Fiscal Responsibility

Floor Speech

Mr. DURBIN. Mr. President, I thank my colleague from Virginia--originally from Illinois--for those kind words. It was not an easy vote to vote in favor of the deficit commission report, but I felt it was the right vote.

To explain my vote, 40 cents out of every $1 we spend, whether it is for a new missile system at the Pentagon or food stamps for the poorest among us--40 cents out of every $1 is borrowed. We primarily borrow it from countries such as China and the OPEC nations.

The fact that we are indebted to them for generations to come will not allow those of us on the progressive side to see a more fair and just America. We are an America that is mortgaged, and those who hold our mortgage have power over us economically and politically. That is why I voted for this.

There are parts of this report I don't like at all. One of the things it does that I commend to my colleagues is something I have never seen in the time I have served in the House and Senate. It takes a look at the Tax Code, tax expenditures. The Senator talked about the day coming soon when we will spend $1 trillion a year on interest on the debt. Each year, now we spend or through taxes forgive $1.1 trillion. That is money that doesn't go into the Treasury that otherwise would. It doesn't go in because it is a deduction, a credit, an exclusion or a tax earmark. So $1.1 trillion a year through the Tax Code is added to our debt.

You have to ask yourself: What are those provisions? Some of them are very important and some are controversial. The No. 1 tax deduction in America is for health insurance. We have it as Members of Congress, and everybody wants that. If we are going to continue this deduction, we need to ask hard questions: Do we go too far? Are there things we can reasonably do to contain the growth in that particular deduction? How about the mortgage deduction? Currently, mortgage interest can be deducted from your income tax. I use it. Most people do who itemize, but 70 percent of Americans don't itemize. In other words, they don't get the advantage of any of these because they do a simple form and take a standard deduction. For 70 percent of Americans, even the mortgage interest deduction has no value to them.

We currently put a limit on the value of a home, where you can apply a mortgage interest deduction of $1 million. Is that the right number? Should that be lowered today? Should we focus more on working families? How about the charitable deduction? Should we take adjusted gross income--one idea of the Commission was that any charitable deduction over 2 percent of adjusted gross income would be deductible, but the first 2 percent would not be. You will hear from churches, charities, and universities saying we should not do this because they want people to give more. Each of these ideas carries controversy with it.

If you eliminated all the deductions, credits, exclusions in the Tax Code, basically closed it up and set it aside, you could dedicate each year almost $200 billion to deficit reduction, and with the remainder of $900 billion reduce tax rates across the board in our economy. The lowest tax rate would go from 15 percent to 9 percent.

The next tax rate--I am trying to remember--would go from about 24 percent to 16 percent. The top tax rate in America would go from 36 percent down to 26 percent.

So you say to Americans: Do you want to deduct your mortgage interest costs--because it is a value to you and your family--and measure that against a reduction in your Federal income tax rate of one-third? Under which scenario do you come out ahead?

Those tax deductions--tax expenditures, as they call them, the $1.1 trillion a year--are greater than either all the personal income taxes collected in America--in other words, all the personal income taxes we pay in go in to cover the tax deductions--or greater than the discretionary spending side of the budget, defense and nondefense. It is huge. In 28 years, we have never opened that door and looked inside. We have to now. Deficit reform should include tax reform.

I brought this up to our friend and colleague, Max Baucus, chairman of the Finance Committee. He agrees. I think we ought to pursue this. We had a bipartisan group saying: Let's get into this. Let's make this part of the conversation. It isn't just entitlement programs, such as Medicare and Social Security, and it isn't just spending--both domestic and defense spending--it is also tax expenditures. Put it all together. I think we have an honest conversation.

Yes, there will be honest sacrifice for all of us, and I thank the Senator from Virginia for raising this whole issue. As we discuss more tax cuts for America, we are proposing making the deficit hole deeper. Each of these tax cuts takes money out of the Treasury. I would argue we should not hit the deficit brake on tax cuts for working families in the middle of a recession. They need spending power to get through. Give them a helping hand now until the recession is behind us. But how can we rationalize tax cuts for the most wealthy Americans when we are facing this kind of deficit? We should be more sensible. We should be able to make these judgments.

Last Saturday, we had a vote which suggested we have no support on the other side of the aisle for restraining tax cuts. They want them all. While they give their speeches about deficits, they turn around then and vote for tax cuts, which make the deficits worse. So that is the dilemma we face.

The last point I will make: The good news is that of the 18 members of the deficit commission, there were some 12 elected officials, and 6 of us--3 Democrats and 3 Republicans--voted for the Commission's report. It was good. It was a breakthrough. It might have been historic.

I would thank the Senator from Virginia for his remarks and his concerns about this issue. He has been working on this with Senator Conrad and others for a long time, as has Senator Begich, and I thank him for that.

Mr. WARNER. Mr. President, will the Senator from Illinois yield for a question?

Mr. DURBIN. I would be happy to yield.

Mr. WARNER. I thank the Senator from Illinois for laying out the facts, but there is one additional fact--again, vis-a-vis the Bush tax cuts--that I think has been absent from some of this debate.

The efforts of the Senator from Illinois--Herculean as it was--to try to get 11 out of 18 votes, and all the painful choices the Senator made in terms of spending cuts, raising revenues, opening, as I think the Senator appropriately said, the whole question of tax expenditures, if my memory is correct, over the next decade-plus, the commission's plan--as dramatic as it was and as controversial as it was--basically took out about $4 trillion.

Mr. DURBIN. Four trillion; that is right.

Mr. WARNER. If we were to make permanent--as some on the other side of the aisle have stated--all the Bush tax cuts, that adds another $4 trillion to our deficit; is that not correct?

Mr. DURBIN. The Senator from Virginia is exactly right. The point I am trying to make is--and he made it so well--that 10 months' work to find $4 trillion that we could reduce from the deficit would be wiped out by the insistence on the other side of continuing these Bush tax cuts indefinitely.

I argued, and continue to argue, do what we have to do now to get out of this recession, but as soon as we see a positive, solid footing for this economy, let's start stepping forward and be very serious about this deficit reduction. I think the Commission gives us a roadmap.

I thank the Senator from Virginia.

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