Floor Statements

The following Senator is necessarily absent: the Senator from Alaska (Ms. Murkowski).

The following Senator is necessarily absent: the Senator from Alaska (Ms. Murkowski).

Mr. President, last June, President Obama promised on national television that ``Government is not going to make you change plans under health reform.''

In his September 2009 address to Congress he told Americans, ``If you have health insurance through your job, nothing in our plan requires you to change what you have.''

Many Americans doubted this would be the case, and they have been proven right.

In the months after the health care law was passed, the administration wrote the regulations for plans with grandfathered status. Grandfathered status was supposed to allow employers to continue offering current health plans, even if those plans don't meet all of the government's new cost-increasing mandates and requirements. And we were told it was intended to help protect Americans enrolled in these plans from ``rate shock,'' or significant premium increases, as a result of the new government mandates.

The consulting firm Mercer has bad news for people hoping to keep what they currently have. It released a new survey of employers on the impact of the health care law. One-quarter of employers surveyed estimate that the law would raise premiums by at least 3 percent. That increase is beyond this year's normal rise in costs due to medical inflation.

A majority of respondents--57 percent--said they will ask employees to pay a greater share of the cost of coverage in 2011, meaning higher deductibles and copays.

As the Mercer study notes, ``The rules for maintaining grandfathered status were tougher than many employers expected. As they start to get a clearer picture of projected costs for 2011, many are finding they need more flexibility to get their cost increases down to a level they can handle.''

Yet the administration's regulations expose employers and employees to extensive bureaucratic redtape just so they can keep their current plans.

In fact, the administration's own experts at the Department of Health and Human Services estimate that between 39 and 69 percent of businesses won't be able to keep the health plans they have now.

Small businesses will fare even worse. By 2013, up to 80 percent of small businesses could lose their grandfathered status. All of this means that few health plans will qualify for grandfathered status, so many Americans will not get to keep what they have.

Employers that lose grandfathered status for their health plans will be forced to comply with all of the new mandates included in the health care law and all of the administration's regulations.

Subjecting employers' health plans to these mandates will either force them to change their plans and increase their costs of insurance or pay a fine and dump their employees into the Federal Government's new insurance exchange.

I do not support the health care law at all, but I believe Americans should get to keep what they have, as promised, so I support the Enzi resolution of disapproval. The resolution would nullify these regulations and direct the administration to develop true grandfathering protections that allow Americans to keep their current coverage.

These latest developments are consistent with the pattern that has emerged ever since this bill passed and was signed into law--one of broken promises. Americans never liked or wanted this bill, and we are continually reminded why they opposed it in the first place.

The following Senator is necessarily absent: the Senator from Alaska (Ms. Murkowski).

The following Senator is necessarily absent: the Senator from Alaska (Ms. Murkowski).

The following Senator is necessarily absent: the Senator from Alaska (Ms. Murkowski).

I ask for the yeas and nays.

The following Senator is necessarily absent: the Senator from Alaska (Ms. Murkowski).

Mr. President, I offer my condolences to Catherine Stevens and to the entire family of Senator Ted Stevens and to the families of those who also lost their lives in that tragic August 9 accident.

I knew Ted for many years and will always remember his devotion to the U.S. Senate and, of course, to the State of Alaska. Ted tirelessly committed himself to help transform Alaska into a modern State. Even if he had not become the longest serving Republican Senator in history, with a career spanning over 38 years, ``Uncle Ted'' would still have become an Alaskan legend. He was beloved throughout the State. And his love for his State was well known, from the largest cities to the smallest towns.

Ted devoted his whole life to public service. Before he was elected to Congress, Ted went through pilot training in Douglas, AZ, and earned his Army Air Corps wings in May 1944. For his service in World War II, he received the Air Medal and the Distinguished Flying Cross.

Incidentally, Ted often told me of his appreciation for the time he spent training in Arizona, my home State. He often spoke, too, of the town of Wickenburg, AZ, where his wife is from.

During his time in the Senate, Ted became a master of Senate procedure. Republicans would often ask him to sit in the Presiding Officer's chair during an important vote because we knew he would handle all of the procedural details and intricacies perfectly.

Not only was he a good legislator, he was a tough legislator. Ted was not shy about inviting comparisons with the Incredible Hulk. When he debated an issue that meant a lot to him, he would wear his Incredible Hulk necktie. Indeed, that necktie saw many a political battle.

As much as I admired Ted for his tough side, I will most fondly recall his gentle spirit and his compassion for the people he was so proud to represent. His soft side and kind nature were so apparent I sometimes wondered how much of his feistier side was for effect.

It was an honor to have known him and a privilege to have served alongside him here in the Senate.

The following Senator is necessarily absent, the Senator from Alaska (Ms. Murkowski).

The following Senator is necessarily absent: the Senator from Alaska (Ms. Murkowski).

Mr. President, I ask unanimous consent to speak for 15 minutes.

I wish to talk about the so-called Ending Offshoring Act, a bill that the Wall Street Journal suggested this morning should be called ``The Send Jobs Overseas Act.''

I ask unanimous consent to have that article printed at the conclusion of my remarks.

Mr. President, this bill provides a temporary payroll tax holiday for multinational U.S. employers who hire a new U.S. worker. But not just any worker. To be eligible, the business must prove that the employee is replacing an employee who had been performing a similar job abroad. The bill, which is not fully offset, proposes to partially pay for this tax holiday for multinational corporations with new tax hikes on multinational corporations--tax hikes that could undermine job creation in America.

How would the tax increases be applied? The bill would disallow tax deductions associated with expanding operations overseas and would limit tax deferral of income U.S. multinational companies earn abroad by selling products in the United States.

Currently, when a foreign subsidiary of a U.S. parent company earns such income, it is not taxed by the United States until it is sent back to the U.S. parent company. Even though most foreign countries only tax income earned within their borders, the U.S. taxes income earned anywhere in the world by U.S. citizens and companies. The deferral policy aims to keep U.S. companies competitive with their foreign counterparts, since we also have the second highest corporate tax rate in the world. So deferral is not a ``tax benefit,'' as some of the bill's proponents claim.

This bill wrongly assumes that all foreign expansion stems from ``greed'' and that foreign expansion only hurts American workers. I will explain why that's simply not the case and why this bill could, in fact, hinder job creation in America and actually send American jobs overseas permanently.

The first point I want to illustrate is how limiting tax deferral could hurt American jobs. Limiting deferral would subject U.S. multinational companies to higher taxes, cutting into their profits and giving foreign competitors a huge advantage in the global marketplace. We have to keep in mind: American companies with overseas operations support and create U.S. jobs.

A new paper from the McKinsey Global Institute shows that America's multinational companies make huge contributions to our economy: They account for 19 percent of all private-sector jobs in the United States, 25 percent of all private wages, 48 percent of total export goods, and 74 percent of nonpublic research and development spending.

In fact, Johnson & Johnson estimates that about one in five U.S. employees hold jobs that support their international operations.

Let me provide an example of how foreign expansion can create jobs here at home:

A few years ago, PepsiCo embarked on an aggressive expansion program in Eastern Europe, largely by buying up existing bottlers and snack chip producers, upgrading plants and equipment, and improving distribution while increasing their marketing efforts in these countries, achieving large gains in sales as a result.

As a result of this expansion, PepsiCo's employment abroad increased, but that did not cost any Americans their jobs. Pepsi merely took over existing plants and their workers.

In fact, PepsiCo's foreign expansion created jobs here in the United States. To support their overseas operations, the company needed to expand their logistics, marketing, and other support operations, all well-paying jobs at their U.S. headquarters. As a result, expanding operations abroad increased employment here in the United States.

The advisers for the McKinsey report provided the jobs statistics that show the correlation between companies' expansion abroad and employment here at home: From 1988 to 2007, employment in foreign affiliates rose to 10 million from 4.8 million. During that same period, employment in U.S. parent companies rose to 22 million from 17.7 million. The reason is, as the Pepsi example shows, that much of the expansion abroad by U.S. multinationals has complemented, rather than replaced, U.S. operations.

In 2008, a Washington Post editorial highlighted a study that made this same point. The study looked at U.S. manufacturers that expanded abroad between 1982 and 2004 and, as the Post wrote, ``found that they tended to grow domestically as well, hiring more U.S. employees, paying them more and spending more on research.''

The study concluded that ``the average experience of all U.S. manufacturing firms over the last two decades is inconsistent with the simple story that all foreign expansions come at the cost of reduced domestic activity.''

New taxes could encourage some companies to locate more or all of their operations abroad, where they could remain more profitable, since many countries do not tax income earned outside their borders. That could really happen. There is nothing that says corporations have to be located in the United States. U.S. multinational corporations will have little incentive to invest and hire here if tax policy prevents them from realizing attractive returns.

The McKinsey report cautions that policymakers have to be diligent about enacting policies that maintain U.S. economic competitiveness:

The United States retains many strengths that make it one

of the most attractive markets for multinational companies'

participation and investments. But numerous fast-growing

emerging markets [such as China, Brazil, and India] and some

advanced economies are making huge strides in increasing

their attractiveness, and are thereby influencing how

multinationals decide where to participate and invest. Thus,

the United States has entered a new era of global competition

for multinational activity. . . . Many of the executives we

spoke with emphasized the need to ensure they are competing

on a level playing field.

So let us not give foreign competitors a new edge by raising taxes on American companies that create new American jobs.

A second point: Many American companies establish operations abroad, not ``to export jobs'' for reasons of ``greed,'' as some of the bill's supporters charge, but to break into foreign markets, add new customers, or cater to a larger market abroad. The Pepsi example I just discussed illustrates this point.

According to the Department of Commerce, only 10 percent of foreign subsidiary sales are into the United States. So 90 percent of the subsidiaries' sales are in foreign markets. This statistic shows that the vast majority of companies are not moving manufacturing overseas only to sell goods back to the United States at a savings, but rather to cater to their customers.

A third point: Rather than picking winners and losers shouldn't we create an environment in which all companies become even more competitive?

One way to do this would be to lower the U.S. corporate tax rate, which is the second highest in the world. A recent article in National Review points out that ``by mid-2009, the U.S. corporate tax rate, including federal and state corporate taxes, was 39.1 percent. In Western Europe, the corresponding rates ranged from 34.4 in France, to 26.3 in Sweden, to 12.5 percent in Ireland.''

The author of this article points out that on the most recent World Bank list of places to pay business taxes, the U.S. ranks 61st out of 183 countries, behind France, Sweden, Holland, Switzerland, Norway, and the UK.

This high corporate tax rate distorts business decisions, such as locating investments; hinders capital formation; and suppresses wages. Rather than increase taxes on certain companies, we should bring the rate down to help correct these distortions.

Let me quote a couple of lines from the Wall Street Journal editorial I mentioned before. They confirm:

The U.S. already has one of the most punitive corporate tax

regimes in the world and this tax increase [proposed in the

legislation before us] would make that competitive

disadvantage much worse, accelerating the very outsourcing of

jobs that Mr. Obama says he wants to reverse.

Paul Volcker, the handpicked individual of the White House on the tax reform panel, whose report recently was received by the President, said in the report:

The growing gap between the U.S. corporate tax rate and the

corporate tax rates of most other countries generates

incentives for U.S. corporations to shift their income and

operations to foreign locations with lower corporate tax

rates to avoid U.S. rates.

That is what is causing people to move abroad, the higher corporate tax rates here. Yet the bill before us would raise those rates even higher on companies that do business abroad.

One Volcker recommendation is to lower the corporate tax rate to closer to the international average which would ``reduce the incentives of U.S. companies to shift profits to lower-tax jurisdictions abroad.''

So rather than raising taxes to try to punish U.S. companies that do business abroad, we should be reducing the tax rate to encourage them to stay here. The Wall Street Journal concludes:

CEO Steve Ballmer has warned that if the President's plan

is enacted, Microsoft would move facilities and jobs out of

the U.S.

Thus proving the point. In fact, the chairman of the Senate Finance Committee, my colleague Max Baucus, said in Congress Daily:

I think it puts the United States at a competitive

disadvantage. That's why I'm concerned.

A concluding comment from the editorial:

The lesson here is that tax rates matter in a world of

global competition and the U.S. tax regime is hurting

American companies and workers.

In conclusion, we are talking again about taxing Americans more at a very time when we should be finding ways to reduce the tax burden on Americans; in this case, so they can compete better with foreign competitors.

I return to the issue before us and, unfortunately, it apparently isn't going to be resolved before Congress leaves, and that is taxing small businesses as well. The proposal of the President and those on the other side of the aisle to raise taxes on American small business men and women and thereby threaten job creation is exactly the wrong medicine at this time. The proposed payroll tax holiday won't help small businesses at all. We have been coming to the floor for weeks saying: Don't increase taxes on any American. So far all we have seen is efforts by the majority in one way or another to find a way to increase taxes on segments of the American economy. That is precisely what is being proposed in the legislation before us.

I reiterate, now is not the time to be raising taxes on anyone, let alone companies that account for such a high number of new jobs. Let's tailor our policies to help these companies employ even more American workers.

Exhibit 1

[From the Wall Street Journal, Sept. 26, 2010]

The Send Jobs Overseas Act

Democrats may be dodging a vote on the Bush-era tax cuts,

but that doesn't mean they don't want to raise taxes before

November. Witness this week's showdown in Congress over

increasing the tax on the profits of American companies with

foreign subsidiaries to punish firms that relocate plants

overseas. How much more harm can this crowd do before it's

run out of town?

Like so many others, this tax increase is being promoted by

President Obama, who declared last week that ``for years, our

tax code has actually given billions of dollars in tax breaks

that encourage companies to create jobs and profits in other

countries. I want to change that.''

Democrats around the country are making this issue their

number one campaign theme, since they can't run on health

care, stimulus or anything else they've passed into law.

Think about this: One of the two major parties in the world's

supposedly leading economy is trying to hold on to its

majority by running against foreign investment and the free

flow of capital. This is banana republic behavior.

We're all for increasing jobs in the U.S., but the

President's plan reveals how out of touch Democrats are with

the real world of tax competition. The U.S. already has one

of the most punitive corporate tax regimes in the world and

this tax increase would make that competitive disadvantage

much worse, accelerating the very outsourcing of jobs that

Mr. Obama says he wants to reverse.

At issue is how the government taxes American firms that

make money overseas. Under current tax law, American

companies pay the corporate tax rate in the host country

where the subsidiary is located and then pay the difference

between the U.S. rate (35%) and the foreign rate when they

bring profits back to the U.S. This is called deferral--i.e.,

the U.S. tax is deferred until the money comes back to these

shores.

Most countries do not tax the overseas profits of their

domestic companies. Mr. Obama's plan would apply the U.S.

corporate tax on overseas profits as soon as they are earned.

This is intended to discourage firms from moving operations

out of the U.S.

The real problem is a U.S. corporate tax rate that over the

last 15 years has become a huge competitive disadvantage. The

only major country with a higher statutory rate is Japan, and

even its politicians are debating a reduction. A May 2010

study by University of Calgary economists Duanjie Chen and

Jack Mintz for the Cato Institute using World Bank data finds

that the effective combined U.S. federal and state tax rate

on new capital investment, taking into account all credits

and deductions, is 35%. The OECD average is 19.5% and the

world average is 18%.

We've made this case hundreds of times on this page, but

perhaps Mr. Obama will listen to his own economic advisory

panel. Paul Volcker led this handpicked White House tax

reform panel whose recent report concluded that ``The growing

gap between the U.S. corporate tax rate and the corporate tax

rates of most other countries generates incentives for U.S.

corporations to shift income and operations to foreign

locations with lower corporate tax rates to avoid U.S.

rates.''

As nations around the world have cut their rates, the

report warns, ``these incentives [to leave the U.S.] have

become stronger.'' Companies make investment decisions for a

variety of reasons, including tax rates. But as long as the

U.S. corporate tax is more than 50% higher than it is

elsewhere, companies will invest in other countries all other

things being equal. One Volcker recommendation is to lower

the corporate rate to closer to the international average,

which would ``reduce the incentives of U.S. companies to

shift profits to lower-tax jurisdictions abroad.''

Mr. Obama believes that by increasing the U.S. tax on

overseas profits, some companies may be less likely to invest

abroad in the first place. In some cases that will be true.

But the more frequent result will be that U.S. companies lose

business to foreign rivals, U.S. firms are bought by tax-

advantaged foreign companies, and some U.S. multinational

firms move their headquarters overseas. They can move to

Ireland (where the corporate tax rate is 12.5%) or Germany or

Taiwan, or dozens of countries with less hostile tax

climates.

We know this will happen because we've seen it before. The

1986 tax reform abolished deferral of foreign shipping income

earned by U.S. controlled firms. No other country taxed

foreign shipping income. Did this lead to more business for

U.S. shippers? Precisely the opposite.

According to a 2007 study in Tax Notes by former Joint

Committee on Taxation director Ken Kies, ``Over the 1985-2004

period, the U.S.-flag fleet declined from 737 to 412 vessels,

causing U.S.-flag shipping capacity, measured in deadweight

tonnage, to drop by more than 50%.''

Mr. Kies explains that ``much of the decline was

attributable to the acquisition of U.S.-based shipping

companies by foreign competitors not subject to tax on their

shipping income.'' Mr. Kies concludes that the experiment was

``a real disaster for U.S. shipping'' and that the debate

over whether U.S. companies can compete in a global market

facing much higher tax rates than their competitors was

answered ``with a vengeance.''

Now the White House wants to repeat this experience with

all U.S. companies. Two industries that would be most harmed

would be financial services and technology, and their

emphasis on human capital makes them especially able to pack

up and move their operations abroad. CEO Steve Ballmer has

warned that if the President's plan is enacted, Microsoft

would move facilities and jobs out of the U.S.

The lesson here is that tax rates matter in a world of

global competition and the U.S. tax regime is hurting

American companies and workers. Mr. Obama would add to the

damage. His election-eve campaign to raise taxes on American

companies making money overseas may not be his most dangerous

economic idea, but it is right up there.

The following Senators are necessarily absent: the Senator from Kentucky (Mr. Bunning), the Senator from Texas (Mr. Cornyn), the Senator from Georgia (Mr. Chambliss), the Senator from Idaho (Mr. Crapo), the Senator from Wyoming (Mr. Enzi), the Senator from South Carolina (Mr. DeMint), the Senator from South Carolina (Mr. Graham), the Senator from Utah (Mr. Hatch), the Senator from Texas (Mrs. Hutchison), the Senator from Georgia (Mr. Isakson), the Senator from South Dakota (Mr. Thune), the Senator from Alaska (Ms. Murkowski), the Senator from Idaho (Mr. Risch), and the Senator from Arizona (Mr. Kyl).

Mr. President, today, Senators Merkley and Burr and I are introducing the Animal Crush Video Prohibition Act of 2010. The bill would criminalize the creation, sale, distribution, advertising, marketing, and exchange of animal crush videos. Representative Gallegly has sponsored a House companion bill, the Prevention of Interstate Commerce in Animal Crush Videos Act, H.R. 5566.

Animal crush videos often depict obscene, extreme acts of animal cruelty designed to appeal to a specific, prurient sexual fetish. These crush videos were the target of a 1999 Federal statute that the United States Supreme Court struck down earlier this year in U.S. v. Stevens. In Stevens, the Supreme Court overturned the 1999 Act banning depictions of animal cruelty on the basis that it was unconstitutionally overbroad, in violation of the First Amendment.

The Stevens case did not involve crush videos and the Court specifically stated that it was not deciding whether a statute limited to crush videos would be constitutional. Instead it left the door open for Congress to enact a narrowly tailored ban on animal crush videos.

Our legislation would ban animal crush videos that fit squarely within

the obscenity doctrine, a well-established exception to the First Amendment. The Senate Judiciary Committee received testimony earlier this month on the obscene nature of crush videos. Dr. Kevin Volkan, a psychology professor with an expertise in atypical psychopathologies, testified about the sexual nature of crush videos and the specific paraphilias associated with them. He stated that in his professional opinion the crush videos contain elements of specific forms of paraphilia in varying degrees and that people, usually men, watch crush videos for sexual gratification. The Humane Society's two crush video investigations also confirm the inherent sexual nature of many crush videos. Those investigations also found a growing market for custom- made videos for those with crush paraphilia.

The United States also has a long-history of prohibiting speech that is essential to criminal conduct. In the case of animal crush videos, the videos themselves drive the criminal conduct depicted in them. Every State and the District of Columbia have laws criminalizing the animal cruelty depicted in the videos, but these laws are hard to enforce. The acts of extreme animal cruelty are committed secretively and anonymously. The nature of the videos also makes it difficult to determine when and where the crimes occurred or that the crime occurred within the relevant statute of limitations. These prosecutorial difficulties are confirmed by the Association of Prosecuting Attorneys. Given the difficulty in prosecuting the underlying conduct using state law, the integral connection between the video and the criminal conduct, and the recent proliferation of animal crush videos on the Internet since the Stevens decision, it is necessary for Congress to enact a new Federal law targeting the interstate distribution network for animal crush videos.

This measure will also take an important step by banning non- commercial distribution of animal crush videos. We believe this is necessary given the nature of the Internet and the propagation of file- sharing and peer-to-peer networks that exist today. Similar to other Federal criminal statutes that prohibit non-commercial distribution, there is an exception for law enforcement purposes.

I want to thank Senators Leahy and Sessions and their staffs for their assistance in addressing this important issue and holding a hearing on the topic in the Senate Judiciary Committee. I also want to thank the Humane Society for bringing this issue to Congress' attention and working tirelessly to address it.

I urge my Senate colleagues to support this legislation and work with me to swiftly enact it.

Mr. President, today, Senators Merkley and Burr and I are introducing the Animal Crush Video Prohibition Act of 2010. The bill would criminalize the creation, sale, distribution, advertising, marketing, and exchange of animal crush videos. Representative Gallegly has sponsored a House companion bill, the Prevention of Interstate Commerce in Animal Crush Videos Act, H.R. 5566.

Animal crush videos often depict obscene, extreme acts of animal cruelty designed to appeal to a specific, prurient sexual fetish. These crush videos were the target of a 1999 Federal statute that the United States Supreme Court struck down earlier this year in U.S. v. Stevens. In Stevens, the Supreme Court overturned the 1999 Act banning depictions of animal cruelty on the basis that it was unconstitutionally overbroad, in violation of the First Amendment.

The Stevens case did not involve crush videos and the Court specifically stated that it was not deciding whether a statute limited to crush videos would be constitutional. Instead it left the door open for Congress to enact a narrowly tailored ban on animal crush videos.

Our legislation would ban animal crush videos that fit squarely within

the obscenity doctrine, a well-established exception to the First Amendment. The Senate Judiciary Committee received testimony earlier this month on the obscene nature of crush videos. Dr. Kevin Volkan, a psychology professor with an expertise in atypical psychopathologies, testified about the sexual nature of crush videos and the specific paraphilias associated with them. He stated that in his professional opinion the crush videos contain elements of specific forms of paraphilia in varying degrees and that people, usually men, watch crush videos for sexual gratification. The Humane Society's two crush video investigations also confirm the inherent sexual nature of many crush videos. Those investigations also found a growing market for custom- made videos for those with crush paraphilia.

The United States also has a long-history of prohibiting speech that is essential to criminal conduct. In the case of animal crush videos, the videos themselves drive the criminal conduct depicted in them. Every State and the District of Columbia have laws criminalizing the animal cruelty depicted in the videos, but these laws are hard to enforce. The acts of extreme animal cruelty are committed secretively and anonymously. The nature of the videos also makes it difficult to determine when and where the crimes occurred or that the crime occurred within the relevant statute of limitations. These prosecutorial difficulties are confirmed by the Association of Prosecuting Attorneys. Given the difficulty in prosecuting the underlying conduct using state law, the integral connection between the video and the criminal conduct, and the recent proliferation of animal crush videos on the Internet since the Stevens decision, it is necessary for Congress to enact a new Federal law targeting the interstate distribution network for animal crush videos.

This measure will also take an important step by banning non- commercial distribution of animal crush videos. We believe this is necessary given the nature of the Internet and the propagation of file- sharing and peer-to-peer networks that exist today. Similar to other Federal criminal statutes that prohibit non-commercial distribution, there is an exception for law enforcement purposes.

I want to thank Senators Leahy and Sessions and their staffs for their assistance in addressing this important issue and holding a hearing on the topic in the Senate Judiciary Committee. I also want to thank the Humane Society for bringing this issue to Congress' attention and working tirelessly to address it.

I urge my Senate colleagues to support this legislation and work with me to swiftly enact it.

The following Senator is necessarily absent: the Senator from Alaska (Ms. Murkowski).

The following Senators are necessarily absent: the Senator from Texas (Mrs. Hutchison) and the Senator from Alaska (Ms. Murkowski).

Mr. President, we continue to have a discussion about whether there should be a tax increase on Americans and, if so, which ones. We are not sure whether the Senate is going to vote on one of those propositions before the elections, but there appears still to be a chance we would do that.

I found it of interest that a couple surveys--one of economists and one of Americans generally--throw more cold water on the idea that we should be raising taxes on any Americans.

I wish to report, first of all, a CNBC poll which just came out today. The headline is ``Most Americans Want All Bush Tax Cuts Extended.'' Well, that is another way of saying: We should not raise taxes on any Americans. I will just quote from two lines:

In the new poll released this week, 55 percent said that

``increasing taxes on any Americans will slow the economy and

kill jobs''. . . .Only 40 percent said the Bush-era tax cuts

should be canceled for higher earners. . . .

One other interesting statistic is that the poll showed that ``55 percent of Americans said [President] Obama's overall economic plans have made things worse so far.''

This poll is consistent with every other we have seen. Most Americans do not believe we should be raising taxes on anyone--on the wealthy, on businesses, on others, on anyone. I think most of them get the fact that if you start raising taxes, particularly in the middle of a recession, you are going to kill economic recovery and certainly slow the creation of more jobs.

Well, that was also the opinion of a group of economists who were surveyed by CNN. They surveyed 31 different economists and had a variety of options. They asked: What should the Senate and the House do? In this survey, 18 of the economists said we should not raise taxes on anyone--in other words, extend the tax rates that have been in effect for the last 10 years for everyone, continue to extend them. There were only three of the economists, incidentally, who said: No, we should differentiate, extend for some but not extend for others. In other words, it is OK to go ahead and raise taxes on the so-called wealthy.

I noted also today that the National Taxpayers Union released a letter with 300 economists saying the same thing, that we should not raise taxes on anyone. Finally, I noted in comments I made Monday that Secretary Geithner had said what we should be doing to preserve jobs in America is to promote savings and investment. That is, of course, precisely what we should be doing. Unfortunately, that is exactly the opposite of what would happen if we raised the taxes on the so-called upper two brackets because that is how small businesses, by and large, pay their taxes.

Fifty percent of the approximately $1 trillion of business income will be reported on returns that have a marginal rate in the top two brackets. That is another way of saying, if you increase the tax in those top two brackets, you are going to dramatically impact small businesses that create about 25 percent of the total workforce here in the United States.

In testimony before the Finance Committee, on which I sit, the former Director of CBO, Doug Holtz-Eakin, testified that an increase in the top effective marginal income tax rate would reduce the probability that a small business entrepreneur would add to his or her payrolls by roughly 18 percent. I suggest it may even be more than that.

What I would like to do is quote from comments from a few small business folks as to the effect of the tax increase on them. If the tax increase were to be voted on by this body and the House of Representatives and adopted into law or if the current tax rate is not extended for everyone, here is what a few small business folks say would happen to them. Some of these examples come from the Chamber of Commerce, some from the National Federation of Independent Business.

For example, Mark Clinton of Decisive Management in Little Rock, AR: Last year, he says, he paid about half his business's income back in taxes. He has a small business that meets this threshold I mentioned before, and he said any tax increase would effectively kill his business. I thought it was interesting. He gets frustrated, he said, when he hears the top-tier tax cuts referred to as tax cuts for ``the rich.'' He said:

These are employers who work hard to balance their budgets

and make ends meet. They need money to sustain their

businesses. Do you want someone who is broke as your

employer? No. You want someone who is able to pay their bills

and pay your salary.

Here is another example of someone who says he would be hurt if his taxes are raised: Jim Murphy, from the firm EST Analytical, in Cincinnati, OH. If taxes go up above the $250,000 threshold, the bottom line of his business will suffer and he will be forced to make serious business decisions to make up for the lost income. He just recently lifted a pay freeze that has been in place for almost 18 months. His company suspended the 401(k) contributions at the same time, and that likely will have to continue into the future. So instead of potentially hiring more people, he is definitely not going to make any new hires. He said that the threat and uncertainty of health care costs going up next year is also a great concern.

So instead of purchasing needed capital equipment and

generating economic activity for other businesses, I will

have to make do with what we have.

I will just mention a couple more.

Ron Hatch of Hatch Furniture in Yankton, SD, said his business, which is a furniture store, has struggled. He has seen his business fall by 25 percent. He had to close one of his two stores. His business is heavily dependent on capital, and he says any tax increase would inhibit his ability to compete and force him to lay off more workers. If the current tax rates are allowed to expire, he says he might well have to go out of business.

Steve Ferree, who owns a Mr. Rooter Plumbing in Gladstone, OR, says he has been lucky his business has been able to survive so far but that increasing his tax rates, the rate at which he pays--just what we are talking about here--would directly impact his business. He would not be able to consider hiring a new employee or buying new equipment should the tax hike take effect.

There are several from the printing industry. I will just quote from one.

Mike Nobis of JK Creative Printers in Quincy, IL, makes the point that the tax increases hurt his clients which then, in turn, hits him. He talks about the fact that his clients are having to cut back their budgets and that this has had an impact on him. He said that increasing taxes will be especially hard-hitting for his clients. As a result, he is going to continue to lose customers, and with that loss of customers combined with the tax increase hitting his own budget, he will be hit from both sides. The looming tax increase and uncertainty with forthcoming health care mandates have left him in a position where he is hesitant to take on risks and grow his business.

Another example from the printing industry: Frank Goodnight of Diversified Graphics in Salisbury, NC. Another from the real estate industry--a lot of examples there--Curt Green from Curt Green & Co. in Texarkana, AR.

Let me close with two examples that show other indirect effects.

Steve Walker from Walker Information in Indianapolis, IN, talks about one of the indirect consequences of his firm having to pay more in taxes, his small business. It is a family business. He said: We have always taken care to give back to our community in Indianapolis and central Indiana. Here is a direct quote:

If Congress increases taxes, it will directly affect the

extent of our charitable work, in addition to impacting our

company's bottom line. I look at pretax dollars as a pie

chart. Right now, Uncle Sam gets 35 percent. If Uncle Sam

gets 39.6 percent, then 4.6 percent will come from other

uses. For us, those uses are as follows: Reinvest in the

business, give to charity, and meet capital obligations.

Meeting capital obligations are fixed, so the impact of a

tax increase will reduce the amount available for charity

first and investment capital second. I have already made

plans assuming that some sort of tax increase is coming.

And he talks about how that will drop his contributions to United Way, for example.

He concludes by saying:

I think Congress needs to have a much greater appreciation

for the direct and indirect consequences a massive tax

increase would have on businesses and the communities that we

and our employees live and work in.

Finally, noting a physician who has a business in Chicago, Dr. Herb Sohn of Strauss Surgical Group makes another point not just about marginal income tax rates but capital gains and dividends as well. Remember that these taxes would also be increased under the Democrats' proposal. He says that increases in dividends and capital gains taxes will prevent his patient care business from expanding to provide quality care to more patients. He talks about having practiced medicine since the early 1970s in the Chicago area. His focus is on his patients, but he says:

Unfortunately, the impending tax increases will impair our

ability to focus on patients and their care. The increases in

capital gains taxes and dividend tax rates will impact our

business, derailing our opportunities to expand our

operations.

Finally, he notes that he is structured as a passthrough entity. And that is how a lot of these small businesses pay their taxes. That is why they are impacted by an increase in the top two marginal income tax rates. He says:

If Congress increases the marginal income tax rates, that

means we will have less money to expand and reinvest in our

business, which, again, is focused on patient care.

He concludes by saying:

I'm not a tax expert, but I do have a straightforward

diagnosis on this issue--Congress needs to keep all the tax

rates at their current levels and not slap us with a bigger

tax bill.

My point is this: The American people, by a wide margin, believe we should not increase taxes on anyone. Economists, by a wide margin, agree. We should not increase taxes on anyone. And the several examples of owners of small businesses who would be the first to be impacted by an increase in the upper two marginal income tax brackets have made it very clear--every one of them--that it will have a direct impact on their ability to hire people, to expand their businesses, or to continue in business, and an indirect impact on the customers they serve, who then, in turn, would have less business for these small businesses.

All in all, it is a bad idea to even think about increasing taxes on any Americans, let alone small businesses. We should make it clear right now that these folks do not have anything to worry about; they are not going to be hit with a big tax hike.