Madam Speaker, on behalf of the Congressional Black Caucus, we would like to discuss the fiscal cliff and our position on the ongoing negotiations. We didn't get here, Madam Speaker, by accident. I was elected in 1992. In the 1993 budget,…
Madam Speaker, on behalf of the Congressional Black Caucus, we would like to discuss the fiscal cliff and our position on the ongoing negotiations.
We didn't get here, Madam Speaker, by accident. I was elected in 1992. In the 1993 budget, we addressed fiscal responsibility by passing the Clinton budget. It was very controversial. In fact, it only passed by one vote of the House, and the Vice President had to vote in the Senate to break the tie. That budget put us on a trajectory toward fiscal responsibility.
That was interrupted by a controversy in 1995, when the Republicans, using the votes on that budget, picked up a majority in the House and tried to dismantle that budget. President Clinton allowed the government to get shut down rather than dismantle the budget. That budget stayed into effect until 2001.
In 2001, Chairman Greenspan was answering questions like: Are we paying off the national debt too quickly, and should we pay off the national debt? The projections were that, by 2008, the entire national debt held by the public would be paid off with no money owed to China, Japan, or Saudi Arabia. We would have paid off all of those debts. All the money would have been back in the trust funds by 2013.
That's where we were beginning in 2001, but the Republicans talked people into thinking that you could pass tax cuts without paying for them, massive tax cuts in 2001 and 2003. There were two wars not paid for and a prescription drug benefit not paid for. All of that surplus evaporated, and now we find ourselves deeply in debt. Rather than paying off the debt, we have more than doubled the debt.
Now it's obvious we have to do something about it, and the Congressional Black Caucus is willing to do its part within certain parameters. This is the Congressional Black Caucus position on going forward:
Excessive partisanship and a lack of willingness to compromise has led us to this moment where tough choices must be made to prevent our Nation from going over the fiscal cliff, but one thing is clear: The path to fiscal sustainability must not be made on the backs of our Nation's most vulnerable communities.
As President Obama and congressional leaders continue to negotiate ways to avoid the fiscal cliff, the Congressional Black Caucus will adhere to the following principles in considering its support of any agreement:
First, we must protect our social safety net. Social Security should be completely off the negotiating table since it does not contribute to the deficit. Additionally, the Congressional Black Caucus will specifically oppose any plan that changes eligibility for Medicare.
Investments in job training, education, health care, transportation, and infrastructure should not be cut to pay for the extension of any of the Bush-era tax cuts. These vital government investments are critical to our Nation's short-term recovery and long-term economic prosperity.
The Simpson-Bowles Commission set a goal of $4 trillion in deficit reduction over the next decade. Considering that goal, $1.5 trillion in cuts have already been agreed to through the spending caps in the Budget Control Act of 2011. Non-defense discretionary spending, as a percentage of GDP, is at a 50-year low. Additional savings through reductions in military operations in Iraq and Afghanistan should also be recognized. So we've gone a long way in recognizing the $4 trillion goal.
The wealthiest Americans disproportionately benefited from the Bush- era tax cuts and the Federal Government's 2008 bailout of some of the largest firms on Wall Street. Revenue increases and allowing the Bush- era tax cuts to expire for the wealthiest Americans must be part of any agreement.
The Congressional Black Caucus supports extending the middle class Bush-era tax cuts, but any extension must be paid for in ways that are consistent with these principles. We should not agree to the extension of any tax cuts without knowing how we will pay for them. We cannot allow an extension of tax cuts now, only to discover that they'll be paid for by cutting Social Security, Medicare, Medicaid, and other critical social safety net programs later.
The Affordable Care Act should not be on the negotiating table. The program does not add to the debt and must be protected and fully implemented as planned. Millions of Americans are already benefiting from health care reform, and millions of Americans stand to gain access to affordable health care insurance in 2014.
Emergency unemployment insurance must be extended. Every dollar spent on unemployment insurance generates $1.55 in economic activity. Unemployment benefits are the most effective fiscal policy to stimulate the economy and put people back to work. Our economy is slowly recovering from the deepest recession since the Great Depression, and 2 million workers would be stripped of their emergency unemployment compensation if no action is taken by the end of the year.
Earlier this year, the Congressional Black Caucus offered an effective alternative budget that addresses the sequester and fully pays for an extension of Bush-era middle class tax cuts without cutting Social Security, Medicare, Medicaid, and the social safety net, while also ensuring that we invest in our children, our communities, and our economy.
We can get this done if we do this consistent with the Congressional Black Caucus principles. The vulnerable will not be hurt. We're close, but we cannot agree to any kind of scheme that puts us in a situation where we extend tax cuts now and then later find that we're going to pay for them on the backs of the most vulnerable in our community.
I now yield such time as she may consume to the gentlelady from Wisconsin, a very active member of the Budget Committee, Ms. Moore.
When you're talking about the budget, there are two sides of the ledger. If you spend more, you should tax more. If you have less in taxes, you have to have less in spending. That's how you balance the budget.
One of the problems we've had for the last few years is people think you can have a tax cut and don't have to cut anything. In the discussion of how much tax extension you can afford, that discussion is almost unrelated to the spending cuts. If you want to extend more tax cuts, then you have to cut more spending. People talk about it like they're unrelated. They say you can cut it off at $500,000, rather than $250,000. If you extend more tax cuts, you have to cut almost 10 percent across the board in non-defense discretionary spending to make up for the lost revenue.
At some point, people should conform their statements to fundamental principles of arithmetic. This is what we've gotten away from. This is what the Congressional Black Caucus budget does. It names how you can come up with the revenue. It names specifically revenue: the Buffett rule, the surcharge on millionaires, investment income like regular income, and naming specific corporate loopholes that can be closed. We show how you can easily come up with the amount of money that's left in the $4 trillion after the trillion and a half in cuts and after the war savings and after the expiration of the upper income Bush-era tax cuts. We can fill the gap.
If you don't want to do it that way, then name the spending cuts. This is where the trouble is. We've heard all this about reducing the size of government with unspecified cuts. That sounds good, until you start specifying.
The last time Republicans had a budget that reduced the size of the government, they cut almost $300 million out of Embassy security. That's what they mean by reducing the size of government. Usually what they mean is Social Security and Medicare, but whatever they mean, name it. We don't want to be in a position in which we've extended tax cuts and then come back next year and say, Oh, now we're broke, and we've got to cut Social Security and Medicare. If that's what you're going to do with a tax cut, then let's consider that as we decide if we want that tax cut or not. I think most people would say, if your goal is cutting Social Security and Medicare, we don't need a tax cut that bad. As a matter of fact, that's how the scheme works. The only way you can cut Social Security and Medicare is to get people to go for the tax cuts now and then come back and say you're so broke and we need so much money that the only place you can get it is from Social Security and Medicare.
So let's get this up front. Let's do it all at once. We know what tax cuts are going to be extended, and we know how they're going to pay for them. We're not going to get tricked later on by people coming up saying that we've got to cut Social Security and Medicare because we extended the tax cuts. This is one of the problems we get into. They will not name the programs that are going to get cut. When they talk about corporate loopholes, they don't say what they are.
If you look at the budget and if you take out Social Security, Medicare, Medicaid, and defense and if you just look at what's called the nondefense discretionary budget, that's about--I'd say in round figures--$400 billion. If you're trying to get $4 trillion in cuts in 10 years, that's $400 billion a year. You would have to eliminate government. There would be no Embassy security, no FBI agents, no food inspection, no Federal prisons, no Head Start, no education, no FEMA, no transportation. I mean, nothing, nothing.
You would have to eliminate everything in order to fund a total extension of the tax cuts. Now, obviously, that's not going to happen.
Obviously, if you extend the tax cuts without offsetting it with other revenues, you've got to go into Social Security and Medicare. When they talk about reducing the size of government, that's why they can't tell you what they're going to cut, because they can't cut that much. When they say they're going to close the corporate loopholes, they can't name them because the corporate loopholes don't add up to enough. When you start talking about Head Start and the legal aid and all those, you're talking about hundreds of millions of dollars. We're trying to get to trillions.
It is generally the practice that we would extend emergency unemployment compensation for longer than normal, which is every time the rate gets high and when it's an emergency, so it's not offset. That is the usual situation.
The problem with this recession is that a disproportionately high portion of the unemployed or long-term unemployed--the people who have been unemployed for a long time--are experiencing even insult to injury because a lot of employers are discriminating against people who do not have jobs. If you apply and don't have a job, they will not consider your application. If you have a job, then they will consider you. So, if you've been without a job for a long time and are still trying to get a job, it's even harder for you to get a job. Now, those people have traditionally worked. They're hardworking Americans who want a job, are looking for a job. Unfortunately, the economy is such that you've got three or four people looking for every job that's out there. So, whatever happens, a lot of people are going to be left out.
And meanwhile, the question is: What happens? If you provide unemployment compensation for them, one of the things that happens is they spend that money into the economy as soon as they get it.
So it is one of the most effective things. If you put $1 into unemployment compensation, economic activity is about $1.55. If you give a $1 tax cut on dividends, the economic activity is about 15 cents because the people getting that benefit will just spend what they ordinarily spend. They may pay off a credit card, they may save some money, but they're not going to spend the money. You want the money in the hands of people who will actually spend it if you want the economy stimulated.
People talk about increasing the age of Social Security or the cost-of-living increase. The first question is whether or not you're going to cut Social Security. And then if you decide to cut Social Security, there are different ways of doing it, some more painful than others. But the first question is: Are you
cutting Social Security? And part of that question is why. If none of the tax cuts get extended, at this point you've got too much money. You've got more money than you need on the table. So the only reason you're even discussing a cut in Social Security is because you want to extend the tax cuts.
Now, I think most people when they're faced with the choice, do you want Social Security to be a piggy bank, every time we're running short in the budget you're going to cut a little Social Security or Medicare or Medicaid, are you going to make that a little piggy bank every time you have a budget problem, and if you're going to extend tax cuts, are you going to pay for them out of Social Security, I think most people would want us to leave Social Security and Medicare and Medicaid alone. Leave it alone. And if you've got enough money for the tax cuts, fine. But do not extend tax cuts and think you're going to pay for it and people are going to like you paying for it out of Social Security and Medicare.
And that's really the choice we have, because the entire discussion about Medicare is only necessitated by the fact that people are trying to extend these tax cuts. And if you extend the tax cuts, then you have to pay for it. And we're talking arithmetic. If you extend trillions of dollars in tax cuts, the only place you can reasonably get it, Social Security and Medicare, unless you're going to raise some other taxes to offset it.
The Congressional Black Caucus has taken the position that we don't want any tax cuts that are paid for if you have to cut Social Security, Medicare, and Medicaid, the social safety net, or investments in our future like education and research and infrastructure. We don't need tax cuts that badly. We need those investments more than we need tax cuts.
So when you start talking about the different ways of cutting Social Security, we need to make sure that it's in the context, that we're talking about cutting Social Security in order to preserve the tax cuts.
They would get a tax cut on their income up to $250,000. Their income over $250,000, they would not enjoy the Bush-era tax cuts. They would be paying the same taxes they were paying when the stock market was--during the Clinton administration, when the stock market almost quadrupled. The Dow Jones Industrial Average almost quadrupled. Under the lower tax rates under the Bush administration, the Dow Jones Industrial Average was incredibly worse at the end of his 8 years than it was in the beginning. Quadrupling under Clinton; worse under Bush than it was in the beginning. Of course, job creation, record under the Clinton administration when you had the higher rate; under the Bush administration, the only measure you're looking at it, is it or is it not the worst since the Great Depression.
Obviously, those who are paying the high rate actually have more of a financial interest in the stock market, because the little bit of tax increase we're talking about, they will more than offset that by the stock market going up like it did under the Clinton administration. If you look at the taxes they saved under Bush, if they could have gotten the returns in the stock market like they did under Clinton, they would have gotten 10 to 20 times more returns in the stock market than they paid in little taxes.
You're exactly right. It probably would not result in any change in the withholding because of that little bit of money, and they would have all of the tax cuts up to the first $250,000, and they would pay a slightly additional tax on the additional $2,000.
One of the things that we need to point out is that with the stagnant economy, most workers haven't gotten a cost-of-living increase in a long time. If we can improve the economy, if we had a little more money and could create jobs and improve the economy such that employers think that people might actually walk off the job and go get another job, they are more likely to get a cost-of-living increase. That cost-of- living increase is more than the additional taxes that we're talking about in most cases.
That's exactly the problem. When you start talking about reducing the size of government with unspecified cuts or revenue increases, not rate increases but revenue increases, whatever that means, without specifying, we don't even know whether it is arithmetically possible. But if it is arithmetically possible, what we suspect is that it is going into things like the deduction you get on health care. You don't have to pay--if you get health care insurance, you don't have to pay income tax on that. The mortgage deduction, charitable deductions, the kinds of things that we probably wouldn't want to cut in order to fund some tax cuts, but the Congressional Black Caucus did talk about deferral of overseas corporate profits. If you eliminate that exemption, that's about half a trillion. A 5 percent surcharge on millionaires, that's about half a trillion. The financial speculation tax, when you buy stocks and trade stocks and bonds, you pay a little one-quarter of 1 percent charge on that. Now, before the discount brokers, people would be paying 1 or 2 percent, not just a little quarter of a percent. So that is certainly something that could be done. Limit the deductibility of corporate debt interest. That's about three-quarters of a trillion. Treating investment income like regular income, that's almost a trillion.
I mean, there are a lot of things that we can do to add up to get to the little bit of money we need left. Negotiating prices on pharmaceuticals under Medicare.
About $500 a month more for health care than they're paying now. That was the plan.
Well, one of the things that ObamaCare did was to provide, for those on Medicare, you get your annual checkups with no copay and cancer screening, no copays and deductibles. We're closing the doughnut hole.
Under the Romney plan, because they're paying providers more, your copay part of that provider fee is more, so your copays and deductible would be more. That's for people over 55. People already on Medicare would pay more under the alternative than they're paying today.
If you're under 55, you're at your $500 a month, every month, trying to make your health care, because the thing is
that if Medicare is saving money, and the health care costs do not go down, then somebody's got to pay the difference. Adding insult to injury to that, you have corporate profits, dividends and commissions and everything else being siphoned off. So you not only have to pay the health care costs; you have to pay enough to cover the corporate profits. And so that's where senior citizens would be paying $500 a month, $6,000 a year more.
There's a provision in the prescriptive drug benefit that passed about a decade ago that prohibits HHS from negotiating drug prices with pharmaceuticals. Now, the VA can negotiate prices; Medicaid can negotiate prices. But somehow, somebody, I don't know who, nobody's taking credit for it, it just kind of ended up in there, prohibits HHS from negotiating drug prices. So when a company says this is what we want, it is illegal for HHS to point out that you're charging everybody less, you charge in Canada less--how about giving us a little savings--that's illegal. Whatever they want, that's what they get.
Well, the Medicare Advantage gives you slightly enhanced benefits under Medicare, and it was provided by Medicare. And what the private sector says is: we could provide those same services for a lower cost; and if you let us get in at 95 percent of what you're paying, everybody wins, because we're saving money. That's a phantom saving, but that was the original deal.
By the time--in the prescriptive drug benefit, we're paying about 115 percent more than the average. And all we're doing is saying, well, let's just pay the average.
The insurance companies do have an advantage in their costs because there are ways of attracting a healthier clientele, so their costs would be lower, not because of efficiency, but because they skewed a better, healthier clientele and that's how they save money.
But what we did was reduced their profit margin to the point where they have to be at least as efficient as Medicare, not getting a bonus, which didn't help anybody.
And that is exactly what we did. Much has been made of the $716 billion that was saved in Medicare. The corporate subsidies was part of it, efficiencies were part of it, but not a dime in benefits was adversely affected. In doing that, we also extended the solvency. Medicare goes broke, was going broke, in 4 years. Now it's 12 years.
Under the alternative plan, during the campaign, it would be back to 4 years. So seniors would be paying--seniors on Medicare now would be paying more. Seniors, younger people when they get to Medicare would pay a lot more, and it goes broke quicker. That was what we were fighting. And the President was reelected, and so Medicare will not be attacked.
But, again, when you talk about additional Medicare cuts, we're just not cutting in the abstract. Those cuts are necessary because people want to extend the Bush-era tax cuts. If you do not extend the tax cuts, you do not have to discuss any cuts in Medicare.
These savings are designed to help pay for tax cuts; and people need to make the choice, recognize the choice. Do you want to cut Medicare in order to preserve some tax cuts? I think a lot of people would say leave Medicare alone.
I yield such time as she may consume to the gentlelady from Texas, Sheila Jackson Lee.
Mr. Speaker, just in closing, the gentlelady pointed out that bad things happen if we go over the cliff. Bad things are going to happen if we get serious about deficit reduction. The only way you can deal with deficit reduction is to raise somebody's taxes or to cut somebody's spending. It's going to be unpleasant. Until you recognize that arithmetic reality, we're not going to make any progress.
You're not going to be popular doing deficit reductions, but we have choices
to make. We can do this without cutting Social Security, Medicare, or Medicaid, the social safety net, or investments in our future. We have a list of ways of doing it, with specifics. Now, we're willing to compromise, of course, but you can't compromise by reducing the size of government with unspecified cuts. Until you specify them, you can't have a discussion. You can't have unspecified revenues that don't involve rate increases when we don't know what you're talking about. We can't compromise on that because there is no proposal to compromise.
We need specifics. We cannot allow people to try to get past a scheme where you extend the tax cuts at a huge price and then come back next year and try to pay for them and notice that you're so broke you have to cut Social Security and Medicare. If that's your plan, let's get it all up front: we're going to cut Social Security and Medicare in order to provide for some tax cuts. I think most people would say, no, leave Social Security and Medicare and Medicaid alone. If you've got some money left over from tax cuts, fine, but we do not want Social Security, Medicare, and Medicaid to be cut in order to provide for tax cuts.
When you start talking about, well, increase the age or reduce the COLA, those are just ways of reducing benefits. So we need to make that threshold statement that we're not going to allow Social Security and Medicare and Medicaid to be used to pay for any of these tax cuts, and we will not allow a scheme to take place where we all agree on some tax cuts first, and then find out that because of the size of the tax cuts we have to cut Social Security and Medicare. Let's figure this all out at once. It can be done. There are some tough choices that have to be made, and the Congressional Black Caucus has shown how those choices can be made, with specifics, in their various documents.
Mr. Speaker, I appreciate the opportunity to have this moment to discuss the Congressional Black Caucus position on the fiscal cliff, and I yield back the balance of my time.