[Congressional Record Volume 157, Number 67 (Monday, May 16, 2011)]
[Senate]
[Pages S2980-S2981]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                             THE DEBT LIMIT

  Mr. KYL. Mr. President, I want to speak for a few minutes today about 
the effort that we are undergoing right now with the Vice President and 
our colleagues in the House of Representatives to find a way to 
constrain spending, reduce our deficits and debt sufficient to warrant 
an increase in the debt ceiling, as the President has asked us in the 
Congress to do.
  We are told by the Secretary of the Treasury that by around the first 
part of August the United States will run up to the debt ceiling and, 
therefore, Congress needs to pass legislation to extend that authority. 
Essentially, this is because financial commitments the United States 
has already made can only be paid if we borrow money to pay those 
financial commitments. Therefore, the debt ceiling would need to be 
increased.
  Members of both bodies on both sides of the aisle have acknowledged 
that one of the primary things we need to do at the same time we raise 
the debt ceiling--if that is to be accomplished--is to ensure that we 
don't have to keep doing that in the future; that is to say, that we 
don't keep piling on more debt by increasing spending in the future so 
that certain things will be necessary at that time: constraints on 
future spending; limitations on the ability of Congress and the 
President to pass additional appropriations for spending; for example, 
setting limits on our budget for the next at least couple of years so 
we know exactly how much Congress would be authorized to spend. Of 
course, those limits should take us back in time. They should not 
increase the amount of spending but should result in reductions.
  Tackling entitlements--we know the big money is in entitlements such 
as Medicaid, Medicare, Social Security, and other forms of what is 
called mandatory spending, spending that is committed to groups of 
Americans that doesn't require congressional action but money that we 
know we are going to have to spend in the future--enormous sums, in the 
trillions of dollars.
  If we are not able to trim that in one way or another, or at least 
stop the increases in growth, we are not going to be able to afford 
those programs in the future and would, therefore, have to continue to 
raise the debt ceiling.
  Another question that has arisen is whether it would be helpful in 
this connection to raise taxes. I have said, and the Republican side 
has said, we will not do that as part of this exercise in extending the 
debt ceiling. There may come a point in time later this year or next 
year where all of us would get together and engage in what some have 
called fundamental tax reform--or I like to call it progrowth tax 
reform because I think a lot of economists believe our Tax Code today 
is not conducive to economic growth, and were we to make it much 
simpler and do things such as reducing the corporate tax rate, for 
example, we can be much more competitive with our foreign trading 
partners. The President himself has made the point that we can reduce 
the corporate tax rate were we to eliminate what some call loopholes, 
and thereby reduce the amount of money we have to collect through the 
tax rate itself. This is a potential when we get into that kind of 
reform.
  I want to distinguish the point of rebalancing our Tax Code to get a 
progrowth kind of Tax Code with the possibility of generating more 
revenue to deal with our debt situation. Those are two totally 
different situations. While I would be very much in favor of taking a 
look at these tax expenditures, various subsidies, for example, to 
different groups to see whether we could reduce some of those, thereby 
reduce tax rates in a revenue-neutral manner so our Tax Code would be 
more conducive to growth, but in a revenue-neutral manner, meaning not 
in order to raise revenues but in order to have a more sensible Tax 
Code so we can be more competitive with our trading partners, for 
example, that is what the President, as I understand it, proposed 
relative to our corporate tax rate, which is the highest in the world 
today. If we can get that down from 35 percent to 20 or 25 percent, we 
can be much more competitive with our trading partners.
  One way is to reduce so-called tax expenditures. To give an example 
or two, we have significant tax credits and deductions that are taken 
for the production of things such as ethanol or for production of 
certain kinds of weather stripping equipment or solar energy equipment. 
This is an effort to promote so-called green energy. Those are pretty 
big subsidies. They are tax credits or deductions called tax 
expenditures. Were some of those to be eliminated or reduced, then we 
can offset that increase in revenue with a reduction in the tax rate 
and still have as much revenue coming into the Treasury but have a more 
sensible Tax Code.
  Let's contrast that with the situation on the debt ceiling question 
because that is the one before us right now. We are going to have to 
act on the debt ceiling in the next couple of months or so. The 
question is, How should we deal with our ballooning deficits and debt 
in order to warrant increasing the debt ceiling above what it is today? 
The answer, of course, is to reduce spending, not raise revenues or 
increase taxes.
  I don't think anybody is suggesting increasing revenues by increasing 
tax rates. But some people have said we can eliminate some of these 
loopholes or tax expenditures, and that is a way to collect more 
revenue. If a company cannot take a certain credit or deduction, it is 
going to have to pay more in taxes.
  I wish to make the point that, no if we are going to get into that 
kind of discussion, we should do it in the context of reforming our Tax 
Code so we can use those increased revenues in order to reduce the tax 
rates, as I said before, so that our country can be more competitive.
  That is the context in which we should be discussing the reduction or 
elimination of some of these so-called tax expenditures.
  Just in looking at this in an abstract way--and I will get more 
specific about numbers--our problem is spending. We have increased 
spending so much more than it has ever been in the past that we are 
getting very deep in debt.
  To just give a comparison, spending is over 25 percent of GDP. That 
is the amount we are now spending at the Federal Government level. Our 
historic level is just above 20 percent of the GDP. That is an enormous 
increase in the amount of spending by this country. Some will point out 
that the revenues collected by the Treasury are also down, and that has 
contributed to the deficit. To some extent that is true. What are the 
reasons? It is primarily because of the recession that we have been in 
since the end of 2006--the decrease in the amount of money that 
individuals and businesses are making, and therefore a reduction in the 
revenues collected as taxes by the IRS. So revenues are down, but it is 
due to the recession that we have. We have not cut tax rates in the 
last few years--since 2006--for example.
  The last time we had any kind of tax reduction was as a result of the 
2001 and 2003 so-called Bush tax cuts. But we were generating a lot of 
revenue in this country before the recession. The recession caused us 
to generate less as families, as State and local governments, and as 
the Federal Government. But CBO figures demonstrate that under any of 
the budgets offered, including the Obama budget, we will be back to 
historic average levels of tax

[[Page S2981]]

collections in just the next few years--something on the order of 20 
percent of our gross domestic product. Revenues are not the problem. 
They are going to be back where they have always been. Our problem is 
the spending, as I said. The spending in this country is now above 25 
percent.
  I misspoke a moment ago when I was talking about collections. The tax 
collections in this country have averaged between 18 and 19 percent of 
GDP. The spending has been a little above 20 percent. So the revenues 
are going to get back up to that 18 or 19 percent under any of the 
budgets that have been suggested--the Ryan budget, the Obama budget, 
and others.
  The problem is spending. Under the Obama budget, spending never gets 
below 23 percent of the gross domestic product. In the Ryan budget, it 
goes from the 25 percent that we are at today to below 20 percent. I 
think that after 10 years, in the Ryan budget passed by the House of 
Representatives, it is about 19.1 percent of the gross domestic 
product. That is a way to get spending down to historic levels. 
Revenues will be back up to historic levels, and that is the way we 
have both a vibrant economy and we produce the revenues the Federal 
Government needs to operate without having to borrow 40 cents or 42 
cents on every dollar as we have to do today.
  When we are talking about how to get the budget better balanced, how 
to reduce our deficits, we should not be looking at the revenue side or 
the taxing side; we should be looking at the spending side. On 
spending, we know the big money is in the entitlements, not the 
discretionary part of the budget.
  We need to, as a downpayment, be looking in the order of magnitude of 
about $2 trillion. Speaker Boehner has said that if the administration 
wants to increase the debt ceiling by $2 trillion, then we should show 
$2 trillion in savings. If it is $1 trillion, then make it $1 trillion. 
So far in our negotiations, we are only talking about a couple hundred 
billion dollars. We have to get up to the $1 trillion and $2 trillion 
level. Over the course of the 10 years, we are going to have to at 
least double that to more than $4 trillion if we are going to handle 
the long-term debt problem. That is how big it is.
  Under the Ryan budget, the actual debt ceiling is increased by $5 
trillion over 10 years. So we are not talking about slashing everything 
in half. We are talking about continuing to have to borrow more money 
to pay our bills. But under the Obama budget, the amount we would have 
to borrow, in addition to what we have, is $12 trillion. President 
Obama would be asking us to raise the debt ceiling by another $12 
trillion, and that is not sustainable in this country. It has to be 
more along the line of the Ryan budget, as I said. That means we are 
going to have to come up this year with at least $4 trillion--I would 
say between $4 trillion and $6 trillion--in savings in order to be able 
to bend this spending curve downward over time. That means at least a 
couple trillion dollars as a downpayment, at least double that over 
this 10-year period, and that means a lot more than what we have been 
talking about in our negotiations so far.
  I do not doubt the good will of the parties to achieve that 
objective, but it cannot be achieved by looking at just domestic 
discretionary spending. We have to look at fundamental entitlement 
reform in order to achieve those kinds of savings. For those who say 
that may change the Medicare Program or it may change the Social 
Security Program, two things:
  First, nobody is talking about changing any of those programs for 
anybody who is currently on them or even somebody who is going to be on 
them within a 10-year period of time. We are not talking about people 
who are on Social Security or people who are even 9 years away from 
Social Security.
  Second, with respect to the benefits that are promised in these 
programs, understand that if we do not do something about them now, 
those benefits are not going to be there in 15 or 20 years. In fact, 
under Social Security, the law is that when it no longer has the 
benefits, the benefits stop. This is not a matter of either keeping in 
law what we have right now or nothing; this is a matter of either 
fixing the programs now or having a dramatic reduction in benefits on 
down the road. That is why we need to tackle this issue now.
  One of the reasons I wanted to discuss this on the floor today is 
because there is some misunderstanding of comments I made on television 
yesterday, and I think it is easy to misunderstand people when they 
talk about raising revenue in the context of dealing with a budget 
deficit. Republicans are simply not going to raise tax rates in order 
to try to reduce this deficit with more revenue as opposed to savings. 
It is much different to talk about that than it is to say there are tax 
expenditures we can deal with, and if we can eliminate those or reduce 
them, then we can also reduce our tax rates and make our Tax Code more 
competitive.
  That makes a perfect amount of sense. But I don't think we will be 
able to do that within the next 2 months. My guess is it is either 
going to be later this fall or early next year before we are able to 
achieve that kind of bipartisan revision of our Tax Code, if we can 
even do it then. I hope we can because I think there is a recognition 
by a lot of folks that there are a lot of these tax expenditures in the 
code that do not need to be in the code. They pick winners and losers. 
The more we can do away with and thereby reduce tax rates, the better 
off we will be. I am hopeful we will, through these bipartisan 
negotiations, be able to come together on significant savings.
  The last point I will make is I would not be concerned, however, that 
the United States of America will ever default on our debt. We will 
not. The President has made it clear, the Secretary of the Treasury has 
made it clear that we can't. In fact, if we look at article IV of the 
14th amendment, it says we can't. So I don't think any creditor should 
be of the view that we are not going to pay them when their T-bill 
comes due. That is not going to happen.
  Nonetheless, it is not a good situation when the income of the 
government is less than the bills we need to pay because even though we 
may pay creditors, that may mean, Mr. President, your paycheck and mine 
might be paid 2 weeks late or something like that, and I am sure all of 
us would like to see our bills paid on time. But I think we can come 
together and even avoid that result if we are able to work together as 
both sides of the aisle and as both bodies in the Congress have 
committed themselves to do.
  Mr. President, 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. CARDIN. Mr. President, I ask unanimous consent the order for the 
quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.

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