[Congressional Record Volume 157, Number 45 (Thursday, March 31, 2011)]
[Senate]
[Pages S2035-S2037]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
DEBT AND DEFICITS
Mr. WHITEHOUSE. Madam President, Abraham Lincoln began his famous
``house divided'' speech with simple, homespun advice that we should
first ``know where we are and whither we are tending,'' before we
``judge what to do and how to do it.'' We are embarked on a journey of
great consequence regarding what to do about our Nation's budget and
how to do it. This is a vital conversation. We simply must reduce our
annual Federal deficits and our Nation's debt. But it would seem wise
at this important time to take President Lincoln's advice and examine
where we are and whither we are tending as we go about making these
decisions.
I will touch on a few factual landmarks that may help orient us to
where we are and help us learn whither we are tending. The first and
most obvious is that we just weathered the worst economic crisis since
the Great Depression. Few of us who were here then--I know the
Presiding Officer was--will ever forget the animal fear and desperate
urgency displayed by Treasury Secretary Paulsen and Federal Reserve
Chairman Bernanke as they, having looked into that abyss, came to this
building, to the LBJ room, and pleaded for our help to save the world
economy. We are now past the worst depths of the financial and economic
crises.
As this chart shows, the economic recovery measured in jobs is
proceeding, though all too tentatively and all too slowly. In Rhode
Island, we are still at 12 percent unemployment in the Providence
metropolitan area and over 11 percent statewide. To Lincoln's question
where are we, well, gradually trending in the right direction. But no
one can yet rule out a double dip back into deeper recession.
Into this gradual and tepid recovery, the Republicans want to inject
H.R. 1. What can we know about that? Mark Zandi, an economic adviser to
Senator McCain's 2008 Presidential campaign, says this legislation, the
House bill, will cause 700,000 job losses. That wipes out about half of
the recovery, if that number is correct. Goldman Sachs, the Wall Street
investment bank, says that bill, H.R. 1, could lower GDP growth by two
full percentage points in the remaining two quarters of the fiscal
year. Goldman Sachs is no fool where economic numbers are concerned. It
would be a perilous choice to dismiss their warning. Our present rate
of economic growth is only about 3 percent. So reducing that by a full
2 percent over a year could wipe out more than half of our economic
recovery. Of course, economic growth correlates to Federal revenues so
the cuts' damage to economic growth would in turn create revenue loss,
so there would be less deficit reduction. That is one landmark of where
we are. We are in a too-slow economic recovery from what was nearly a
second great depression, and we face a bill from the House that
threatens that too-slow recovery.
Another mark of where we are and whither we are tending relates to
the balance between regular Americans and corporate America's
respective contributions to our Nation's revenue. In 1935, regular
Americans and corporate America evenly split the responsibility to fund
our country's obligations. Then in each of these indicated years, it
broke through the following ratios: humans twice as much as
corporations in 1948; three times as much in 1971; four times as much
in 1981; and recently the ratio broke through 6 to 1, individual
Americans contributing more than six times the revenue that corporate
America contributes. When people say how overtaxed corporate America
is, it is worth looking at the facts of where we actually are and
whither for decades we have been tending--ever diminished corporate
contributions to our Nation's revenues.
Look next at how we collect revenues. Look at the landmarks of our
dysfunctional Tax Code. Start with what it takes to comply with our
beast of a code. The National Taxpayer Advocate, an independent office
within the IRS, has calculated that Americans spend 6.1 billion hours
of time engaged in tax compliance each year. Think of what could be
invented, what could be built with 6 billion hours of human work.
Instead, it is all consumed, every year, in the economic dead weight
loss of tax compliance. In terms of where we are, that is an important
fact, and it is an abysmal place to be.
Let me take my colleagues to another place. Here is a picture from
our Budget Committee Chairman Kent Conrad taken in the Cayman Islands.
This nondescript building doesn't look like much. It certainly doesn't
look like a beehive of economic activity. But over 18,000 corporations
claim this building as their place of business. It gives a whole new
meaning to the phrase ``small business'' when we think of 18,000
corporations claiming that building as their place of business. As
Chairman Conrad has pointed out, the only business going on here is
funny business, monkey business with the Tax Code, tax gimmickry. This
is estimated to cost us as much as $100 billion every year. For every
one of those dollars lost to the tax cheaters, honest tax-paying
Americans and honest tax-paying American corporations have to pay an
extra dollar or more to make up the difference.
Here is another building with a tax story to tell about where we are
as we look at our budget debate. This is the Helmsley building New York
City. This building is big enough to be its own zip code so that the
IRS reports of tax information by zip code can tell us a lot about this
building. Here is what this building tells us from actual tax filings.
The well off and very successful occupants of that building paid a
lower tax rate than the average New York City janitor paid. It seems
extraordinary, but it is not a fluke. The average tax rate of the New
York City janitor is 24.9 percent of their income. Of a New York City
security guard, is 23.8 percent of their income. And of the occupants
of that wonderful building, 14.7 percent of their considerably larger
incomes. That seems as though it must be extraordinary, but it is not a
fluke.
The IRS reports that the tax rate actually paid by the highest income
400 Americans--the story is the same--the highest earning 400
Americans, in the IRS's most recent calculation, each earned an average
of $34 million-plus a year, over a third of a billion each and every
year, 400 of them. I truly applaud their success. It is a magnificent
thing. But here is the rub. They actually paid on average only a 16.7
percent total Federal tax rate. I asked my staff to calculate the wage
level where a regular single worker starts paying 16.7 percent in total
Federal taxes. It is at a salary of $28,650. A representative job
[[Page S2036]]
at that income level in my home State, in the Providence labor market,
is that of a hospital orderly which the Bureau of Labor Statistics
calculates pays $29,100 a year. At that point, they are paying the same
as the 400 biggest taxpayers who each earned over a third of a billion
dollars, 16.7 percent. So it is not just the fortunate and successful
residents of the Helmsley building who pay a lesser share of their
income to support their country than does the janitor, it is also the
top 400 income earners, those averaging over a third of a billion in
income, who contribute a lesser share of their income than the hospital
orderly pushing his cart down the halls of Rhode Island Hospital at
night.
Where are we? Well, it seems to me we are upside down as far as this
is concerned. I believe no less an economic titan than Warren Buffett,
the fabled ``oracle of Omaha,'' agrees with me that this needs to be
corrected.
The corporate Tax Code makes little more sense. Decades of lobbyists
have carved it into a Swiss cheese of tax loopholes, of earmarks for
the rich and powerful. The result? We have a nominal corporate tax rate
of 35 percent. But here is what the New York Times reported last week.
General Electric, one of the Nation's largest corporations, made
profits of over $14 billion last year and paid no U.S. taxes. In fact,
it actually received a $3.2 billion refund from the taxpayers. Maybe
that was a 1-year anomaly. But a previous analysis by the New York
Times of 5 years' worth of corporate tax returns found that Prudential
Financial only paid 7.6 percent; Yahoo, 7 percent; Southwest Airlines,
6.3 percent; Boeing, 4.5 percent; and what looks to be our tax
avoidance champion, on $11.3 billion of income, the Carnival Cruise
Corporation paid 1.1 percent in Federal taxes. One recent paper
actually calculated their cash effective tax rate at 0.7 percent on
$11.3 billion in income. Carnival lines is not just taking us for a
cruise, they are taking us for a ride.
But wait, there is more. Don't forget that we make the American
taxpayer subsidize big oil to the tune of $3 billion a year, and big
oil has made a trillion dollars in profits this decade. Indeed, on an
effective tax rate basis, the petroleum-gas industry pays the lowest
rate of any industry.
These are all noteworthy landmarks and each should inform us about
where we are and whither we are tending as we face our budget. But the
big landmark, the Mt. Everest of landmarks casting its vast shadow over
the entire budget discussion, is health care.
I agree with Congressman Paul Ryan. He said:
If you want to be honest with the fiscal problem and the
debt, it really is a health care problem.
He is dead right. And the landmark feature of this landmark problem
is this. The health care cost problem is a health care system problem.
Our national health care costs are exploding. The health care system is
driving the costs of Medicare. The health care system is driving the
costs of Medicaid.
The health care system is driving the costs of private insurance. The
health care system is driving the costs of the military's TRICARE
system. No one is exempt. The health care system is what is driving the
cost problem in public and private programs alike. So we have to
address the health care system problem if we are going to get our
health care costs under control.
How do we solve this? We actually have a pretty good toolbox that has
five major tools in it.
One, quality improvement. Quality improvement saves the cost of
errors, misdiagnosis, disjointed care, and so forth. For example,
hospital-acquired infections alone cost about $2.5 billion every year,
and they are virtually entirely avoidable. They should never be events.
Two, prevention programs. Prevention programs can avoid the cost of
getting sick in the first place. More than 90 percent of cervical
cancer is curable if the disease is detected early through pap smears.
Three, paying doctors for better outcomes rather than for more and
more tests and procedures can save money while improving the outcomes.
Four, a robust health information infrastructure has been estimated
to save $81 billion a year by the RAND Corporation, and that number may
very well be low as the system builds itself out.
Finally, five, the administrative costs of our health care system are
grotesque. The insurance industry has developed a massive bureaucracy
to delay and deny payments to doctors and hospitals. The doctors and
hospitals have had to fight back, so they have had to hire their own
billing departments and consultants.
In the little Cranston community health center, which I visited a few
months ago, half of the staff are dedicated to trying to get paid, and
they have to spend another $200,000 a year on consultants. All of
that--the entire war over payment between insurers and hospitals and
doctors--adds no health care value--zero. We have heard that on the
private insurance side, anywhere from 15 to 30 percent of the health
insurance dollar gets burned up in administrative costs. We know we can
do better because the costs of administering Medicare are closer to 2
percent of program expenditures. Add this all up, and the numbers here
are enormous.
The President's Council of Economic Advisers has stated that 5
percent of GDP can be taken out of our health care system without
hurting the health care we receive. That is about $700 billion a year.
The New England Healthcare Institute says it is $850 billion a year.
The well-regarded Lewin Group has estimated the probable savings at $1
trillion a year, a figure echoed by former Bush Treasury Secretary
O'Neill.
Not only are the numbers enormous, but the results are a win-win.
Consider the five strategies: higher quality care with fewer errors and
infections; prevented illnesses, so you do not get sick in the first
place; secure, complete health records that are there when you need
them, electronically, so your doctors, your lab, your pharmacy, your
hospital, your specialists all know what everybody else is doing;
payment to doctors and hospitals based on keeping you well and getting
you well rather than on giving more procedures and things to you; and
finally, not so much infuriating insurance company bureaucracy,
hassling both patients and doctors. Those are not bad outcomes even
without the savings.
So what do we draw from this if we keep all these landmarks in mind,
landmarks of where we actually are in this budget debate? Well, our
colleagues on the other side, particularly our House Republican
colleagues, say they are determined to reduce our annual deficit and
our national debt, that it is their top priority. But in evaluating
that claim, look at H.R. 1, which spends all its cost-cutting fury on
only 12 percent of the budget--the nonsecurity discretionary spending--
and zero percent on the revenue side.
If they are really serious about deficit and debt reduction, why risk
destroying 700,000 jobs when job destruction only adds to the deficit
and to our debt through lost economic activity and revenue?
If they are really serious about deficit and debt reduction, why is
not one corporate tax loophole on the chopping block--not one? Why is
the Tax Code off limits in this discussion, as it burns up 6 billion of
our precious hours every year and makes that hospital orderly, pushing
that cart down the linoleum hallway at midnight, pay a higher rate than
those fortunate and able Americans who made more than $1/3 billion each
in a single year?
If they are really serious about this, if deficits and debt are
really the most important thing we face, why is there no discussion of
corporate America's ever-diminishing contribution as a share of our
national revenue?
If our friends are really serious, why is there no plan for even one
of the 18,000 corporations in that phony-baloney headquarters in the
Cayman Islands to pay its proper taxes?
Finally, if they are really serious, why is there so much pure
political nonsense about ObamaCare and socialized medicine instead of a
mature discussion about using and improving the tools in the health
care bill to address our grave national health care system problem?
Further, why is it necessary to throw Planned Parenthood and Head
Start and every single idealistic young kid in City Year and Teach for
America under the bus? Not one kid in an American school doing Teach
for America can be spared, and yet we must keep our full deployment of
57,000 troops in Germany? Is it necessary to single out the
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Environmental Protection Agency for the gutting that polluters long
have lusted for? Why go after Social Security, which has never
contributed a nickel to America's debt or deficit?
It just seems to me that until one, just one, corporate tax loophole
is on the table; until one, just one, subsidy to big oil is on the
table, one, just one, subsidy to big agribusiness; until we are even
beginning to talk about billionaires contributing Federal revenue in
the same share of their income as that hospital orderly; until our
friends are not so casual about threatening 700,000 jobs and perhaps
$20 billion in related tax revenue; until the cuts and all those riders
in H.R. 1 make it something other than a Republican Trojan horse of
political favors and ideology, then count me a skeptic about their real
priorities.
I have always found that you get a better read looking at what people
actually do rather than just believing whatever they say. If you look
at what H.R. 1 actually does, it is the same old Republican agenda--
attacking programs that help the poor, attacking women's right to
choose, attacking national voluntary service, helping polluters get
around public health measures, reducing the share of revenues paid by
corporations and very high income individuals. It is the same old song.
And most important, if you go that road, it is just not adequate to
meet the serious problems at hand. We need to look throughout the
budget and across all of our opportunities to bring down our Nation's
deficits and to bring down our Nation's debt.
I look forward in the months ahead to a serious, fair, and sensible
discussion, a mature discussion of how to reduce our deficits and our
debt.
I thank the Chair, and I yield the floor.
I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The legislative clerk proceeded to call the roll.
Mr. HARKIN. Mr. President, I ask unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER (Mr. Coons.) Without objection, it is so
ordered.
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