Continuing Resolution

Floor Speech

Mr. WHITEHOUSE. Mr. President, later this week, we will consider a spending measure to fund the United States Government through the remaining 6 months of this fiscal year. While the majority leader is on the Senate floor, I want to thank him, as well as Appropriations Chairman Inouye and Senator Patty Murray, for their hard work in negotiating an end to the budget stalemate and preventing the threatened government shutdown.

The battle over that spending measure brightly illuminated the contrast between the priorities of the two parties. The priorities of the House Republicans, I believe, are completely upside-down. In the debate over the spending bill, they fought to cut programs that helped the middle class and for extreme tea party policy riders that had nothing to do with the budget. These included a prohibition on funding for women's health and eliminating the Environmental Protection Agency's ability to protect us against carbon and other pollution.

At the same time, the House Republicans refused to even consider raising revenue by closing tax loopholes, for instance--not one. They refused to entertain ending even one corporate tax giveaway or one special treatment for wealthy taxpayers.

If that debate didn't make the contrast between the two parties crystal clear, the House Republican budget for 2012--the so-called Ryan budget--sure did. In his budget, Congressman Ryan proposes privatizing Medicare and requiring seniors to pay the majority of their health expenses with their own money. They would get a voucher, which actually would go to the insurance company, and the difference would be up to them. In the same document in which Congressman Ryan would decimate Medicare, he would cut taxes for millionaires and billionaires by trillions of dollars.

Now, one major factor that contributed to our budget deficit is the economic crisis that we recently weathered. It is amazing the amnesia we can have in Washington. We are not even through the recession that has been so painful for so many families in Rhode Island, and yet we seem to have forgotten that economic crisis. Well, those of us who were here ought to remember the desperate urgency that was displayed by Treasury Secretary Hank Paulson and Federal Reserve Chairman Ben Bernanke as they, having looked into the economic abyss, came to this building--to the LBJ Room right here in the Senate--to plead with us for help to save the world economy. These are not two easy men to frighten, and they were very frightened.

We are now past the worst depths of the financial and economic crises, and as this chart shows, the economic recovery measured in jobs is proceeding, although all too tentatively and all too slowly in Rhode Island. We are still at 12 percent unemployment in the Providence metropolitan area and over 11 percent statewide. Now that we are finally creating jobs--but very few compared to the job losses of the crisis--now that we are finally at least on the good side of the equation, House Republicans have proposed yanking government support for the recovery and jeopardizing many of the jobs that are on this chart.

Their spending proposal, H.R. 1, would have cut spending so severely that former McCain Presidential campaign economic adviser Mark Zandi estimated it would cost as many as 700,000 jobs.

Just look at our job gains: For February, 222,000; for January, 68,000; for December, 167,000; and for November, 128,000. We would wipe out months and months of job gains with a 700,000 job loss.

Goldman Sachs, the Wall Street investment bank, said this bill--H.R. 1--could reduce the growth in our annual gross domestic product by two full percentage points over the rest of the year. We were only expecting about three percentage points of growth, so to knock off two of them is a big hit on jobs.

So I will begin by pointing out that as we deal with the debt and deficit, we cannot forget about jobs. It is growth, ultimately, and a recovering economy that will help reduce our national debt.

As you will recall, the Republicans also resisted any efforts to close any corporate tax loopholes. Corporations, our Republican friends contend, are overtaxed, and any closing of a loophole would amount to an unacceptable tax hike. So let's look for a minute at the actual state of things. Let's look at the facts for a minute.

This is the actual state of corporate tax payments in America. In 1935, for every $1 an American individual contributed to our revenues, American corporations also contributed $1. By 1948, American individuals were contributing $2 for every $1 that corporate America contributed. By 1971, it broke through 3 to 1. In 1981, it broke through 4 to 1. And in 2009, we broke through 6 to 1, with American individual taxpayers contributing every year to our annual revenues six times as much as American corporations.

So we have gone, in a lot of people's lifetimes--you have to be pretty old, but there are plenty of people who remember 1935--from, basically, even-Steven between corporate America and individual Americans, with individual Americans carrying six times the tax burden of corporate America. So when people say how overtaxed corporate America is, it is worth looking at this history of ever-diminishing corporate contributions to our Nation's revenues.

Let's look now at one of the factors that is driving the erosion of corporate tax revenues. This is an interesting house--a building located down in the Cayman Islands. It is not particularly large, kind of nondescript. Our Budget Committee chairman, Kent Conrad, uses this photograph quite often.

This building may not look like a beehive of economic activity, but over 18,000 corporations claim they are doing business in this building. That is correct; 18,000 corporations claim to be doing business in that little building. It gives a whole new meaning to the phrase ``small business'' when you think of trying to pack 18,000 corporations into that little structure.

Well, as Chairman Conrad has pointed out, the only business being done in that building is funny business or monkey business with the Tax Code. Tax gimmickry. This nonsense is estimated to cost America as much as $100 billion every year. For every one of those dollars lost to the tax cheaters, honest taxpaying Americans and honest taxpaying corporations have to pay an extra dollar or more to make up the difference.

Now, let's go to another building that has a tax story to tell. This is the Helmsley Building in New York City. It is a nice-looking place. The building is big enough to have its own Zip Code. That means the IRS reports of tax information by Zip Code can tell us a lot about this building. Here is what this building tells us from actual tax filings and actual tax payments.

The well-off and very successful, indeed, admirable occupants of that building paid a lower tax rate than the average New York City janitor. The average tax rate of a New York City janitor is 24.9 percent. The average tax rate of a New York City security guard--I am sure the Helmsley Building has security guards--is 23.8 percent. But the average tax rate actually paid by the occupants, the successful, capable, but well-compensated occupants of that building, is 14.7 percent, about three-fifths of the rate that their janitors and security guards are likely paying.

So that seems as though it must be extraordinary, but, believe it or not, that is no fluke. The IRS reports the tax rate that is actually paid by the highest earning 400 Americans. They have to go back a few years to do the calculations, but here is their most recent information, and the story is the same. The highest earning 400 Americans each earned on average more than $344 million--more than $1/3 billion in 1 year--and the average tax rate those 400 high-income earners actually paid was 16.7 percent.

I applaud their success. It is the American dream writ large when somebody can make $1/3 billion in a single year. But when they only pay 16.7 percent, it makes you wonder. You might wonder, for instance, at what wage level does a regular single working person start paying 16.7 percent in total Federal taxes? If you are a single filer without deductions, you hit 16.7 percent of your salary going to the Federal Government in taxes at $18,650 in salary.

So what does that equate to for jobs? The Bureau of Labor Statistics calculates that in my home State, in the Providence labor market, a hospital orderly is paid on average $29,000 a year. That means that the 400 biggest income earners in America, each earning on average $1/3 billion, are paying the same tax rate as the hospital orderly pushing that cart down the linoleum hallways of the Rhode Island Hospital at 2 o'clock in the morning. That is the way the code actually works. There are a lot of people in between that and making what a hospital orderly makes, and they pay a lot more in taxes than 16.7 percent. But when you get to the very high end, when you get to the occupants of the Helmsley Building, when you get to the people making $1/3 billion a year, those tax rates actually paid go down to the point where they are paying the same rate as the janitor--less than the janitor--and the same rate as the hospital orderly.

I have heard my colleagues say that rates go up the higher income you pay, and nominally they do. But when you look at what is actually paid, when you look at what goes through our contorted Tax Code system, out the back end come these extraordinarily low actual tax payment rates for the most well-off and well-compensated Americans.

If you go to the corporate Tax Code, that makes little more sense. Decades of lobbyists have carved our corporate Tax Code into a Swiss cheese of tax loopholes, of tax earmarks for the rich and powerful. The result? We have a nominal corporate tax rate of 35 percent. But here is what the New York Times reported recently. General Electric, one of the Nation's largest corporations, made profits of over $14 billion last year and paid no U.S. taxes--none. Indeed, it actually received a $3.2 billion refund from the American taxpayer.

I read recently that Goldman Sachs in 2008 reportedly paid income tax, Federal tax, of 1 percent. Maybe those were 1-year anomalies, but if you look at a previous analysis by the New York Times, of 5 years of corporate tax returns, consolidated, that analysis found that Prudential Financial only paid 7.6 percent--less than our hospital orderly; Yahoo, 7 percent; Southwest Airlines, 6.3 percent; Boeing, 4.5 percent; and what looks to be our tax avoidance champion, on $11.3 billion of income, the Carnival Cruise Corporation paid less than 1.1 percent in Federal taxes averaged over those 5 years. One recent paper actually calculated Carnival Cruise Lines' effective tax rate at 0.7 percent on $11.3 billion in income. Carnival Lines doesn't just take you for a cruise, they are taking all of us for a ride. Good, honest CVS, a corporation in my home State, pays full freight. Why should they pay 30 times the tax rate of Carnival Cruise Lines? It makes no sense.

But wait, there is more. Don't forget that we make the American taxpayer subsidize big oil to the tune of at least $3 trillion a year, and big oil has made $1 trillion in profits this decade. They hardly need to raid the pockets of the American taxpayer, but on an effective tax rate basis, the petroleum-gas industry pays the lowest rate of any industry.

I think these are all noteworthy landmarks of where we are in our budget and debt and deficit discussion. But the big landmark, what I call the Mount Everest of landmarks that casts its shadow over the entire budget discussion, is health care. Representative Ryan's health care budget proposal is radical and would create terrible harm for seniors. But I do agree with Representative Ryan on his statement that says the following:

If you want to be honest with the fiscal problem and the debt, it really is a health care problem.

He is right, and the landmark feature of this landmark problem is this: The health care cost problem is a health care system problem. Our national health care costs are exploding. The health care system is driving up the costs of Medicare. The health care system is driving up the costs of Medicaid. The health care system is driving up the costs of private insurance--of BlueCross, of United. The health care system is driving up the cost of the military's TRICARE system and the VA system. No one is exempt. It doesn't matter who your insurer is, the health care system is what is driving the costs in public and in private programs alike.

We have to address the health care system problem if we are going to get our health care costs under control. Simply going after one manner of payment, such as the Medicare system, misses the real target and will cause us to fail at our endeavor.

Instead of tackling this vital problem of the underlying growth in health care costs, the Ryan budget would end Medicare as we know it. Just look at these numbers. I was born in 1955. It was at $12 billion, the entire national health care system. By 1979, it was up to $219 billion; by 1987, $512 billion; by 1992, $849 billion; and from 1992 to 2009, it has soared to $2.5 trillion. This is a rocket every insurer is on, and you can't just throw the Medicare people off of their health care and pretend you are going to do anything about bringing down that accelerating curve. But instead of tackling the underlying growth, the Ryan budget would end Medicare as we know it. That would be a tragedy and a mistake.

Medicare, along with Social Security, is one of the most successful programs for human well-being in the history of the world. It allows tens of millions of older Americans to enjoy their golden years with minimal concern about paying for health care. Paired with Social Security, Medicare guarantees American seniors the freedom to retire without fear of privation or destitution. As with Social Security, American workers pay for this privilege through payroll taxes, and they have a right to the retirement benefits that they have been promised and that they have earned.

The House Republican budget drafted by Mr. Ryan would break our pledge with Americans who have been paying Medicare payroll taxes by ending Medicare as we know it and replacing the single-payer system with vouchers for private care that will not come close to paying the full cost of insurance. Indeed, that may be an understatement. According to the nonpartisan Congressional Budget Office, the Ryan plan would leave the average senior with over $12,500 in out-of-pocket expenditures that they would have to pay by 2022. That is nearly as much as the average Rhode Islander gets from Social Security now.

The current Medicare system is projected to cover 68 percent of a senior's health care costs in 2012, and the Ryan plan would only cover 25 percent. Three-quarters of a senior's health care responsibility would be on them, and Medicare would only pick up 25 percent. That is an unaffordable and a indefensible burden that destroys the freedom and the security Medicare provides to seniors and provides to their children as well.

Don't forget that we all enjoy the freedom of knowing our parents will be taken care of no matter how dread the disease they suffer, and we do not have to compromise our choices in life in order to hedge against the fear that our parents will suffer such an indignity, such a terrible result. It helps all Americans to have that freedom in our seniors' hands, to have that fear lifted from their and our hearts.

The Ryan plan is 180 degrees from where we should be on health care reform. It would greatly increase costs. Costs go up because of how inefficient private insurance is--for the average senior, from a projected $14,770 under current policy to $20,510, a 39-percent increase in the underlying cost--in other words, a huge giveaway to the private health insurance industry that would get these vouchers. It would ignore the potential for tremendous savings in delivery system reform and saddle seniors with enormous out-of-pocket expenses.

As I said, rising Medicare costs are not driven by Medicare. Every insurer has their costs going up like a rocket on that chart I showed. We have to get at the problem of the underlying cause.

How do we do this? We actually have a pretty good health care toolbox that has five major tools in it. One is quality improvement. Quality improvement saves the cost of errors, of missed diagnosis, of disjointed care, and so forth. For example, hospital-acquired infections alone cost about $2.5 billion every year, and they are virtually entirely avoidable. They should be and could be ``never'' events. That alone would save $2.5 billion, and quality improvement can extend far beyond just the realm of hospital-acquired infections.

Two is prevention programs. Prevention programs avoid the cost of getting sick in the first place. More than 90 percent of cervical cancer is curable if the disease is detected early through Pap smears. Three, you pay doctors for better outcomes rather than for ordering more and more tests and procedures. That will save money while improving outcomes for Americans.

Four is a robust health information infrastructure which will save billions of dollars a year and open exciting new industries once it takes life. We are approaching that tipping point now, I am glad to say.

Finally, five, the administrative costs of our health care system are grotesque. The insurance industry has developed a massive bureaucracy to delay and deny payments to doctors and hospitals. So the doctors and the hospitals have had to fight back and hire their own billing departments and their own consultants.

I visited, a little while ago, our little Cranston, RI, community health center. They told me there that half their staff is dedicated not to providing health care but to fighting to get paid. On top of dedicating 50 percent of their staff to trying to get paid, they have to spend another $200,000 a year on fancy consultants. All of that, the entire war over payments between insurers and hospitals, adds zero health care value.

We have heard that on the private insurance side, anywhere from 15 to 30 percent of the health insurance dollar gets burned up in administrative costs. We know we can do better because the cost of administering Medicare is closer to 2 percent of program expenditures.

So you add up all of this, all those five strategies, the numbers are enormous. The President's Council of Economic Advisers has stated that 5 percent of GDP can be taken out of our health care system costs without hurting the health care we receive. That is about $700 billion a year.

The New England Health Care Institute says it is $850 billion a year. The well-regarded Lewin Group has estimated the probable savings at $1 trillion a year, a figure that is echoed by former Bush Treasury Secretary O'Neill.

Those are very big numbers, but not only are they big numbers, they represent results that are a win-win. Remember the five strategies: higher quality care with less errors and infections; prevented illnesses so you do not get sick in the first place; secure, complete health records that are there when you need them electronically, so your doctors, your lab, your pharmacy, your hospital, your specialists all know what everybody else is doing; payments to doctors and hospitals based on keeping you well and getting you well, rather than on giving you more procedures and more tests; and, finally, not so much of that infuriating insurance company bureaucracy hassling both patients and doctors.

Those are not bad outcomes even without the savings. So what do we draw from this if we keep all these landmarks in mind, landmarks of where we are as we approach this budget debate? Well, our colleagues on the other side, particularly our House Republican colleagues, say they are determined to reduce our annual deficit on our national debt. That is their top priority.

But they only want to seem to address 12 percent of the budget, the nonsecurity discretionary spending, and examine no savings at all on the revenue side. If we are serious about deficit and debt reduction, why risk destroying 700,000 jobs, when job destruction only adds to the deficit and to our debt through lost economic activity and lost revenue?

If we are serious about deficit and debt reduction, why is there not one corporate tax loophole--not one--on the chopping block? Why is the entire Tax Code off limits in this discussion as it burns up 6 billion hours that Americans spend every year--6 billion hours that Americans spend every year--complying with its contorted requirements.

Why must that hospital orderly, pushing his or her cart down the linoleum hallway at midnight, pay a higher tax rate than some of the most fortunate and able Americans making hundreds of millions of dollars each in a single year? If we are serious about this, if deficits and debt are the most important thing we face, why no discussion of corporate America's ever-diminishing contribution as a share of our Nation's revenue? Should that not be something we at least consider?

If we are serious, why is there no plan for even one of the 18,000 corporations in that phony-baloney headquarters in the Cayman Islands to pay its proper taxes? If we are serious, why is there so much pure political nonsense about ObamaCare and socialized medicine, instead of a mature discussion about using and improving the tools in the health care bill to address our grave national health care system problem.

Why has Representative Ryan proposed taking a sledgehammer to Medicare, instead of making thoughtful and efficient investments to improve the way we deliver health care?

It seems to me that until one corporate tax loophole is on the table, until one subsidy to big oil is on the table, until one subsidy to big agribusiness is on the table, until we are even beginning to talk about billionaires contributing Federal revenue beyond the share of their income that hospital orderlies contribute, until we are not so casual about threatening 700,000 jobs and perhaps $20 billion in related tax revenue that job loss would cause, until then, it is still politics as usual and it is not a sincere desire to tackle our debt.

I have always found that you get a better read looking what people actually do, rather than just believing whatever they say. If you look at what Republicans made their priorities on the CR debate and in the Ryan budget, look at what they do. It is the same old Republican agenda: attacking programs that help the poor, attacking women's right to choose, attacking national voluntary service, helping polluters get around public health measures, reducing the share of revenues paid by corporations, and very high-income individuals. It is the same old song.

Most important, the problem is that if you go that road, it is not adequate to meet the serious problems at hand. We need to look throughout the budget and across all our opportunities to bring down our Nation's deficits and to bring down our Nation's debt. Everyone needs to participate, including our corporate community, including our wealthiest, most talented and most fortunate, everyone. We cannot--we simply will not--get out of the debt and deficit problem we have if we put the whole load of that on the backs of the American middle class.

I look forward in the months ahead to a serious, fair, and sensible discussion, a mature discussion of how to reduce our deficits and our debt.

I yield the floor.

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