Mr. President, if I have time at the end of my remarks, I would like to yield to the distinguished Senator from Hawaii. I will try to be prompt. Soon, this Senate will take a historic vote that will impact every American. These votes do…
Mr. President, if I have time at the end of my remarks, I would like to yield to the distinguished Senator from Hawaii. I will try to be prompt.
Soon, this Senate will take a historic vote that will impact every American. These votes do not come very often. The last was decades ago. I think we all understand--or at least most of us understand--how critical tax reform is. All of us in the Senate, on both sides of the aisle, are familiar with the burdens and the complexity and the lack of competitiveness associated with our current tax system.
It is abundantly clear that this complexity and our antiquated corporate tax system acts as a brake on our economy. It is equally clear that in recent years our economic growth rate--our gross domestic product--has been stuck at a historic low level of 1.9 percent or less.
There are many opinions as to why our economy has been so stagnant, causing American job loss, unemployment, and more reliance on government programs. I want to underscore what the people of Kansas have told me repeatedly as to why, at least in part, this has happened. Small business owners, manufacturers, our community bankers, other lending institutions, individual workers laid off or workers hanging on paycheck to paycheck, and virtually everybody in rural America-- farmers, ranchers, and growers--at every townhall meeting have told me that the No. 1 issue of concern is the crushing weight of Federal regulation.
That was summed up by one Western Kansas rancher who said: ``Pat, I feel ruled, not governed.''
But we are unwinding right now this regulatory overkill. Today we are making government a partner, not a regulatory adversary. How on Earth did we reach this sad state of affairs? Well, there are many factors-- administrative policies that seem to mimic or compare to the European Union monetary policy, government agendas, and central control. But with this tax bill that can change, and it will change if only we recognize and take this important opportunity--an opportunity that many Members in this body have never had to truly make a difference. This time we can.
Can America get back to a place to make history and, once again, to experience the power of the American dream?
I am confident that we can. We have before us now a comprehensive plan to address these issues, cleaning up and modernizing the Tax Code to help generate more growth in our economy. The bill before the Senate does exactly that, providing meaningful tax relief for families, small businesses, farmers, ranchers, and growers. I am especially pleased with the rates and bracket structure the legislation would put into place on the individual side.
We have done a good job pushing these rate reductions down to lower and middle-income families. This would provide a net tax cut for families in Kansas of about $2,500 and over 10,000 new jobs.
As many have pointed out today, we accomplish this by reducing individual tax rates, raising the standard deduction, and increasing the child credits in the Tax Code.
Let's be clear, these are consensus, bipartisan ideas and proposals that many of my colleagues on the other side of the aisle have, in the past, at least--now not now, because of the legislative standoff we have been going through--regularly proposed and supported.
Let me also comment on concerns raised by some of my colleagues that we simply cannot afford this bill and that it will worsen the country's financial condition.
In putting this bill together, we have used very modest economic growth estimates, below the historic post-World War II norm of 3 percent. In fact, the Congressional Budget Office is currently projecting 1.9 percent growth over the next 10 years, and we learned today that the Joint Committee on Taxation says the Senate bill will create only modest economic growth.
Now, notwithstanding the fact that I have never seen a CBO or Joint Taxation Committee projection that has been really accurate, I think these estimates are far too low. It is hard to believe. It is simply unacceptable.
I refuse to accept that we cannot return to a more robust economic growth. I think we will achieve better growth rates, and observe that we are well on our way. Recent economic activity bears this out.
The economy is now growing at a solid pace with low unemployment and low inflation. Real GDP growth during the first two quarters of the year averaged 2.1 percent at an annual rate, and since January, the unemployment rate fell 0.6 percentage points to 4.2 percent in September. That is the lowest rate in about 16 years. Overall growth is poised to average about 3 percent over the second half of this year--3 percent in the second half of this year.
While these are positive trends, my colleagues, we can do more. We need even stronger growth. Stronger growth leads to higher living standards, less dependence on governmental support, and a lower need for spending on entitlement and other programs.
How do we get there? We have a tax bill--a tax bill to maximize growth, to create jobs, and to increase wages. This is not what we have just heard from many on the other side--trickle-down economics or any other name that they want to call this. This is commonsense economics, which I have yet to see be refuted by any mainstream economist.
Increase the supply of capital in the economy, and you expand the productivity of the economy. This result is more business investment, leading to worker productivity gains--workers who can then earn more, increase their after-tax income, and, in the end, raise their living standards.
I want to turn to an essential sector of our national economy-- agriculture, those who are responsible for feeding America in a troubled and hungry world. I am very pleased that the bill reflects the importance of production agriculture to our economy. It is important to keep in mind that few other sectors of the economy face the multiple uncertainties of production agriculture. We are talking about weather, storms, fires, volatility in our global commodity prices, trade disputes, and transportation issues, and the list goes on.
When we pass this bill, the agriculture industry will have a number of provisions in the Tax Code that recognize the uncertainty and the volatile nature of the income and expense associated with agriculture operations.
These provisions--and we are talking about 34, 35 of them at last count--include accounting rules that allow farmers to manage their income and expenses.
For example, in the year when our commodity prices are low--and, yes, this year they are low--they can account for costs in a way that keeps them in operation.
There are also specific inventory rules to help manage costs associated with the livestock and dairy operations and to handle items needed for other basic operations, such as fertilizer and also crop treatments. There are unique rules for timber operations.
Now, if you want to get down into specifics and just how far we drill down to be of help to agriculture, even baby chickens have their own inventory rule--which, by the way, differs from the rules for ostriches and emus. I would imagine nobody would even think of drilling down to that extend.
There are rules set for how to handle damaged stocks and livestock disasters. They are certainly important as of today. I can tell you that these disaster rules provided a critical boost to ranchers in my State, enabling them to begin to recover from the devastating prairie fires in Western Kansas earlier this year.
Turning to the new provisions in the bill, we have developed it with agriculture in mind. I would be remiss here not to mention the strong input and advice I have received on these matters from Senator Grassley, Senator Thune, Senator Scott, and my other colleagues who also share a strong interest in the agriculture economy.
The bill, for example, liberalizes the depreciation rules for agriculture operations, giving farmers and ranchers 5-
year property depreciation, and permitting full expensing of plant and equipment purchases.
The bill would greatly improve the ability of the agricultural community to use the cash method of accounting, which provides complexity in managing cash flow, which is essential to providing certainty in operations.
There are significant provisions in the legislation that establish a new income tax rate for passthrough organizations. This is a very important issue for the agricultural community. The majority of farms and ranchers are set up as passthroughs, and most of the income earned by farmers flow through these structures.
The bill also includes new rules for farmer cooperatives, which are a very important part of production agriculture. We work very hard to ensure that the benefits of cooperative farming are held whole in this tax reform plan.
The bill also doubles the exemptions for the estate and gift taxes up to $22 million per couple. I know this sounds like a lot to some of my colleagues, but for landowning, cash-constrained farmers, they can hit this exemption amount quickly, especially in my State of Kansas. Even when they do not, many farmers and ranchers spend thousands of dollars a year on lawyers and accountants' fees to plan for the best way to pass their life's work on to their children--something very special in rural and smalltown America.
While I will continue to press for a permanent repeal of the death tax, for now, let's modify it so we reduce its damaging reach.
Finally, and above all, the legislation will provide farmers and ranchers with certainty during a very difficult time that we are going through, certainty that they will be not taxed out of business on a down year, certainty that they will have cash available to fund their own operations, certainty that their hard-earned income, farm, or ranch will not have to be sold off just because someone has died, certainty that the Federal Government recognizes their irreplaceable role in meeting the challenges of a very fractured and hungry world.
I am very pleased, to say the least, that the Senate bill keeps the ag tax provisions but will also help our farmers by creating a much more pro-growth tax system, lowering their tax burden and simplifying the tax provisions relating to the ag sector.
We have an opportunity to experience a renaissance in our American economy. It seems to me that for too long we have had a sort of copycat kind of economic policy based on the European Union. We are talking about a lot of government control. We are talking about more taxes. We are talking about a lot of things that simply have enabled us to tread water.
I know we are in a difficult time in the Senate with regard to partisan differences. It reminds me a little bit of a country western song that obviously my staff would hope that I would not mention, but it was: ``The bridge washed out, I can't swim, and my baby's on the other side.''
Well, the bridge is not washed out, and the tax bill is on the other side, along with an American renaissance that will make America enjoy even more economic growth and get us back to that historic 3-percent growth rate and even more. That bridge is open.
I urge my colleagues to consider it as we go forward in this debate. Hopefully, we have the votes. Then, if we have the votes--and I think we do--hopefully, some of my colleagues across the aisle will join us.
I yield the floor.