Concurrent Resolution on the Budget for Fiscal Year 2006 - Conference Report

CONCURRENT RESOLUTION ON THE BUDGET FOR FISCAL YEAR 2006--CONFERENCE REPORT

BREAK IN TRANSCRIPT

Mr. GRASSLEY. Mr. President, I first compliment the chairman of the committee, Senator Gregg, for his outstanding work in getting a budget before the Senate because that didn't happen last year. I am so glad we have a budget because it is discipline for the Congress, and anybody knows, when it comes to spending money, Congress needs discipline. So I urge my colleagues to support this conference report.

Of course, a budget resolution is more or less a blueprint. It sets the overall level of spending and also for revenue of the Federal Government. The budget itself does not change any law. As I said, it is a blueprint, ground rules, for all of the other spending and revenue legislation that will be considered in the Senate yet this year.

Under the Senate rules, any bill that exceeds the level set in the budget may be subject to a point of order that would require a 60-vote supermajority. That is where the discipline comes--when people want to spend more money without raising taxes or taking the money from some other program, then they would be beyond the budget, and consequently a point of order could be raised. It is very difficult to get a 60-vote supermajority in this body. Consequently, it keeps spending within the budget. So it is budget discipline that Congress needs.

By imposing the supermajority requirement, the budget encourages the Senate to stay within these overall limits that are in the document we are going to vote on tonight, while at the same time providing the opportunity to exceed those limits if a supermajority can be gotten. And when there are extenuating circumstances, you have to assume extenuating circumstances get that sort of a vote in the Senate.

The annual budget process is often the subject of much controversy, as I think you can tell from the debate tonight. I want to take a moment and focus on a number of specific provisions as they relate to the committee that I chair, the Senate Finance Committee, which has the responsibility for all of the legislation that affects Medicaid and Medicare, as well as everything dealing with the raising of taxes or the decreasing of taxes involved with the income tax code.

The budget resolution conference report provides reconciliation instruction--in other words, mandating that the Finance Committee, like it mandates other committees to do similar things in their jurisdiction, to achieve $10 billion in program savings and $70 billion in tax relief.

While these instructions do not actually require the Finance Committee to enact any specific policy--that is our option how we meet these goals--there are a number of policies that are assumed and I think realistic within the numbers that are provided in the budget resolution.

The budget provides for $10 billion in savings from the Finance Committee, and I surely and confidently commit the Finance Committee to make every effort to work in a bipartisan fashion where we keep in mind principles that guide us in producing a better Medicaid Program.

The Finance Committee will look at proposed savings that will be shared equally--I should not say equally but shared proportionately between the Federal Government and the States because the Medicaid Program is a Federal-State partnership.

States are in trouble. We want to help them. We want to emphasize flexibility for the States through voluntary options that States can exercise to get more bang for the Medicaid dollar and even save money in the process, maybe in some instances, through flexibility, even serving a larger population than they now serve but with a more efficient expenditure of that money. The Finance Committee will do this while making a commitment not to eliminate coverage for Medicaid beneficiaries.

I look forward to taking action to improve Medicaid. Doing nothing is far worse for Medicaid. If we do not eliminate wasteful practices, if we do not provide States with this necessary flexibility, if we do not provide States the relief they are asking for, they are simply going to cut whole groups of people off the rolls to make their budget ends meet within their State legislative prerogative.

I recall reading in the paper a couple of months ago, I think it was the State of Mississippi found itself in a position where it could not afford everything the Federal Government mandated on Medicaid, and they just dropped 55,000 people from the rolls. They should not have to do that, they do not want to do that, and we can help them not to do that by giving more flexibility to the States.

That is why I say doing nothing is far worse for Medicaid beneficiaries than what we are going to attempt to do in the next few months through this reconciliation instruction to provide a rational, reasoned approach to protecting and strengthening the Medicaid Program. That is what we will do in meeting our instructions.

I am going to leave Medicaid now and go to the tax relief portions in this budget and comment on two aspects: The amount of relief for the budget period--that is the next 5 years--and the use of reconciliation to bring about the tax relief that a majority of this Senate is going to say we need.

Before I start with the numbers, I want to put in context the revenue side of the budget. Some have argued, and particularly we have heard this even tonight, that bipartisan tax relief has gutted the revenue base permanently, and that is hogwash. They argue that this change is a reason to raise taxes. People want to raise taxes, can you believe that, Mr. President, instead of not extending the tax relief that was voted in 2001, 2003, and I guess some in 2004?

The facts, according to the Congressional Budget Office--and remember, they work for everybody, Republicans and Democrats; they are not Republican or Democrat, they are professionals. Their statistics show otherwise.

I want to put a chart up and have my colleagues concentrate on Congressional Budget Office data, and this covers the period of time from 1960 to 2015, so we get a historical response to people who are saying we have permanently gutted the tax base.

This chart shows the volatility of revenue and its relationship to economic performance. When we suffer economically--and that is the green line on the chart--as related to the ups and downs in the growth of the economy, the gross domestic product, it shows that we suffered economically. You can see the red lines going up and down being revenue coming into the Federal Treasury in relationship to the growth or the sinking of the economy over this historical period of time. Then we also see when the economy grows, revenues go up. When the economy sinks, obviously, revenue coming into the Federal Government goes down.

We have heard so much about what this administration has done to the revenue base of the country. What we see in the first 4 years of the Bush administration--so you have to look at the years 2001 to 2005--you will remember we inherited a recession. I hope people on the other side of the aisle realize that the NASDAQ lost 50 percent of its value in the year 2000. I hope people remember that this economy started in a recession 3 months before President Bush was ever sworn in for the first time. So the bubble broke. We had those corporate scandals that date back to the midnineties becoming public in the year 2001. And then we can see from the chart that the uptick in the economy started late in the Bush administration and continues today.

The Congressional Budget Office shows, as we can see, revenue is coming back. So let's not confuse cause and effect. The tax reduction we voted on in 2001 and 2003 has helped the economy recover and the Federal Treasury is benefiting. So we have to look at what is projected out, starting this year and into the future.

We see the economy fairly stable for the next few years, and we see the revenue base high above the growth of the economy. So let's be clear, undertaxation of the American people is not the source of our budget problems. And all the people over here who think we ought to raise taxes, I wonder when they have their town meetings how many people in their town meetings say: I am undertaxed; I want to pay more taxes. I do not have people coming to my town meeting saying that. I think what the American people are saying is that Congress overspends, and this budget is all about discipline in spending. Undertaxation, I hope my colleagues understand over there, is not the source of our problems.

Now, let's start with a basic number. When the Senate Budget Committee considered the resolution a few weeks ago, Republicans laid out our plan for reconciled tax relief. This plan was a product of discussion with members of the Republican caucus, just like I presume the Democrats have discussions about tax policy among their people.

Our objective now is to preserve current law, levels of tax relief that were voted in 2001 and 2003, and anybody who says you should eliminate the tax cuts of 2001 and 2003, they are not saying eliminate the tax cuts, they are saying raise your taxes. That is what they are saying.

Our plan centers on a seamless extension of tax relief provisions that began in 2001. It is critical that these provisions be rationalized in a commonsense way. Assuring taxpayers of the continuity of promised tax benefits should be one of our highest priorities.

Taxpayers should not face a reversal of the level of tax relief we have delivered. Certainty of tax policy is absolutely necessary for economic growth, and economic growth is absolutely necessary for creating jobs. This objective is critical with respect to the widely applicable provisions dealing with capital gains and dividends, small business expensing, low-income savings, the alternative minimum tax, and college tuition deductibility.

Do those people over there who say we ought to eliminate the tax cuts of 2001 and 2003 think we ought to eliminate the college tuition deductibility? I do not think so. But that is where they would take us. Millions of taxpayers from all walks of life have come to rely upon these tax relief provisions, and they are going to expire if we do not do something about it. They are going to get an automatic tax increase without even a vote of Congress if we do not do something. We should have guts enough to vote for tax increases if we want to, not just sit idly by and let taxes go up.

Some on the other side have been critical of the $70 billion in reconciled tax relief that is in this budget resolution, as was Social Security reform. At my hearing this week we heard a lot of complaining about so-called Social Security reform, but we do not get a lot of answers from the other side on Social Security or on taxes. We do not get problem solving. We do not get any constructive dialogue.

Where is the Democratic plan for tax relief? Has anyone seen it? All we hear are criticisms. How many times have we heard about AMT? Answer: We have heard we ought to be doing something about AMT plenty of times. There is an AMT problem. I have a couple of charts that tell the story. I would like to have my colleagues look at the baseline.

I ask unanimous consent for an additional 5 minutes.

The PRESIDING OFFICER. Without objection, the Senator from Iowa is allotted an additional 5 minutes.

Mr. GRASSLEY. I want my colleagues to look at the baseline. We can see the orange line. That is the individual taxes based on historical average.

The AMT is part of the individual income tax. Historically, individual income taxes have been at about 8 or 9 percent. That is the red line. The AMT and the regular tax balloon proportionately, under current law, over the next 40 years is going to go up very dramatically. This balloon effect is due to the sunset of bipartisan tax relief and AMT.

Now let us focus a little bit closer. Let us look at the next chart. This chart shows that extension of the bipartisan tax relief still leaves individual taxes at record levels. The blue line shows individual taxes are going to be growing very dramatically. The chart also shows that fixing the AMT leaves individual income taxes at record levels, as we can see from the orange line. What we can see is we seriously do have an alternative minimum tax problem and fixing it will not gut the revenue base over the long term. It is common sense that an unfair tax such as the alternative minimum tax, that is out of control, should be fixed without regard to offsets.

Common sense plays out on the budget side as well. We have even heard incorrect assertions that this budget does not address the alternative minimum tax problem. Well, guess what. In this budget, there is room for extending the current patch or hold harmless for millions of families facing an alternative minimum tax.

We hear all about the fact that the budget does not have anything to do with the alternative minimum tax. Well, it does. I just said it does. It is part of it. But where is the Democratic plan for alternative minimum tax relief? Where is the response for even the current period we are talking about in this budget? I have been looking for a Democratic plan and I cannot find it.

This budget contains plans for tax relief. The reconciliation instructions give us the resources to maintain current law tax relief. Put another way, the reconciliation instruction is our best means to protect against the tax hike automatically foisted upon millions of American taxpayers.

Now I turn to the second aspect of the tax relief portion of the budget. We will hear a lot of criticism against the use of reconciliation for tax relief. It was not an easy choice. I prefer regular order in the Senate, but recent tax legislative history in the Senate suggests that the reconciliation option is an important tool to have at our disposal.

With partisan obstructionism on the part of Democratic leadership, many regular order tax relief packages over the last 2 years have been stalled in the Senate. Even tax relief packages that the Democrat leadership claims to support encounter that sort of partisan obstructionism.

Members will recall that several cloture votes were required to get the bipartisan FSC/ETI legislation through the Congress last October. Likewise, we were unable to go to conference with the House on the CARE Act and other popular tax relief packages because of Democratic leadership objections. The situation has only become worse this year. The climate may still be more difficult if the Democratic leadership acts on the threats they have talked about of shutting down the Senate if the controversy over judicial nominations is brought to the forefront. From a practical standpoint, there is a significant risk that reconciled tax relief may be the only tax relief vehicle that can pass the Senate in this environment. I hope that is not the case. It is prudent to consider a possibility. Because of this hostile partisan environment, a reconciliation bill may be the only known path to preserve the tax relief provided during the last 4 years. For this reason, our caucus viewed the reconciliation numbers as a comprehensive blueprint for preserving current law levels of tax relief.

There is $36 billion of tax relief for regular order tax relief we will have to offset. This amount is meant to cover packages such as a comprehensive energy bill.

What it comes down to is this: We need to take care of legislative business. We need to continue the tax relief promised to the American people, but we are better off with a plan that prevents tax hikes. I am pleased we have this plan.

Once again, I urge my colleagues to support the budget resolution.

http://thomas.loc.gov/