Congressional Budget for Fiscal Year 2004

Mr. CORNYN. Mr. President, I thank the distinguished chairman of the Budget Committee on which I had the honor of serving for his work on this budget resolution and for his leadership on the Budget Committee. My compliments as well to the ranking member, Senator Conrad, for the civil but spirited way in which the committee debated the markup of this budget resolution.

I believe the budget resolution we have before us represents the priorities of the Federal Government and, more importantly, of the American people. I rise today to discuss some fundamental questions which I believe are important to this debate, and to address arguments that have been made in support of spending more of the taxpayers' money in the name of fiscal restraint, as odd as that may sound, and at the same time to talk about cutting deficits.

As many of my colleagues on the committee and here on the floor, I support this budget resolution, including the President's jobs and growth package. I believe it can make a real difference, not only to my State of Texas but to the Nation. I believe, if we hold to our principles and our priorities, we can assure that the needs of the Nation are met and help our economy grow.

If we are successful, we can help prevent future generations from being saddled with the bill for excessive spending that some in this body seem determined to create. Over what remains of the 50 hours allotted under the Congressional Budget Act under this debate, many amendments will be offered and have already been offered that reduce the amount of the President's growth package. If that were not enough, many of those who want to cut tax relief want to turn around and spend what would have been tax relief on bigger government. Rather than allow American taxpayers to choose how they want to spend their hard-earned money, those who would seek to cut tax relief and increase spending want to choose for the American people how that money should be spent and grow Government ever larger.

The fundamental question in this debate is simple: Should we support higher taxes, more Federal spending, and bigger government or should we facilitate economic opportunity and jobs? For me, that is what this debate is all about. Who should spend that money: politicians and bureaucrats or taxpayers? Families or the Government? Small business owners on investment and job creation or the Federal Government? Senior citizens on enhancing their retirement security or the Federal Government?

This debate is really about who we should trust to get done the job of growing our economy and creating greater economic opportunity for all Americans. Should we help people keep more of their money so they can spend it, invest it, or save it as they wish or should we simply add more taxes to an already beleaguered American taxpayer, giving up on economic growth and increasing the deficit?

I urge my colleagues, don't be fooled. This debate is not about shrinking deficits. It is about growing spending.

The first chart to which I would like to direct my colleagues is one that demonstrates a rather dramatic fact; that is, over the last couple of years we have seen spending soar, while Government revenues have shrunk. In fact, revenues have fallen by nearly 9 percent over the last 2 years. At the same time, though, Congress has seemed not to have even noticed because spending has increased by 12 percent over that same period.

We all agree on the need to control deficits. Our friends on the other side of the aisle contend that allowing more people to keep what they themselves earned would, in fact, balloon the deficit. I disagree. It is not spending by taxpayers that balloons deficits; it is spending by Congress, as this chart dramatically represents.

If you listen to this debate closely, you will notice that opponents of the President's growth package and this budget resolution do not propose that we pay down the debt instead of tax relief. They, in fact, propose spending hundreds of billions of dollars instead of tax relief and this growth package. They want to spend every penny of what would be relief to taxpayers and an investment in economic growth on something else altogether.

Those on the other side of the aisle, and on the other side of this issue, seem to be concerned about deficits when there is a proposal to provide relief to the beleaguered American taxpayer. They spend hours on the Senate floor and in committee rooms warning that taxpayers keeping more of what they earned is a risky proposition.

We have heard all that before and it still does not wash. Notice carefully that they are not shy about spending more of the taxpayers' money, even if that spending causes the very same deficits they complain about here on the floor. In fact, despite the deficit, despite a sluggish economy, despite the costs of waging war and rebuilding our military, many of our colleagues want to increase discretionary spending but not just on the Department of Defense and on homeland security. That funding is already provided for in this budget resolution. The money that should flow back to the taxpayers will, if our colleagues who oppose this resolution are successful, flow instead to more and more Government spending.

The next chart I show to my colleagues is a list of Budget Committee amendments to what was ultimately voted out as the budget resolution. Each of these amendments failed. But as you can see, this chart, I believe, is an indicator of what those who oppose this budget resolution propose instead.

For example, here is one amendment for an additional $2.2 billion. You can see the figure of $200 billion more for Medicare, an additional $1.8 billion for function 700 for veterans, another for increased spending on natural resources—all of which are provided for, to some extent, in the budget resolution that was voted out of committee. But you can see from the chart the total of these amendments would have added, if they were not defeated, approximately $440 billion in new spending.

That is why I say those who complain so loudly about budget deficits but at the same time propose huge increases of hundreds of billions of dollars in new Federal spending really do not have their story straight. Because, of course, if we do not cut spending, and if we do not see the economy grow, that means less hope and less opportunity for American workers. And that means more taxes for the beleaguered American taxpayer.

My question is simply this: Why shouldn't the Government be required to do what American families have to do during lean times? Why shouldn't the Government have to tighten its belt in lean times?

Indeed, the growth of Government continues, but the economic recovery will not under these tax-and-spend proposals. Shared sacrifice, which is what is called for during lean times, is not shared, at least by the American taxpayers, if they continue to see nondiscretionary increases in spending with no end in sight.

I support the President's growth package as recommended in this resolution because I believe individuals and families in my State and across America, the people who pay the taxes and earn the money, can better save, spend, and invest their money as they see fit—far better than can the Federal Government. I believe Texans know better what they need than the spenders in the Halls of Congress.

According to the latest Scripps Howard Texas poll, the people of my State are worried about not having enough money for their retirement, about skyrocketing energy prices, and about college tuition for our children. They are worried about the issues that affect their lives directly.

The President's jobs-and-growth plan addresses these concerns by providing a short-term economic stimulus that will encourage investment and job growth, as well as strengthening our long-term economic growth. The President's plan will create more wealth, provide higher wages and more jobs, thereby leaving more money for families, while increasing their standard of living.

As for the argument that this proposal would cause greater deficits, I disagree. If we were to hold the line on new spending, if we were responsible with the taxpayers' money—the money they send to Washington every year—and if we make the most out of the revenues we have by following the limits set out in this budget resolution, then we will prevent growing deficits and extinguish this deficit entirely in the foreseeable future.

It is only by spending beyond our means that we create deficits. Last year's failure to pass a budget resolution is a clear example of the failure to act, the failure to set important guidelines for the Federal budget. The failure of last year's Senate leadership to accomplish what we are now doing on the Senate floor meant the Senate had few guidelines to follow, few limits on spending, and no responsibility, at least within the constraints of a budget resolution, to control boundless spending by the Government.

Let's recall a little bit of history that revisionist historians both in this body and outside seem to forget.

The chart I have in the chamber shows, of course, what we all remember; that is, at the time President Bush came into office, we saw a tremendous trend downward in terms of the growth of our gross domestic product. And, of course, we have seen a tremendous decline in the stock market. It has really only been by virtue of the tax cuts that were passed in 2001—which would be made permanent—that we see increased money in consumers' pockets, money they have been able to use to buy a car, to buy a house, in conjunction with lower interest rates. That is what has kept the meager recovery we have seen as good as it has been.

Of course, the economic recovery was staggered by the events of 9/11 and, of course, the continuing war against terrorism and, obviously, the uncertainty associated with the geopolitical situation in the Middle East.

As a result, our economy has been sluggish and investor confidence remains low. GDP has grown at an anemic rate, while the labor market has remained soft, with an unemployment rate in February of 5.8 percent.

To address the economic challenges that confront our Nation and confront America's families, the President proposed, and I support, and this budget resolution reflects, a jobs-and-growth package. This package will spur near-term and long-term economic growth. It will provide an opportunity for more robust business investment and, yes, it will encourage new job growth.

His proposal, which this budget resolution includes, would first accelerate to January 2003 portions of the tax bill that was passed by this body in 2001 that are currently scheduled to be phased in, including a reduction in marginal income tax rates, additional relief from the marriage penalty, a larger tax credit for children, and increasing the size of the 10-percent income tax bracket. The net effect of these proposals is allowing taxpayers to keep more of what they earn, so they can spend it as they see fit.

Who benefits? Well, obviously, the individual taxpayer. But just as importantly, small business owners, including sole proprietors and partnerships, most of whom report and pay taxes on their personal income tax returns.

This plan will increase the incentives for small business owners to invest in technology, machinery, and other equipment to help them expand and create jobs, and reduce the cost of capital needed to help small businesses grow. And, of course, as a result, people who are looking for work, who want to work but cannot find a job, will benefit, too.

As the President has stated:

[M]ore than two-thirds of taxpayers who pay the highest marginal tax rates are small business owners who include their profits when they file their individual tax returns with the IRS.

All together, the tax relief I propose will give 23 million small business owners an average tax cut of $2,042 this year. And I'm asking Congress to make those reductions permanent, so that America's entrepreneurs can plan for the future, add more employees, and invest in our economy.

Those were the words of the President of the United States when he made this proposal. Again, it translates into a single word, and that word is "jobs."

Under this proposal, this budget resolution, a married couple with two children and an income of $40,000 will see their income tax reduced by $1,133, a 96-percent decline; an older couple with an income of $40,000 will see their taxes reduced by 41 percent; a married couple with one child and an income of $40,000 will see their taxes decline by 33 percent; a married couple with two children and an income of $60,000 will see their taxes decline by 24 percent; and a married couple with two children who earn $75,000 between them will see their taxes reduced by 19 percent.

I also want to address briefly that portion of the budget resolution that eliminates the double taxation of corporate income such that dividend income will no longer be taxed at the individual level.

As the chairman of the Budget Committee has pointed out earlier, American taxpayers pay some of the highest taxes in the world—second only to Japan, I believe, on corporate dividends. Under current law, dividends can be taxed once at the corporate level and up to the highest tax bracket for individual taxpayers, once those dividends are paid by a corporation to its shareholders. That is more than any nation in Western Europe.

Under the President's proposal—which is only fair—those dividends will be taxed once and not twice. There are numerous economic benefits to the economy, and I really believe this is one of the most important aspects of this growth package. The first effect will be to lower the cost of capital. This will make new investments in technology and equipment more attractive to firms while providing investors with larger after-tax returns. For individual taxpayers and families, this means more money to spend, save, or further invest. For companies, as individuals invest more, increasing the amount of capital available in the capital markets, worker productivity will increase, real wages will rise, and more jobs will be created.

This proposal will also—not incidentally—remove the current bias toward debt financing.

As Alan Greenspan said in testimony before the House Financial Services Committee in February:

In my judgment, the elimination of double taxation will be helpful to everybody. .    .    . There is no question that this particular program will be, net, a benefit to virtually everyone in the economy over the long run, and that's one of the reasons I strongly support it.

The PRESIDING OFFICER. The Senator's 20 minutes have expired.

Mr. CORNYN. I ask the chairman for 2 or 3 more minutes.

Mr. NICKLES. I yield an additional 5 minutes to the Senator.

Mr. CORNYN. My thanks to Senator Nickles.

Finally, I want to point out that 45 percent of those who earn $50,000 a year or less—many of whom are seniors—will benefit from this ability to enhance and secure their retirement years. It will also boost the stock market and the value of hundreds of thousands of retirement plans, as corporations that don't currently pay dividends choose to do so because of the elimination of the bias against payment of corporate dividends in our Tax Code, and grow the stock market value in all likelihood, and, as I say, help secure the retirement of American workers.

Finally, this budget resolution increases to $75,000 the amount small businesses may expense from taxable income in the year that investment occurs. This incentive to further investment by small businesses—which create the vast majority of jobs in our country—will help lower the tax-adjusted cost of capital for small business, the "job factory of America," as the President has called it. This increases the ability of small businesses to make new purchases, invest in new equipment, hire new workers, or retain current ones. That is more jobs and more growth.

In conclusion, while the Congressional Budget Office has scored this proposal by the President, this growth package, in a static way, both sides of the aisle recognize—indeed, one of the Democratic alternatives to the President's proposal embraces the concept—a stimulus effect and growth effect by tax cuts.

PriceWaterhouseCoopers, for example, has reported that the President's growth package would increase the number of jobs by an average of 1.2 million a year during the first 5 years and an average of 900,000 per year over 10 years, and that the proposal would add $738 billion in new income to the economy during the first 5 years and about $1.5 trillion over 10 years, and other private sector estimates are even higher.

The President's Council of Economic Advisers estimates that the jobs and growth plan will create 1.4 million new jobs by the end of 2004.

Mr. President, if we are serious about growing jobs, about putting this economy back on track, and if we are serious about the need to restrain massive Government spending, then we must get serious about setting these priorities in our budget blueprint. Let's not just talk about preventing deficits while at the same time calling for more spending. Let's not decry a plan that benefits the economy by benefiting taxpayers and call for that money instead to be spent by Government. Let's, instead, set limits and stick by them.

I yield the floor.