[Congressional Record Volume 151, Number 155 (Tuesday, December 6, 2005)]
[House]
[Pages H11086-H11092]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
THE ECONOMY
The SPEAKER pro tempore. Under the Speaker's announced policy of
January 4, 2005, the gentleman from Texas (Mr. Conaway) is recognized
for 60 minutes as the designee of the majority leader.
Mr. CONAWAY. Mr. Speaker, it is great to be here tonight to host this
hour, and I am looking forward to having a colloquy with some of my
friends from our party to discuss the economy, which I think in this
era of where we are right now does not get bragged on enough; and so we
are going to spend the next hour bragging on the economy.
Before I do that, though, I would like to talk a little bit about
what my friends on the other side have been talking about.
When I was campaigning for this first time, the Chair and I are in
our first term in this House, I talked about trying to make some
friends on the other side of the aisle, trying to build a group of
folks we could deal with across the aisle in a bipartisan manner. I
committed to myself to try to avoid inflammatory rhetoric, overreaching
hyperbole, all the kinds of things that sometimes get us and our
colleagues in a lot of trouble when we come to these microphones and
speak.
Having listened for the last few minutes to the folks on the other
side, I would like to, with as much respect as I can, challenge some of
the things that we have heard here tonight.
I am a CPA. I spent 30-plus years in business helping write financial
statements and do tax returns and all the kinds of things that a CPA
does. With respect to financial statements, it was always the goal of
the financial statement to fairly present the financial results of a
particular enterprise, whether it is a small business or a large
business. The goal was the same, get all the information out, allow the
investor, the banker and the owner to make fair and well-informed
decisions.
One of the things we do here each night is to try to do that same
thing. We try to get information out to each other, to the American
people, so that they can make good decisions; and then, hopefully, we
can make good decisions as well.
Sometimes it is not what is said that is as important as what is left
unsaid, and I would like to point out a few things tonight that were
left unsaid while my colleagues talked about the debt of the Nation and
how we got in this particular position.
One of the things that you heard over and over is that we are
experiencing the largest deficits ever, and that is an accurate
statement. But it also ought to be put in context with a couple of
other ``largest ever,'' and that is, that we are now in the largest
economy, the largest U.S. economy, ever. The American economy, U.S.
economy, has never been bigger than it is today. That is not an excuse
for the deficit, but it helps to put it into context.
We also have more people working in America today than ever. More
people employed, more people self-employed, more people at jobs every
single day to try to feed their families, provide for themselves, and
make their communities a better place to live. That is a point that
ought to be said in the same sentence or same several sentences when we
talk about the deficit.
We have got more people owning homes today than have ever owned homes
in America, and that is a major statement because with respect to
probably on an absolute basis from the family standpoint, homeownership
is the single largest asset, single largest borrowing that most all
families will ever do. There is obviously some exceptions to that; but
by and large, most folks will see their biggest debt is their home and
biggest asset will be the equity in that home. Overall, good news with
which to examine the deficits.
Now, coming at my role here in Congress with a background in finance,
background in accounting, you go at budgets or correcting budget
deficits, there is really only two things to do. You either raise
revenues or you cut expenses, and what got left unsaid tonight over and
over and over as my colleagues on the other side talked about the
spending that the Republicans have championed over the last 5 years in
our attempt to try to reduce that was where would the Democrats not
spend money.
We heard a lot of things about what they did not like about the $50
billion that we passed a couple of weeks ago in rates of reduction in
the growth of spending in mandatory programs, mandatory programs being
two-thirds out of our annual budget. They did not like any of those.
They would argue that every single one of those cuts was into programs
that were totally efficient and totally without an opportunity to
reduce spending in those areas, and they were not really cuts as I have
mentioned. They were simply reductions in the rate of growth.
What got left unsaid was where would the Democrats, our Blue Dog
[[Page H11087]]
colleagues, actually cut, which program. Let us be precise. It is real
easy for my colleagues and me to stand up here and say we are against
excess spending, we are against the runaway spending, we are against
all those kinds of things. But talk is cheap in west Texas, where the
Chair and I hang out. Where are the specific programs that they think
are subject to being cut? We did not hear any of that.
Maybe over the next several weeks, as they said, they are going to
come down here again next Tuesday night and talk about what their plans
are, and maybe then they will lay out for us are they going to cut
defense. I do not think so. Are they going to cut homeland security? We
did not hear that tonight. In fact, what we did hear is that they are
going to increase spending in those areas. Are they going to cut
mandatory spending? It did not sound like it. It sounded like they
would prefer to increase spending in all of these areas.
That leaves the nondefense, nonhomeland security discretionary
budget, which is about $400 billion, a lot of money; but if we have got
a $300 billion deficit and we only have $400 billion that they would be
willing to kind of work on in terms of providing us with spending cut
direction, that runs everything else by the way. So I do not
realistically think you can cut out of the $400 billion that is in
discretionary spending that you can cut enough to eliminate $300
billion in deficits.
The other side of the equation, though, is revenue. What I did hear
tonight is that my colleagues are in favor of tax increases, period.
Someone once said that trying to work your way out of a deficit with
tax increases is like standing in a bucket and trying to lift yourself
up with the handles. Those do not work.
What we have seen over the last 3 years, 4 years now, the new tax
rates, the new tax code that we have in place for America, a tax code
and a tax scheme that is pro-growth, pro-job creation, is a recovery
from a pretty tough time. Let me just go quickly through a couple of
numbers that will help you set in context, and then I would like to
allow a couple of my colleagues time to visit with us about that.
In 1999, the Federal Government's total tax receipts, and this was in
the years of surpluses as they have mentioned, was $1.827 trillion; and
then in 2000, it was just a little over $2 trillion in tax receipts.
Then we had a couple of things happen that seem to get lost often when
we are in these Chambers and we are talking about projections that were
done back in 1999 and 2000, about the ongoing surpluses as far as you
could see into the future.
We had a little thing called September 11, 9/11, horrible attack on
this country that had a devastating impact on our economy. We also had
the bust of the dot-com era, the stock market bust. We had corporate
accounting frauds with which I am very familiar. A lot of things went
bad. We were already, unbeknownst to most, already in a recession and
heading into recession.
In 2001, it went down to $1.99 trillion. In 2002, it went down to
$1.853 trillion. In 2003, it went down to $1.782 trillion. That is when
the 2001 tax cuts and the 2003 tax cuts began to take effect and tax
revenue recovered the next year to $1.88 trillion. In 2004, the year we
just finished, it was $2.153 trillion.
That is the way we should raise taxes, is to grow this economy and to
have more people working than have ever worked before. All of those
good things increase receipts for the Federal Government, and that is
the way you do it.
{time} 2145
You do not do it by raising rates and taking more money away from
people that have earned it.
I noticed tonight they mentioned tax increases on earned income. Tax
increases on money that people have earned. I spent a long time trying
to earn money, and I know how hard it is to come by. I spent a long
time trying to advise clients what to do with their money and how to
comply with the Tax Code, and I understand how difficult that is when
those tax laws go up.
So we have got some things left unsaid from our folks on the other
side, and perhaps next week they will come back with a specific plan
and specific programs that they would propose that we reduce spending
in, and then I suspect that will get the attention of an awful lot of
folks on our side of the aisle and we can then go about trying to craft
some sort of a bipartisan bill that we can work with.
Because I hang out with some folks that would really like to reduce
the Federal Government's spending. I think we should be about doing
that, and I think if the other side comes to us next week with some
specific program cuts they would champion, maybe we can do that.
I want to ask my colleague, the gentleman from Georgia (Mr. Price),
also a freshman with me tonight, and he has agreed to come and speak
with us on the economy and share his thoughts with us, so I yield to
the gentleman from Georgia.
Mr. PRICE of Georgia. Mr. Speaker, I thank Congressman Conaway for
organizing this hour and giving us an opportunity to present what we
will call ``correct the record.'' How does that sound? I served, as you
know and others, four terms in the State Senate in Georgia, and in
three of those terms I was in the minority. At that time, we used to
kind of call the majority party on the carpet and we would make certain
that people knew exactly what they were doing. We got to where we were
giving away what we were calling a stuck pig award. And we called it a
stuck pig award because when you put the truth out on the table, some
folks sometimes squeal.
That is kind of what I heard tonight from the Blue Dogs. They were
very eloquent in their presentation, but what I heard was squealing.
That is what I heard. I heard squealing.
They talked about the Deficit Reduction Act and why they thought it
was done and why they felt it was to cover tax cuts. And we are going
to talk about that a little tonight, and I appreciate the gentleman's
bringing that up and putting that on the table. But I think it is
important for people to appreciate and understand that across the
Nation the reason that we took that step 2 weeks ago with the Deficit
Reduction Act was not to cover for tax cuts, which, as I said, we will
mention and talk about very specifically, because we are very proud of
the tax decrease package we have that we will be putting on the table,
but the reason we did the Deficit Reduction Act was to decrease the
size of government. It was to cut waste and fraud and abuse and it was
to fulfill the promise that we make, and I know some folks on the other
side of the aisle make to their constituents, and that is that it is a
principled position of decreasing the size of government, making the
government smaller and spending less money.
That is why we passed that bill. That is why we put it on the table.
We would love to have had some support from the other side of the aisle
from some folks who say so often that they do believe that the
government spends too much. We gave them a chance to put that vote up,
and you heard them tonight themselves say, and they said so proudly,
listen to this, not one Democrat voted for that. Well, now, that is
real leadership. You put a spending cut, a savings bill on the table
and not a single Democrat supports it.
Now, Congressman Conaway mentioned the increased tax revenue, and I
think it is important to say that when you decrease taxes, what
happens. What happens when you decrease taxes? The other side would
have you believe that revenue plummets, that revenue to the Federal
Government plummets. Well, if you look at the facts, the facts are that
when you decrease taxes, what happens is that you increase revenue, as
the gentleman said.
This chart is from the CBO and it shows clearly, as my colleague
mentioned, in 2003, tax revenue to the Federal Government, $1.78
trillion. That is when the most recent tax decreases, tax cuts, took
effect at that point. In 2004, $1.88 trillion. In 2005, $2.14 trillion.
Mr. CONAWAY. If the gentleman will yield for one second, let us
correct our language. Because what we are talking about voting on this
week are extensions of the current Tax Code. These are not tax cuts.
They are only cuts when the Federal Government has got some claim to
this money.
So what we are talking about doing on Thursday or Friday of this week
is to extend the current pro-growth, pro-job creation tax scheme we
have in
[[Page H11088]]
place. So let us not talk about it in terms of cuts in the future, let
us make sure my colleague and I use the right phrases.
Mr. PRICE of Georgia. I appreciate that so much, because that is
exactly right. Anybody that is opposed to extending these tax decreases
is in favor of, in fact, a tax increase.
And what could we expect from continuing the tax decrease? Well, I
would expect, just as I know my colleague would, that the revenues to
the Federal Government will increase, more than enough, I am certain,
to continue the appropriate programs that we should at the Federal
level, and, in fact, what we ought to be able to anticipate is the
opportunity to further continue those tax decreases.
Now, I have some other examples of what happens when you decrease
taxes that I would like to share with my colleagues. Remember, 2003 is
when the tax decrease went into effect, and this chart here shows the
amount of growth by each quarter, the amount of growth by each quarter
before the tax cuts took effect and after tax cuts took effect.
What you will see very clearly, this is as vivid as it gets, before
the tax cuts took effect, you had kind of variable growth. We had the
difficulty, as the gentleman mentioned, of the challenge of 9/11, the
extreme hardship that we faced at that point and the difficulty of
recovering from that. The tax cuts were put in place and they took
effect at the beginning of 2003, and since then, since then we have had
10 straight quarters of plus 3 percent or more growth in GDP. In fact,
every one of those quarters is greater than every one of the quarters
before when the tax cuts were not in place.
That is the kind of remarkable growth that occurs when you put more
money in people's pockets. It increases the amount of economic activity
throughout our country.
This is the remarkable chart that demonstrates again what happens
with tax cuts, with tax decreases. This chart demonstrates the change
in employment. These are the jobs across our Nation. Again, this line
in the middle is when the tax cuts took effect. Before that you see
from January 2001 through the beginning quarter of 2003, before the tax
relief occurred, you see decreased job growth.
Again, 9/11 took an incredible toll, but decreased job growth. What
happens when the tax cuts takes effect? You have increased job growth,
with 4.4 million jobs created since the tax cuts took effect. Every
single quarter you have job growth. Sometimes less, oftentimes a lot
more. This past month, we had 215,000 new jobs created across our
Nation.
So what happens when you cut taxes? You increase revenue to the
government, you increase the economic productivity and growth in this
Nation, and you increase jobs. That is what happens when you cut taxes.
Would my colleague agree with that?
Mr. CONAWAY. I agree with that completely, and the evidence is in the
statistics that we have and that the gentleman is presenting tonight
and that my other colleague from Texas will, I suspect, share with us
as well.
Mr. PRICE of Georgia. Let me just share a few more charts with my
colleagues, because I think these charts just speak loudly. They say a
picture is worth a thousand words, and these charts can say it so much
better than I can.
This shows again the jobs as it relates to the unemployment rate
since the tax cuts took effect. So again, we have jobs that we see in
this line down below here, the green line as it heads up; unemployment
rate in the red line, and time across the bottom. So the tax cuts take
effect right here. Job growth is relatively low. Continued upward
increase in the amount of jobs. And in terms of the rate of
unemployment, topped off in early 2003, and since then, has been
steadily declining.
In fact, we are now at an unemployment rate in this Nation of 5
percent, which many economists will tell you is full employment; that
people are changing jobs or moving or from between one position or
another, that 5 percent unemployment is virtually full employment.
The unemployment rate right now is less than, less than the average
unemployment rate for the 1970s, for the 1980s, and everybody remembers
the boom time in the 1990s, for the entire decade of the 1990s. Less
than the average rate right now for those decades. So I think that
demonstrates clearly exactly what happens when you decrease taxes.
And the wonder and the beauty of our economy is that it responds so
consistently and so clearly and really so quickly.
Let me share one more chart, because I think that oftentimes, we have
the other side talking about the spiraling deficit and how the tax
decreases add to that deficit. Well, in fact, what has happened over
the past number of months and years is that the deficit in fact has
decreased. With a decrease in taxes, the deficit has decreased. And
over the past 18 months, what we have seen is a 30 percent decrease in
the deficit. In fact, this year, a $138 billion decrease in the
deficit.
So I want to thank my colleague once again for providing this time,
but I think it is important that the American people appreciate that
the responsibility that we believe we have in Congress is to make
certain that individuals have more money in their pocket, are able to
determine greater their destiny, to decrease the size of government,
and that all of those things play into increasing the ability of the
market to increase jobs and increase the productivity of our private
sector and economic development.
Mr. CONAWAY. Mr. Speaker, I want to thank my colleague from Georgia
for coming out tonight and sharing these facts with us. I want to quote
my good colleague from Texas, everybody is entitled to their own
opinion, but none of us are entitled to our own set of facts. And the
more we speak to the facts and the less we talk about the make-believe,
I think the better off we all are.
This is clear and convincing evidence that the tax system, while
flawed in many ways, is working, and that to tinker with that at this
point in time is muddle-headed and hopefully something we will keep
from happening. So I want to thank my colleague for coming out and
joining us.
And I now want to recognize my good friend and colleague from Texas,
Congressman Hensarling, who has been at this for four or five times as
long as I have been, and who is a constant champion of reining in
Federal spending.
We sometimes equate Federal spending with the Federal Government's
growth, and I think that is an accurate portrayal, and Congressman
Hensarling is a leader among many of us here on the Republican side,
and in the Congress overall, and a voice calling for a smaller Federal
Government and also smaller Federal spending to accomplish that.
So I now yield to the gentleman from Texas (Mr. Hensarling).
Mr. HENSARLING. Mr. Speaker, I thank my good colleague and fellow
Texan for yielding to me this evening. I appreciate his leadership on
the issue of helping promote economic growth and helping promote jobs
in our economy. I also want to thank my colleague, the gentleman from
Georgia, for his illuminating presentation and, indeed, a picture is
worth a thousand words, so we benefited by many, many words tonight
through those pictures.
There are a number of facts that the American people need to know,
Mr. Speaker, and I hope that we can help illuminate those this evening.
As we enter the Christmas season, people are looking for some good news
and, Mr. Speaker, there is a lot of good news out there. There is good
news because of the economic policies that have been enacted by this
Republican Congress at the instigation of President Bush.
Since we passed tax relief, as the gentlemen have pointed out, 4.4
million new jobs, jobs with a future, have been created in this
economy. That is 4.4 million new jobs. Mr. Speaker, that is wonderful
news at this Christmas season. Now, before we passed the tax relief,
this economy was struggling. It was struggling after 9/11, it was
struggling after the wake of all the corporate scandals, and it was
struggling in the wake of the bust in the high-tech bubble.
But what this President knew, and what this Republican Congress knew,
is that if you would only allow the American people to keep more of
what they earned, put more capital into small business, allow families
to keep more of what they earn as they go about
[[Page H11089]]
their daily lives, that people would go and they would expand their
businesses.
{time} 2200
They would become entrepreneurs, and they would start new businesses.
And then the greatest housing program, nutritional program, and
educational program in the history of mankind would be created, and
that is a job in the free enterprise system.
Thanks to the tax relief policies of this Republican Congress, that
is what has been done. Now we are going to have this incredibly
important vote, I believe, at the end of this week where the Democrats
are trying to increase taxes yet again on the American people. What is
odd about the procedures that we have, and my colleague from Texas
knows this, but when a Member of Congress does something to enact
spending, spending is forever; but somehow tax relief is only
temporary. We have to vote to keep it alive. Spending goes on forever
and ever and ever, but we have to keep tax relief alive.
This is not about any further tax cut; this is about preventing tax
increases on the American people. That is what this is about. Already
the Democrats want to take all of the tax relief that has been enacted
in past years away. Somehow they want to bring back the death tax so
Americans will have to visit the undertaker and the IRS on the same
day. They want to bring back the marriage penalty so that when two
people fall in love, they are going to have to pay Uncle Sam extra
money if they want to get married. They would double the child tax
credit.
I can tell you as a father of two young children, it is not easy. And
yet the Democrats want to take that child tax credit and cut it in
half. They want to take away the accelerated depreciation for small
business and they want to tax investments, the capital of capitalism,
that makes all of these jobs possible.
Mr. Speaker, I have held a number of jobs in my life. I used to clean
out chicken houses on a poultry farm. I used to tote luggage at a
Holiday Inn in College Station, Texas, and I used to bus tables. And
although I am somewhat loathe to admit it, I actually practiced law at
one time.
Mr. CONAWAY. Mr. Speaker, if the gentleman would yield, was the
chicken coop cleaning better or worse than the practice of law?
Mr. HENSARLING. That is an excellent question. I will say this,
though. It has proven to be excellent practice for this particular
avocation of Congress since there are a number of messes that have been
left here as well that need cleaning up.
But the point I was going to make is that of all of the jobs I have
held, no poor person ever hired me. It was somebody who rolled up their
sleeves, risked their capital, and went out and created a business. So
Democrats keep on telling us how much they love jobs, they just seem to
hate everybody that creates them because they want to go out and tax
and tax and tax and tax. That is no Christmas gift for the American
people.
Let me tell you, Mr. Speaker, what is going to happen later this
week, if we allow the Democrats to impose their tax increases yet again
on the American people, let me tell you what could happen to the 4.4
million jobs that have been created because of tax relief. Let me tell
you about just a few in my congressional district.
Not long ago, I went to visit a small business in my congressional
district called Jacksonville Industries located in Jacksonville, Texas.
They are an aluminum and zinc die cast business. They employ about 20
people. Prior to passing tax relief, due to competitive pressures, they
were on the verge of having to lay off two of their workers, two of 20.
That is 10 percent of their workforce.
Because of what we call ``accelerated depreciation,'' they were able
to go out and buy this new piece of equipment. It is large. It is
noisy. I could not tell you what it does, but it makes them more
competitive. And because it makes them more competitive, they went out
and hired three new workers. They did not lay off two. They hired
three. They hired Roger. They hired Jess. They hired Victor.
The Democrats now, though, they want to go and increase the taxes on
Jacksonville Industries. They want to take away the paychecks from
Roger and Jess and Victor and replace them with welfare checks. Mr.
Speaker, they call that compassion.
I will tell you about Hugh Dublin and East Texas Right of Way and
Tennessee Colony over in Anderson County in my district in east Texas.
This company specializes in the purchase of leasing and leasing of
right-of-way for property for many different purposes. Previously, it
had two full-time employees, a very small business. But once we passed
tax relief, this business took off. The economy soared. As you have
seen earlier this evening, we are having over 4 percent economic
growth. Their business soared, and so East Texas Right of Way went out
and hired two other people who are unemployed, Dan and David. Those are
two new workers who now have good jobs.
Yet the Democrats this week are trying to increase taxes on Hugh
Dublin and East Texas Right of Way. They want to take away Dan and
David's paychecks and replace them with welfare checks. And, Mr.
Speaker, they call that compassion.
Let me give you one more example. Eddie Alexander of Triple S
Electric in Henderson County, Texas, once again in my congressional
district, has a small business that specializes in residential and
commercial electrical contracting. Up until we passed the tax relief,
his business consisted of himself with one part-time helper. But since
the passage of tax relief and the economic boom that has brought on, he
has hired two new individuals. He hired Jarad. Jarad was unemployed. He
hired John. John was unemployed. Now they are both full-time employees.
They started at minimum wage, and they have worked hard. They are now
making above minimum wage, and they have both been able to go out and
provide homes for their families, something that earlier they could not
do.
Yet the Democrats this week are trying to raise taxes on Eddie
Alexander and Triple S Electric. They want to take away Jarad and
John's paychecks and replace them with welfare checks.
Mr. Speaker, they call that compassion. I do not see the compassion
in that. I see compassion in keeping the tax relief alive. I see
compassion in preventing tax increases on small businesses and
preventing tax increases on American families. That is where I see the
compassion.
Let me tell you about some more compassion that I see in the economic
policies of this President and this Republican Congress. We are seeing
the highest rate of homeownership in the entire history of the United
States of America under this administration and this Republican
Congress. The highest rate of homeownership. Part and parcel of the
American Dream is to go out and have your own home and put that roof
over the heads of your own family. That is the American Dream. Under
this administration, this Republican Congress, our policies, our tax
relief policies that the Democrats are trying to take away, so many
people have been able to buy new homes because of the tax relief. Yet
the Democrats would take that all away with their tax increases. The
compassion is seeing that we have the highest rate of homeownership in
the entire history of the United States of America.
Mr. Speaker, as you have heard earlier this evening, this Nation
still has a big deficit challenge. But you know what, since we have
passed tax relief, the deficit has come down. I wish it were because we
were spending less. Many of us fight the battles up here to try to
protect the family budget from the Federal budget. But what it is, we
have cut tax rates and guess what, we have more tax revenues. And do
not believe me, it is not my opinion, go to the United States Treasury.
Look at the report. It is there in black and white. Already individual
income tax receipts are up 14.6 percent over last year since we passed
tax relief. Business income tax, corporate income taxes are up a
whopping 47 percent. More revenues, more tax revenues are bringing down
the deficit.
Now, for some people that may not make a lot of sense, but it is
happening. We have the proof. Mr. Speaker, we have seen it in history.
Under President Reagan when we cut marginal tax rates, guess what? Not
only did the economy grow but so did tax revenues. Tax revenues grew by
about 25 percent.
[[Page H11090]]
The same is true under the Kennedy administration. They cut tax
rates, and real economic growth was promoted at about a 5 percent rate,
and it increased revenues to the Federal Government by about 33
percent.
You can go back to what some people consider fairly ancient history,
the Coolidge administration. Guess what? They cut tax rates and they
got more tax revenue, an increase of 61 percent. Why? Again, if you
will allow the American people, if you will allow small businesses, if
you allow American families to keep more of what they earn, they will
go out. They will start that new barbecue stand over on the corner.
They will start a new transmission shop over there, and they will grow
a new automobile dealership on that street corner. It is free
enterprise. We have 200 years of history to show us that is where jobs
of the future are created. That is where the great nutritional program
is, the great health care program, the great educational program.
But to support that free enterprise system, we have to prevent the
Democrat tax increase that they are trying to impose upon the American
people. I want to thank my colleague from Texas in leading this Special
Order this evening and making sure that the American people know that
due to the economic policies of this Republican Congress and this
Republican President, there is a lot of good news today, 4.4 million
new jobs. But that is in peril. It is in peril if we do not prevent the
Democrat tax increase that we know is coming and coming soon.
But when the American people know what is at stake, when they know
that the Democrats want to increase taxes and take away jobs, the
American people are not going to buy into that; and we will keep this
economy growing and the American people will truly have a great
Christmas and a great holiday season.
Mr. CONAWAY. Mr. Speaker, I thank the gentleman from Texas for coming
out tonight and sharing his background and his experience in this area.
He is one of those loud, clear voices on behalf of limited Federal
Government, limited Federal expenditures; and I am proud that he has
come out tonight to help us with this.
Let me flush out what he was talking about in terms of increased
Federal receipts. Back in January of this year, the CBO estimated that
fiscal year 2005's tax receipts, Federal receipts, would be about
$2.045 trillion. CBO is an organization that gets paid to try to
estimate these things. They generally do a really good job. When we
finished out the year, I was looking at the same Treasury report that
my colleague made reference to awhile ago, and for fiscal year 2005
which ended September 30, 2005, receipts were $2.153 trillion, over
$100 billion more in Federal tax receipts than we had estimated just 9
months previously.
So the numbers we have been talking about tonight, the $50 billion in
tax cuts, the $56 billion and the impact extending the current tax law
will have on tax revenues, pale against over 108 to $109 billion of
increased Federal revenues that has come about as a result of the pro-
growth, pro-job creation tax policy that was put in collectively in
2001 to 2003.
In addition to that good news, at the end of last week, the GDP
growth for the third quarter of calendar year 2005 was 4.3 percent.
That is a good growth rate on any economy, a developing economy or
whatever it is. But let us make sure that we understand this is on the
single largest economy in the world. It grew 4.3 percent in the third
quarter, and that is staggering growth under any conclusion.
{time} 2215
The unemployment rate was mentioned earlier as being as low as 5
percent. That is full unemployment in reckoning of many economists and
is certainly lower than the averages of unemployment of the previous 3
decades. The decade of the 1970s, which you remember, we had a big
depression then, and as a result of a run-up in oil and gas prices. We
had lower than in the 1980s, when those of us in the oil business
experienced a significant downturn in 1986 and later, and then lower
than the boom years of the 1990s when the unemployment rate was as low
as anybody thought it would ever be. The current unemployment rate is
actually lower than that. Statistics are full of all kind of odd and
important indexes that statisticians and economists use to try to make
projections as to where the economy is going. One of those that you do
not hear a lot about is the consumer confidence index, and that is
supposed to be a measure of how consumers feel about themselves, are
they going to go spend money, do they feel comfortable with their job
and those kinds of things. It jumped from an 85.2 percent rating in
October to a 98.9 percent rating in November, a 1-month jump of over 13
points in consumer confidence. What that tells us is that retailers for
the Christmas season ought to do very well.
One of my colleagues today said go try to find a parking spot in the
mall these days, and for all of the doom and gloom that is out there in
the media, it is not being reflected in Americans going to the malls
and working on Christmas gifts and charity gifts for other folks that
do not have it.
So the consumer confidence is up. Another statistic that gets talked
about a little bit is that sales of new homes jumped 13 percent in
October, the largest 1 month percentage gain in 12 years, and new
single-family homes also climbed to an all-time record high of 1.42
million units, more people, again, as we have said several times
tonight, more people owning a home in America than have ever owned a
home.
Now 1 month does not make a trend. But continuing to talk about
Federal tax receipts and revenues, the first month of fiscal year 2006
was the month of October of 2005. And during that first month, Federal
tax receipts were about $149 billion, and a year ago, the equivalent
month in October of fiscal 2005, which was October of 2004, Federal tax
receipts was $137 billion, so a $12 billion gain in just 1 month
against previous years' months.
Now you have got to be careful. That may or may not be a trend. But
it is hard to say it is bad news, that the tax receipts for October of
this year are greater than tax receipts for October of last year. I
think that is good news. I would also like to point out a couple of tax
provisions that are included in the extension that we will do later on
this week that are important, and one of those would continue the tax
deduction for state and local sales taxes for States that do not have a
State income tax, States like yours and mine, Mr. Speaker, and my
former colleague. Texas does not have a State income tax.
And so this provision would allow Texans to deduct, rather than the
State income taxes, to deduct State and local taxes, which are used to
fund many of the exact same programs that States who have income taxes
use those taxes to provide goods and services to their citizens.
Another deduction that is extended is the above-the-line deduction
for higher education expenses. Now, trying not to bore everyone with
tax returnese or speak, above-the-line deductions means that you get to
detect that without having to itemize your deductions.
So higher education expenses, the deduction for that is continued, as
well as an important expenditure for many teachers who find the school
budgets do not provide some of the extras, and maybe even sometimes
some of the essentials that a teacher needs in providing a good
classroom experience for her students, teachers get to deduct their
out-of-pocket expenses above the line, which means they don't have to
itemize deductions to get to deduct those personal expenses that the
teacher may pay.
One that I came across tonight, or an example of one I came across
tonight is the tax incentive to revitalize the District of Columbia.
Included in the Code of the past two tax cuts has been a $5,000 tax
credit for anyone, any new first time home purchaser here in the
District of Columbia. Well, one of the folks on my staff, who as you
know, staff are legendarily overworked and way underpaid. One of the
folks on my staff 2 years ago took advantage of this provision and
bought his first home and has begun to build equity in that home over
the past 2 years and would not have been able to do that were this tax
provision not in place. When you sell a home, you have bought it from
somebody who previously owned it, hopefully, and in all likelihood,
that person is going to go invest that money in another home, so it is
important that we have first-time buyers to work
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into the market, work into the housing market, because as we stated
earlier, for many families, the ownership of a home is the single
largest asset that they have in their portfolio. And this gentleman now
has a home that he is paying a mortgage on, of course, but is building
equity in that home, building equity in his personal wealth, and he is
going to be better off as a result of having done that.
Let me talk about something that we probably should have talked about
right off the bat, and that is the Federal Government does not grow
this economy. A lot of times, the Federal Government gets a lot more
credit for good economic news than it deserves, and in all likelihood,
sometimes a lot more of the blame for bad economies than it deserves.
But the truth of the matter is a growing economy that we have right now
is not created by a Federal Government. It was created by hundreds of
thousands of hard working Americans, employees who go to work every day
and work for their employer to try to provide a good or a service that
that employer can sell and make money on.
Self-employed individuals who have gone out there and taken the
business risk of leaving that paycheck, leaving the security of a check
every 2 weeks to try to make it on their own. Those are the folks who
are building this growing economy, who are adding people to their
payrolls, who are hiring new people or setting up additional businesses
to take advantage of opportunities that we are having in this growing
economy. So we cannot overstate the value of the hard working American
in growing this economy. But we do have some risks a lot of times of
overstating the impact the Federal Government has. In my view, the role
of the Federal Government is to get out of the way of these hard-
working Americans and let them continue to grow this economy, pay their
fair share of taxes, of course, but let us not do things that puts the
government in the way of creating jobs, gets in the way of furthering
homeownership, gets in the way of growing this economy and providing
new opportunities for men and women in this country.
I participated in, back in the early 1990s, in a needs assessment for
Midland, Texas. This was an attempt to survey on a statistically valid
basis throughout Midland County, what were the needs of people within
Midland, what were the needs of your family, what were the needs in
your neighborhood, what were the needs within the overall community.
And we got all of this information together and began to sort them into
like items and pared the list down to 10 so that we had, in fact, 10
top needs that the people in Midland, Texas, told us they were having
in their homes, their families, their neighborhoods and the community.
And as you look down that list, nine of those needs would have been
positively impacted by a family that had a job.
It has been my experience that jobs cure an awful lot of ills within
every community. When families are working, the family itself is better
off. Communities are better off. The strains on the social network,
that is the United Way, that is all those social charities that we have
in place to create that safety net that is so vital in every single one
of our communities, is less strained when more people have jobs. It is
also better supported when more people have jobs.
So it is important that we give credit where credit is due with
respect to this growing economy. The gentleman from Texas (Mr.
Hensarling) mentioned one of his, or three actually of his constituents
that are good examples of why these pro growth/pro job creation tax
policies are in effect now and that we ought to continue them in
effect.
I want to talk about Calvin Fryar. Calvin is a good friend of mine
from Brownwood, Texas. He and his partners own a company that
distributes gasoline. They also have convenience stores. They hire
people to work. And he told me the other day at dinner that, because we
were talking about extension of these current tax cuts. He said that
the one that was the most important to him as a small business owner
was the section 179 deduction. Section 179 provides for the immediate
write-off of certain equipment that is purchased by businesses and put
into use each year. And I think it is about $100,000. Calvin told me
that when that came into effect, I think it was 2003, that it helped
him make a decision to invest additional money into the businesses that
he was trying to create. And not only did he invest the amount of money
that qualified him to immediately deduct that amount, he also invested
a lot of money on top of that, and in doing so, created jobs, and not
only did he create jobs for the people who built whatever it is he
bought, but he also created additional jobs for his company because he
was expanding his opportunities within the gasoline distribution area
as well as convenience stores.
So he was adding jobs to his business as a result of that one
specific Tax Code that is expiring, and under the tax law that we will
pass, hopefully pass on Thursday, will be continued.
Another one of those that is very important, and my colleagues
earlier in the previous hour mentioned it, and that is the tax rate on
capital gains and dividends. If you were to listen to the colleagues on
the other side, it is as if the Federal Government has some innate
claim to some portion of your capital gains, some portion of your
dividends, and I would argue that that is not logical. Where is it
stated anywhere that the Federal Government has a claim on selling
property that you have held, selling property that you have invested
in, selling a business that you built from scratch? Why is it that the
Federal Government has a claim to a certain amount of that?
And right now, under the current tax law, the Federal Government has
a claim on 15 percent of that capital gain, or 15 percent of those
dividends. That may or may not be correct. It is the law of the land,
but certainly, increasing that number, you would have to answer the
question is, all right, why does the Federal Government have a claim on
or does it own in some way the capital gain that I get when I sell
stocks and bonds or when I sell a business? Why is it that the other
side believes that a higher tax rate on capital gains is somehow some
right of the Federal Government? That is not. If we were to let those
current tax provisions expire, capital gains would get thrown back up
to the previously high percentage rates.
Everything is going to get thrown back in with ordinary income, the
taxable income rates and we will be right back into a circumstance
where we are raising taxes the wrong way, raising taxes by raising
rates, as opposed to raising taxes by having an economy that is growing
at a staggering rate providing new jobs to workers in this country.
So I would argue against that as we close out this hour. If you look
at the reporting, we are talking about the economy tonight, and if you
look at reporting of economic news, it is, I guess, an attempt to be
balanced. Balance is rarely neutral though. You will hear somebody talk
about, well, you know, this economic statistic is looking up and
looking better; but if that path continues, it will drive us into
higher interest rates, or if we have got increased job growth or jobs
going to be created at too fast a rate, then that is going to drive up
inflation.
So it is rare that you ever have good economic news simply presented
as good economic news. And maybe we will never get to a point where
that happens. Hopefully, on the nights that we get to come in here and
talk about the economy, get to brag on the economy actually, we will be
able to help set the record straight. As I mentioned earlier, my good
colleague, Mr. Hensarling, has said often that we are all entitled to
our own opinion but we are only entitled to one set of facts; not our
own set of facts just the set of facts as are out there.
Hopefully we can be responsible for what we say in front of these
microphones, be held accountable for what we say. The other side made a
lot tonight about accountability and all those kinds of things. I would
argue that that same accountability ought to go to things that are said
from behind these microphones.
If I have said something that is incorrect, if I have made an
insinuation or made some sort of a comment that was intended to
mislead, that I am called to account for that. And I would hope the
other side would ascribe to that same kind of philosophy, that the
folks in the Chamber tonight who are listening to this debate, or
listening to
[[Page H11092]]
these arguments, not really debate since we are not going back and
forth, but listening to the three of us put out information that we
believe is important for the American people to hear and to
understand--and to understand how we are coming to the conclusions that
we are coming too, that we be held to a very high standard of what we
say and that we are able to back up each and everything that we do say
with facts that are verifiable.
So Mr. Speaker, I want to thank you tonight for being able to lead
this hour, and I want to thank my colleague from Texas, Mr. Hensarling,
for his role in our talk tonight and I want to also thank my freshman
colleague from Georgia, Mr. Price, for his helping me out tonight as
well. So the message I would leave with the American people is this,
that we have got a growing economy, we have got an economy that is well
grounded and is going to sustain this growth; but that what we do not
need to do is to increase taxes, tax rates on that economy, but that we
continue the pro growth/pro job creation tax rates that have been in
effect since 2001 and 2003.
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