Mr. President, I have two issues I wish to discuss today. The first one is one I have spoken about before, which is the DISCLOSE Act, which we are going to be voting on probably tomorrow. The last time I talked about the DISCLOSE Act, I…
Mr. President, I have two issues I wish to discuss today. The first one is one I have spoken about before, which is the DISCLOSE Act, which we are going to be voting on probably tomorrow. The last time I talked about the DISCLOSE Act, I raised the issue of the film that was made in the 2004 campaign by Michael Moore. This was an effort, very clearly, on the part of Mr. Moore to influence the election. No one could have seen that film without realizing it was a serious attempt to make sure Americans did not vote for President George W. Bush.
Well, Citizens United, a group that has political views different from Mr. Moore's, believed that the film violated the law, and they filed a complaint with the Federal Election Commission because they said it was clearly a political document, not just another movie, and it was filmed for the purpose of trying to affect the election.
At the time, Michael Moore had this to say about Citizens United and their complaint:
That's the difference between our side and their side. Even
when we disagree, we are respectful of freedom of speech, but
when they disagree, they try to shut you down. Well, it's
unAmerican and it's wrong and people are not going to stand
for it. People in this country don't like to be told they
can't watch something or see something.
I can argue with Mr. Moore about whether our side really does hate freedom of speech, but the interesting point is that he insisted we have more opportunities to watch rather than less opportunities to watch and that any other position was, to use his term, un-American.
What did Citizens United do? They decided that rather than fight Michael Moore, they would join him, and they made a movie and they ran the movie in the 2008 election. Immediately, they were attacked for making this movie because, unlike Michael Moore, Citizens United as a group happens to have a corporate charter. They are a corporation by definition, and the complaint was, you are entering the campaign and violating the law which says corporations cannot contribute to political parties.
Citizens United took the case all the way to the Supreme Court and said: But we are not contributing to a political party; we are not violating the law against corporate contributions. We are exercising our first amendment right to make a movie and tell people what we happen to think about Hillary Clinton. Their views about Hillary Clinton were no more generous than Mr. Moore's views about President Bush.
I haven't seen either movie. I don't particularly care to at this point. The issue is, does Citizens United have the same right to freedom of speech that Michael Moore does or is the technicality of the fact that Citizens United happens to be a corporation and Michael Moore is rich enough to make his movie by himself, without a corporate form and without shareholders, mean that he can speak and they cannot? The Supreme Court said: No, we won't support that idea, that he can speak and they cannot; and as long as they are not making a direct contribution to a party--that would be a violation of the law--they have the right to make a movie and they have the right to distribute it.
Well, that is what the DISCLOSE Act attempts to do something about. We have heard complaints on this floor: Oh, it is evil and improper for corporations to speak, unless, of course, they happen to be the New York Times corporation--they can speak all they want--or the Washington Post corporation. They can speak all they want. But if a group of citizens get together, and they have some shareholders, and say, we want to speak in the political arena, they are told, no, no, no, you can't, except by the Supreme Court, which says, yes, yes, yes, you can. That is why I support the Supreme Court decision.
All right. We get the DISCLOSE Act to say that the Supreme Court made a terrible mistake but we will do everything we can to try to rectify that mistake. We are told over and over again that we are not limiting their freedom of speech; we are just going for disclosure. Then there are all kinds of aspects of the bill that go beyond disclosure, and we are treating everybody alike, except for those groups we have carved out of the terms of the DISCLOSE Act, so they won't have to comply with the DISCLOSE Act, and those happen to be the kinds of groups whose support is necessary for the people who voted for this bill in the House.
All right. Let's assume for the sake of argument that there are things in the Supreme Court decision that do need some legislative attention. Why, then, don't we have some hearings? Why, then, don't we have the bill open for amendment? I am the ranking member of the Senate Rules Committee--the committee that would receive the jurisdiction on this bill--and we have not seen it in the Rules Committee. It has not been referred to committee. There have been no hearings. There has been no opportunity for amendment. There has been no opportunity to sandpaper some of the rough places and make the bill more acceptable to people who are currently opposed to it. It is simply: It passed the House in this fashion; let's bring it to the floor of the Senate the way it passed in the House and prevent the Senate from having any impact on the way it is worded or structured.
So I am going to vote against the DISCLOSE Act for two reasons: No. 1,
I happen to believe that the Supreme Court got it right and that Citizens United has every bit as much right to produce a movie that attacks a political character as Michael Moore does. The technical fact that he does it as an individual should not change the importance of the dialog that should take place in the public square. No. 2, even if the Supreme Court decision does need some kind of legislative fix, it should be handled in regular order. We should have seen it in the Rules Committee. We should have had an opportunity to amend it, to debate it, to hear witnesses on it, to question those witnesses and have an understanding of it. For those two reasons, I intend to vote against it.
Tax Policy
Turning my attention very quickly to the issue the Senator from Arizona was discussing which has to do with tax policy, I wish to call to the attention of my colleagues an article that appeared in the Wall Street Journal on September 21 with respect to capital gains taxation and the impact of seeing the capital gains tax rate go up on the economy. The headline of the article is ``Cap Gains Taxation: Less Means More.''
I ask unanimous consent to have the entire article printed in the Record at the conclusion of my remarks.
I will highlight only one portion of this article in the interest of time. It is the point that is made as the final point in the article where it says:
Higher capital gains taxes will not substantially reduce
the deficit.
They point out--we have all seen it--that the higher the capital gains tax goes, many times the lower the capital gains tax revenues. Why is that? Because if you have an investment in a business or a piece of real estate and the cost of getting out of that investment is inordinately high because of a capital gains tax rate, you won't be as motivated to get your money out of that investment and put it into a more productive one as you would be if the capital gains tax were low.
We have all known that. The economic information on that has been around for a long time.
But there is another aspect to this I want to highlight; that is, the impact on jobs. The figure they use in this article is that if the capital gains tax rate went to zero, the loss to the Treasury, in terms of income, would be $23 billion a year. Oh, you may say, that is a lot of money. We can't afford to lose $23 billion a year coming into the Treasury. What impact would that have on the deficit? We would lose $23 billion a year that we need.
All right. Let's assume that the $23 billion comes in. What does this administration propose to do with it? They want to put it in the stimulus package to create jobs. They would spend the entire $23 billion as rapidly as it came in. It would go out in a stimulus effort to create jobs. The point made in the article is that by not taking in that $23 billion and leaving it in the economy, we are giving the economy itself and those people who are in the business of creating jobs $23 billion in incentives to create jobs. If I can quote the last paragraph:
A capital gains tax reduction to zero produces new jobs at
the cost of $18,000 per worker--far less than might occur
from any other proposals.
In other words, if the government took in the $23 billion, and then spent it in incentives to create jobs, they would spend more than $18,000 per job than would happen if we simply left that money in the hands of the people who know how to create jobs. I am not suggesting a capital gains tax rate of zero, but I am saying let's leave it where it is, because it is the most efficient way to create new jobs in this economy, rather than have it come into the government and have the government hand it out in ways that are proven to be less effective in the creation of new jobs than the reality of the economy working on its own.
Those are my two messages, and I appreciate the opportunity of sharing them today. No. 1, let's defeat the DISCLOSE Act. No. 2, let's leave the tax program where it is, because that is the most efficient and effective way to create new jobs, and new jobs is what we want and need in this economy more than anything else.
I yield the floor.
Exhibit 1
[From the Wall Street Journal, Sept. 21, 2010]
Cap Gains Taxation: Less Means More
(By Allen Sinai)
Congress is deliberating on what to do about the ``Bush tax
cuts''--the reductions in income, capital gains and dividend
taxes legislated in 2001 and 2003--currently set to expire at
the end of this year. The recession may officially be over,
but what Washington does on tax policy still matters for an
economy that's creating very few net new jobs and is stuck
with an unacceptably high unemployment rate and record-high
federal budget deficits of over 9% of GDP.
Capital gains taxation is one area in which lawmakers can
help jump-start the economy. Capital gains tax rates for
taxpayers in the top four income brackets are set to move
higher in a few months. My new study, ``Capital Gains Taxes
and the Economy,'' published this week by the American
Council for Capital Formation, shows that the net effect of
lower capital gains taxation is a significant plus for U.S.
macroeconomic performance.
The study simulated reductions and increases in capital
gains taxes starting in 2011 and extending to 2016 to
estimate the effects on economic growth, jobs and
unemployment, inflation, savings, the financial markets and
debt.
Here are a few of the relevant findings:
Hiking capital gains tax rates would cause significant
damage to the economy. Raising the capital gains tax rate to
20%, 28% or 50% from the current 15% would reduce growth in
real GDP, raise the unemployment rate and significantly
reduce productivity. These losses to the economy outweigh any
gains in tax receipts from the increase in the capital gains
tax rate.
For example, at a 28% capital gains tax rate, economic
growth declines 0.1 percentage points per annum and the
economy loses about 600,000 jobs yearly. If the capital gains
tax rate were increased to 50%, real GDP growth would decline
by 0.3 percentage points per year, and there would be 1.6
million fewer jobs created per year. At a 20% capital gains
rate compared with the current 15%, real economic growth
falls by a little less than 0.1 percentage points per year
and jobs decline about 231,000 a year. Smaller increases in
the capital gains tax rate have smaller effects on the
economy, but the effects are still negative.
Lowering capital gains tax rates would help grow the
economy and jobs. My study found that when capital gains
taxes are reduced to below 15%, the after-tax return on
equity rises, stock prices increase, household wealth rises,
consumption moves higher, and capital gains can be realized.
Capital gains tax receipts to the government increase and
household financial conditions improve to provide a healthier
basis for future consumer spending.
My study also found that a reduction in the capital gains
tax rate to 5% from 15% raises real GDP growth by 0.2
percentage points per year, lowers the unemployment rate by
0.2 percentage points per year, and increases nonfarm payroll
jobs by 711,000 a year. Productivity growth improves 0.3
percentage points a year.
Taken to its logical conclusion, moving to a zero capital
gains tax rate would have an even bigger effect, increasing
growth in real GDP by over 0.2 percentage points per year and
approximately 1.3 million additional jobs per year.
Higher capital gains taxes will not substantially reduce
the deficit. The net impact on the federal budget deficit of
a reduction in the capital gains tax rate to 0% is a decline
in tax receipts of $23 billion per year after the positive
effects of stronger economic growth on payroll, personal and
corporate income taxes are taken into account. This is
significantly less than the $30 billion per year static
revenue loss estimate, which does not include feedback
effects. A capital gains tax reduction to 0% produces new
jobs at a cost of $18,000 per worker, far less than might
occur from many other proposals.
The bottom line is that any capital gains tax increase is
counterproductive to real economic growth. To the contrary, a
reduction in the capital gains tax rate would be a pro-growth
fiscal stimulus that creates new jobs and new businesses,
funds entrepreneurship, reduces the unemployment rate,
increases productivity, and in the long run brings in more
payroll taxes. In the case of capital gains taxation, less
means more.