[Congressional Record Volume 151, Number 147 (Tuesday, November 8, 2005)]
[Senate]
[Pages S12516-S12517]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                      RECONCILIATION TAX CUT BILL

  Mr. VOINOVICH. Mr. President, I rise to comment on the reconciliation 
tax relief bill that will most likely come before the Senate next week. 
I felt it necessary to come and speak on this topic because I am 
thinking of not only our generation but of the generations of our 
children and grandchildren and the legacy we leave them.
  How do the decisions we make in the Senate today affect their lives 
after we have long left this body? That is a question I will be asking 
should the Senate, as I expect it will, begin debate on reconciliation 
for tax cuts.
  Last week, Alan Greenspan testified before the Joint Economic 
Committee and told Congress:

       We should not be cutting taxes by borrowing. We do not have 
     the capability of having both productive tax cuts and large 
     expenditure increases, and presume that the deficit doesn't 
     matter.

  I do not know how anyone can say with a straight face that when we 
voted to cut spending last week to help achieve deficit reductions we 
can now then turn around 2 weeks later to provide tax cuts that exceed 
the reductions that we made in spending. It just does not make any 
sense, and I think it does not make any sense to the American people.
  Well, I for one am taking Chairman Greenspan's warning seriously. 
Last week, I voted to cut spending. And should tax cuts come to the 
floor next week, I will vote against them. I believe it is the only 
responsible course of action.
  There are three reasons we should oppose tax cuts at this time: No. 
1, we cannot afford these tax cuts; No. 2, we do not need these tax 
cuts; and, No. 3, we should be working on tax reform rather than tax 
cuts.
  In case anyone has forgotten, the deficit for fiscal year 2005 was 
$317 billion. That was the third largest deficit in our Nation's 
history. The first and second largest deficits occurred in 2004 and in 
2003.
  On October 20, the gross Federal debt climbed past $8 trillion. 
Looking at this chart, you can see what is happening. This is the 
combined debt, the public and the Government debt. It climbed to over 
$8 trillion. And according to the Congressional Budget Office, in 
fiscal year 2005, interest on the public debt grew more rapidly than 
any other major spending category, rising 14 percent above the fiscal 
year 2004 level.
  So we can see that this debt is escalating rapidly, and it is 
something about which we should all be very concerned.
  Let me put this in perspective. Just the interest payments on the 
public debt are more than $1,600 for each tax-paying American--more 
than $1,600 for each tax-paying American. If we could wave a magic wand 
and stop adding to the deficit today--which we won't--the Federal debt 
would still be about $28,000 for every person in the United States, and 
close to $1 million each if it is left to those who are under 20 years 
of age.
  And even if we were to start running surpluses as large as last 
year's deficit, it would still take us 14 years to pay off just the 
debt held by the public.
  It is time to recognize a simple fact of life. Contrary to what some 
of my colleagues seem to believe, tax cuts do not pay for themselves.
  We have heard about the impact of the previous tax cuts, how in the 
past few months revenues have exceeded expectations, and how economic 
growth would pay for all the tax cuts Congress enacted in 2003. But as 
this chart shows, exceeding expectations does not mean there was no 
revenue lost as a result of the tax cuts.
  As shown on this chart, the red bar indicates what our revenues would 
have been had we not had the tax cuts. The blue bar shows what the 
projected revenue was as a result of the tax cuts. The green bar shows 
what we actually received as a result of the tax cuts. Now, we can see 
there is a difference between if we had not had the tax cuts and having 
the tax cuts.
  Now, let's go to 2004. Shown in red is what we would have expected in 
revenues in 2004 had we not had the tax cuts. We had the tax cuts, and 
shown in blue is what was expected as a result of them. The good news 
is, we did receive more money than we anticipated from the tax cuts, as 
shown in the green.
  Now, let's go to 2005. Again, the red bar shows what the projection 
was of what we would have had without the tax cuts. The blue bar shows 
what the projection was of the revenues we would have because we had 
the tax cuts. And the green bar shows actually what the revenues were 
that came in.
  The fact is, tax cuts are never free. All during this time, we were 
adding to the national debt.
  Now, I voted for tax cuts in 2001, 2002, and 2003 because the country 
needed stimulative medicine, and it worked. But like any other 
medicine, an overdose of tax cuts can, and in my opinion will, do more 
harm than the original disease.
  In 2003, I said that $350 billion in tax cuts would be enough to get 
the economy moving, and now I am saying that

[[Page S12517]]

any more would be an overdose. It is time to put the tax cut medicine 
back on the shelf, particularly in light of the war in Iraq, our 
spending on homeland security, and Hurricanes Katrina and Rita.
  Just today, the Senate increased mandatory spending over the next 10 
years by $9.5 billion.
  The second reason to put the tax cut medicine back on the shelf is 
that most of the provisions included in the reconciliation package do 
not have to be extended now. In fact, most of the tax cut provisions 
included in the reconciliation package, including the reduced rates on 
dividends and capital gains, do not expire until 2008--over 2 years 
from now.
  So here are the provisions of the economic growth plan that we worked 
on during the last several years. You can see that one of the 
provisions of the proposal for next week is ``reduced rate on dividends 
and capital gains.'' This is not going to expire until 2008. Another 
one is ``section 179 expensing,'' which many of us supported in the 
bill we passed last year, the JOBS bill. That is not going to expire 
until 2007.
  So the point I am making is, there really is not any need for us to 
pass these tax cuts next week because most of them are not going to 
expire until years in the future.
  As my colleagues can see, most of the core provisions of the 
President's tax reform plan, as I mentioned, do not expire until 2010. 
A handful expire in 2007 or 2008, and only one expires next year.
  When Alan Greenspan testified before the Joint Economic Committee 
last week--I think this is really telling testimony on the part of 
Chairman Greenspan--a member of the committee asked if he supported 
extending the 15-percent tax rate for capital gains and dividends. 
Chairman Greenspan replied that he could only support extending these 
tax cuts if they were paid for.
  According to Chairman Greenspan, large budget deficits will drive up 
interest rates over time, raising the Government's debt service costs.
  I think, as we watch what is happening to interest rates, they are 
starting to creep up. What we forget is, as they creep up, interest 
costs are going to take a larger and larger percent of our Federal 
budget.
  I quote Alan Greenspan again:

       Unless the situation is reversed, at some point these 
     budget trends will cause serious economic disruptions.

  I will repeat it again. Alan Greenspan:

       Unless the situation is reversed, at some point these 
     budget trends will cause serious economic disruptions.

  The fact is, if these tax cuts are so important, we should pay for 
them, which is why I supported the pay-go amendment to the budget 
resolution in March, and supported it again last week.
  My third reason for opposing piecemeal tax cuts at this time is that 
the President's Advisory Panel on Tax Reform just released its final 
report. All of us have heard from families and businesses in our 
respective States lamenting the complexity and frustration with the 
current Tax Code.
  Well, thanks to our former colleagues, Connie Mack and John Breaux, 
it seems to me we have a chance to finally do something about it.
  Why extend tax deductions piecemeal when we should be considering 
fundamental tax reform? Our tax structure should be simple, fair, and 
honest. Our current Tax Code achieves none of these objectives.
  I used to prepare my own tax returns and made out tax returns for my 
clients. I would not touch my tax return today with a 10-foot pole 
because of the complexities.
  I am with the 55 percent of other Americans who have to hire 
professional help to make out our tax returns. Last year, it is 
estimated that Americans spent more than 3.5 billion hours doing their 
taxes, the equivalent of hiring almost 2 million new IRS employees, 
more than 20 times the agency's current workforce. If the money spent 
every year on tax preparation and compliance was collected, about $140 
billion each year or over $1,000 per family, it could fund a 
substantial part of the Federal Government, including the Department of 
Homeland Security, the Department of State, NASA, the Department of 
Housing and Urban Development, the Environmental Protection Agency, the 
Department of Transportation, the U.S. Congress, our Federal courts, 
and all the Federal Government's foreign aid.
  Individuals, businesses, and nonprofits must pay these compliance 
costs, but the Federal Government cannot use them for any useful 
purpose. Individuals and businesses lose money that they could 
otherwise save, invest, and spend on their children's education, buy a 
home, or simply enjoy an extra evening out with the family. But the 
Federal Government gets nothing. That is the equivalent of stacking 
money in a pile and lighting a match to it.
  We all recognize the need for a simple, fair, and honest Tax Code. 
This is a win-win goal for everyone. Simply cutting tax compliance 
costs in half from 20 percent to 10 percent would have the same impact 
as a major tax cut. Just cutting the compliance costs would be the 
equivalent of a major tax cut for most Americans, but it would be a tax 
cut that does not reduce Federal revenues but would guarantee that 
people are paying their fair share and bring more money into the 
Federal Treasury.
  We all know that fundamental tax reform is critical and that 
President Bush will be sending us his recommendations in February. I 
simply cannot understand why some of my colleagues want to make so many 
provisions of the current Tax Code permanent or add new tax cuts, when 
next year we very well may be eliminating the same provisions as part 
of fundamental tax reform. Why do it now when we are expecting the 
President to come back with a fair and simple, honest tax reform 
package? Again, this is not the time for piecemeal tinkering. No 
homeowner would remodel their kitchen and bathroom the year before 
tearing down the house to build a newer and better one. That is, in 
effect, what we would be doing next week if we vote for these cuts.
  In closing, I reiterate the three reasons we should oppose tax cuts 
at this time. No. 1, we cannot afford them because of our soaring 
deficit and national debt. Putting our spending on the credit card of 
our kids is unconscionable, particularly because they will have to work 
harder and smarter to compete in the global marketplace to maintain our 
current standard of living and quality of life.
  Two, we do not need these tax cuts at this time. If this body 
believes we must have them, we should follow Alan Greenspan's advice 
and pay for them. If these tax cuts are so important to the economy, 
then let's pay for them.
  And third, from a public policy point of view, these tax cuts are 
premature because in the very near future, we may well change them as 
part of fundamental tax reform and simplification.
  I thank my colleagues for their attention and urge them to vote 
against the tax cuts proposed next week. I reaffirm a Republican 
principle we have held dear over the years and one that I adhered to as 
mayor of the city of Cleveland and Governor of Ohio; that is, balance 
budgets and reduce deficits.
  I yield the floor and suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The bill clerk proceeded to call the roll.
  Mr. VOINOVICH. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.

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