[Congressional Record Volume 154, Number 154 (Friday, September 26, 2008)]
[Senate]
[Pages S9564-S9567]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                               TAX POLICY

  Mr. GRASSLEY. I thank my friend from Iowa. On that last point, my 
colleague from Iowa speaks of something that I would like to emphasize. 
And I presume one of the reasons he would

[[Page S9565]]

not like to see it on the continuing resolution is that it would 
jeopardize all of the relief in there for the flood victims we have in 
Iowa?
  Mr. HARKIN. Exactly.
  Mr. GRASSLEY. I would supplement also--I did not come here to speak 
on the same thing Senator Harkin did, but let me supplement something 
Senator Harkin said about suspicions that something could be wrong here 
and we need some sort of investigation.
  Maybe my colleague from Iowa heard that about 2 or 3 days ago, there 
was an announcement by the FBI that they were investigating four of 
these institutions. If the FBI thinks something is wrong, you might not 
be far off that something is bad and needs to be investigated.
  I wish to put my remarks this morning in the perspective of what I 
have been saying since June and July, and then we had the August summer 
break, and now in September on two previous occasions. So on maybe four 
or five previous occasions throughout the summer, I have come to the 
floor to speak about the differences of the tax policies of the two 
candidates for President. I come for that same purpose today.
  But I wish to also say that my purpose in coming is twofold--one, so 
that people will pay more attention to the tax policies of the two 
Presidential candidates and consider those tax policies in light of 
some of the history I have brought to their attention, the history from 
a couple of standpoints: what had been said in previous elections and 
then what actually happened after those Presidents were sworn in, and 
maybe it was not exactly as they said it was in the Presidential 
election. So take that into consideration during this election.
  The other one is to point out the history of different tax policy, 
when we have a President of one party, a Congress of another or when we 
have a Congress and a President of the same political party. So we take 
that into consideration when we want to analyze the checks and balances 
of Government working well for good tax policy. Why concentrate on tax 
policy? Because tax policy is a very important part of overall economic 
policy. Will we have a tax policy--hence, an economic policy--that 
grows the economy and creates jobs?
  What this generation of policymakers ought to be all about is having 
an economic policy--and tax policy being part of it--that will advance 
opportunities for the next generation so we continue down the American 
trend of each generation succeeding, living better than the generation 
of mom and dad.
  Starting in the third week of July, I have come to the floor to 
compare the tax plans of Senator McCain and Senator Obama. They are the 
two Presidential candidates. During this series of visits with my 
colleagues, I have talked about the relationship between party control 
and the likelihood of tax hikes or tax cuts. I use this famous 
thermometer chart. Well, I don't know whether it is famous, but I think 
it is a pretty good indicator of some things I have stated. There is a 
big difference between tax policy that comes out of a Congress, where 
the Congress and the President are of the same political party. A 
different tax policy emerges when the House and Senate may be of one 
party and the President of another. But we can see up there that when 
we have a Democratic President and a Democratic Congress at the top, we 
have less tax cuts and, in some instances, tax increases. When we have 
a Republican President and a Democratic Congress, we still have tax 
increases but somewhat less than when there is a Democratic President 
and Democratic Congress. Then, going down to the third from the top, we 
see a Democratic President, a Republican Congress. There we have tax 
decreases but not as much as if we go down to the next line, where we 
have a Republican President, a Republican Senate, and a Democratic 
Congress--more tax decreases but not as much as the next line. There is 
a Republican President, a Democratic Senate and a Republican Congress, 
where we get more tax cuts.
  But we really get job-creating tax cuts and economy growth tax cuts 
when we have a Republican President and Congress.
  I would like Members to think in terms of the thermometer, as we look 
at the debate going on in the campaign for the Presidency.
  Later on in July, I talked about the 1992 campaign promise of a 
middle-class tax cut, then the 1993 tax legislation that instead of 
having middle-class tax cuts, we had, in the words of Senator Moynihan, 
then chairman of the Finance Committee, a ``world record'' tax 
increase. I use this chart, which depicts 16 years of Rip van Winkle, 
to remind people of Rip van Winkle waking up between the 1992 campaign 
for a middle-class tax cut that was promised before the November 3, 
1993, election and then the tax legislation of 1993, which, in the 
words of Senator Moynihan, chairman of the committee at that time, 
ended up going from a middle-class tax cut promise of the 1992 campaign 
to the largest tax increase in the history of the country. Here we have 
the history of rhetoric in campaigns and how they might turn out after 
a President is sworn in.
  In our first week back after the summer break, I discussed the 
effects of the proposed 17 percent to 33 percent increases in the top 
two tax rates. That is not my policy. That is not my making something 
up. That is basically what one of the candidates, Senator Obama, had 
said he is going to do if elected President. Then I also spoke during 
that speech of those 17-percent to 33-percent increases in the top two 
rates being very negative to the growth of small business activity and 
then, in the end, the detriment that does to job creation because small 
business creates most new jobs.
  Then last week I discussed the impact of Senator McCain's and Senator 
Obama's tax plans on our senior citizens.
  Today I would like to focus on the fiscal impact of both tax plans. 
It is particularly timely, considering the Treasury's recent activity 
and proposal to resolve the problems in our Nation's financial sector. 
Needless to say, from a fiscal policy standpoint, we are sailing into 
uncharted waters. I am sure everyone realizes there is always a large 
gap between what a Presidential candidate promises and what that 
candidate is able to deliver, if elected. We still need to carefully 
examine the plan that both my colleagues are putting forth during this 
election season. While neither plan is likely to be enacted exactly as 
laid out in the campaign, we can evaluate how realistic those plans are 
and also gain some insight into the candidate's vision of the Tax Code.
  For a long time now, I have been saying we should stop calling the 
tax relief enacted in the 2001 and 2003 bills the Bush tax cuts and 
call it the bipartisan tax relief that it has been. Both bills, 
especially the 2001 bill, were passed with Democratic support in 
Congress where the Republican majority was narrow. My colleagues of the 
other party enjoy referring to it as the ``Bush'' tax cuts because they 
would like to put all blame on the President. That is quite easy to do 
when a President's popularity isn't so great. But, in fact, that is 
intellectually dishonest because the Bush tax cuts, if they had been 
enacted the way he campaigned and proposed them, would have been 
another $350 to $400 billion more than what Senator Baucus and I, in a 
bipartisan way, worked out because we thought it was more responsible 
and we could still do the economic good at a lower level of tax breaks. 
It should be called the bipartisan tax bill that it is and not 
denigrated with the Bush name on it because it was a lot different than 
what President Bush proposed to Congress.
  In the case of the 2003 tax relief bill, Republicans passed it due to 
Vice President Cheney's tie-breaking vote. Maybe we don't want to speak 
to that so much as a bipartisan bill. But the first version of it going 
through the Senate, as I recall, was bipartisan. The implication that 
President Bush or Republicans were able to impose this legislation by 
themselves is ridiculous.
  The 2001 and 2003 bipartisan tax relief bills became law only with 
the support of Members of both political parties. In confirmation of 
what I have been saying, that both bills were bipartisan, in those 2001 
and 2003 tax relief bills we find that both major campaigns have 
adopted what is essentially the meat and potatoes of both bills.
  To illustrate how both campaigns have adopted significant parts of 
the 2001 and 2003 tax relief package, I

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present this chart. It is taken not from a partisan group but by the 
Tax Policy Center. This chart shows, as we can see, the fiscal impact 
of how both plans would change current law. The Tax Policy Center shows 
that Senator McCain's plan to prevent widespread tax increases would 
lose revenue of $4.2 trillion over 10 years. That is the red bottom 
line. Senator Obama's plan, which would include some widespread tax 
increases, would also contribute to the deficit. The Tax Policy Center 
says that number for the Obama plan would be $2.9 trillion. Remember, 
the Congressional Budget Office looks ahead 10 years, so I am talking 
about 10-year figures.
  I have another chart. This chart assumes current law levels of tax 
relief in effect and then compares Senator McCain's and Senator Obama's 
plans. The Tax Policy Center also produced the data I am using in this 
chart. This chart shows Senator McCain's plan would raise $600 billion 
less than current tax policy. Senator Obama's tax plan would raise $600 
billion more than current tax policy.
  I respect the analysis done by veteran analysts at the Tax Policy 
Center. They have worked hard to develop a lot of data for 
policymakers, such as those of us in this Senate, for our use. If, 
however, we were processing legislation, it would have to be scored by 
the nonpartisan Joint Committee on Taxation, not by the Tax Policy 
Center. So the Tax Policy Center data is helpful, but we must note that 
the Joint Committee on Taxation will be the decisive scorekeeper of any 
legislation that either candidate would propose in their budgets after 
they are sworn in.
  The Tax Policy Center has acknowledged that both candidates' plans 
lack detail. Necessarily then, the analyses and conclusions reached by 
the Tax Policy Center are qualified and need to be. There is a key 
caveat in these totals. Both plans assume revenue-raising offsets that 
lack specificity to be scored. Senator Obama has specified about $100 
billion in defined revenue-raising proposals. That is close to the most 
aggressive accounting of revenue raisers in the congressional 
inventory. I am going to refer to a snapshot of the revenue raisers the 
House Ways and Means Committee has developed. It is in what I have 
referred to as the revenue-raising well chart. This is a chart that is 
modified from time to time, but I have been using it in the Senate for 
well over a year.
  As this chart shows, roughly $90 billion in revenue-raising offsets 
have been defined, scored, and approved by the House Ways and Means 
Committee. That figure is considerably higher than revenue raisers 
approved by the Senate Finance Committee. Some of these offsets will be 
used in legislation we hope to pass shortly. This well chart gives us a 
rough snapshot of what is available. In other words, it is to bring 
some realism to what is politically accomplishable within the House and 
the Senate or between the two. This chart gives us that rough snapshot.
  Let's then give the candidates the benefit of the doubt and round 
that $90 billion up to $100 billion.
  Let's also look at the track record of tax-writing committees over 
the last few years. If you look at that history, you will find the 
committee generates about $1 billion per month. That is about--you can 
add it up--$12 billion per year. So let's gross-up the defined revenue 
raisers, then, to $220 billion.
  Now, if you take that conservative number of $220 billion, how do the 
plans of the two candidates for President stack up? Senator Obama's tax 
plan contains $920 billion in unspecified, unverified tax increases. If 
we net that number against the $220 billion--that looks a little more 
realistic--we find that Senator Obama's plan is short on specified 
revenue raisers by $700 billion. To be evenhanded, Senator McCain is 
carrying $365 billion in unspecified revenue raisers. If we net that 
number against the known revenue raiser number of $220 billion, we find 
that Senator McCain's plan is short of revenue raisers by $145 billion. 
So let's take a step back just for a moment. It means the deficit 
impact of Senator McCain's plan is understated by about $145 billion. 
It means the deficit impact of Senator Obama's plan is understated by 
$700 billion. As against the current tax policy baseline, it means the 
plans are not as far apart as they might appear.
  So let's go back to the current policy baseline. This is the Tax 
Policy Center's chart I have referred to two times already. It means we 
need to raise Senator McCain's deficit impact number from $5.3 trillion 
to $5.45 trillion. Likewise, we need to raise Senator Obama's deficit 
impact number from $3.9 trillion to $4.6 trillion. Keep in mind that 
the current policy baseline shows a revenue loss of $4.7 trillion. That 
is what the ranking Republican on the Ways and Means Committee, Mr. 
McCrery, calls the ``reality baseline.''
  In recent weeks, Senator Obama has indicated he might revisit the 
marginal rate increases and increases in tax rates on dividends and 
capital gains after the election. I hope he will because his tax plan 
will stop growth in our economy. It is very bad when you have a 
recession. He said, if elected, he might reconsider them in light of an 
economy that might be in recession. So the deficit impact of Senator 
Obama's plan might be further understated.
  If the candidates were just proposing tax changes, the deficit impact 
of their numbers would end with these figures I presented on these 
various charts. That would assume neither candidate would be doing 
anything on the spending side.
  There is no Congressional Budget Office estimate of the two 
candidates' spending plans. A nonpartisan think tank, the National 
Taxpayers Union Foundation, has performed analyses and estimates of the 
two candidates' plans. I would use this chart that I do not think I 
have shown to Senators before. You can also find a comparative analysis 
at the National Taxpayers Union's Web site.
  Let's take a look at Senator McCain's plan first. The National 
Taxpayers Union, a nonpartisan public policy research organization, 
NTU, says that Senator McCain's plan would include new spending of 
$68.5 billion per year. You can find the document, again, on the NTU's 
Web site.
  Senator McCain has made it clear he wants to cut spending. That is 
consistent with his career in the Senate. He has been a spending 
cutter. Sometimes he has found it to be a very lonely fight. Senator 
McCain, despite fighting wasteful spending, has too often lost. 
Sometimes I have disagreed with his definition of wasteful spending, 
and, obviously, other times I have agreed with him. But one thing is 
clear: Senator McCain pushes spending cuts, and any honest, nonpartisan 
observer could not quarrel with that point. Senator McCain's overall 
economic plan continues his principle of cutting spending and keeping 
taxes low.
  Senator Obama's plan on spending is completely different. The 
National Taxpayers Union counted up 158 new Federal spending programs. 
A conservative estimate of those programs came to $344.6 billion per 
year. We are talking, then, for emphasis, that Obama would spend $344.6 
billion per year. You can look that up also on the NTU Web site.
  If my friends on the other side have what they feel is a better 
estimate of Senator McCain's, on the one hand, and Senator Obama's, on 
the other hand, new spending plans, I would be glad to take a look at 
it. But when you look at the NTU analyses, you can see that Senator 
Obama's spending plans would amount to $276 billion more per year. 
Conservatively speaking, it means that, if elected, a President Obama's 
tax and spending plans, if enacted, would exceed a President McCain's 
plans, in deficit impact, before the end of the first term.
  Something has to give. Senator McCain has been willing to put 
spending cuts on the table. It has been a hallmark of his congressional 
career. He would have to find a way to get the Congress to follow 
because that is not Congress's inclination, to cut spending. It would 
probably be his greatest challenge, but we know he is in the fight to 
restrain spending.
  As a country, we cannot endure a deficit impact as large as would be 
projected under Senator Obama's tax plan, on the one hand, and add to 
it his spending plan, on the other hand. Where will Senator Obama 
adjust his plan, if elected? Will he abandon the tax cuts he has 
promised? Will he enlarge the group of Americans he has targeted for 
tax increases? Will he abandon his ambitious spending plans? Will he 
cut spending?

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  I think you need to think of the history of past campaigns, of what 
can happen to spending or tax policy enunciated in a campaign but not 
carried out after that President is elected, as evidenced by President 
Clinton in 1993, passing the biggest tax increase in the history of the 
country--and those are Senator Moynihan's words--contrary to the 
middle-class tax cuts he promised during the campaign. I hope Senator 
Obama is not up to that same game. But voters ought to be alerted to 
it, ought to be alerted, too, to make sure, as to things Senator McCain 
is saying, that if he is President, you have that to measure against. 
We need to keep candidates intellectually honest, not to promise too 
much on the campaign trail; when they get sworn in, they do not have so 
many promises to keep. But we should expect Presidents to keep 
promises.
  More importantly, a President McCain or a President Obama is likely 
to be dealing with expanded Democratic majorities on Capitol Hill. That 
gets me back to my tax increase thermometer and what it has told us 
over the past 20 years: that with a unified Democratic Government, 
taxes are likely to go up, as evidenced by the top of the thermometer 
shown on this chart. At the highest level of tax increases, you get 
that when you have a Congress and a President that are both under 
Democratic control, as evidenced by the 20-year history. Spending is 
not likely to go down because whether Republicans are in control of 
Congress or the Democrats, the inclination of Congress is not to cut 
spending. That is not right, but that is a fact of life, and a 
President who wants to veto bills is a damper on that.
  In closing, I would like to review the issues I have raised today 
very quickly. Many folks are asking about the fiscal impact of the tax 
plans proposed by Senator McCain and Senator Obama. The Tax Policy 
Center has produced data looking at the proposals against current law. 
Both candidates implicitly acknowledge current law is not a realistic 
measure. With that noted, the Tax Policy Center has examined the 
proposals against the more realistic baseline--current tax policy. If 
unspecified revenue raisers are deducted from both plans, the deficit 
impact of both plans grows. Likewise, we find the gap in deficit impact 
between the two plans narrows.
  We cannot ignore the deficit impact of the spending side of each 
candidate's plan. Senator Obama's plan outspends Senator McCain's plan 
by over 500 percent. When Senators McCain's and Obama's plans are 
combined, Senator Obama's plan adds more to the deficit. In this 
troubled time, the Federal Government has stepped into the breach of 
the financial sector meltdown--all the more reason we need to closely 
scrutinize the tax and spending policies of our colleagues, Senators 
McCain and Obama.
  Mr. President, out of respect for my colleagues--I had more to say, 
but it was in a little different version--I am going to give up the 
floor. But is anybody on the record to speak after the Senator from 
Michigan is done?
  The ACTING PRESIDENT pro tempore. There is no unanimous consent 
request.
  The Senator from Iowa has 1 minute remaining, also, I would notify 
him.
  Mr. GRASSLEY. Senator Harkin?
  The ACTING PRESIDENT pro tempore. No. You have 1 minute remaining. 
There is no unanimous consent request after Senator Stabenow.
  Mr. GRASSLEY. How much time do I have?
  The ACTING PRESIDENT pro tempore. The Senator has 1 minute remaining.
  Mr. GRASSLEY. Mr. President, I ask unanimous consent to have the 
floor for 5 minutes after the Senator from Michigan speaks.
  The ACTING PRESIDENT pro tempore. Is there objection?
  Without objection, it is so ordered.
  The Senator from Michigan is recognized.

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