American Jobs and Closing Tax Loopholes Act of 2010

Floor Speech

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Mr. THUNE. Madam President, this amendment is, in my view, probably the most important thing that we can do for the economy right now. The Senator from Montana talked about job creation. Everybody in this Chamber cares about that. I think Democrats and Republicans alike believe we have to create jobs in our economy. We need to get economic growth going again.

I think we have a fundamental difference about how best to do that, and what my amendment would do is address what I think are the two biggest problems we face--the sort of clouds, if you will, hanging over the economy in this country. One is debt. We have this spiraling Federal debt which is set to double in 5 years and triple in 10 years on the current path under the budget that has been proposed by the President.

If we include the debt that government agencies owe each other--in other words, intergovernmental debt--add that to the public debt, right now we are in debt $13 trillion. That is the total amount of debt we have today. That is going to balloon in the next 5 years and the next 10 years. The budget window we use to do our budgeting around here suggests it is going to be much higher than that.

So I think what the American people are saying, at least what I believe the American people are saying--and I think we have probably different interpretations of that, but what I believe the American people are saying and what I see in poll after poll after poll is people are concerned about the cloud this growing public debt imposes on our economy and the burden it places on future generations. They are also profoundly concerned about their jobs and about their economy. They want Congress to take steps that will help grow the economy and create jobs.

The best way to do that is for the government to get out of the way, so to speak, and incentivize small businesses to do what they do best; that is, create jobs. It is the small businesses in our economy that are the economic engine. They are job creators. We should not be imposing more burdens on them. We should try and keep taxes low. We should try and keep regulations and keep from imposing new governmental burdens on our small business sector and our economy.

So we have a piece of legislation before us today in which I think both sides, Republicans and Democrats, agree we need to do something to address unemployment insurance and extending the benefits of those who have lost their jobs in the recession.

We need to address the issue of physician reimbursement cuts which will occur if Congress does not take steps to address that. Of course, we need to extend the expiring tax provisions that many of us support--for example, the tax credit for investment in research and development, which is one of the things companies use to keep us more competitive. Those are all things that have expired, are expiring. Those are issues that need to be addressed. I think both of us agree on that.

The question becomes, What is the best remedy, how best do we do that? What the Democratic majority has proposed is a solution which, at the end--and I think this is even under the best-case scenario, which I do not believe we have a CBO score on yet--but the more recent version of their piece of legislation would still add about $50 billion to the debt. So it would increase the amount of debt I just mentioned earlier. It does raise taxes. It raises taxes on small business. It raises taxes on investment.

It puts more taxes on oil companies by raising taxes that would go into the Oil Spill Liability Trust Fund. And, of course, because my amendment does not include that tax increase, somehow we are painted as being in defense of big oil. Well, let me point out one thing about that--this was true in health care; it has been true with many things that have happened here on the floor--and that is, it would be one thing if the revenues raised by increasing the tax from 8 cents to 49 cents per barrel of oil were actually going to be used to clean up oilspills. It is stated to go into the trust fund, the Oil Spill Liability Trust Fund, but it will be used to fund other things. So, again, you get this double-counting. You get this practice we have seen employed here by the majority on a number of occasions where you are raising revenue that is supposedly for a specific purpose, the proceeds of which are going to be used for something entirely different. That, of course, is coupled with the fact that the tax, as we all know, is going to be passed on to the American consumers. So the American consumers are going to be burdened with higher taxes. At the same time, the other side can say: We are being tough on big oil. We are going to stick them with this big new tax. Ironically, it is not going to go to clean up oilspills; it is going to go to fund these things we are talking about funding here.

We have a better way. We can reduce government spending and do this. We can actually extend these expiring tax provisions by reducing taxes by about $26 billion under my amendment. We can cut spending by over $100 billion under my amendment. And we can actually make some progress toward reducing the Federal debt. We have about $68 billion, under my amendment, that can be used to pay down the Federal debt. So we reduce the debt, we cut taxes, we extend unemployment benefits, we address the physician reimbursement issue--and by the way, my amendment addresses that through the end of the year 2012. The amendment now offered by the Democratic majority extends it to the end of this year. So if you are a physician out there who is looking for some certainty and looking for something that is a long-term solution to this issue of cuts in reimbursement, then you get, under my amendment, an extension to the end of the year 2012. Under the Democratic majority option here today, you get something that extends it only until the end of this year. So you can do all those things and still cut the debt, cut taxes, and reduce Federal spending. So what we are offering is a different way.

It seems to me, when you are sitting on a $13 trillion debt and you are growing your debt at $1.5 trillion every year, which is what is happening--the deficit this year is going to be about $1.5 trillion. That is what it was last year. We are looking at trillion-dollar deficits as far as the eye can see, to the point where the interest on the debt at the end of the 10-year period we use for budgeting purposes in the Senate will exceed the amount we spend on defense. We will spend more on interest on the debt than we spend on national security in this country if we continue down this path. In fact, we will spend, at the end of the 10 years, 4.1 percent of our entire economy--our entire gross domestic product--on interest on the debt.

Madam President, $13 trillion in debt--the other day, I tried to put that in perspective so people can appreciate and understand it because I think sometimes it is hard for most of us, myself included, to wrap our heads around $1 trillion. It sounds like a lot in the abstract. But to try to put it into a perspective that perhaps we can understand, I used the analogy of, what is 1 trillion seconds? If you took 1 trillion seconds, what would that mean in terms of total number of years? Well, 1 trillion seconds represents 31,746 years. If you took 13 trillion seconds--which is what the debt now represents, the total debt our country owes--you are looking at over 412,000 years, if a dollar equals a second. So 1 trillion seconds: 31,746. Madam President, $13 trillion is what our total debt consists of today. Again, you are looking at over 412,000 years. I think that speaks to why we need to get the debt and the spending here under control.

Interestingly enough, a while back here in the Senate, to much fanfare, the majority passed pay-go rules. The assumption would be that somehow going forward new spending would be paid for and reductions in tax revenues would be offset somehow by increases in tax revenues and all that.

Well, since that time, since the passage of pay-go, the Senate has already approved well over $100 billion in new spending, not paid for that is added to the debt. If this legislation is enacted, that number will approach $200 billion since we passed pay-go--the much-touted, with much fanfare, as I said, solution that was going to solve the fiscal woes of our country and suggest a different way of doing things in the Congress.

Well, anything but that has happened. On the contrary, every time we have had a major piece of legislation, pay-go has been waived. We waive it. We declare everything an emergency. Now everything is an emergency and nothing gets paid for, and the debt continues to grow, and the debt-o-meter, the spend-o-meter around here continues to spin faster and faster and faster, and the credit card is handed to future generations who are going to have to deal with our inability to live within our means.

So the alternative we offer to the legislation before the Senate today that is being put forward by the Democratic majority is, as I said, very simple and very straightforward. It does a number of things. It does all the things we need to do in terms of extension of unemployment insurance, of the physician fee--making sure that cut does not occur, that the physician reimbursement issue is addressed, as I said, through the end of the year 2012--as well as extending these expiring tax provisions that are very important to our economy and to our economic growth.

But we do that in a different way. We take $37.5 billion of the $50 billion in unobligated stimulus funds and use those funds to extend existing tax and benefit provisions. We cut money from the government by reducing congressional budgets. I think it is fair that when the American family, the American business community, and people across this country are making hard decisions about their own personal budgets--their family budgets, their business budgets--having to figure out where they are going to cut back, the least we in Congress can do is to scrub our budgets and figure out what we can do to reduce spending.

So we cut money from the government by reducing congressional budgets. We rescind unspent Federal funds. There are lots of appropriated moneys out there that do not get spent that revert back or get spent later. What this amendment simply says is, if moneys that have been appropriated have not been spent, then let's use that money to pay down the Federal debt. Let's do these things we need to do here, and then let's make sure we are not continuing to spend and spend and spend, particularly dollars that are not needed. It requires the government to sell unused lands and to auction off unused equipment.

It also imposes a 1-year freeze on the salaries of Federal employees and eliminates their bonuses and caps the total number of Federal employees at current levels. I have a modification that would amend this legislation because there has been a concern raised that it would mean nobody could get a raise, even those who deserve it. What the modification would do is allow Federal agencies and managers flexibility to determine how they are going to work within their personnel budgets to provide, perhaps, raises for those who have been deserving. But, overall, their top-line number would be frozen. So it is not as if no Federal employee ever would have to go without any kind of a raise. But we think it is important that the Federal Government go on a diet, just as the family budget is having to do right now as well. We also collect $3 billion in unpaid taxes from Federal employees.

We encourage responsibility and prioritizing within the Federal budget by requiring a 5-percent across-the-board discretionary spending cut for all agencies, except at the VA and the Department of Defense.

Again, there has been a lot of suggestion that somehow this is going to wreck the economy and force--as I saw some things out yesterday--that this is going to force a government shutdown. What this amounts to is a 2-percent reduction through the end of this fiscal year, which is September 30. I do not think, out of a $652 billion budget, that if you are a good manager at these Federal agencies, you could not find 2 percent to shave in order to achieve the savings we need to pay for this legislation. It encourages responsibility and prioritizing as well by saving $5 billion in eliminating what is nonessential government travel. And it eliminates bonuses for poor-performing government contractors.

Finally, it does create a new deficit reduction trust fund where rescinded balances and moneys saved through this amendment will be deposited for the purposes of paying down the Federal debt.

Now, I said this the other day, and I will say this again: I think this ought to be a no-brainer for us here. Irrespective of which side of the political aisle you are on, you undoubtedly are hearing from constituents across this country who are very concerned about the amounts of spending, the amounts of debt, who are concerned about increasing taxes, particularly businesses. We hear a lot about investment frozen on the sidelines because investors are concerned about the uncertainty that exists out there with regard to taxes and what they are going to do in the future.

Clearly, this bill, as I said earlier, raises taxes. It raises taxes by about $50 billion in the current version of it. What we would do is reduce the tax burden by extending these expiring tax provisions but do it in a way that does not require new taxes on investment, new taxes on small businesses, new taxes on our economy at a time when we can least afford it, when we ought to be looking at ways to keep taxes low and to make sure we are doing everything possible to lessen the burden on our small businesses, those job creators in our economy.

One of the things that was mentioned, and we do in our legislation, is we do address one of the issues with regard to health care. I think the Senator from Montana characterized that lowering the affordability threshold for the individual mandate will strike at the heart of health care reform.

Well, first off, let me just point out that this amendment was taken directly from an amendment that was filed by Senator Schumer during the Finance Committee markup of the health care reform bill. I do not think his intention was to strike at the heart of health care reform. I thought the heart of health care reform was to make sure people have access to affordable coverage. I do not think that was Senator Schumer's intent. I think he was thinking we ought to make sure low-income people were not forced to buy unaffordable coverage simply because of health care reform and because they needed a way to finance health care reform.

This amendment would make sure individuals and families are not subject to an intrusive and burdensome new Federal mandate if they cannot afford health insurance. So it is a fairly straightforward modification to the health care legislation which takes away some of the burden that is imposed on people at lower income levels. In fact, it makes a lot of sense to me. If you look at the current health care bill, under that bill low-income individuals--those under 300 percent of the Federal poverty level--are slated to pay about $1 billion in mandate penalties.

Now, the suggestion was that somehow, if we make this change, insurance premiums are going to go up. Well, I am telling you something. We tried to make this point many times during the course of the debate on health care reform. Insurance premiums are going up. In fact, PricewaterhouseCoopers predicted this week that health care costs are going to continue to rise at an unsustainable rate--next year by about 9 percent. So it is already clear that health care reform is not going to live up to many of its promises. It is going to continue to raise premiums for most Americans. And that has a lot more to do with the health care reform, the substance of that, than anything else. It does not have anything to do with what we are trying to accomplish here by, as I said, reducing the impact of the individual mandate on low-income individuals in this country.

So these are all fairly straightforward reforms. We do touch medical malpractice reform. We think that is something that should have been a part of health care reform and was not that would help reduce health care costs for people in this country and achieve some savings we can use to, again, help pay down the Federal debt, help address the concerns we need to address with this legislation.

But bottom line, as I said earlier, what we are looking at here is a very clear choice for U.S. Senators. U.S. Senators can choose to solve the problem before us in one of two ways. The first way is through $50 billion in tax increases, $50 billion in additional debt, and over $100 billion in additional spending--or about $100 billion in additional spending. The alternative I offer cuts taxes by $26 billion, reduces spending by $100 billion, and cuts the Federal debt, reduces the Federal debt by $68 billion, according to the Congressional Budget Office.

In my view, as I said at the beginning of my remarks, there is nothing more important to our economy than dealing with this cloud of debt, this huge burden that hangs over our economy of out-of-control Federal spending, out-of-control Federal debt, deficits that are over $1 trillion or at $1 trillion as far as the eye can see, the concern about tax increases on our economy and how those would impact our small businesses and their ability to create jobs. So this legislation, again, deals with the issue of the debt, deals with the issue of taxes, deals with the issue of spending, and accomplishes all of the underlying objectives we all have of extending unemployment benefits, of dealing with these expiring tax provisions, and dealing with the impending reduction in physician reimbursements.

So with that introduction, I reserve the remainder of my time. I think we have other speakers who want to come down, and I look forward to hearing from them as well.

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Mr. THUNE. Madam President, in response to the comments of my colleague from Delaware, I do not think anybody is denigrating the quality of Federal employees. To the contrary. We are all Federal employees. We all know Federal employees. We are all friends of Federal employees. And we
have a lot of Federal employees who do a great job.

All we are simply saying is when you are in a tough economy, everybody ought to look at what they can do to live more within their means. When we are running a $1.5 trillion deficit this year and trillion-dollar deficits as far as the eye can see, Lord knows we ought to be looking within to figure out what we can do to try and find some savings that we can use to either pay for the things we need to do or perhaps pay down the Federal debt which, as I said, my amendment does.

AMENDMENT NO. 4376, AS MODIFIED

Also, because I think there is a concern that somehow every Federal employee is going to be frozen, I have a modification to my amendment that addresses that concern.

Madam President, I ask unanimous consent that the changes at the desk be incorporated into my amendment. For the information of my colleagues, these are changes to section 403, and they address the criticisms.

The amendment would prohibit increases in salaries or bonuses for Federal civilian employees. The changes that are at the desk will allow such increases and bonuses to occur so long as agencies do not exceed their fiscal year 2009 budget for salaries.

This is a unanimous-consent request. This would address the concerns raised by some of my colleagues on the other side about making sure Federal agencies have adequate flexibility with salaries and bonuses to address those employees they think are deserving of pay raises. All they have to do is live under that top-line number that gives them flexibility as a Federal manager and to work within it.

The ACTING PRESIDENT pro tempore. Is there objection?

Mr. BAUCUS. Reserving the right to object, I may say to my friend from South Dakota that this sounds a lot like wage price controls, where the Congress is trying to decide the wages of all kinds of different sectors based on, I don't know what. A lot of trap lines have to be run before this request can be granted. So at this point, Madam President, I object.

The ACTING PRESIDENT pro tempore. Objection is heard.

Mr. THUNE. Madam President, I simply offer that modification to my amendment to address the concern that every single Federal employee is going to be capped at some level for some foreseeable period of time. That is not the intention.

In fact, what the modification would do is ensure that within the overall budget--within the top line--a manager could make adjustments to individual employee salaries or bonuses if that is something they desire to do. It just means the Federal Government--the agency--is going to have to live within a certain number at the top line. They can work within that salary number beneath that top line. That is all it does.

Again, what I have said before, and I will reiterate for the benefit of my colleagues, is that I think we have a responsibility to be fiscally responsible in Washington, DC. As I said before, we have people all over the country making hard decisions with regard to their personal and family budgets, with regard to their small businesses, and they are having to reduce employee salaries, for example, and they are having to make reductions in force and let people go. Those are hard decisions to make. Surely in Washington, DC, where we have seen year-over-year increases in Federal spending, in discretionary domestic spending, that exceeds inflation by six times--look at the fiscal year 2010 and fiscal year 2009 appropriations bills and the increases that were allowed--21 1/2 percent in those two appropriations bills, at a time when inflation was 3 1/2 percent. How can we justify increasing spending over 20 percent in Washington, DC, when the rate of inflation in our economy is 3 1/2 percent and people all over the country are having to make cuts? It is high time Washington, DC, and the Federal Government went on a diet.

That is not to say anything to denigrate or impugn the quality of Federal employees. As I said before, there are a lot of Federal employees who do a great job. All this is simply saying we in Washington, DC, ought to lead by example. There is great power in example, and we have not been providing the example for the American people. We are asking them to make these hard choices, but we are not willing to make those choices ourselves.

So I think this amendment gives Members of the Senate an opportunity to say yes to fiscal responsibility, yes to living within our means, yes to paying for what we spend money on, and yes to not handing the credit card to our children and grandchildren. These are not Draconian ideas; these are fairly straightforward savings that we would achieve simply by shaving a little bit from these Federal budgets--making sure we rescind those stimulus funds that haven't been spent or haven't been allocated to pay for this new spending. We use those funds that have been appropriated but not spent to finance some of what we are doing and then apply that to pay down the Federal debt and freeze some of the Federal agencies in terms of their budgets and ask for a 5-percent reduction in some of these agencies over the course of the next foreseeable years.

Those are all fairly straightforward steps I think anybody would take if they were trying to get back within a reasonable budget to address what are very serious concerns about the amount of spending and the amount of debt we are piling on future generations. So I am sorry the majority is resistant to accepting the amendment. It would address the concern that was raised by a couple of our colleagues on the other side.

It wasn't my intention to impose a very restrictive straitjacket-type approach on Federal managers. On the contrary, we think there should be a top line budget, that we ought to be able to live within it, and certainly managers can make decisions within that about how best to allocate those resources. Congress has actually blocked its own pay raise in the past 2 years, so it seems to me that is at least something we could apply to other areas of our Federal Government as well.

So, again, I think the whole purpose behind this amendment is simply to create an opportunity for Senators to vote for fiscal responsibility, to vote for paying for the things we spend money on in Washington, to vote for living within our means, and to vote for not adding billions and billions of dollars to the Federal debt, which is already at $13 trillion and growing by the day.

It seems, at least to me, this is an opportunity for us to demonstrate to the American people that we are serious about getting Washington's spending and debt under control. This amendment addresses the issue of unemployment insurance and extending that, addresses the issue of expiring tax provisions, reduces taxes by $26 billion, addresses the impending cut in physician reimbursements that would occur if Congress doesn't take action, but it does it for 2 years longer than what the legislation of the majority would do. We address that up to the end of the year 2012.

So it takes care of all those things, and it does it in a fiscally responsible way by reducing spending by over $100 billion, as I said before, by reducing taxes, by keeping taxes low on small businesses, which are the job creators in our economy. According to the Congressional Budget Office, it reduces the Federal debt by $68 billion. That is a win-win for the American people--the American taxpayer--and it should be a win-win for the Senate.

I hope my colleagues will support this amendment, and with that, Madam President, I reserve the remainder of my time.

The ACTING PRESIDENT pro tempore. Who yields time?

Mr. THUNE. Madam President, may I inquire as to how much time remains on each side?

The ACTING PRESIDENT pro tempore. The Senator from South Dakota has 6 minutes, and the majority has 34 minutes.

Mr. BAUCUS. Madam President, I suggest the absence of a quorum, and I ask unanimous consent that the time during the quorum be equally divided.

The ACTING PRESIDENT pro tempore. Without objection, it is so ordered.

The clerk will call the roll.

The assistant legislative clerk proceeded to call the roll.

The ACTING PRESIDENT pro tempore. Madam President, I ask unanimous consent that the order for the quorum call be rescinded.

The ACTING PRESIDENT pro tempore. Without objection, it is so ordered.

Mr. BAUCUS. Madam President, I might ask the Senator from South Dakota, through the Chair, whether he wishes to renew his request to modify his amendment because I might tell him, through the Chair, that the amendment has been cleared on this side.

The ACTING PRESIDENT pro tempore. The Senator from South Dakota.

Mr. THUNE. Madam President, I will renew my request to so modify my amendment, and I appreciate the manager accepting that change.

The ACTING PRESIDENT pro tempore. Without objection, it is so ordered.

The amendment is so modified.

The modification to amendment No. 4376 is as follows:

SEC. 403. TEMPORARY ONE-YEAR FREEZE ON COST OF FEDERAL EMPLOYEES SALARIES.

Notwithstanding any other provision of law, the total amount of funds expended on salaries for civilian employees of the Federal Government in fiscal year 2011 shall not exceed the total costs for such salaries in Fiscal Year 2009: Provided the amounts spent on salaries on members of the armed forces are exempt from the provisions of this section; Provided further, nothing in this section prohibits an employee from receiving an increase in salary or other compensation so long as such an increase does not increase any agency's net expenditures for employee salaries.

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Mr. THUNE. I will proceed accordingly and try to conclude this in 2 1/2 minutes. That, unfortunately, does not give me enough time to say favorable things about the substitute of the Senator from Montana.

But I do want to close the debate on this amendment by saying that I do think this presents to us a very clear choice about how to accomplish what this legislation strives to accomplish; that is, as we have all talked about--something I think both sides agree on, Democrats and Republicans--extending unemployment benefits to those who have lost jobs; extending expiring tax provisions that are currently in law, such as the research and development tax credit, that are important to our economy and to our competitiveness; and, finally, making sure the reduction or the cut in physician reimbursements under Medicare does not go into effect.

So those are basically the elements we are talking about today in terms of the things we are trying to get done. The difference occurs as to how we would propose paying for that. The Democratic majority has put forward their proposal which does include tax increases, about $50 billion now in the current version of it in tax increases. It does raise the debt by about $50 billion, adds more onto the Federal debt, notwithstanding the commitment to pay for things under the pay-go rules that were enacted in the Senate, and it does increase spending substantially.

What I am offering as an alternative for Senators to vote on is an approach that is very different. It reduces taxes. There are no tax increases in it. The tax reductions occur because of extending existing tax law, actually reducing taxes by $26 billion.

It reduces the Federal debt, according to the Congressional Budget Office, by $68 billion, and it reduces spending by $100 billion. As I said earlier, I think it is important the Federal Government go on a diet. We have all kinds of issues, and Americans across this country have lost jobs, unemployment is at a high rate, people are having to make decisions. There has been a loss of income. They are reducing their personal budgets, their family budgets, their business budgets.

Here in Washington, DC, we continue to spend and spend and spend like there is no tomorrow and hand the bill to future generations. So this is the debate. It is a clear difference in approach, and I hope my colleagues will vote in favor of fiscal responsibility, vote in favor of paying our way, vote in favor of living within our means, and vote in favor of reducing the debt on future generations.

So I would ask my colleagues in the Senate to support this amendment. I yield back the remainder of my time

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