Omnibus and Tax Extenders Legislation

Floor Speech

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Mr. KING. Madam President, I believe the Senator from Wisconsin wants to make a comment before I do.

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Mr. KING. A quick colloquy.

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Mr. KING. Madam President, I rise to join my colleagues, including the Senator from Wisconsin, to discuss what we are going to be voting on tomorrow.

First, I should say I have no major problem with the budget deal, with the omnibus. The process isn't exactly what it should have been. We didn't consider our 12 appropriations bills on the floor. However, the appropriations process did go through the committee process, and it was a result of bicameral and bipartisan negotiations.

My problem is with the tax extenders part of the package. First, it is a double standard. For all of this year--and we struggled in the Armed Services Committee and through the appropriations process-- everything that had to be increased in spending for whatever purpose had to be paid for. That was the standard. Everything has to be paid for. We had to find offsets. Then all of a sudden, we are considering a $680 billion hole in the deficit that doesn't have to be paid for. It is like we are all concerned about the debt, except when we aren't. Frankly, as someone who has been here for a fairly short time, I find this puzzling. The rule ought to apply both ways, because tax expenditures, by the way, are what they are. Republican and Democratic economists concede that the deductions, loopholes, and changes in the Tax Code are called tax expenditures. That is what they are, because otherwise they would be revenues to the government.

These are real dollars, and this is what has happened since the Tax Reform Act of 1986, when tax expenditures represented about 5 percent of GDP. Here we are today, and then the package we are talking about. We are going up into this area. This is almost 8 percent of GDP. This is a huge outlay that is like new mandatory spending. It happens automatically. It doesn't have to be reviewed every year. There is no assessment of whether these expenditures are effective or not, and some of them obviously are.

I have no problem with many of the items that are in here--mortgage interest deduction, health care interest deduction. But some of them deserve consideration, just as our budgets deserve consideration. This is on automatic pilot. This is a kind of new mandatory spending. The other piece is that we are deepening the debt hole. This is the percent of GDP of spending, and these are revenues. This is the deficit. This is the debt. That is what is killing us in the long run.

There is a tremendous interest rate risk here--as the Senator from Virginia pointed out. We are now at historically low interest levels. In living memory, I don't know a time when interest rates have been as low as they are. For every point that interest rates go up with an $18 trillion debt, the cost to the Treasury is $180 billion. The math isn't that complicated. If interest rates go up to 5 percent, just interest payments on this $18 trillion debt will be $900 billion a year. So 90 percent of our current total discretionary budget would go to interest payments. It would swamp the defense budget. It would swamp the discretionary budget. Yet we are tiptoeing along the edge of this precipice.

If interest rates go up with an $18 trillion debt, we are in real financial trouble. The second problem with this huge debt is it gives us no room for slack. It gives us no room for an emergency, for a recession, for hostilities, for a major terrorist attack and its effect on our economy. We have no cushion because we have used the cushion up. We continue to use it up, even when the economy improves. This $18 trillion some day is going to have to be paid back.

Finally, these aren't really tax cuts. Tax cuts are when you lower taxes and lower expenditures or raise other taxes so it is revenue neutral. If you cut taxes in a time of deficit, which means you have to simply borrow the difference of what the revenues would have been, that is not a tax cut. That is a tax shift.

We are simply shifting the taxes from ourselves to our children. This bill should be called the ``tax your grandchildren act'' because we are cutting our own taxes, but we are borrowing the money that otherwise would be collected and our kids are going to have to pay it back at some point with interest.

That is unethical. That isn't right. If 5-year-olds knew what was going on and could vote, we would be dead ducks, because that is who is bearing the burden of these policies.

What do we have to do to solve this? In some ways, it is simple and in other ways it is hard. Conceptually it is simple. We have to bring expenditures and revenues into balance. That means looking at the whole course of Federal revenues and also Federal investments, and we also have to make investments to make our economy grow.

The best solution to this deficit problem is a growing economy. But ultimately for me, this is an issue of ethical stewardship. Tom Brokaw wrote the famous book ``The Greatest Generation.'' They fought World War II, sacrificed, built the Interstate Highway System, and built the economy that we are running on today--the greatest generation.

I shudder to think what would be the case if Tom Brokaw wrote a book about our generation, which is borrowing and is not keeping our infrastructure up, is not adequately providing for the common defense, and is shifting the cost from us to our children. That is not stewardship; that is intergenerational theft. That is what we are engaged in here.

We are going to have one vote tomorrow. I intend to vote for the bill because I believe in the budget section, but I am very uncomfortable with the tax extender section. I don't have policy problems with many of those tax extenders. I do have a fundamental problem if they are not paid for. I don't think it is honest for us to go home and say that we cut your taxes when our grandchildren are going to have to pay those bills with interest.

That is the point that I think needs to be made about this, not that we are going to be able to stop this train that is going to be coming through here in the next 24 hours, but that we really need to talk next year about serious tax reform, about trying to balance revenues and expenditures and putting this country on a financial path, on a fiscal path that is sustainable and responsible.

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