Tax Expenditures: House of Representatives

Floor Speech

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Mr. HOYER. Last week, as I have been doing for a number of weeks, I have been speaking about our budget and the crisis that confronts us and the challenge that confronts us.

Last week, former Republican Congressman Joe Scarborough said this about the hard work of getting America out of debt: ``The belief of some on the right that America can balance the budget by cutting education, infrastructure, the Corporation for Public Broadcasting, and home heating assistance to the poor is tantamount to budgetary witchcraft.'' That was Joe Scarborough, a former conservative Republican Member of Congress from northern Florida.

Last week, Budget Committee Chair Paul Ryan expressed a similar thought when he said this: ``If you literally think you can just balance the budget by cutting waste, fraud, and abuse, foreign aid, and NPR, it doesn't work like that,'' said Paul Ryan, chairman of the Budget Committee.

Both Congressman Scarborough and Congressman Ryan are exactly right. Last week I explained why Republicans' spending plan, even as it cripples America's competitiveness, barely makes a dent in our debt. That is because the spending targeted by Republicans, non-security discretionary spending, only amounts to 14 percent of the entire budget. Should we focus on that? Yes. Can we get to where we need to be from there? No.

If you want to meet an arbitrary goal of cutting $100 billion and you confine yourself to just 14 percent of the budget, you severely damage investments in education, in innovation, and in competitiveness without making our fiscal condition significantly healthier.

That is why, to really get our debt under control, we have to go beyond that 14 percent. We have to stop making the cuts that, while reckless, are politically easy. We have to start doing what is in the best interests of our country even though it is politically hard.

That means addressing the defense spending that takes in more than one quarter of our budget. It means making hard choices that can keep our entitlements strong for generations to come. But we also need to pass deficit-reducing tax reform.

Our Tax Code is a monumental collection of rules and regulations riddled with loopholes and preferences which are a drain on job creation and, frankly, exacerbate the deficit.

Many of those loopholes, or tax expenditures, as they are also called, are popular with all sorts of special interests. But they exact a high price from the rest of us: billions of dollars and more than 225 million collective hours spent on tax preparation, money and time that could be invested in more productive activity.

Just as importantly, when the Tax Code is full of loopholes, businesses and families start making decisions on maximizing tax breaks, not on their economic common sense. Closing those loopholes in return for lower tax rates frees us all to make more economically sensible choices; in other words, fewer preferences, lower rates.

Closing those loopholes can also reduce the deficit. In the spending bill on the floor this week, total discretionary spending for fiscal year 2011 adds up to $1.1 trillion, an awful lot of money. How much do our tax expenditures cost for the same fiscal year? Coincidentally, $1.1 trillion. This chart reflects that realty: $1.077 trillion in expenditures, $1.068 trillion, almost exactly the same sum, in tax expenditures. How much do our tax expenditures cost for the same fiscal year? Just as much as we spend on non-security discretionary spending and security spending.

Clearly, tax expenditures must be part of the answer. The two commissions that met to try to focus on getting our deficit under control, making sure that we are economically viable into the next century and making sure that our children are not left in a deep economic hole, that they will have the resources necessary to meet the challenges of their time and will not look at our generation as the generation of debt, said as much.

It must be part of the answer, tax expenditures, because if we attempt to solve our debt without addressing defense, entitlements, and revenues, we are fighting with one hand and four fingers behind our back.

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