Congressional Budget for the United States Government for Fiscal Year 2008
CONGRESSIONAL BUDGET FOR THE UNITED STATES GOVERNMENT FOR FISCAL YEAR 2008 -- (Senate - May 09, 2007)
BREAK IN TRANSCRIPT
Mr. GRASSLEY. Mr. President, I speak in favor of the motion by the Senator from New Hampshire, the ranking member of the Budget Committee, to make sure we continue existing tax policy throughout the period of time of this budget resolution.
Considering the issue of taxes and this budget, press reports have indicated we may be in the ninth inning of this budget season. The President sent his budget to Capitol Hill 3 months ago. The Senate Budget Committee marked up a budget resolution. It passed the Senate. That resolution lays out the Democratic leadership's fiscal priorities for the next 5 years. As everyone knows, the American people spoke last November and as a result of that election, we have a new Democratic majority in both Houses of Congress. So for the first time in 12 years, Democrats have the privilege, but also the responsibility, for our budget.
The Senate spoke very clearly in support of some tax relief. The voice came in the form of Senator Baucus and his amendment. My friend, the chairman of the Finance Committee, secured $180 billion to prevent part of the big tax increase that will go into effect January 1, 2011. Although the Baucus amendment only provides 44 percent of the tax relief room that is actually needed to keep existing tax policy in place so there is no tax increase, it is, in fact, far superior, though, to the position on the same issue by the other body, because the House position is zero tax relief. That is right: zero tax relief. What does zero tax relief mean? It means a total tax increase of $936 billion over 5 years. That, in fact, is the largest tax increase in history, and it is a tax increase that will occur automatically without a vote of Congress. Of course, it is inconceivable that people say: Well, we aren't responsible for a tax increase. If you like the tax policy we have today and you don't do anything to stop it, and you automatically have a tax increase, then the people who let it automatically happen are responsible for increasing taxes--the biggest tax increase in the history of the country.
That tax increase means real dollars out of the wallets of real middle-income families. I have a chart here. The chart shows a wall of tax increases. The chart shows a family of four at $40,000 a year average income--the national average--will face a tax increase of $2,052. Now, for a lot of my rich liberal friends, that may not seem like a lot of money, but for a hard-working family of four in my State of Iowa, a $2,052 increase in taxes without even a vote of the Congress happening on January 1, 2011 is a lot of money, and it matters. That is why that wall of tax increases ought to be clear to everybody, and we ought to do everything we can to bring down that wall.
As a senior Republican member of the Budget Committee, I have not been consulted on the budget by our chairman, but I have made my views clear to our distinguished chairman. What I know about the budget I have learned from press reports. If those reports are true, I would encourage the chairman and the Senate leadership to stand strong for the Senate position, which is taking care of some of the tax increase that would have taken place--44 percent of it--not as good as it ought to be, but it is surely better than the other body.
Press reports indicate that the Democratic Budget Committee chairmen are working on a compromise that would condition the tax relief on a surplus. That is, the Baucus amendment would be subject to a trigger.
Now, what is a trigger? Well, I have another chart. This chart deals with perhaps the most famous trigger. The chart shows, as my colleagues can see, Trigger, the cowboy actor Roy Rogers' horse. You can see from the chart that Trigger is a pretty impressive looking horse. We would definitely like to have such a Trigger on my farm to help with the chores, and I am sure my grandkids would enjoy a ride with Trigger were he stabled on my farm. He is a beautiful horse.
As western movie buffs know, Trigger is no longer with us. Trigger is stuffed and on display at the Roy Rogers-Dale Evans Museum in Branson, MO. Although Trigger was an impressive looking horse, this trigger device the Democrat leadership is looking at is far from impressive. The trigger notion is something that has a long history with Democratic leadership. Back in 1996, as an example, the Clinton administration and the Democratic leadership argued for a trigger for the $500 per-child tax credit and other family tax relief issues. They took this position after President Clinton had vetoed the bill containing the family tax relief proposals. If the Clinton administration and the Democratic leadership had prevailed, millions of American families would have received the $500 per-child tax credit perhaps in 1999 through 2001--only in those years. If President Clinton and the Democratic leadership had won and the trigger were in place, then millions of families would have lost the child tax credit in the years 2002 until now. So why would anybody in Congress want to be so antifamily and put in a trigger policy, as the practice was at that time, that would deny families with children the child tax credit? It doesn't make sense, but that is the way triggers work.
The same dynamic occurred in 2001. With surpluses, the Democratic leadership opposed broad-based, bipartisan tax relief, including a doubling of the $500 per-child tax credit. One of the ideas the Democratic leadership flirted with at that time was the trigger. There were a few Republicans attracted to the idea as well, I have to confess.
The trigger was debated somewhat, but it was never found to be workable. It wasn't workable. So if it wasn't workable 6 years ago, why are they bringing it out of the attic now for consideration? Because a trigger is a complicated matter. It could be suggested that the mechanics of a broad-based tax trigger are a little bit like trigonometry. Trigonometry is a division of mathematics that deals with triangles. It is simple on its face, but you can see from this textbook, it can become pretty complicated pretty easily. Look at this. That is complicated.
Interweaving the complexities and uncertainties of triggered tax relief with the vast American economy could lead to a new term. That new term would be ``trigonomics.'' As much as folks complain about the uncertainty and complexity of the tax policy, I don't think the Democratic negotiators should want us to take us to the land of trigonomics.
To some degree, the current law sunset of 2001 and 2003 is a de facto trigger. If you look at those in opposition to permanence of the bipartisan tax relief, you will find that it is, with very few exceptions, the same folks who like triggers.
The tax system is a very complex, very pervasive force in our society.
It affects real Americans, all Americans, and it affects all economic activity. So creating conditional tax relief through a trigger mechanism would destabilize an already unwieldy tax system. How are families, how are businesses, how are investors supposed to plan their affairs with a trigger hanging over their current tax law rules that keeps taxes low? Think about that. What would we be doing to the hard-working American taxpayers?
Now, as an aside, those taxpayers, by the way, are sending record amounts of revenue to the Treasury Department. This very day, it is reported in the Wall Street Journal that more taxes came in in April than we have ever had in the history of our country--because the bipartisan tax relief plans of 2001 and 2003 are growing the economy. They are the goose that laid the golden egg, for 3 years in a row, bringing in massive amounts of revenue into our Federal Treasury, to a point where, by the end of this fiscal year, the annual deficit will be less than 1 percent of gross national product. When you are dealing with a $13 trillion economy, 1 percent up or down is about as good as you can do 12 months ahead in planning a budget and tax policies for this great country of ours. So the American taxpayer is doing his or her part to reduce the deficit.
I ask unanimous consent to have printed in the Record a couple of articles from the BNA Daily Report for Executives, one dated May 3, 2007, another dated May 7, 2007.
There being no objection, the material was ordered to be printed in the RECORD, as follows:
BREAK IN TRANSCRIPT
Mr. GRASSLEY. So then why trigger tax increases when the current law tax levels are bringing plenty of revenue into the Federal Treasury? Why would you want to mess with a policy that is bringing in what would now have to add up to $750 billion more than what we anticipated would be coming into the Federal Treasury from that tax policy when we adopted it? And in the process, we would be punishing the American taxpayers, who are already working hard and paying additional revenue at a lower level of taxation, as we passed it in 2001 and 2003.
The biggest problem I have with a trigger is that it creates yet another budget process bias for higher Federal spending. If Congress decides to spend more than planned, the trigger gives the American taxpayer the shaft. Spending taxpayers' money then trumps future promised tax relief if a
trigger is in place. The American taxpayer need look no further than the budget resolution conference report that we are debating now to see triggered future tax relief's futility.
After winning the November elections by claiming to enforce fiscal discipline, Democrats have done three things with the budget in conference: One, they have guaranteed new spending of at least $205 billion over the budget baseline. Secondly, with multiple reserve funds, they have set up many arenas of new spending and new taxes. Thirdly, for the first time in 6 years--I emphasize this--with a new majority in Congress, a tax hike on virtually every American taxpayer is built into the budget in future years. Now, did the American people know this was how the term ``fiscal discipline'' would be defined after the votes were counted last November? Higher taxes and higher spending. Did the American people vote for this definition of ``fiscal discipline'' after the last election? My guess is the answer is the American taxpayers didn't think ``fiscal discipline'' meant higher taxes and higher spending.
If fiscal discipline were the real goal of the new Democratic leadership, they would employ a trigger, then, on the new spending they baked into this budget cake. How about that. The new spending in this budget would only be triggered if the Federal budget were in surplus. Do I have any takers among the Democratic budget negotiators on that issue?
Before the Democratic leadership rolls out its budget, I challenge them to show a proposal with a single dollar of spending restraint dedicated to deficit reduction. It is a challenge I have issued for several years since bipartisan tax relief has been attacked on fiscal discipline grounds. My challenge has not been met. If you go back a decade, you will not find a proposal for spending restraint from the Democratic leadership. Check the record. You won't find anything on the spending side of the ledger.
The use of a trigger is more evidence of this obsession with higher taxes and more spending. Instead of accepting the Baucus amendment, which is supported by a strong bipartisan vote in both bodies because it passed here with only one dissenting vote and it had more than two-thirds on a motion to instruct in the House of Representatives--so instead of accepting the Baucus amendment, which is supported strongly by bipartisan votes in both Houses, the Democratic negotiators are taking a different path, ignoring the overwhelming votes of both the Senate and the House. They want to use a trigger as cover. The trigger will mean that future Democratic spending proposals will gut future tax relief, thereby guaranteeing a tax increase on virtually every American taxpayer, without even a vote of the people, because it is automatically going to happen.
I don't think it is too late. I suggest that if the Democratic budgeteers want to talk the talk of fiscal discipline, then walk the walk of fiscal discipline, apply the trigger to spending, but apply it to the $205 billion in brandnew spending. Don't build a wall of tax relief on the American people; build a wall of fiscal discipline against runaway Federal spending. In other words, we will tear down that wall of tax increases that are automatically going to happen.
I yield the floor.
Source