[Congressional Record Volume 155, Number 45 (Monday, March 16, 2009)]
[Senate]
[Pages S3098-S3099]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                          A THREATENING BUDGET

  Mr. McCONNELL. Mr. President, Americans are beginning to get a sense 
of what the administration's budget means to them. I think it is fair 
to say that most of them are worried that it spends too much, it taxes 
too much, and it borrows too much.
  At a moment when the economy is already seriously challenged, when 
more people every day are struggling just to make ends meet, and when 
the national debt is already staggeringly high, Americans were hoping 
for relief. Instead, they got a budget that threatens the biggest tax 
hike in history, record spending, and massive debt. This budget 
literally shocked a lot of people. Spending in this budget is so 
massive that some estimate more than 250,000 Government workers will be 
needed to spend it all.
  This is consistent with the approach the administration and the 
Democratically controlled Congress have taken since the beginning of 
the year. In just 50 days since Inauguration Day, the Democratically 
controlled Congress voted to spend $1.2 trillion, which works out to 
$24 billion a day or $1 billion an hour--most of it borrowed--and we 
are doing this all, of course, in the midst of a recession.
  People across the country are understandably nervous about this kind 
of spending which won't create the jobs that are promised and which 
will cause further tax hikes in the future to pay for all the 
borrowing.
  Today, I wish to focus on the tax portion of the budget, the various 
tax hikes the administration, of course, will need in an attempt to 
cover the budget's $3.6 trillion price tag.
  The administration says that 95 percent of Americans will not see a 
tax increase under this budget plan. Well, Americans might not see an 
immediate increase in their income taxes, but there is more than one 
way, as they say, to skin a cat, and there is more than one way for 
Government to take money out of your pocket. I will mention just three 
that the administration has proposed.
  First, there is the proposed new energy tax which would tax everyone 
who uses energy, which, of course, is 100 percent of the population.
  The administration estimates that its cap-and-trade proposal would 
raise about $650 billion from gas and electric companies and other 
businesses. The first thing to note about this tax is that no one, not 
even administration officials, thinks this figure is even close to the 
amount that will actually be raised, and no one, not even 
administration officials, believes that every cent of it won't be 
passed along to consumers. The President himself said during the 
campaign that his cap-and-trade plan would cause utility rates to 
``skyrocket.'' This is President Obama himself who indicated during the 
campaign that he thought utility rates under his plan would skyrocket. 
More recently, OMB Director Orszag publicly reaffirmed the 
administration's view that cap and trade would increase energy taxes 
for everyone. This means that anybody who turns on a lightbulb will 
feel the pain. How bad will it be? Well, researchers at MIT were a 
little more specific than the President and Mr. Orszag. These 
researchers at MIT predicted that the proposal would cost the average 
American household $3,128 a year. Now, this is the average American 
household under this budget and the energy taxes it will levy: $3,128 
per household.
  Most of the utilities and manufacturers that take a direct hit from 
the energy tax are big businesses, but what about the small businesses 
which account for nearly three-fourths of all new private sector jobs? 
Well, there is a tax for them too. Thanks to an income tax hike on 
anyone earning more than $200,000 a year, many will see their taxes go 
up significantly. Think of a general contractor, a family restaurant, a 
startup technology firm. These are the engines of our economy. They are 
struggling now. They will struggle even more once these tax hikes go 
into effect.
  Businesses with 20 or more employees get hit particularly hard. These 
businesses account for two-thirds of the small business workforce. The 
President's budget includes a tax increase on more than half of those 
businesses.
  It is an iron rule of economics that taxes influence the decisions of 
those who are taxed. And businesses that have less income as a result 
of higher taxes are likely to do three things: cut jobs, put off buying 
new or better equipment, and take fewer risks. The real-world 
consequences of those decisions are immense: more jobs lost, less 
innovation, fewer new products, and lower salaries for employees, 
almost all of whom are probably making less than $200,000 a year.
  Hundreds of thousands of Americans are losing their jobs every month. 
Millions fear losing their homes. In response, the administration has 
promised in this budget a tax hike on the Nation's biggest job 
creators. These businesses are shedding workers already. Higher taxes 
will force them to shed even more.
  I understand the administration's desire to make good on its promise 
of reforms. Most Americans understand that reforms are needed in health 
care, education, energy, and other areas. But they want the 
administration to fix the crisis in the financial sector first. Until 
we devote our full attention to that crisis, all other recovery efforts 
will be in danger of coming undone. With the highest unemployment rate 
in 25 years, Americans simply don't see the sense in raising taxes on 
small business.

[[Page S3099]]

  Americans from all walks of life--and both political parties--are 
worried about something else in the budget. They don't understand why 
charitable organizations and the people they serve should suffer in 
order to pay for new or expanded Government programs. Yet in an attempt 
to pay for all of its spending proposals, the Obama budget reduces the 
deductions for charitable donations.
  At a time of economic distress, when more people than ever depend on 
these organizations, the administration's budget reduces the incentive 
for people to donate to them. This will affect donations everywhere, 
from the Salvation Army to the Juvenile Diabetes Research Association, 
to educational nonprofits such as universities and art museums. 
According to one study, this proposal can lead to $9 billion less in 
charitable giving each year.
  The proposal on charitable giving appears to follow the European 
model, where people rely on the state to support cultural institutions. 
In Europe, people rely on the State to support cultural institutions, 
but nonprofits across our country are mobilizing against the idea and 
for good reason: people who give money to these institutions should not 
be penalized for it, and charities and nonprofits themselves certainly 
should not be expected to subsidize the administration's policy dreams.
  These are hard times. Why make them even harder? That is the question 
a lot of people who have seen this budget are beginning to ask. They 
are looking at the highest tax increase ever, higher taxes on small 
business, a proposal that would divert billions of dollars away from 
the Nation's charities, and a light-switch tax that will touch every 
single American, and they see a lot more hardship. These tax hikes are 
precisely the wrong prescription at a time of already serious economic 
distress.
  The budget plan has a number of fatal flaws. But in the midst of a 
financial crisis, American workers don't need another reason to fear 
they will lose their jobs, small business owners shouldn't be further 
discouraged from investing, and the Nation's charities should not have 
to fear that even less money will come in. This budget doesn't just 
spend and borrow too much, it taxes too much.

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