80% by 2050. And that's before accounting for the

Laffer effect, likely future interest costs, state deficits

and the rising ratio of voters receiving government payments

to those paying income taxes.

It would be a huge mistake to imagine that the cumulative,

cascading burden of many tax rates on the same income will

leave the middle class untouched. Take a teacher in

California earning $60,000. A current federal rate of 25%, a

9.5% California rate, and 15.3% payroll tax yield a combined

income tax rate of 45%. The income tax increases to cover the

CBO's projected federal deficit in 2016 raises that to 52%.

Covering future Social Security and Medicare deficits brings

the combined marginal tax rate on that middle-income taxpayer

to an astounding 71%. That teacher working a summer job would

keep just 29% of her wages. At the margin, virtually everyone

would be working primarily for the government, reduced to a

minority partner in their own labor.

Nobody--rich, middle-income or poor--can afford to have the

economy so burdened. Higher tax rates are the major reason

why European per-capita income, according to the Organization

for Economic Cooperation and Development, is about 30% lower

than in the United States--a permanent difference many times

the temporary decline in the recent recession and anemic

recovery.

Some argue the U.S. economy can easily bear higher pre-

Reagan tax rates. They point to the 1930s-1950s, when top

marginal rates were between 79% and 94% or the Carter-era

1970s, when the top rate was about 70%. But those rates

applied to a much smaller fraction of taxpayers and kicked in

at much higher income levels relative to today.

There were also greater opportunities for sheltering income

from the income tax. The lower marginal tax rates in the

1980s led to the best quarter-century of economic performance

in American history. Large increases in tax rates are a

recipe for economic stagnation, socioeconomic ossification,

and the loss of American global competitiveness and

leadership.

There is only one solution to this growth-destroying,

confiscatory tax-rate future: Control spending growth,

especially of entitlements. Meaningful tax reform--not with

higher rates as Mr. Obama proposes, but with lower rates on a

broader base of economic activity and people--can be an

especially effective complement to spending control. But

without increased spending discipline, even the best tax

reforms are doomed to be undone.

Madam President, I suggest the absence of a quorum.

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

Mr. President, I wanted to speak for a moment here about the status of discussions that Members of Congress have been having with the President and others regarding the debt ceiling, the extending of the debt ceiling, and how we can solve the problem that confronts our country.

Obviously, in 10 minutes, I will be brief and hit some of the highlights. But the first question I was asked on a program I was involved in was: Well, why wouldn't Republicans be supportive of raising taxes? So I want to answer that. There are three answers to that question. The first is, if you go to the doctor and he is going to treat you for what is wrong with you, he needs to figure out what is wrong and then treat that condition rather than something totally different. So the reason we are not going to want to raise taxes here is because it has nothing to do with the problem we have.

I meant to have this chart blown up, but I wasn't able to do it in time, but this shows how much money we are

spending. As you can see, when President Obama came into office, the spending spiked dramatically. We have historically spent about 20 percent of the gross domestic product of the country. With the Obama spending, we have gone straight up to about 25 percent of our gross domestic product. The problem, in other words, is not taxing; the problem is spending. So that is the first reason we should focus on spending, and reducing Federal spending, not focus on the Tax Code, which is not the problem.

The second problem with raising taxes as a part of this exercise is the taxes the President is talking about are not just on millionaires and billionaires. There are 319,000 households that report income of over $1 million, so you can say 319,000 billionaires or millionaires. But there are 3.6 million households also in the same tax bracket that don't report incomes of even $1 million. So as we have done before, with the alternative minimum tax, for example, we aim at the millionaires and billionaires but we end up hitting a lot of other Americans. This isn't just about taxing millionaires and billionaires.

Who are the other people who would be the target of the tax increases proposed by the President? Well, we know that 50 percent of all small business income is reported in those top two brackets. So the first thing you have to think about here is doing harm to the economy. If you are hitting the small businesses with more taxes--which, by the way, historically create two-thirds of the jobs coming out of a recession-- you are going to inhibit economic growth. That is a problem that is recognized even by the Obama administration and by the President. Last December, the President reached agreement with the Congress and we extended the existing tax rates--sometimes they are called the Bush tax cuts, but those tax rates have been in existence for a decade now--and they were extended another 2 years.

At the time the President said: In the time of economic downturn, that is the worst time to raise taxes so we shouldn't do it.

We are still in an economic downturn, one could say even worse than it was back then. We are now back up to 9.2 percent unemployment. The economy is not getting better; it is still sick, and the worst medicine for a sick economy, as even the President has said, is a tax increase.

One of the taxes the administration sought to increase was the subject of a report by the Obama administration's small business agency, the SBA, and it said this particular tax increase ``could ultimately force many small businesses to close.''

Why would you propose raising a tax which could ultimately force many small businesses to close? It doesn't make sense. That is the second reason we are focused on wasteful Washington spending, not on raising taxes.

The third reason to talk about the problem of raising taxes is related to the second; that is, the effect it would have on job creation and the economy. If you add the tax rate that will result from the automatic tax increases in January of 2013 and the tax increases that are part of ObamaCare, the top rate in this country will be 44.8 percent, and that is before your State income tax rates.

Corporations pay 35 percent, and they get a lot of deductions, so they don't always pay 35 percent. So here you have a small business person who is paying 10 percentage points above what a big corporation pays, and the 35 percent is too high. The President himself has said: We should get rid of corporate so-called tax expenditures or loopholes so we can, with that savings, reduce the corporate rate in America to something closer to 20 or 25 percent, which would make American businesses more competitive with our foreign competitors.

If we need to reduce the corporate rate down to 20 or 25 percent, it makes absolutely no sense for us to have the small business entrepreneurs in our country paying almost 45 percent. That is why we don't want to raise taxes on small businesses.

Moreover, some of these taxes are not just on those who are in the top two income tax brackets but are in businesses that I mentioned, the retailers and manufacturers, that would be hit with one of the taxes the SBA says could ultimately force many small businesses to close.

So those are the three key reasons why it is not the time to raise taxes, why we ought to be focused on spending. Spending is the problem. It has gone up from 20 to 25 percent of the gross domestic product in this country. We have had a deficit now of $1.5 trillion each of the years of the Obama administration.

The Obama administration, in just 5 years--if it gets the first year of the second term--in 5 years would double all the national debt of this country all the way from George Washington to George W. Bush.

So if you take all Presidents and the debt we have acquired and then you double it, that is what happens under 5 years of the Obama administration budget and then the second 5 years would triple it. That is the problem we have. It is not taxes; it is spending. Secondly, because you are not just hitting millionaires and billionaires, and, third, because it would be very bad for the economy.

The administration has said: Well, it is just not fair. We need some ``shared sacrifice'' is their term, some shared sacrifice. I have two answers to that.

First of all, how about before we ask people to sacrifice, let's get rid of the waste, fraud, and abuse, and initiate savings that the Office of Management and Budget, the General Accounting Office, the CBO, all these groups have found exists in our budget, if we would just get about it.

There is over $100 billion a year we could save by not making overpayments or improper payments in Medicare, Medicaid, and unemployment insurance, just those three alone. In unemployment insurance, $1 out of every $9 is improperly paid. What is wrong with a government that has that kind of error rate? That is $16.5 billion a year. In Medicare, the error rate is over 10.5 percent and Medicaid 8.4 percent. You could save $87 billion a year just in those two programs. That is well over $100 billion a year.

What does the administration say to that? No, we don't want to talk about that.

That is not shared sacrifice. That is not any sacrifice. You are not taking any benefit away from any beneficiary by just enforcing the law Congress has passed. The administration says, no, it doesn't want to talk about those things.

The other reason is, I am just asking here: What is fair? You have to admit, the top 1 percent of American taxpayers are wealthy people and so they pay twice as much in taxes. They represent 1 percent of the taxpayers, of course. So do they pay 2 percent of the taxes? How about 5 percent? Does the top 1 percent pay 10 percent of all the taxes, 20 percent, 30 percent? How about 38 percent? One percent of the people pay 38 percent of the taxes in the country. I would call that shared sacrifice. The top 10 percent pay almost 70 percent. So how much do you want the top 10 percent to pay, 80 percent, 90 percent?

How fair is that, when the bottom 50 percent pay nothing and all of them receive benefits from the government and 30 percent of them receive an EITC benefit or payments back from the government in some other form, directly to them. So you have half the people who pay no Federal income taxes, the top 10 percent pay 70 percent of all the income tax.

We have said that is OK; we want to have a progressive tax rate. The OECD--these are the developed countries of the world--have done a study, and they make the point we have the most progressive income tax system in the world. Of all the developed countries in the world, we make the wealthy pay the most. We have said that is OK.

But how much more can this one group pay? They cannot carry the entire government on their back. So it is, frankly, political demagoguery for anybody to suggest that either we can solve the problem by taxing corporate jets or we can solve the problem by having millionaires and billionaires pay more than they already do. That only gets you a little bit.

The people who end up paying the taxes are the broad middle class. That is the way it always is.

So beware of the politician who says: I am just going to target the rich; you don't have to worry about it. The tax on millionaires was supposed to hit

about 125 millionaires, the AMT, that now hits somewhere between 20 million and 30 million Americans.

That is why I say we have to solve the problem. The problem is spending. It is not revenues. So when people ask me: Well, why aren't you willing to meet the President halfway and agree to raise taxes, those are the three reasons. It would stop our economy from creating the jobs it needs in order to get out of the economic doldrums we are in and begin to produce the kind of economic recovery that produces wealth. When you are unemployed, you are not working, you are not making money, you are not paying taxes to the Federal Government.

We can pay the Federal Government a lot more in tax revenues every year if we go back to work and if we are making more money and we are more productive as a country. But as long as we are in the condition we are right now, the Federal revenues are going to decline.

That is the answer. Get the economy moving again, and you don't do that by imposing another heavy burden of taxes on it. That is why we have to focus on spending. I hope my colleagues and I can work together in the days to come and reach agreement so we can actually get the country moving on a path toward economic recovery and sound fiscal future.

The following Senators are necessarily absent: the Senator from Oklahoma (Mr. Inhofe), the Senator from Alaska (Ms. Murkowski), the Senator from Kentucky (Mr. Paul), the Senator from Florida (Mr. Rubio), the Senator from Pennsylvania (Mr. Toomey), and the Senator from Louisiana (Mr. Vitter).

The following Senators are necessarily absent: the Senator from North Carolina (Mr. Burr), the Senator from Utah (Mr. Hatch), and the Senator from Kansas (Mr. Roberts).

Further, if present and voting, the Senator from Utah (Mr. Hatch) would have voted ``yea.''

The following Senators are necessarily absent: the Senator from North Carolina (Mr. Burr), the Senator from Utah (Mr. Hatch), the Senator from Kansas (Mr. Moran), and the Senator from Kansas (Mr. Roberts).

Further, if present and voting, the Senator from Utah (Mr. Hatch) would have voted ``nay.''

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

Mr. President, I ask unanimous consent to speak for up to 5 minutes as in morning business.

Mr. President, I ask unanimous consent that the time during the quorum call be equally divided, and I suggest the absence of a quorum.

The following Senators are necessarily absent: the Senator from Alaska (Ms. Murkowski), the Senator from Florida (Mr. Rubio), and the Senator from Louisiana (Mr. Vitter).

Mr. President, today I am introducing, with Senator John McCain, S. 1344, which is a response to Arizona's largest wildfire, called the Wallow Fire. This act is the Wallow Fire Recovery and Monitoring Act.

The Wallow Fire in Arizona burned, over about 40 days, 538,000 acres of Arizona land, making it the largest fire in the history of our State. Just to put it into perspective, that is nearly 841 square miles or almost four times the

size of the city of Chicago. The fire destroyed 32 homes and 4 rental cabins. Nearly 10,000 people were evacuated at one point, and the fire cost the taxpayers over $100 million before it was finally extinguished. Unfortunately, it will likely cost double that amount for the necessary rehabilitation of the forests that needs to occur now. After a fire such as this, there is only a short opportunity to hasten forest rehabilitation, reduce risks of flooding, insect epidemics, and future fires, and capture at least some of the economic benefit from the dead and dying trees to help offset and pay for those restoration costs.

Given the urgent need for action, as I said, I am introducing today the Arizona Wallow Fire Recovery and Monitoring Act, joined by my colleague, John McCain, as an original cosponsor. This legislation would expedite the removal of hazard, dead, and dying trees in community protection management areas within the Wallow Fire area. The removal projects carried out under the act will be completed within 18 months of enactment. The reason for this timeline is that when it comes to timber harvesting of the fire-killed trees, the costs of delay are extreme. Fire-killed trees will lose more than 40 percent of their value in less than 2 years.

Due to the intensity, the size, and the magnitude of the fire, there is a tremendous amount of dead and dying trees within the Wallow Fire area. Portions of the forest that have burned pose a risk to forest users, to communities, and to private property and the remaining resources. These risks include the hazards of falling trees, erosion, flooding, reburns due to excess fuel loads, and insect infestation risk to the remaining live trees. Under these postfire conditions, timber salvage is a management tool to mitigate these risks, generate revenue and jobs, and put the forest on the road to recovery.

We saw the negative consequences of delay firsthand in Arizona after the Rodeo-Chediski Fire in 2002, which at that point had been our State's largest fire. Bureaucratic regulations and lawsuits so severely delayed salvage efforts that by the time the projects were cleared to proceed, the trees had lost most of their economic value. Congress should not stand by and allow this situation to be repeated.

That said, we are not looking to eliminate environmental safeguards or exempt timber harvests from Federal environmental laws. This bill is narrowly tailored, limiting the removal of hazard, dead, and dying trees to those trees located within community protection management areas. One of these areas includes the wildland urban interface and other areas critical to communities. In addition, a comprehensive hazard tree and commercial timber evaluation and an environmental assessment under the National Environmental Policy Act, or NEPA, are required. All appeals and judicial review would follow the processes in the bipartisan Healthy Forest Restoration Act.

The practice of postfire timber salvage may be controversial in part because there is limited scientific information on its ecological effects. Most of the scientific literature that does exist is based on forests in the Pacific Northwest. The forests in that part of the country are very different from the dry ponderosa pine-dominated forests that burned in the Wallow Fire. Thus, the bill would require monitoring for all timber removal projects implemented under the act.

Finally, from a fiscal perspective, there is never going to be enough Federal funding for the forest restoration work that needs to be done to save the forest that remains. Acknowledging this reality, this bill takes the proceeds from the timber removal project sales and keeps them on this forest to help pay for future forest restoration treatments.

This bill strikes a responsible balance between environmental concerns and economics after a catastrophic wildfire. I urge my colleagues to support its swift passage.

The Arizona Wallow Fire Recovery and Monitoring Act requires a comprehensive evaluation of the forest conditions and hazard tree and fire-damaged timber resources across the Wallow Fire Area; limits the areas where dead and dying trees can be removed to Community Protection Management Areas; limits tree removal to hazard trees and trees that are already down, dead, broken or severely root sprung trees where mortality is highly expected; prohibits the construction of new, permanent roads; provides for an expedited, but thorough, environmental review of tree removal projects proposed in the Wallow Fire Area, including full public participation in the development of such projects; uses the processes for appeals and judical review established in the bipartisan Healthy Forest Restoration Act; requires monitoring of the ecological and economic effects of timber removal projects; and authorizes the use of timber receipts to offset the costs of forest restoration.

Mr. President, today I am introducing, with Senator John McCain, S. 1344, which is a response to Arizona's largest wildfire, called the Wallow Fire. This act is the Wallow Fire Recovery and Monitoring Act.

The Wallow Fire in Arizona burned, over about 40 days, 538,000 acres of Arizona land, making it the largest fire in the history of our State. Just to put it into perspective, that is nearly 841 square miles or almost four times the

size of the city of Chicago. The fire destroyed 32 homes and 4 rental cabins. Nearly 10,000 people were evacuated at one point, and the fire cost the taxpayers over $100 million before it was finally extinguished. Unfortunately, it will likely cost double that amount for the necessary rehabilitation of the forests that needs to occur now. After a fire such as this, there is only a short opportunity to hasten forest rehabilitation, reduce risks of flooding, insect epidemics, and future fires, and capture at least some of the economic benefit from the dead and dying trees to help offset and pay for those restoration costs.

Given the urgent need for action, as I said, I am introducing today the Arizona Wallow Fire Recovery and Monitoring Act, joined by my colleague, John McCain, as an original cosponsor. This legislation would expedite the removal of hazard, dead, and dying trees in community protection management areas within the Wallow Fire area. The removal projects carried out under the act will be completed within 18 months of enactment. The reason for this timeline is that when it comes to timber harvesting of the fire-killed trees, the costs of delay are extreme. Fire-killed trees will lose more than 40 percent of their value in less than 2 years.

Due to the intensity, the size, and the magnitude of the fire, there is a tremendous amount of dead and dying trees within the Wallow Fire area. Portions of the forest that have burned pose a risk to forest users, to communities, and to private property and the remaining resources. These risks include the hazards of falling trees, erosion, flooding, reburns due to excess fuel loads, and insect infestation risk to the remaining live trees. Under these postfire conditions, timber salvage is a management tool to mitigate these risks, generate revenue and jobs, and put the forest on the road to recovery.

We saw the negative consequences of delay firsthand in Arizona after the Rodeo-Chediski Fire in 2002, which at that point had been our State's largest fire. Bureaucratic regulations and lawsuits so severely delayed salvage efforts that by the time the projects were cleared to proceed, the trees had lost most of their economic value. Congress should not stand by and allow this situation to be repeated.

That said, we are not looking to eliminate environmental safeguards or exempt timber harvests from Federal environmental laws. This bill is narrowly tailored, limiting the removal of hazard, dead, and dying trees to those trees located within community protection management areas. One of these areas includes the wildland urban interface and other areas critical to communities. In addition, a comprehensive hazard tree and commercial timber evaluation and an environmental assessment under the National Environmental Policy Act, or NEPA, are required. All appeals and judicial review would follow the processes in the bipartisan Healthy Forest Restoration Act.

The practice of postfire timber salvage may be controversial in part because there is limited scientific information on its ecological effects. Most of the scientific literature that does exist is based on forests in the Pacific Northwest. The forests in that part of the country are very different from the dry ponderosa pine-dominated forests that burned in the Wallow Fire. Thus, the bill would require monitoring for all timber removal projects implemented under the act.

Finally, from a fiscal perspective, there is never going to be enough Federal funding for the forest restoration work that needs to be done to save the forest that remains. Acknowledging this reality, this bill takes the proceeds from the timber removal project sales and keeps them on this forest to help pay for future forest restoration treatments.

This bill strikes a responsible balance between environmental concerns and economics after a catastrophic wildfire. I urge my colleagues to support its swift passage.

The Arizona Wallow Fire Recovery and Monitoring Act requires a comprehensive evaluation of the forest conditions and hazard tree and fire-damaged timber resources across the Wallow Fire Area; limits the areas where dead and dying trees can be removed to Community Protection Management Areas; limits tree removal to hazard trees and trees that are already down, dead, broken or severely root sprung trees where mortality is highly expected; prohibits the construction of new, permanent roads; provides for an expedited, but thorough, environmental review of tree removal projects proposed in the Wallow Fire Area, including full public participation in the development of such projects; uses the processes for appeals and judical review established in the bipartisan Healthy Forest Restoration Act; requires monitoring of the ecological and economic effects of timber removal projects; and authorizes the use of timber receipts to offset the costs of forest restoration.

The following Senator is necessarily absent: the Senator from North Carolina (Mr. Burr).

Mr. President, I have heard a lot of talk on the Senate floor, including from the last speaker, and certainly from the President of the United States about shared sacrifice. The White House spin is that the Democrats in the negotiations about extending the debt ceiling have conceded hundreds of billions of dollars in savings and Republicans have conceded nothing and therefore Republicans need to be willing to raise taxes. That is the mantra. That is the spin.

But there are two things wrong with this spin: First, it is wrong as a matter

of fact, as I will point out, and second, it would result in very bad policy. As Senator Rubio said a moment ago, the only thing that should be off the table is bad policy, and certainly anything that would hurt our economy and job creation at this time is bad policy.

First with regard to the assertion from some in the White House that Democrats have made all the concessions and so it is the Republicans' turn--the last speaker, as a matter of fact, said, and I will quote her directly, ``Everybody pays except the rich.'' Well, I would like to point out why that is absolutely not the case.

The negotiations Vice President Biden has presided over have talked about two different kinds of savings: on the discretionary side, which is the budget we deal with every year, and on the mandatory side, which is spending programs such as Medicare, Medicaid, some of TRICARE, some veterans' benefits, Social Security, and things of that sort.

If the savings the White House has attempted to portray as all coming from Democratic concessions refers to the discretionary part of this pie, then I would simply say that is a false statement because we haven't discussed it. What we have talked about is setting a top-line budget number--a so-called 302(a) number in budget parlance--and that is what the Members of the House and Senate would then have to spend. But there has been no discussion of where those savings come from, so it simply would be wrong to say there has been any kind of negotiation about where those savings come from and the Democrats have made all of the concessions. There have been no concessions made by either side, as a matter of fact.

If it is the mandatory side we are talking about, it is true we have had a lot of discussion about savings that can result from changes in the way we operate some of these mandatory programs. Now, we are not talking about any major reform of Medicare or anything of that sort, but if I can just sort of characterize something in a very loose way as waste, fraud, and abuse, there are a lot of savings that can occur in various programs, and there are even some revenue increases that can result from increased fees and that sort of thing that do result in some additional savings overall on the mandatory side.

In terms of the revenue increases, I would point out that between $153 billion and over $200 billion of the money on that side of the ledger actually comes from increased revenues. So when the White House says: Well, revenues have to be on the table, the fact is that revenues have been on the table. We have been talking about increased revenues. We are not talking about increasing taxes. But if the government sells something and gets money from it, that is revenue. If there is a user fee of some kind and we want to raise that to keep up with the times, that is revenue. And if you add up all of the revenues we have agreed to, we Republicans have agreed to between $150 billion and $200 billion. So it is simply false to suggest that we haven't been willing to talk about revenues and that all of the concessions have been on the Democratic side.

We have also had some spending reductions or less rate in the growth of spending in some of these mandatory programs on the table for discussion, and about 60 percent of those, in my calculation, are concessions Republicans have made, and about 40 percent are concessions Democrats have made. My Democratic counterparts would probably argue it is somewhat different, from their point of view, but the fact is both sides have made concessions. And even if you concede they are 50-50, the fact is, therefore, Republicans have made as many concessions in these negotiations as have our Democratic colleagues.

By the way, one reason we have both been willing to make concessions is we agree we are in a dire circumstance here, and we sometimes have to get out of what we call our comfort zone and agree to what in ordinary times we would never agree to but we realize now we have to make some changes. So we are willing to make concessions that ordinarily we wouldn't, and we have, and so have the Democrats. The net result, as I said, I think it is 60-40 on our side, plus all the revenues we have conceded. But if somebody on the other side said: No, it is 50-50, or something on that order, I wouldn't argue. But the fact is, it is false and misleading for the White House to suggest that all of the concessions have been made by the Democrats and none have been made by Republicans. That is simply factually incorrect.

The second thing that is wrong with this spin is that, as Senator Rubio said, bad ideas should be off the table, and it is a bad idea to raise taxes on an economy that is already sick. I mean, the last thing we should be doing is raising taxes, as a result of which job creation would be inhibited. It is the worst medicine for a sick economy.

I asked one of my Democratic colleagues why, since we shouldn't be raising taxes at this point in time, there was such an insistence on his side. His response was: Well, you have to understand, with us, it is kind of theological. Well, maybe it is theological, but I would argue that ideology here has a place to the extent that it is backed up by reality, but ideology that is not backed up by reality has no place in these negotiations. And raising taxes just for the sake of raising taxes, so that somebody can say to their constituency: Well, we did it, we were able to raise taxes, is not a sound way to approach the problem.

Thomas Sowell, one of the most erudite observers of the American scene, wrote, in National Review Online on July 5, a piece he titled ``Politics vs. Reality.'' It goes to this point.

Mr. President, I ask unanimous consent to have printed in the Record this article at the conclusion of my remarks.

The whole point here about raising taxes is this should not be about shared sacrifice. It shouldn't be about sacrifice at all. We are not talking about austerity. We should be talking about prosperity--in other words, the conditions by which everyone can do well, and specifically, how we can create jobs, how we can put Americans back to work, and how our economy can grow.

As I said, the worst medicine for a sick economy is raising taxes, and that is why Republicans oppose tax hikes and not because, for example, I have some interest in protecting some Hollywood movie millionaire. I don't. The person is probably not in my political party. What I have an interest in is protecting America's small businesses so they do not go broke and so they do not have to close up shop because higher taxes were imposed on them. That is exactly what the President's own Small Business Administration Office of Advocacy said would happen with one of the taxes they propose to raise; that is, repealing LIFO, which is an accounting term meaning last in, first out. The SBA Office of Advocacy said repealing LIFO ``would result in a tax increase for small businesses that could ultimately force many small businesses to close.'' That is from the President's own Office of Advocacy for the SBA. That is what I oppose--putting small businesses out of business just because of some theological attachment to raising taxes.

Accountants have talked for a long time about what the best method of accounting is. The IRS has always said LIFO is perfectly acceptable, and about 36 percent of American businesses--primarily retailers and manufacturers--use this accounting technique. It would be fine if we decide to say: Well, we are going to go to a different technique. What would be wrong is to retroactively impose a tax on people who have been using this accounting method as though they have been doing something wrong. They haven't. The IRS has always said LIFO is fine. But it is all about revenue. We need more money to spend, so we are going to retroactively tax 36 percent of American businesses that use this accounting method. That is wrong, and that is why the Small Business Administration Office of Advocacy has said this could put many small businesses out of business. It is why we shouldn't be considering it.

What are the other taxes they propose? Well, one of them is to cap itemized deductions, so you would only be able to deduct either 28 percent or maybe up to 35 percent of your income. Obviously the first effect of this is to make it much more difficult for Americans to contribute to charity, to buy

homes because they wouldn't have the advantage of the mortgage interest deduction, or to pay medical expenses, and so on. As the Wall Street Journal has editorialized, this is just a backdoor way of raising marginal tax rates without actually appearing to do so.

But the biggest problem with this capping of deductions is not that it is going to hurt the millionaires. They are either going to be caught by the AMT or their income is so high they are even going to be paying above AMT rates notwithstanding these limits on deductions. The real people this hurts are the small business owners who pay in the higher bracket. We know that 50 percent of small business income falls in the top two brackets. Businesses have deductions that are the ordinary and necessary part of doing business. All businesses are allowed to take them, both corporate and noncorporate. Why would we eliminate the ability of small businesses to take the same kinds of deductions corporations can take by capping the amount of deductions that could be taken in income reported in the top two brackets?

The final point about this is we know that efforts to tax millionaires and billionaires always end up taxing a lot more people than that. According to the IRS, in 2008 there were only about 319,000 tax returns that showed an income of $1 million or more, but the number of returns falling in the top two brackets--the ones affected by this proposal of the Democrats--numbered more than 3.6 million people. These would be the people who are affected by this proposed increase in taxes.

I would just parenthetically note two others. The last millionaire tax was the alternative minimum tax. It was created in 1969 and targeted against 155 millionaires. Guess how many people it will apply to this year. It will apply to 34.4 million Americans. So when you aim for the millionaires, you end up getting everybody else.

The third tax the Democrats talk about raising is the old favorite: Big Oil. This is so targeted, it only hits five companies in the whole world, five American companies. Never mind that we are punishing American businesses--American oil companies--that are in the same business as other companies all over the world that are not being punished. No, we are going to attack American businesses that, by the way, employ 9.2 million Americans. We are going to say they have to pay higher taxes than other businesses just like them.

There are three particular tax provisions.

Other businesses get to take an R&D tax credit--research and development. Aren't we all for research and development? Yes, but not in the oil and gas industry. And where might they put that research and development money? Well, for example, into ensuring that when they sink a well deep in the Gulf of Mexico, it will be environmentally safe. Nope, you can't deduct that. All other businesses will be able to but not you. What sense does that make? It is bad policy.

How about the usual and necessary business expense, the deduction for writeoffs for business investment? All other companies get to deduct that, but we would say to the oil companies: You don't get that same deduction.

Perhaps most perniciously, we are trying to compete with foreign businesses, so we would say to Americans who earn income abroad: You can deduct against the taxes you would owe here the taxes you pay over there. All of the other world nations get to do that. They would take that away from these particular kinds of companies.

So this is discriminatory, it is job killing but, most of all, it impacts American consumers directly because every dollar of increased taxes is going to find its way into the price we pay at the gas station when we buy gas. Now, whom does that hurt, therefore? Does it hurt some millionaires and billionaires? Who owns the oil companies? Well, a lot of pensions do, a lot of retired teachers and firefighters and so on.

People have to think this through. You are not hitting millionaires and billionaires. I know it sounds like good rhetoric, but when you are hitting American businesses that try to compete around the world and that develop a product we would like not to have to pay four bucks a gallon for, the last thing you want to do is to play politics by saying: Well, for those particular folks, we are going to raise their taxes.

I remember the last time we raised taxes on another millionaire kind of outfit, the yachts. It was a luxury tax that we opposed back in 1990, and it seemed like a good idea, just like this tax they were talking about imposing on airplanes. They didn't actually talk about that in our meeting, so I don't know exactly what it is. But they say it would raise $3 billion over 10 years, which pays for hardly a fraction of the $14 trillion debt we have. Nonetheless, they want to go after private airplanes.

I don't know how many people work in the private airplane manufacturing business. But it was interesting that in 1990 when the luxury boat tax was passed, there were 7,600 jobs lost in the boating industry. Very quickly the people who made the boats, a lot of them up in Massachusetts, decided this wasn't such a hot idea and so they repealed the tax in 1993. By the way, it lost revenue because of the unemployment benefits and lost income tax revenue had to be developed in order to offset the loss in business.

The point of all of this is that when the administration and others talk about shared sacrifice, of making some kind of rich business or rich person pay taxes, you have to think through what the effect is on the American economy and on job creation. The reason Republicans oppose these is not because we love the person who pays the tax so much as we wish for American jobs to be created, or at least not have more jobs lost. And the people who are proposing these tax cuts seem to be absolutely oblivious to the effect their proposals would have on hard- working Americans.

My colleague from Washington State a moment ago said, and I will quote her again: Everybody pays except the rich under Republicans' idea of how things ought to be.

I think I pointed out that is not true. But in case anybody needs a reminder of who pays income taxes in the country: The top 1 percent pays 38 percent of all income taxes. The top 10 percent pays 70 percent. The bottom 40 percent pays no personal income tax.

So is it true that everybody pays except the rich? No. The rich pay by far and away most of the taxes paid in this country, and a lot of people believe that is as it should be. We have a progressive system. The rich can afford to pay more, and so we expect more from them. But let's not demagog the issue and suggest that isn't true. It is true. The rich do pay more, and we have decided in this country that they should. But how much more do you want them to pay? Ninety percent? Ninety-five percent? How about 100 percent? How much revenue do you think we could get from somebody if we said he is going to have to pay 100 percent of what he earns in income taxes? We know there are two rates at which you generate exactly zero revenue: zero and 100.

So when we talk about shared sacrifice, let's put this into perspective and let's realize we are not talking about sacrifice in the sense of trying to hurt people or austerity so much as we are talking about prosperity. And you don't create more prosperity with job-killing taxes.

I want to add one other thing for the record here. There are two publications that note areas in which we could save hundreds of billions of dollars if we were willing to discuss them. When we talk about things that are on the table or off the table, here are two things our Democratic friends have said are not on the table: We will not talk about fraud in the unemployment insurance system or fraud in Medicare and Medicaid. According to these two articles, which I will ask to be put in the Record, there are tens of billions of dollars in each where we could save the taxpayers money, money that is being paid out now to either downright crooks or being paid inappropriately to people who don't qualify.

Since 1986, the GAO has published at least 158 reports about Medicare and Medicaid fraud, for example. In 1993, Attorney General Janet Reno declared health care fraud America's No. 2 crime problem, right behind violent crime. These are off the table, some of our Democratic friends say. Well, we think this is a way in which we can save money without requiring others to have to sacrifice.

Mr. President, I ask unanimous consent to have printed in the Record the

piece by Michael Cannon in the National Review On Line dated July 4, and the piece by Paul Davidson from USA Today dated July 5 at the conclusion of my remarks.

I appreciate my colleagues' indulgence here.

Mr. President, the bottom line is that when we talk about shared sacrifice, we need to appreciate that in the negotiations that have been occurring Republicans have made a lot of concessions, and that the reason we oppose the concession of raising taxes is not because we have some ideological attachment to somebody who makes a lot of money but, rather, because we have an ideological attachment to the American worker who needs a job or who needs his or her job protected. From what we understand, the taxes that have been proposed by our Democratic colleagues would all be job killers. At the time our economy is in the unhealthy state it is, the worst medicine is job-killing taxes.

Mr. President, I would be happy to yield. I am also happy to conclude. I think we are rotating between Democrat and Republican.

Mr. President, I am not sure where the question is in there. But what I would say in response is, with all due respect to my colleague, his numbers are absolutely wrong. I don't have at my fingertips the precise figures, but I can tell you this--by the way, I don't also know what you mean by ``in charge of wealth.'' In terms of who owns wealth or income, the people in the upper brackets pay far more in taxes than the percentage of wealth as a percent of the economy, and I would be happy to supply those figures to my colleague. And there is a difference between income taxes and all other taxes as well, and that chart doesn't suggest which is which.

I would be happy, though, to demonstrate to my colleague that whether you are talking about income taxes or all taxes, the upper income level pays far and away the higher percentage than those in the lower portion, and in taxes they pay more than the percentage of wealth that they create or that they earn.

The bottom line is that I think anybody making the argument that there is not shared contribution to the revenues of the country by the upper income would be making a false argument. I know that is not the argument my colleague is making, because he agrees with the progressive income tax system and has pointed out that it is progressive even by the numbers you have.

But let's do this, because I respect my colleague. I will get the numbers I rely upon, you get the numbers you think you rely upon and the sources of each, and you and I can agree to come to the floor at an appropriate time convenient to us both, and then we can both have the data at our fingertips from which we can make our respective arguments.

Sure. And on that last point, it makes a larger point. When Congress tries to get the millionaires and the billionaires, those are the very people who can adjust their way of earning and of giving and of living so that they end up paying less in taxes. That is why it doesn't much matter what the rate of taxes is at the upper income. They are never going to pay more than a certain percentage, because they can afford the lawyers and the accountants to make sure that they don't pay more. It is the people in the middle income who can't do that, and they end up paying up what the IRS says they owe, and they can't adjust their way of living and giving in order to pay less in the way of taxes. Whatever deductions they get, they get, and they are going to have to live with those.

When we try to hit the upper income with higher rates, it generally doesn't work. That is another reason why we think it is an ineffective way.