Congressional Budget for the United States Government for Fiscal Year 2009

Floor Speech

CONGRESSIONAL BUDGET FOR THE UNITED STATES GOVERNMENT FOR FISCAL YEAR 2009 -- (Senate - May 15, 2008)

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Mr. GRASSLEY. Madam President, I believe we should adopt Senator Kyl's motion to instruct the budget conferees. First of all, I wish to comment on the status of the alternative minimum tax. There is some good news regarding the need to do a patch to protect over 20 million families. The Democratic leadership in this body recognized the importance of halting the effect of this tax on these families and provided room in the budget for a patch for this year.

I commend my friend, the chairman of the Budget Committee, for that improvement of the budget resolution over previous years. I do so again and note that the Kyl instruction is consistent with the chairman's position in that regard.

The bad news is, we are halfway through the year and the patch has not been done. The reason is that Blue Dog Democrats in the other body will not supply the votes for an un-offset patch in the House of Representatives.

By the way, the only Blue Dog answer to deficit reduction is to raise taxes. We have seen it on the AMT, and we have seen it on spending legislation. We are seeing now the GI benefit provisions in the war supplemental bill. Why they think of only raising taxes and not of where to cut spending levels to offset the need to spend someplace else I don't understand. They never seem to propose spending cuts as a remedy. I think it is fair for me to say they never do. They only ask for higher taxes.

I hope people in this body will start to pay attention to this issue. The Blue Dogs' bark is deficit reduction, but their bite is always more taxes.

In addition to the AMT patch, both bodies need to deal with several expired provisions of tax law. We need to focus on this problem and get legislation ready.

Earlier today, the House began work on an extenders bill. It is offset with tax increases. I urge them to send the bill to the Senate so Chairman Baucus and I will have a vehicle to deal with this pressing problem. We need to act ahead of time. We need to act before the IRS forms are finalized. We cannot go through another filing season fiasco, such as waiting until December last year when it finally got passed, and the IRS had a lot of extra work after the forms had already gone out. Let's not create big problems for our taxpayers and the Internal Revenue Service.

Senator Kyl's motion then is very important to assure us of the quickest route to complete action on AMT and extenders. The quickest route is the same route as last year: Drop the offset demand.

Folks on the other side happen to be complaining all the time that offsets are essential. I would like to make it clear that the policy issues behind offsets are one thing. We ought to ask ourselves the same question on any tax policy proposal, whether it raises revenue or loses revenue. The question should be: Does a tax legislative proposal make tax policy sense? It ought to be decided on the basis of policy. That is the bottom line.

On the matters of tax policy, Senator Kyl's motion to instruct, the answer is very evident. On the AMT patch and extenders, the answer is overwhelmingly clear. The answer is ``yes'' on the motion to instruct. The policy call is a slam dunk. It is backed up by the politics; that is, supermajority votes for an AMT patch and extenders in the House and Senate that are very difficult to get.

We have to divorce the merits of the current law provisions from the offset question. Offsets should be judged on their merits. An AMT patch and extenders should be judged on their merits. Why should we seek divorce of the two, some might ask. Here is the reason.

Right now, we have a budget process, including pay-go, that is biased toward higher taxes and, of course, higher spending. As evidence, take a look at expiring spending provisions. According to the CBO, they total $1.3 trillion--a whole $1.3 trillion. That is double a permanent AMT patch score. That spending is not subject to pay-go. It, unlike expiring tax provisions, is included in the baseline; hence, it is home free. Just like the record tax increases built into this budget, so too is a record spending increase.

I have not even talked about appropriations increases. That additional above-baseline spending is included as permanent, once passed.

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Mr. GRASSLEY. The bottom line is that it is about time we start treating spending and taxes the same, under pay-go. So the Kyl motion to instruct treats expiring tax relief the same as expiring spending. That reason alone, aside from the merits of the AMT patch and extenders, should be enough to get the support from all of us on the Kyl motion to instruct.

The bottom line is that pay-go has a bias toward tax increases and increased spending. We ought to have the same rules apply to the expenditure side as to the tax side. Presently, they do not. But this would make it possible for that to be the case.

The chairman of the Budget Committee continues to say he is going to bring in all this money from shutting down abusive tax shelters, which I also favor. Some examples are cross-border leases of foreign sewer systems, which he mentioned, or shutting down tax havens, which he mentioned. I would support him in every one of those efforts.

But Congress has done a great deal already, shutting down abusive leasing deals. We did that in 2004. The Senate has tried to shut off tax benefits from older deals, but the House Democrats have rejected closing those loopholes. So I do not see how the distinguished chairman can count on this revenue even though he keeps saying this is the answer to all of our offset problems--in other words, getting enough new revenue to offset tax cuts someplace else.

The chairman also continues to say we can get $100 billion per year from shutting down offshore tax havens, according to the Permanent Subcommittee on Investigations. The fact is, there are no legislative proposals out there that the Joint Tax Committee has scored to bring in anywhere close to the $100 billion we are led by the other side, by the majority, to believe we are going to be able to do.

The 12,748 companies the chairman says are in the Ugland House in the Cayman Islands are not claiming to be doing business there. It is simply their registered address, just like an address in Nevada or Delaware is a registered address of many more thousands of companies. Does the chairman have a picture of an office building in Wilmington, DE, or Reno, NV? I assume the chairman is just as willing to go after onshore tax evasion facilities by State corporate law as offshore tax evasion, and he would want to do so in a way that does not put our information exchange network at risk.

The chairman knows that it is the Joint Committee on Taxation that provides Congress with revenue scores, not the Permanent Subcommittee on Investigations. Anything that would raise the kind of money assumed in this budget would involve a significant change in tax policy, which is the last thing the chairman says he wants to do.

Again, I do not see how the distinguished chairman can count on all this revenue without assuming substantial tax increases when the Joint Committee on Taxation, the ``god'' of assuming revenue coming in under tax law changes--if that ``god'' cannot score it.

I yield the floor.

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