Congressional Budget For The United States Government For Fiscal Year 2008

Floor Speech

CONGRESSIONAL BUDGET FOR THE UNITED STATES GOVERNMENT FOR FISCAL YEAR 2008 -- (Senate - May 09, 2007)

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Mr. THUNE. Mr. President, I wish to thank the Senator from New Hampshire for yielding and also to just elaborate on some of the things he talked about with regard to his motion. I congratulate him on offering this motion to instruct because I believe it gets at the heart of this issue, which is whether we are going to continue this economic expansion, the job growth that has come with it, the explosion in Government revenues associated with the tax relief that was enacted in 2001 and 2003 or whether we are going to go down the opposite path and increase taxes by, as he said, the largest amount in American history.

Now, up until this last year, this budget we are talking about today, the largest tax increase in American history happened in 1993. That was $293 billion in increased taxes that was put through the Congress in that year. What has been proposed this year, through the budget process in the other body, in the House of Representatives, was a $916 billion tax increase, and, as the Senator from New Hampshire has noted, here in the Senate it is a $700 billion tax increase.

The only question really before us is whether this conference committee which is going to meet is going to adopt the House version, which is triple the largest tax increase in American history, or adopt the Senate version, which is double the largest tax increase in American history. Either way, whether we adopt the Senate-passed budget or the House-passed budget, we will be adopting the largest tax increase in American history--if we adopt the House version, three times the largest tax increase in history and, if we adopt the Senate version, more than two times the largest tax increase in American history.

So the gentleman from New Hampshire, the Senator who has proposed a motion that would instruct the conferees who will be meeting, the Senate conferees who will be meeting with the House conferees to work out and reconcile the differences between these two budget resolutions--one, as I said, is the House, which is triple the largest tax increase, or the Senate version, which is double--his motion would essentially instruct the Senate conferees to go into that conference with a position that doesn't accept the House tax increase or the Senate tax increase; rather, it allows these existing tax cuts to stay in law--in other words, not to allow them to expire.

I have a chart here which illustrates a little bit about what I am speaking of today, and this chart essentially shows what is included in that $900 billion tax increase. As I said earlier, the Senate, in its budget resolution, adopted a position that restored about $180 billion of the tax relief that would expire under the House-adopted budget resolution. As we can see, this is the amount taxes will go up if this budget is adopted. This is the amount the Senate said we will put back with the Senate budget resolution here, which our colleagues on the other side were able to get through the Senate. It puts back $180 billion.

I will give the House credit because the House voted yesterday on a motion to instruct their conferees to adopt the Senate language. That makes sense because I think they heard what a lot of people said when they went home and met with their constituents; that is, we don't want to see the largest tax increase in American history. We don't want another $900 billion in taxes imposed on the American economy at a time when the economy is growing and expanding and creating jobs.

Just look at the last few years here: 7 1/2 million new jobs, unemployment at 4.5, 4.6 percent, the lowest historical average in the last three decades, 21 consecutive quarters of economic growth.

This is the counterintuitive part about this because, as was pointed out back in 2001 and 2003 when these tax cuts were being debated, if we reduce taxes the revenues are going to go down. Well, in fact, the opposite has happened. What has happened is what has happened throughout the course of history--under the Harding administration in the 1920s, the Kennedy administration in the 1960s, the Reagan administration in the 1980s, and now currently; that is, when you reduce marginal income tax rates, capital gains income rates, what happens? People take their realizations, they pay their taxes, they reinvest, and you get not less Government revenue but more Government revenue--in this case, dramatically more Government revenue.

Between 2004 and this year, we have seen Government revenues increase by $300 billion; that is, revenue coming into the Federal Treasury between 2004 and 2005 was up almost 15 percent, 14.7 percent; between 2005 and 2006, around 13 percent; and in this current fiscal year, the first 7 months of this current fiscal year, Government revenues are up 11.3 percent over last year. In fact, in the month of April, we have $70 billion more Government revenue than April a year ago.

These tax cuts are working not only to stimulate the economy and to create jobs but, as I said before,

miraculously, to generate more Government revenue. We have $300 billion more Government revenue coming in as a result of reducing taxes, which again proves the historical fact that when you reduce marginal income tax rates and capital gains tax rates on the American people, they take their realizations, they pay taxes, they invest, they create more jobs, the economy continues to expand, and you get not less Government revenue but more Government revenue.

So I think what is happening here in the Senate is an attempt to provide a fig leaf of cover when it comes to this issue of taxes. The problem with that is this particular cover is a cover not for the taxpayers in this country, it is perhaps a cover for the tax raisers in this country. It is a small cover, however, because if you take $180 billion of tax relief that is restored under the budget resolution adopted here in the Senate, you can cover some of this stuff.

What they propose is that we are going to put back some of the marriage penalty that would come back into play under the House-passed version, and we are going to restore some of the 10-percent tax rate--the lowest tax rate, which applies to people making $15,000 and less--and we are going to provide some death tax relief. We will lower the top death tax rate from 55 percent to 45 percent. Well, what does that do? What do you do, then, about the alternative minimum tax, which is going to hit 20 million additional taxpayers if this budget is adopted? What about the child tax credit, which under the Democratic plan is slashed from $1,000 back to $500? What about lower tax rates throughout the rest of the rate schedule? Even if you fix, as they attempt to do with this small amount of tax relief, the 10-percent tax bracket, the lowest tax bracket, you still have tax increases in every other tax rate on the schedule. In fact, those who are paying 25 percent taxes are now going to go up to 28 percent. Those who were paying at the 28-percent rate currently will see their tax rate going up to 31 percent. Those paying at the 33-percent rate are going to see their tax rates go up to 36 percent. Those fortunate few paying at the 35-percent rate, the highest marginal tax rate today, are going to see their tax rates go up to 39.6 percent.

My point is, you can provide a fig leaf to say that we are doing something to allow for some of these tax cuts, this tax relief which has benefited our economy and the American people into the foreseeable future, but what about the rest of all these tax breaks that are going to expire, which means the largest tax increase in American history?

If we look at what the motion of the Senator from New Hampshire does, it says we want to extend these tax breaks to include the deduction for student loan interest. There are a lot of working families trying to put their kids through college who are taking advantage of that tax break.

How about the earned-income tax credit, which is helping a lot of our military families, many of them serving in Iraq and Afghanistan?

As I said before, the child tax credit is being slashed from $1,000 down to $500, essentially cutting in half the amount of credit a working family can get for their children when they file their tax returns. That was something which was put in place to help working families.

I can go right down the list. Let's take senior citizens' dividend income--currently taxed at the capital gains rate of 15 percent, but under this proposal it goes up to 39 percent. We have a lot of seniors in this country who have invested and now have dividend income, capital gains income. Their capital gains income rates are going to go up as well. If they have capital gains income they are going to show, that will go up from 15 percent to 20 percent.

My point very simply is that if you pay taxes in America today, the prescription in this budget resolution which was adopted here by the Senate, put forward by our colleagues on the other side and the one adopted by the House, has one prescription: higher taxes. Every working American who pays taxes today is going to see their tax bill go up. In fact, in my State of South Dakota, which I will use as an example, the average tax increase on a working family in South Dakota would be $2,596 under this budget, with 2,840 jobs being lost and $262 million lost in our economy. That is in my State of South Dakota, and probably, if you take any other State, you would find the numbers to be dramatically higher in terms of job loss, in terms of the loss to the local economy and the impact it is going to have on taxpayers.

Again, just in an attempt to summarize what I am saying here, the Democrats have attempted, in the form of a fig leaf, to provide some amount of tax relief cover in this budget. What they do not tell us is that the amount of tax relief does nothing to cover the increase in taxes that will occur under this budget. They take about $180 billion off the table and say to the American people: Keep that. But they are still going to be raising taxes by over $700 billion, even if the Senate version of this budget resolution is adopted in conference. If the House version ends up being adopted, it will be over a $900 billion tax increase--the largest tax increase in American history by three times in the House, over two times in the Senate.

Again, if you take this amount, this fig leaf, and you say: We are going to put the 10-percent rate back, we are going to do something to provide some marriage penalty relief because we think married couples ought not to be penalized for being married, which I happen to agree with, and that was part of the tax relief passed in 2001 and 2003, and I think they realize that is a popular piece of tax relief, so they are going to attempt to restore some of these things--that still doesn't do anything about capital gains and dividends, which will hit seniors, or anything about R&D tax credits or the per-child tax credit or anything on the rate structure, the rates which go from 25 percent up to 28, from 28 to 31, from 33 to 36, and from 35 to 39.6. Every rate on the rate schedule is going up under this particular proposal.

So I am here today to support the motion of the Senator from New Hampshire to instruct the conferees as they go into conference between the House and the Senate to leave these tax cuts alone. Don't allow them to expire. Don't permit the largest tax increase in American history at a time when the economy is growing and expanding and creating jobs and we are seeing not less Government revenue but dramatically more Government revenue, to the tune of a $300 billion increase in Government revenues just in the past 3 years alone.

These tax cuts are working. They are having their desired effect. They are accomplishing what was intended in the first place when this Congress, in its wisdom, enacted these tax cuts in 2001 and 2003. It would be a shame to take a fig leaf and try to say to the American people, to the taxpayers of this country, that we are going to provide a little bit of cover for the tax raisers here in the Congress, but we aren't going to do anything to provide cover for the American taxpayer, those people who are going to pay higher rates in all these areas if this budget is passed and if the conference report comes back either with the Senate version or the House version, both of which increase taxes, it is just a question of by how much.

So I hope we can adopt and get the votes necessary to pass the motion of the Senator from New Hampshire to instruct our conferees to allow these tax cuts to stay in place. Don't allow them to expire, don't raise taxes, don't do something that would harm our economy and the jobs being created by passing the largest tax increase in American history.

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Mr. THUNE. Will the Senator yield for a question?

Mr. GREGG. I am many happy to yield.

Mr. THUNE. I understand my colleague from North Dakota. We both come from an area of the country where we have a lot of hard-working, plain-spoken people. They get this. If you have a bunch of tax cuts that are in law today and you allow them to expire, which is what this budget does, that constitutes a tax increase. People in my part of the country get that. If you are not trying to hide something, why would you put a fig leaf on it? The amendment offered to the budget by our colleagues on the other side said: We will take the more popular things, and we will allow those tax cuts to be extended, which to me and those I represent very simply implies that the ones you aren't extending are going to expire, which constitutes a tax increase. We can talk about whether that is $300 billion or whether, if you include the AMT, it is $700 billion. But the fact is, the House budget resolution allows the tax cuts to expire to the tune of $916 billion. The Senate said: We are going to put a fig leaf on that, and we are going to allow $180 billion in tax relief, which to me implies they understand exactly what they are doing. They are trying to hide this tax increase by putting a fig leaf on it.

To the people in my State and the people of New Hampshire and the people of North Dakota, this is a very simple thing. They get this. They understand what they tried to accomplish when this was debated in the Senate during the debate on the budget resolution was simply to put a fig leaf on this to offer up some tax cuts, some tax relief, and they wouldn't have had to do that, if they weren't raising taxes by $916 billion. It is pretty straightforward.

The motion of the Senator from New Hampshire is very straightforward. All it says is: Let's allow these tax cuts to be extended because they have created jobs, 7.5 million new jobs, 21 consecutive quarters of economic growth, 4.5-percent unemployment rate, and $300 billion in additional Government revenue over the past 3 years. Government revenues have not gone down. They have gone up. We have not less Government revenue; we have more as a result. Why would you fix something that is not broken? That is something people in the part of the country I represented understand clearly. If you are allowing tax cuts to expire, if you are not extending them, you are raising taxes.

Mr. GREGG. That was an excellent question. I appreciated that.

Mr. THUNE. I am not sure it was a question.

Mr. GREGG. Why would you fix it, if it is not broken?

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