[Congressional Record Volume 153, Number 21 (Monday, February 5, 2007)]
[House]
[Pages H1190-H1196]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
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COUNTDOWN TO TAX INCREASE
The SPEAKER pro tempore (Mr. Ellsworth). Under the Speaker's
announced policy of January 18, 2007, the gentleman from Kentucky (Mr.
Davis) is recognized for 60 minutes as the designee of the minority
leader.
Mr. DAVIS of Kentucky. Mr. Speaker, we would like to take some time
this evening to continue the conversation that we began the first full
week of Congress, talking about the impact of world view on policies
that affect the creation of jobs, that affect families, working
families, creating hope and creating opportunity for the future.
As we have shared each week, we want to point out that though there
were a variety of motivations in the most recent elections, one thing
is clear that was not talked about by the American people, I don't
think realized the full impact and the emotion of many of the votes
that were taken, is that we are now 1,426 days away from one of the
largest tax increases in American history.
It has only been 18 days since the last time the Democratic Party
voted unanimously to raise taxes in this Chamber. The reason that I
bring this up is I go back to the last time there was a significant
raising of taxes. In 1992, Bill Clinton was elected President of the
United States. He promised to cut taxes on working families, and, in
fact, came into office and decided that he needed to change his mind
based on a different statistic and brought about what was the largest
tax increase in American history.
Now that was particularly interesting to me. I remember the night of
that election, was not in politics, was working in business, and was
getting ready at that time, had just started, my wife and I started a
manufacturing consulting business to begin working with other
companies, helping them with their business systems, helping them to
improve productivity to compete in the international arena and helping
them to create jobs and keep our jobs in the Midwestern United States
in the Ohio Valley.
I was informed by the Internal Revenue Service the next year that I
was going to be allowed to invest in our government. And what it did
was that investment took away money that was hard earned by all of the
families that were working together with us.
Over time what that would have added up to would not have been a
fancy lifestyle, because we were focused very much on serving our
community. What it would have added up to quite simply was more jobs.
It would have been not only more jobs in our company where we would
employ people to empower others to work together, but especially where
we saw the impact of these regressive tax policies was in the damaging
of the economy during the 1990s.
The Clinton administration actually inherited the fruit of Ronald
Reagan's vision. Ronald Reagan cut taxes. He sought to streamline
regulation. He sought to empower people. It led to the longest period
of sustained continuous growth in the history of this country.
Mr. Clinton was able to inherit that. But Ronald Reagan was the
author of that. The fruit of the policies of the Clinton administration
were most felt in the late 1990s. They were felt as the Internet bubble
burst, as we began to see increasing pressure from foreign competition,
as we began to see jobs leave this country.
We saw regulation increase, we saw taxes increase. Ultimately, all of
that adds up to money coming from one place, and that is the pocketbook
of the American taxpayer. I look back on companies that we went to
serve over and over again. We heard about the increased tax burdens
that were on the working families, that were on the middle managers,
that were on the engineers.
Out in the community, that translates into an increased burden on
teachers and police officers, on people providing services, small
business owners and the local community. It was something that was not
often seen in the national press, but was felt very much in the Ohio
Valley. It was felt in the Rust Belt; it was felt across the Northern
Midwest.
We saw that working in manufacturing, in the machine tool industry,
[[Page H1191]]
where these taxes and regulations were difficult and created a
tremendous burden. They did not create jobs, in fact, created quite the
opposite. The cost of health care began going up.
There was a cost of compliance with environmental regulations that
went up. And all of that was ultimately passed to the American
consumer. When George W. Bush was elected President, he wanted to carry
on that vision of Ronald Reagan and so did the Republican Congress that
had passed tax cuts through the late 1990s that had been vetoed by
President Clinton.
When President Bush came into office, he inherited a recession that
was well under way. Combined with the 9/11 attacks, it was a
devastating impact on the American economy. But the tax cuts that were
enacted in 2001 and 2003 and that we extended each of the past 2 years
had quite the opposite effect in time of war, in a time of national
threat: seven million new jobs were created.
More importantly than that, I think that the leadership in the
Republican Party, the conservative vision, the Ronald Reagan vision for
America, understood one thing, that by allowing people to keep more of
what they had earned, they will spend it wisely. They will spend it in
a way that will bring back more to them and build for their future and
invest in their future.
That is why we have constantly introduced legislation to allow people
to keep more of what they earn. That is why last year we introduced the
401 Kids Bill, to allow parents, at the birth of their child, to set
aside money for college that could be accrued year after year just like
an IRA.
That legislation has no hope in this Congress, because the chairman
of the Ways and Means Committee has said that every one of the tax cuts
that has created these record revenues will be repealed in 1,426 days.
One thing that many of us did not understand before in this country,
but I want to share with all of you tonight watching from home, is
this: that in order for the Democratic Congress to bring about one of
the largest tax increases in history, they simply have to do nothing.
The compromise that was negotiated for the original tax cuts was that
those taxes had a sunset and that many of the taxes, particularly small
business taxes, education tax credits had to be extended from Congress
to Congress, from year to year to reauthorize them.
It is very clear from the candidates in the Democratic Party for
Congress, over and over they are saying that taxes must be raised. The
gentleman from North Carolina made a statement over the weekend that
not only did taxes need to be raised, but we needed to have universal
health care and dramatically encumber the cost of providing for health
care for small businesses.
Charles Rangel, the chairman of the Ways and Means Committee, said
that he saw none of the tax cuts that were passed in 2001 and 2003 and
that we had extended in previous Congresses to see any merit in being
continued.
What that means at the level of the working family, what that means
for every family, for the vast majority of us in this Chamber tonight,
and those who are watching at home, is this: you will have, if you are
making between 30 and $60,000 a year, at a minimum a $2,098 tax
increase, that will come automatically with no legislation.
The reason for that is, in 1,426 days these taxes simply increase.
And I think that we need to keep in mind one thing. The goal of
government cannot be and is not to create jobs, because government
cannot create jobs. It does not have free assets that can generate
value that can build a nest egg for a working family.
What we can do is create a framework to empower a framework that
allows people to achieve, to pursue the American Dream, that allows
them to go forth and to work, to create a vision for their own future,
to build a future for their children and grandchildren, and to
encourage their children that they can pursue one.
That is why America is the number one destination for people from all
over the world, because America is the land to begin again. I saw that
with the grandparents of my wife, Pat, who came through Ellis Island.
My children have been to Ellis Island to see the names of their great
grandparents on the wall.
They came to this country because they believed in their own way the
streets were paved with gold, with opportunity, with a future that they
could pursue by hard work, by savings, by serving others that they
could make a difference. Within one generation of that, their children
were educated. They had their children going through college, their
children were out working in the economy. And they in two generations
have created jobs.
My wife was the first woman in the history of her family to graduate
from college, and she pursued that opportunity and that vision. I have
a daughter now who is getting ready to teach school, who is student
teaching now. She is not going to face that same kind of opportunity
because the tax policies, the economic policies toward working families
in this country are about to regress in 1,426 days.
I believe that our role must not be to raise taxes, to create
additional burdens for small business, to create additional burdens for
the creation of jobs, to create additional regulations. What we need to
do is create taxpayers. And by cutting taxes, by allowing people to
keep more of what they earn, a phenomenal thing has happened. The
United States Government has had record revenue of taxes coming into
the government.
And the challenge is not the revenue coming in by so many new
taxpayers by the millions of new jobs that are created. The real
challenge is reducing government spending, addressing the validity of
programs and whether they add value or not, and making sure that our
bureaucracy is leaned up, flattened out and made more efficient to
serve the taxpayer more effectively and allow those resources to go to
the place where they are needed the most.
My colleague joining me tonight who has been the leader of this
Countdown Crew over the past 5 weeks is my friend from Pennsylvania,
Bill Shuster, also coming out of the small business world like me, who
understands what it is like to meet a payroll, understands what it is
like to pay for health benefits, understands what it is like if we do
not get up in the morning and go to work, there is no salary at the end
of the month, and in order to make sure that we can make a difference
for our family, we had to go to work and work hard.
In that time, we both understood the impact of those tax increases on
limiting our ability to provide for our children's future and also to
have money in the economy that is going to create more jobs. With that
I would like to yield to the gentleman from Pennsylvania.
Mr. SHUSTER. Mr. Speaker, I thank the gentleman for hosting this
evening's hour, as we count down the tax increase that is going to
occur in this country in 1,426 days unless this Congress acts, unless
the Democratic majority acts to stop it.
I think it is important, you pointed out, that you are a small
business owner. I was a small business owner. I know there are many
small business owners in Congress. And I think it is important that the
American people understand there are people serving in Congress that
know what it is like to meet a payroll, to get up and unlock the doors
every day and make sure that your business and the people that you
employ have a job there.
It is extremely difficult to do when the tax burden goes up. And if
we do not act, as I said in this Congress, the Democratic majority does
not even have to act; it just has to run out the clock.
As you mentioned, what we will experience on January 1, 2011, is over
a $200 billion tax increase. And that will occur over the next 3, 4
years as tax cuts that we put in place in 2001 and 2003, if they are
not extended as you pointed out, that there was a deal made that we had
to have them sunset. But we need to make sure that those tax cuts stay
in place so that the millions of small business owners and families,
hardworking families in this country, get to keep more of that money in
their pockets, so that they can go out and spend it or save it for
whatever the purposes that they have.
You have, I know, six kids. So you know what is coming down the road
for you, and college tuition is going to be a lot of money. And for you
to be able to save, as millions of hardworking Americans being able to
save, that
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money is extremely important. My daughter, we just had her at Penn
State this weekend. She was accepted there. As we start to look at
colleges, you start to realize the expense. It is not just tuition, but
kids going away to school, and living expenses.
A family in this country of four that make 40, $50,000 a year, if we
do not extend those tax cuts, they are going to get a tax increase of
about $2,000. $2,000 is a lot of money to hardworking Americans. If you
take that $2,000 and invest it in an account that is going to get you 5
percent, a modest 5 percent return, you do that over 10 years, that
grows to $30,000. That is a significant nest egg of savings that you
can spend on your children's education.
It is better that we leave it in the pockets of the American people
than to bring it here in Washington and spend it on the array of things
that do not make sense to the people back home. It is their money. They
worked hard for it. And they should be able to keep most of it and not
send it here to Washington.
What happened when we cut taxes in 2001 and 2003? Well, over the last
4 years alone, we have created 7.2 million jobs in this country. That
is something that is very worthwhile.
The unemployment rate is down to 4.5 percent. That is well below what
it was in 2005, and on average it is the lowest in four decades. This
economy is moving forward. You mentioned that the national media did
not cover something very well in the past. Well, this is one of those
cases where the national media is not covering the strength of this
economy.
4.5 percent unemployment is a good number. Creating 7.2 million jobs
over the last 4 years is a good number. In December alone, 167,000 jobs
were created, in December. We have not got the January numbers, but the
estimate is it is going to be in that 150,000 job-creation range.
The 7.2 million jobs we have created, that is more jobs than the
European Union and Japan combined created in the last couple of years.
Mr. DAVIS of Kentucky. Mr. Speaker, the gentleman was talking about
the employment impact numbers, particularly when the tax cuts came in.
I can remember working on a factory floor in Orleans, Indiana in the
weeks immediately after 9/11, and the economic shock that hit the
entire home products and office products industry, every segment of our
economy, but in this particular town this factory was the largest
employer in that area.
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And there was a great fear about what the economic impact was going
to be over time. I was working in business, I was contemplating running
for Congress at that time. And the one thing that we began to see as we
entered 2002 in that work with that business was that the economy, even
then, began creeping back because those tax incentives to working
families, to individuals, to reinvest their money, to invest in the
economy, to continue to save made a tremendous difference. In fact,
that company continued to grow. It came out of that post-9/11 slump and
continued to grow in a great way.
And when you talk about 4\1/2\ percent unemployment, it is remarkable
to me. I remember about the time that we graduated from college, right
when Ronald Reagan was introducing his proposal that was said to be so
radical and they were going to be ineffective, that even though we had
unemployment that was approaching 10 percent at that time, they said
that the best economy, 6 percent in this economy would be the very best
you could do for full employment. And here we are at 4\1/2\ percent.
But on top of that, we are at record manufacturing productivity levels
in this history of this Nation. And I think it just further personifies
the point that you are making.
Mr. SHUSTER. And it is no mystery what happens when you cut taxes.
And as you mentioned, I heard the same interview you heard on Meet the
Press, or Tim Russert's show, I forget what it is called. John Edwards,
the 2004 vice presidential candidate for the Democratic Party, said
quite matter of factly and calmly that yes, we are going to have to
raise taxes; yes, we are going to have to raise taxes to provide a
universal health care that is really code for a Federal Government
program that is going to take the decision-making process out of the
American people's hands, and there is going to be some bureaucrat
sitting in some cubicle in Washington deciding what medication you can
take or can't take, what procedure you can have or can't have.
And I think that we have proven that when you put the forces to work
in the marketplace, like we did on Medicare part D, that not only do
you give people a choice, but with that choice comes competition and
with competition comes the stabilizing and in some cases the decrease
of prices. And that is the way we need to move forward, not with a huge
tax increase which John Edwards, as I said, I think he had a Walter
Mondale moment with Tim Russert saying, oh, sure we are going to
increase the taxes. And you know, for a guy who is a multi-millionaire,
who I see lives in a multi-million dollar home in North Carolina, it is
certainly easy for him to say, well, sure we are going to increase.
Now, he says they are going to do it on just the wealthiest. But I
think we all know when you increase to get the kind of revenues that he
is talking about to fund a huge government run program, it is going to
trickle down and the people that are making 50 and $60,000 a year,
people in my district, two-income earners, if they are teachers from
the Altoona School District, two teachers that have been around 15, 20
years are making $100,000 or better now. And those are the people that
are going to get hammered on these tax increases.
But back to the point I was making. It is no mystery what happens
when you cut taxes. And don't listen to me. Don't listen to George
Bush. Don't even listen to Ronald Reagan. Go back in history to when
President Kennedy in the sixties when he cut taxes, cut the marginal
income tax rate, it spurred the economy on. Revenues to the government
increased. And again, that is what happened under Ron Reagan and that
is what is happening today under George Bush. Cutting taxes is a
positive thing. When you let people keep more money, they spend it.
They spend it on what they want to spend it on, which helps to spur the
economy on. So once again, don't listen to me, if you are a Democrat.
Look at what Jack Kennedy did back in the sixties. I think that is the
way we want to move this economy forward.
Mr. DAVIS of Kentucky. I think it illustrates a universal principle
too that if you, kind of like the verse in Ecclesiastes of casting your
bread upon the waters and it will come back to you and by allowing a
seed to be sown, to grow over time it will make a big difference. And
the real difference, I think, that needs to be highlighted is this is a
fight, a battle of world views, of seeing, really, the short term
versus the long term. A lot of money can be taken into the Federal
Government in a short term by raising taxes. But in the long term it
could have a devastating effect.
I think if the gentleman from North Carolina who is running for
President had laid out what he actually did with his tax money or the
money that he earned, the American people would probably have a
somewhat different view of things. And when I see a super rich Senator,
or a very, very wealthy liberal who in many cases inherited their
money, making statements about wanting to raise taxes on the rich, what
they don't talk about is the tremendous amount of money that they spend
to create special investment trusts where they effectively don't pay
taxes.
And again, to your point, it comes back down onto working families.
It comes back down onto teachers, onto police officers, small business
owners, people working in retail, people in transportation, pilots,
engineers, the folks who keep our economy moving forward. And to our
point, leave it in people's own pockets, and they will make a
difference.
But I think it is especially important that the message gets sent,
that our friends and neighbors are going to see that increase.
Mr. SHUSTER. If the gentleman would yield. I have started to
accumulate little stories of people in the ninth Congressional district
of Pennsylvania that I represent, what has happened to them over the
past several years with these tax cuts. Gregg Rothman, who owns or is
partner in RSR Realty in Cumberland County, Pennsylvania, which is the
county seat, is Carlisle,
[[Page H1193]]
Pennsylvania, which is known to many where the War College is and where
Jim Thorpe made his name at the Carlisle Indian school.
But Gregg Rothman, he became a partner with this firm in 1999.
Because of the reductions in the capital gains tax, that has allowed
many empty nesters to enter the housing market. It has increased sales
and their business has grown tremendously. And, in fact, since 1999
when they went into business, or when he bought into the partnership,
they had 20 realtors. Today they have 60, and that is an addition of 40
new jobs of people out in Cumberland County, in central Pennsylvania,
working. Creating jobs is what these tax cuts enabled people like Gregg
to do. He saw his highest volume of sales since entering the realty
business just in the last couple of years.
Now I have got another story in my hometown in Everett, Pennsylvania.
A couple of young guys started BC Stone several years ago. Travis
Collins is the President of that company and he went to high school a
couple of years behind me. What they have been able to do is create a
tremendous business. In this little town of Everett, Pennsylvania they
are selling stone granite tops, marble tops all across the State of
Pennsylvania, all across the region, in the mid-Atlantic region. He has
grown from 16 employees in 2001 to today he employs 70 people. And that
is because this economy is growing. Not only are people building and
buying new homes and remodeling them, which helps his business, but he
is able to go and buy equipment, modernize what he is doing there and
along the way, go from 16 employees to 70 employees in this town of
about 2,000 people. And they are good paying jobs.
They have been successful enough that they have bought an old hotel,
the Union Hotel in downtown Everett, and they are renovating it and
going to revitalize it and they hope by 2008 they are going to open up
this hotel and restaurant and employ 20 full-time employees. Adding on
to the, from the 16 to the 70 and then this new business with 20, and
that is all because of this, of the tax cuts we have put into place in
early 2000, 2001, 2003 and extended them here a couple of years ago.
That is what makes this economy, or helps to make this economy move
forward, by letting people keep their own money, by letting
entrepreneurs and small business owners and families decide how to
spend their money, not the Federal Government.
And as you mentioned earlier, your background as a small business
owner, your background as a person who has children, who has a family,
you know the importance, and it is important for the American people to
realize that if this Congress doesn't act in 1,426 days, a $200 billion
tax increase is going to occur. And if anybody doubts it, you mentioned
earlier, the chairman of the Ways and Means Committee, Congressman
Rangel from New York, said quite frequently and quite clearly that all
those tax cuts were on the table. He didn't see any of them or many of
them that were, that he thought were good or that they were tax cuts
that he supported. And, in fact, I don't think he supported any of
them, if I am not mistaken.
But further than that, the Democratic majority, when they came to
Congress, one of the first things they did was to make it easier to
raise taxes. They call it PAYGO, which sounds good but really it is
TAXGO because what they are going to do is they will ratchet up
spending. They will pay for their increase in spending by increased
taxes. And so you have PAYGO or TAXGO is what it really should be
called.
And then they decreased, or they made it easier to raise taxes by
going from a three-fourths majority, which the Republicans put in
place, because we wanted it to be difficult to raise taxes on the
American people. But they changed it from three-fourths to a simple
majority. Now, many of the incoming Members on the Democratic side I
know ran on a conservative agenda. You know, I want to see how they are
going to go back home and tell the people back there that we made it
easier to raise taxes on you. They talk about, I know the Blue Dogs
come down here and talk about fiscal responsibility and talk about
cutting the budget or balancing the budget. But how are they going to
do that if they are not willing to make the hard choices on what
programs, not just to cut, more importantly to reform the entitlement
programs. Reform doesn't necessarily mean cut. It means make them
efficient. Make them produce or become more efficient. You get more out
of your bang for your buck. You don't have to necessarily cut the
programs. But so more and more people can get those programs more
efficiently, instead of just raising taxes or slashing benefits.
At the end of the day, if you are going to increase spending, I
believe this has been very clear by the Speaker and the leadership of
the majority party, that they are going to increase spending and they
are going to increase your taxes. Why else would you make it easier to
pass a tax increase? And that is, again, one of the very, very first
things they did when they came into the majority party here. So it is
going to be interesting to watch how that plays out with the Blue Dogs
and many of the incoming Members that they claim that they are going to
be fiscally responsible, that they are going to be conservative, that
they are not going to tap into their constituents' wallets and bring
more money here to Washington instead of leave it home with them.
Mr. DAVIS of Kentucky. I think that is a good point. The whole PAYGO
budget system really is more smoke and mirrors than it is reality,
because I think the thing, again, the American people were not told by
the media and certainly weren't told during the run-up to the election
that they exempted their existing programs from that. They say there
has to be a spending cut or a tax increase to offset any other
increases in spending in other programs. But there were loopholes that
were left for them to increase spending.
But I think the real thing that we have got to look at here is the
impact on American families that will come from the tax increases that
are coming if Congress does not act. And this is not a Democrat or
Republican issue. This is an American issue, this is an economic
security issue.
And I would just like to recap. Nationwide, a family of four making
$65,000, which is the midpoint income for all families in the United
States, will see their taxes go up over $2,000 if nothing is done by
Congress. Married couples with an average income like this family I
just mentioned would experience a 12 percent tax penalty just for being
married. For focusing on the values of family, the strength of the
family, there is going to be a tax penalty reinstated upon them. I
think that is simply unacceptable that that would take place.
More importantly, the cost of raising children has gone up. We
certainly know that. We have six children. We have one in college, one
who is on deck to go to college, another one who is going to be in
college shortly behind the first two. These children are working hard.
They have jobs. They are contributing now to the economy and the
community and they are taxpayers. And they understand firsthand the
impact of these policies. But our family, for the cost that we have in
raising our children, making sure they are not a burden on society,
making sure that we are providing for all of their needs, appreciated
the $1,000 tax credit that was provided by the Republican Congress in
2001, and what we are going to see is that is going to be reduced by
$500.
A family with four children will see a $2,000 increase just on their
tax bill because they have children. They will see an additional 12
percent penalty because they are married. This flies in the face of the
kind of empowerment and freedom and opportunity that families need. We
need to have policies that encourage families, that encourage moms and
dads to stay together. I think every child deserves to have a mom and
dad. I grew up without a dad. I know what that is like, to be alone, to
have my mom working sometimes two jobs to make sure that our needs were
met. I remember going to work when I was 16. And the first time I saw,
wondering what those taxes were, all that money that had come out of my
pay then.
One of the things that were done, and I entered that as a minimum
wage worker. One of the things that was done, again, by a very
progressive focus, conservatives in Congress, was to create a 10
percent tax bracket. We
[[Page H1194]]
took millions of people at the lower end of the economy off the tax
rolls for a simple reason, to make sure that they could keep more of
what they earn. And it is important that we keep in mind the impact on
families of every one of these decisions.
I wish that everybody in Congress had been in business in some
capacity where they created jobs, where they had to make a payroll,
where they had to generate opportunity for others, where they had to
personally make sure that health benefits were paid. And I think what
they would experience is a very different perspective when it is your
name that is on the bottom line having to produce that revenue to
provide for those benefits.
And I remember times that those of us in our little company family
would go without a paycheck or take reduced pay simply to make sure
that we got those benefits paid. And regressive policies that increase
taxes discourage people from doing what I think is the right thing and
taking care of their employees.
Tax increases and health care are very much this way. We saw in
Kentucky, in my State, or in the commonwealth, a very devastating
approach to health care that had a huge rise in cost by driving 45 of
47 carriers out. It was a program very similar to what Hillary Clinton
wanted to see passed back in 1993. And what was the impact of that? Was
there an increase in the quality of health care provided by small
business owners? No, it was a significant decrease. It was a
significant driving of people out of health care and into other means
of provision for that care.
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Why was that? Because the incentives mostly punished the small
businesses. We need to allow small businesses to band together to get
the same low rates that big businesses do. But in that vein I want to
keep in mind what the impact is. We saw businesses that provided for
their employees, that provided for basic benefits either give their
employees a cash subsidy because they wanted to get out of the business
altogether or they simply had to cut benefits because costs were going
up so much. And there are many hidden taxes in this process that have a
tremendous impact over the long term.
Payroll tax is another issue. There is a lot of talk about Social
Security right now. The system needs to be reformed. I think if we sit
down and do the numbers and we see that the increase is at three to
three and a half times the rate of inflation for Medicare and Social
Security that down the road we are going to have a significant problem.
But we are not talking in this Congress now about reforms in the
system. What is the novel solution that is being provided? Raise taxes.
That would be, in fact, the largest single payroll tax increase in
history, to take the cap off the Social Security taxes. And who gets
hurt? It is not the super-rich. It is not the billionaires who are
calling for tax increases because they don't really pay taxes the way
you and I do. It is going to be those folks who are in the middle who
bear the burden of this economy who are going to bear that burden as
well. And I think that the impact of millions of jobs is simply
unacceptable. It has a ripple effect throughout the economy and a
regressive effect.
Just keep in mind, as we talk about competition with China, people
see the Chinese economy as this great juggernaut; but one point that I
would like to make in particular when we look at the increases, in less
than 3 years the U.S. has added economic output by over $3.2 trillion
of additional economic output. That number of our increase in economic
output is bigger than the entire economy of China. That is a staggering
statistic when we think about that, the economic engine that we have.
And it would be a grave error to put additional burdens on the families
who are the producers, who create the value in that economic engine,
that would hurt the generation that comes behind us.
Would the gentleman from Pennsylvania have some other perspectives?
Mr. SHUSTER. Absolutely. And you talked about the size of the U.S.
economy. Those tax cuts that we put in place from 2001 and 2003 that
helped this economy move forward, the reason it happened is because
those tax cuts put $1.1 trillion in the pockets of the American
taxpayer, $1.1 trillion. And a lot of that money went into savings, but
most of that money went back into this economy directly, into whether
it was paying for your child's college education, whether it was to buy
a washer and dryer, buy a new car, buy a house, remodel your house. I
mean, there are hundreds of thousands of ways that people put that
money back into the economy. And we did that by cutting taxes on every
American that pays taxes. Some folks in this country were even taken
off paying taxes. We lowered the rates so that there were many people
that didn't have to pay taxes. And once again, when you put money back
into people's pockets, what happens is the economy grows.
I have another story from my district. Smith Elliott Kearns &
Company, it is a regional accounting firm located in my district in
Franklin County, Pennsylvania, and they service clients throughout
central Pennsylvania, western Maryland, and actually up and down the
east coast. They have clients from New England to Florida. And they
characterize their clients as mom and pop shops, small and mid-size
companies. And they told me about one of the tax cuts we put into
place, which was a section 179 deduction, which allows smaller
companies to elect to expense up to $108,000 of equipment purchased in
the year of the acquisition, and that that is phased out from 108,000
up to over $400,000 of equipment. They phase out the amount of money
they are able to expense. But that has tremendous growth in this
economy of people going out and buying equipment, whether it is a truck
to do pickup and delivery or whether it is a piece of equipment that
makes the company more efficient. And in 2009, at the end of 2009,
beginning of 2010, those deductions will revert back to the amount
before we passed the law of $25,000.
It is amazing how much money companies are saving and reinvesting in
their companies to make them more efficient, to add jobs, create jobs.
And when you buy that equipment, not only does it make your company
more efficient but some other company has to produce it, and those
companies have to put people back to work. So it is a snowball effect
on our economy. And once again, it is something that the national media
is just not covering it the way it should. I watch Lou Dobbs, and he is
doom and gloom all the time about what is happening in our economy. All
he sees is the negative side, and there is so much positive occurring
in our country.
As I mentioned, this accounting firm has hundreds of clients that are
using these tax cuts, using these ways to save themselves money, to
reinvest in their company, to create jobs. And that is why it is so
important for the American people to really pay attention to what is
happening here in the United States Congress.
The Blue Dogs have been down on the floor. They haven't been down in
a week or so, but they talk about the change, the American people want
a change. And they may be right. The American people want a change. But
there is nobody that I know of in the United States, in the Ninth
Congressional District and across this country, that I have heard say
they want a change to increase their taxes. I haven't heard it, except
for maybe folks like George Soros and Bill Gates and, of course, John
Edwards, who are multimillionaires and multibillionaires. They don't
mind paying more taxes. But when you have that much money, there is
certainly a lot less pain, or I should say there is no pain at all when
you have that much money.
But if you are a hardworking American in Pennsylvania, in Kentucky,
in Indiana, in Missouri that are out there every day getting up, trying
to save money for your kids to go to school, trying to pay the bills,
it is significant when the Federal Government reaches into your pocket.
And as we talked about here earlier tonight, a family of four that
earns $40,000 to $50,000, when these various tax cuts expire, people
are going to get about a $2,000 tax increase. And that is significant
for a family of four making that kind of money, and it is just wrong.
And we here in Congress have to make sure that we are making the
[[Page H1195]]
tough decisions on controlling spending. Controlling spending and
continuing to see this economy grow because we are getting record
levels of revenue flowing into the Federal Treasury because this
economy is growing, because of the Gregg Rothmans of the world and the
Travis Collinses and the people throughout this country, the small
businessmen, the small entrepreneurs that are creating jobs, buying
things, putting people to work so that this economy continues to
flourish.
So as the sign says there, in 1,426 days, which means December 31 of
2010, this Congress and the next, all we have to do is run the clock
out. Run the clock out, and the American people are going to get a huge
tax increase.
And we need to make sure that we are here fighting. But we can't do
it without the help of the American people. The American people have to
be communicating to their representatives to keep those tax cuts in
place because it is good for America, and the numbers bear out: 4.5
percent unemployment, 7.2 million jobs created over the last 4 years.
These job gains are throughout our economy. Also, when you look at the
different segments, the educational attainment groups in this country,
all those groups have seen unemployment drop. Even for those without a
high school diploma, we have seen their jobless rates drop by about
three quarters of a percentage point just last year, and over the last
2 years a 1\1/2\ percent drop in the unemployment rate of people who
don't have a high school diploma. That is significant.
And if you look at the want ads, I think in almost any newspaper in
this country, you will see where people are advertising for jobs. It
takes training. It takes some level of education to get these jobs,
whether it is a truck driver, which is a pretty good paying job. Today
it is a very good paying job. You have got to have the training. So the
way to do it is, I believe, not to have some new vast government
program, but to keep cutting taxes on people so that people who are in
a job can get some training so that maybe they can get another job that
pays more.
Mr. DAVIS of Kentucky. Relating to your point, if I may reclaim my
time for a moment, the welfare to work tax credits that have been
extended progressively every year are a perfect example of that by
giving incentive to a small business owner, considering that 88 percent
of all new jobs are created by small business owners, but to give them
a direct tax incentive to take that risk, to invest in an individual,
to teach them and train them to give them a job, it proves your point.
Mr. SHUSTER. Right. And just to sum up, there are millions of
Americans out there, hardworking Americans, that in the last election
didn't vote to see their taxes increased. And I defy anybody in here to
show me that their constituents, that the majority of their
constituents, the vast majority of their constituents voted to have a
tax increase.
It is going to be very interesting here in the coming months. We are
going to have the budget come up here next month. It is going to be
very interesting to see what our Democratic colleagues on the other
side propose. The President has proposed a budget that is a budget that
is controlling government spending. It is extending the tax cuts that
we have put in place, and along the way we are going to move towards a
balanced budget and even surpluses. But the only way we do it is not to
increase taxes but to allow this economy to grow so that the revenues
continue to flow into the Federal Government and that we control
spending.
Control spending and reform entitlements. Medicare, Medicaid, and
Social Security, we have got to look at reforming them. That doesn't
mean cutting benefits. That doesn't mean necessarily increasing taxes.
It means looking at ways to better provide those services so that we
are not wasting as much money in the entitlement programs.
So as I said, I think it is going to be an interesting next couple of
months. We are going to see what the Democrats propose as their plan.
And as I mentioned earlier this evening, I think we are going to see
the proposal of significant tax increases, which I think is going to
make many Members on the other side of the aisle very uncomfortable if
they have to vote for a tax increase. But if we don't act, if we run
out the clock, in 1,426 days, January 1 of 2011, we are going to see
one of the most massive tax increases in American history.
Mr. DAVIS of Kentucky. Mr. Speaker, reclaiming my time, I would like
to close by a sharing a little bit of a story I think that brings some
of this into perspective.
You heard us share earlier that 88 percent of all new jobs created in
this country are created by small businesses, companies that employ
less than 500 employees, and those small businesses are started by men
and women who have vision, that want to take risks, that are willing to
step out. Congressman Shuster and I know that feeling of taking that
step. That is a scary thing when you are going to make it on your own
and not try to depend on a large corporation, suddenly realizing that
you can create that value, create that future, and that others will
follow and join with you and that you can begin to perpetuate it and
grow. And the great industries, the great technologies that have come
in this country, the great opportunities that have been created have
been by those entrepreneurs who have gone out and made that difference.
See, our key must be to create taxpayers, not raise taxes. Our goal
is very simple in government. We want to provide policies and we must
provide policies that empower people, that don't restrain them or
constrain them from achieving their fullest potential. And I shared
earlier one thing I think that is very, very important. We have a kind
of have-it-now view in society of what is in the 24-hour news cycle,
what is the impact going to be of this decision in the next 24 hours or
in the next three months or one year on Wall Street. But those whom we
are competing with internationally right now think in terms of
generations. They think in a 20- or 30- or 40-year window, what the
impact of their policies will be on their children or their
grandchildren. If we step back and we take the vision of our Founders
or even the vision of some of our leaders in the community, we will
prove the fact that those who are forward thinking, who want to see
into the future and invest accordingly and make that difference to
create opportunity, they are the ones who will be successful.
And one of the stories that comes to mind, I am going to end it with
a small business, but it began over 20 years ago in Kenton County,
Kentucky, in the city of Covington.
{time} 2215
Covington basically laid in the shadow of Cincinnati. There was
residential development up in the hills, but once the great flood
levee, as one of the great entrepreneurs in that region shared with me,
when the flood levee went up after World War II, much of the business
began to leave, the riverfront literally died and the tremendous amount
of river commerce.
As the decades went by, small businesses began to leave. There was a
movement out to the suburbs. Then Interstate 75 came through. Even more
business was diverted from downtown and the economy became weaker and
weaker. There were less good jobs there, less jobs for the payroll tax
base to support community services.
As we entered the 1980s and the Reagan tax cuts were beginning to
take hold, some interesting things happened. Some business people, some
developers, community leaders, had a vision that they could reform the
way the city looked, they could change the image of northern Kentucky.
It included many people from all different backgrounds. But they
agreed on one thing, that they were going to change the direction of
their city. They were not going to depend on outside government to do
it. They were going to do it themselves, by investing their time and
their talent and their treasure in that vision.
What began to change was, first of all, a significant change in
image. And then a few years ago, the mayor, my friend Butch Callery,
who is a Democrat, and I want to say this for our friends at home, for
my conservative Republican friends, Butch is a real Democrat, but he is
a Democrat who cares deeply about his city, and we worked together, any
way we can help with development and growth.
He went from being on the city commission into the position of mayor,
[[Page H1196]]
leading with this vision of economic development. And he saw two things
to do that were very critical. He has developed and empowered a new
arts district, where we have artists and artisans who are coming
literally from around the Nation to bring their businesses, their
galleries and outlets into Covington, Kentucky. The city fathers, 50
years ago it would not have looked anything like it is starting to look
right now in development. It is an awesome thing to see happen.
But the second thing, and to me the even more exciting thing, is the
broad public-private partnership that he has forged, working with the
chamber of commerce, working with the State, working with other elected
officials and working with the business community and working with the
educational community.
Getting the proper incentives and then joining with northern Kentucky
University and Gateway Technical Community College, he worked to create
a project called the Madison E-Zone, an enterprise zone for high
technology businesses where there were going to be special
opportunities to work together, to network together. And right there,
in the urban heart of Covington, they laid this in.
The vision is very simple. We want to get the synergy of high
technology education. Northern Kentucky University started a School for
Informatics. Instead of simply bringing an academic in, though there
are many, many competent academics out there, when we deal with high
technology, when we deal with information technology, electrical
engineering, it is good to have somebody coming from industry, and they
brought a man named Bob Farrell, a tremendously successful information
technology entrepreneur, to come in and begin running that School for
Informatics. They have a School for Entrepreneurship that is also tied
into the same venue.
Finally, these incentives, working with the local businesses, have
created a new knowledge base. That is how Silicon Valley got started in
the community around Stanford University. We may is not have Stanford
University here. We are starting in a new way with a new vision. But
like my colleague to my south, Hal Rogers, likes to say, we are going
to have ``Silicone Holler'' in Kentucky, because we are going to create
those technology jobs, and we are not going to see our young people
have to leave the State, because now new businesses are not only
coming, but they are small businesses, and what is so exciting is they
are new businesses that are starting by Kentuckians who have grown up
in Kentucky who are educated here and they are creating a future here.
One of those companies is Tier 1 Software. It started out when two of
the partners, Kevin Moore and Norm Desmarais, reached out. They took
that chance. They took that big step to start their business. They
began seeking opportunity to do software development, implement the
applications that they developed, begin to build that business,
beginning to create additional jobs, working alongside the School for
Informatics. They began doing work with the Department of Defense.
Again, what they are working on is knowledge preservation.
My point in bringing this up, it all started note just 2 years ago or
4 years ago, it began with that long-term vision, with an application
of policy from the Federal Government to make a difference in
development. Here is the challenge. Even these businessmen are
inheritors of Ronald Reagan's legacy.
When these tax increase Goss into effect in 1,426 days, businesses
like Tier 1, companies with startup potential to create jobs in my
State for my citizens and my constituents so they don't have to leave
are going to go away because of the burdens that will be restored. A
regressive burden will be restored with payroll taxes, with income
taxes. And also the inability to depreciate or write off investments
for hardware, as Congressman Shuster mentioned earlier, are going to go
away, and it is going to put a tremendous burden on the economy and our
region.
I want to see it flourish. I want to see us continue to grow and
change and transform and create more taxpayers in the future. That is
why progressive tax policy reduces the rates, allows people to keep
more of what they earn, and, in the end of the day, we don't burden
them unnecessarily. We empower them and free them to build a future for
their children.
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