Agriculture Reform, Food, and Jobs Act--Motion to Proceed--Resumed

Floor Speech

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Mr. THUNE. Madam President, I come to the floor today to talk about the significant uncertainty surrounding sequestration and its threat to our economy. The Congressional Budget Office forecasted that the pending fiscal cliff facing this country; that is, the scheduled tax increases and across-the-board spending cuts that will result from the expiration of current tax policy and the enactment of sequestration, could lead to recession. In fact, the Congressional Budget Office said repeatedly that if the tax increases and sequestration occur at the end of this year, there will be a 1.3-percent economic contraction during the first quarter of 2013. I believe that would argue for extending the existing tax rates. I think the uncertainty associated with the tax rates perhaps expiring at the end of the year and businesses not knowing what is going to happen is creating a real problem and a real cloud out there in the economy.

I believe it is important that there be economic certainty for people in this country, particularly for investors and small businesses.

So it seems to me, at least, that getting those tax rates extended would be a very important part of the solution.

Having said that, I also believe we need tax reform for this country. We need comprehensive tax reform that will fuel economic growth. I think there is enormous potential for economic growth and job creation if, in fact, we could get to overhauling our Tax Code in this country, making it more simple, more fair, more clear, and obviously lowering the rates and broadening the tax base. But until that happens, we need certainty, which means we need to get the existing tax rates extended. I hope we can do that sooner rather than later because I think the longer we wait, the greater we put at risk our economy and what could happen if we don't act.

So that is one component of the fiscal cliff. Obviously, there are other components.

Under the Budget Control Act, the spending authority of most Federal departments and agencies is going to be reduced on January 2, 2013, as a result of the sequestration. Now, the triggered reduction in spending is $1.2 trillion. After accounting for 18 percent in debt service savings, the required reductions amount to $984 billion to be distributed evenly over 9 years--in other words, $109.3 billion per year. So if we look at it year by year, that is $54.7 billion in reductions that will be necessary in both the defense and nondefense categories of the budget starting on January 2, 2013. It is expected that those cuts will range between 7 and 9 percent, but we believe the administration needs a plan for implementing sequestration, after a number of conflicting statements about how and if it will be carried out.

As one example of the conflicting statements coming out of the Obama administration, Defense Secretary Leon Panetta sent a letter to Senator McCain last November saying that the sequestration would not impact war funding. In April the OMB Controller testified before the House Budget Committee that the issue of whether war funding would be reduced by the sequester was still being evaluated. Just last week another official from the Office of Management and Budget said that war funding would, in fact, be impacted by the sequester.

It has been almost a full year since the Budget Control Act was passed, and Congress needs a precise understanding from this administration as to the full effects of sequestration on all programs and accounts across the Federal Government, including national security funding. That is why I have introduced a bill, along with Budget Committee ranking member Jeff Sessions, that would require the administration to bring some much needed transparency to the scheduled across-the-board spending cuts. Our legislation, S. 3228, the Sequestration Transparency Act, would require the administration to submit to Congress a detailed preview of the sequestration required by the Budget Control Act. Specifically, this bill would require the President to submit a report to Congress by July 9--next month--of 2012 that includes an estimate of the sequestration percentages and amounts necessary to achieve the required reduction for each spending category on an account level. The administration's report would also be required to include any other data and explanations that enhance the public's understanding of a sequester and actions to be taken under it.

This report will assist Congress in its yearend legislative business, including fiscal year 2013 appropriations and addressing the deep and unbalanced defense budget cuts that are expected under sequestration, which are in addition--in addition--to the $487 billion in reductions that were carried out last August.

Of course, we would not be in this situation had the Senate passed a serious budget over the last 3 years that addressed tax and entitlement reform. The Senate's failure to produce a budget year after year has left us with the Budget Control Act. Now the Budget Control Act is the law of the land.

While I am certainly disappointed that the President and the Joint Select Committee on Deficit Reduction failed to reach an agreement to bring down our deficits in the long term, the cuts to national defense that are scheduled to go into effect are particularly troubling. The President's own Defense Secretary warned that the sequester would ``hollow out the force and inflict serious damage to our national defense.'' That is from the President's own Defense Secretary. Yet, after repeated requests from both the House and the Senate, the administration has refused to provide even the most basic details about the cuts required by the sequester.

There is a great deal of uncertainty regarding sequestration and the tax increases that would occur the first of next year. At a time when our economy continues to grow at a very sluggish pace and unemployment remains above 8 percent, the last thing we need coming out of Washington is more uncertainty. Job creators are concerned about the pending fiscal cliff, and if Congress does not act before the election to deal with these issues, the economy will suffer from this uncertainty in the coming months.

The legislation I have introduced, along with Senator Sessions, requires the administration to share with Congress and with the American people their plan for exactly how the sequestration will be carried out. This is straightforward legislation. It is about transparency, and it is something where I hope my colleagues on both sides of the aisle will work to ensure that these numbers--this sequestration plan--are shared with the Congress and with the American people.

We have, as everybody knows, a big pileup occurring at the end of the year with sequestration. The pileup includes tax rate increases which will occur on marginal income tax rates, capital gains rates, dividend rates, the death taxes, the debt limit increase. All of these things happen at a time that will create incredible amounts of uncertainty in our economy. The best we can do for the American people, for our job creators, for investors, and for our small businesses is to provide as much certainty as is possible going into the end of this year. It seems to me, at least, that starts with ensuring that we have a plan coming out of the administration that specifically clarifies how this sequestration would be implemented so that Congress can react accordingly, hopefully before the end of the year and hopefully sometime in the next few months, perhaps as a part of our appropriations process this year.

With regard to the tax increases, I would make the same argument that former President Bill Clinton has been making, which is that we need to extend these tax rates. We create too much economic uncertainty out there by having this cloud

on the horizon, which I think is a real warning sign to us, and it is a reminder that we get on a regular basis--frankly, for the most part, on a daily basis--when we talk to small businesses in our home States about the importance of addressing the tax, the regulatory, the spending, and debt issues before the end of the year when this big pileup would occur.

So I would argue for and plead with my colleagues to work together on the sequestration issue to ensure that it doesn't have the devastating impacts on our national security budget and that, combined with the tax increases, it doesn't have the devastating impact on our economy that is being predicted by the Congressional Budget Office. They have pointed out that if these things all happen at the end of the year, it could cost us 1.3 percent of economic growth, which, according to the President's own economic advisers, means about 1.3 million jobs for American workers. We already have chronic high unemployment now--40 consecutive months of unemployment above 8 percent. We have a sluggish, anemic economy. We shouldn't pile on top of that all this uncertainty with regard to taxes, with regard to regulations, with regard to what is going to happen regarding sequestration at the end of the year.

Again, this bill simply does not address in substance how we would change that, but it merely requests and requires the administration to provide to the Congress and the American people a clear plan about how they intend to implement sequestration in hopes that we might be able to make some necessary changes to ensure that the defense budget isn't gutted and that these adverse impacts on the economy are not felt by the American people and by our small businesses. I hope my colleagues will support this legislation and that we can get a vote on it very soon; that we can get the administration acting in a way that will inform not only us as Members of Congress but also the American public.

I yield the floor, and I suggest the absence of a quorum.

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