[Congressional Record Volume 157, Number 104 (Wednesday, July 13, 2011)]
[Senate]
[Pages S4558-S4561]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. NELSON of Florida:
  S. 1364. A bill to ensure the timely payment of Social Security 
benefits in August 2011; to the Committee on Finance.
  Mr. NELSON of Florida. Mr. President, the Budget Committee chairman, 
the Senator from North Dakota, has, in fact, laid out a budget. It puts 
us on a serious road toward budget balance by utilizing real numbers, 
not sleight of

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hand numbers, not budget fakery numbers, not a budget as a political 
document but a budget as an economic document. And it nips--indeed, it 
savages--the annual deficit and the Federal debt of $4 trillion over 10 
years.
  This is real money, and it is real money that is basically in balance 
between $2 trillion of spending cuts--which we have had all of those 
kinds of talks going on down at the White House, and they seem to get 
to an agreement of $2 trillion of spending cuts. But when it comes to 
the revenue side, there seems to be an unwillingness to accept 
revenues.
  What I would like to do is elucidate further on the Budget Committee 
chairman's presentation yesterday or the day before of this budget on 
how we can produce $2 trillion of new revenue and it not be considered 
as just straight tax increases but, instead, of going to two other 
parts of the Tax Code that have been off limits to so much of the tax 
planning and tax cuts that we have been talking about. Of course, I am 
talking about the $14 trillion of tax expenditures that the Federal 
Government expends by not having that tax revenue coming in to the tune 
of $14 trillion for special tax preferences over the course of the next 
decade.
  Now, if that were not enough in itself, there is also an additional 
$1 trillion that is money that is kept abroad that is not brought back 
into this country and, therefore, is not taxed. Just a little portion 
of that money being kept overseas could be brought in and used in 
productive activities in the United States. But it would be brought in 
as income instead of housed in one three-story building in the Cayman 
Islands for 18,000 corporations, where all it is is a residence for a 
corporation to use to avoid U.S. taxes.
  Now, if we are going to do anything serious about lowering the 
deficit, we are going to have to try to stop this nonsense that is 
going on. In the case of tax preferences, the tax expenditures, the $14 
trillion, the Senate, in an overwhelming vote a couple of weeks ago, 
actually attacked one of those tax preferences.
  Remember when we voted something like 95 to 5 here to get rid of the 
subsidy on ethanol made from corn? It was a subsidy put in years ago to 
encourage ethanol made from corn as a way of blending it with gasoline 
that would then lessen our reliance on oil, particularly foreign oil. 
But now we know we can make ethanol from a whole bunch of other things, 
and it doesn't have to be making ethanol from something that we eat, 
which all it was doing was driving the price of corn higher and, of 
course, corn is being used as a feed in the feed lots and, therefore, 
the meat products that the American consumer was getting at the grocery 
store went much higher in price.
  So we realized here was a tax subsidy, a tax preference, in other 
words, a tax expenditure, that had outlived its usefulness. There are 
$14 trillion of these tax preferences that are, in effect, for the next 
decade, and it would not be an unreasonable question to ask: Could we 
reduce those tax preferences just a little bit? If you reduced them, 
just 17 percent of all those tax preferences, you would produce $2 
trillion. If that $1 trillion that is kept overseas--if you could stop 
some of those laws that keep foreign income held by U.S. companies 
abroad, if you could just tax a little bit of that, then we could even 
lower the percentage that we needed to get into the tax expenditures.
  Now, there are some tax expenditures that are obviously very popular 
and very necessary. Charitable contributions, which include 
contributions to churches, they get a charitable deduction that you 
deduct from your overall income in order to get your adjusted gross 
income. From that you subtract the various deductions you have to get 
to your taxable income. Clearly, giving charitable contributions is an 
activity that we want to encourage, and we encourage that in the Tax 
Code.
  Another example is, you own a home. You go to the bank, you get a 
mortgage, the mortgage payments that include principal and interest. 
You are able to deduct the interest that you are paying on that 
mortgage, and that is a tax preference. It was originally put in to 
encourage home ownership. Well, should that preference continue for 
those who don't need the help?
  I think these are questions. So if we start just doing little things 
with this $14 trillion of tax preferences, we can make major reductions 
in the annual deficit.
  Let me give another example: Oil and gas. There are a lot of tax 
preferences for the oil and gas industry. Normally, when a business 
goes in and provides capital to get a business up and going, that 
capital equipment is allowed to be deducted over the life of that piece 
of equipment.
  Well, so much of oil and gas equipment is allowed to be written off 
in the very first year as an expense of doing business in that first 
year. That is just one other example. So if we look at it, are we 
capable of taking $14 trillion of tax preferences--some people call 
them tax expenditures; some people call them tax giveaways--and, 
therefore, reduce those, especially the ones that are ineffective and 
inefficient, even though it is going to step on somebody's toes? Some 
special interest that has that tax preference, they are not going to 
like it. They want their goodies. But for the purpose of balancing the 
budget, for the purpose of bringing this deficit down so we can get on 
the road to fiscal order instead of the fiscal chaos that we have now, 
is that not a legitimate question to ask and a legitimate road to go 
down?
  No less than one of the senior economic advisers to President 
Reagan--his name is Martin Feldstein. He was a Harvard professor and 
the Chairman of the Council of Economic Advisers to President Reagan. I 
want you to see what he says about reducing tax expenditures.

       Cutting tax expenditures is really the best way to reduce 
     government spending. Eliminating tax expenditures does not 
     increase marginal tax rates or reduce the reward for saving, 
     investment or risk-taking. It would also increase overall 
     economic efficiency by removing incentives that distort 
     private spending decisions. And eliminating or consolidating 
     the large number of overlapping tax-based subsidies would 
     also greatly simplify tax filing. In short, cutting tax 
     expenditures is not at all like other ways of raising 
     revenue.

  Martin Feldstein, well regarded in conservative circles.
  With this crisis looming, why can't we get people to recognize that 
if we want balance, they have to give, too, and here is a good way. I 
want to expand on this--another way we could do it.
  We could actually, as the Simpson-Bowles commission suggested, lower 
these tax expenditures Martin Feldstein is talking about. We could even 
take that additional revenue and pour it into the rest of the Tax Code 
and lower the tax rates for everybody, including corporate tax rates, 
and in the process we could also simplify the Tax Code into three tax 
brackets. All of the tax brackets would be lowered if we got rid of 
some of those tax expenditures. There are multiple ways we can use 
this, and in the process, then, we are starting some serious tax 
reform.
  The Senator from North Dakota has laid this out. He has explained 
this to the Senate. He has the unanimous support of the majority of the 
Senate Budget Committee. He has the near-unanimous support of the 
entire majority in the U.S. Senate. He has explained this to the 
President and to the Vice President.
  Of course, one of the easy ways to react to this is, well, there is 
not enough time. If we want to do major tax reform and tax 
simplification for the sake of our consumers, there sure is time 
because we could solve this debt ceiling crisis with a commitment down 
the line to doing just exactly what I have talked about.
  As we are in this maelstrom of all of these different ideas going 
around about what we are going to do before August 2 so the debt 
ceiling can be raised and so the country can pay its bills, I have 
heard about some disturbing things out there on the horizon. One is 
that Social Security is going to get whacked and that Medicare is going 
to get whacked.
  By the way, what the Budget Committee is proposing does not whack 
Social Security or Medicare providers. In the first place, Social 
Security is not in financial trouble in the foreseeable future. It is 
not until the late 2030s that it starts to get into difficulty. It is 
around 2035 that it would not, in that year, be able to pay 100 percent 
of its payments. We can correct that before then.

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  Our problem is now. Our problem is this next decade of bringing this 
budget on a path toward balance and bringing the annual deficit down to 
a much lower percentage of gross domestic product.
  The budget I have just outlined, that is the work product of the 
Senate Budget Committee chairman, brings it down at the end of the 
decade to 1.8 percent--the deficit--to GDP. Anytime we get below 3 
percent of the deficit being a percentage of GDP, we are on the path to 
fiscal stability, and we would be moving toward that position of 
balance--a position, by the way, we enjoyed 11 years ago because we 
were in surplus. Eleven years ago, we had 4 years of surplus in a row, 
but we started enacting policies--and, I might say, not with the vote 
of this Senator--that caused the revenues to drop off considerably. 
Then, of course, when we got in the situation where we started 
increasing expenditures for one reason or another--increasing 
expenditures for national defense, for two wars--and those were wars we 
were not paying for with a revenue source; in fact, we were just going 
out and borrowing the money.
  So this brings me now to Medicare and Social Security. It might make 
some people in Washington, DC, feel good to whack Medicare. It 
certainly wouldn't make this Senator feel good. It certainly wouldn't 
make an awful lot--as a matter of fact, some 45 million senior citizens 
in this country are on Medicare, some of whom are living from hand to 
mouth, from Social Security check to Social Security check, and from 
Medicare reimbursement to Medicare reimbursement for their health care. 
It certainly wouldn't make them feel good. And it is not going to do 
anything immediately for the deficit we are having to confront. So why 
trade off, saying we are going to whack these two programs and not 
attack things such as tax expenditures that are inefficient and don't 
produce what they are supposed to do via the incentives in the Tax 
Code? It simply doesn't make sense.
  Oh, by the way, isn't it interesting, isn't it almost ironic that the 
people who are now attacking Medicare and saying we have to whack it 
are the very people who were criticizing us 2 years ago in the health 
care bill when we eliminated $\1/2\ trillion of inefficiencies and 
overpayments out of Medicare to put the program on a more financially 
solvent path? And they were the very ones who were criticizing us for 
taking that money out of Medicare. Well, I say to my colleagues, we 
already took on Medicare, so we ought to get down to the hard choices 
of budget deficit reduction, which means cutting spending and getting 
rid of some of these tax expenditures so we can start bringing our 
budget into balance.
  My final subject is Social Security. Now, why in the world would we 
want to scare the bejabbers out of 45 million senior citizens of this 
country, some of whom literally are living hand to mouth and from 
Social Security check to Social Security check and some of whom cannot 
afford the cost of drugs even partially provided for through Medicare 
Part D, the prescription drug benefit? I don't think we want to do 
that.
  As we get closer to August 2, I am hearing--and I hope every other 
Senator is hearing from all of these senior citizens and these disabled 
workers who are relying on Social Security--that they are concerned 
about Washington's failure to get its house in order, and if we fail to 
get our house in order, it is going to threaten the very source of 
income they count on. So to risk a government default and to say the 
only way we can do it is by taking it out of Social Security is not 
going to do anything for us in reducing the deficit over the next 
decade, which is the problem at hand.
  Yesterday, the President was asked if he could tell the folks at home 
that no matter what happens, Social Security checks are going to go out 
the day after the government is supposedly going to go into default. Do 
my colleagues remember what the President said? He said: I cannot 
guarantee that those checks go out on August 3 if we haven't resolved 
this issue because there may simply not be the money in the coffers to 
do it.
  So the people who are relying on a fixed income of Social Security to 
survive--Social Security payments are more than just a government 
statistic. For them, Social Security is more than just a Federal outlay 
or an entitlement expenditure. There are almost 4 million Social 
Security beneficiaries in my State. I can tell my colleagues that their 
Social Security pays the rent, it pays for the groceries, and it helps 
pay their medical copays. It helps pay for that over and above what is 
provided in Medicare.
  It is interesting, these speeches I hear. It is all ``it is your 
fault, and it is your fault, and it is the other guy's fault, and it is 
so partisan, and it is so ideologically rigid.'' The only way we are 
going to solve something that is as tangled up as this is for people of 
good will to be willing to respect the other fellow's point of view and 
come together and build consensus to find a workable solution.
  So as we get closer--and we can almost hear the background music; it 
is getting more ominous day by day as the clock ticks down to August 
2--there is something we can do about it. The threat that Social 
Security payments could be delayed should not be used as a weapon to 
force a slash-and-burn cut to these entitlements. I said 45 million 
earlier; it is actually 56 million retirees who rely on these payments.
  A recent report from the Congressional Research Service states:

       Under normal procedures Treasury pays Social Security 
     benefits from the General Fund and offsets this by redeeming 
     an equivalent amount of the Social Security Trust Funds' 
     holdings of government debt. Treasury now may need to issue 
     new public debt to raise the cash needed to pay benefits. 
     Treasury may be unable to issue new public debt, however, 
     because of the debt limit.

  In other words, if the debt ceiling is not raised, Social Security 
benefits could be delayed or jeopardized. So perhaps what we ought to 
do is enact some legislation that takes Social Security out of the 
equation in the event we don't reach a deal on the debt ceiling by 
August 2.
  In the past, the President and the Congress have agreed to exempt 
Social Security from the debt ceiling in order to ensure that the 
payments go out to Social Security recipients. As a matter of fact, as 
recently as 1996, Treasury reported it had insufficient cash to pay 
Social Security benefits in March of that year. In response, Congress 
then passed--and it was a bipartisan Congress; it was headed by a 
majority of the Republican Party, and there was a Democratic President, 
President Clinton. They passed--and it was signed into law--a measure 
that provided the Treasury with temporary authority to issue securities 
to the public in the amount equal to the Social Security benefit 
payments due.
  I will conclude by pointing out that after that was done in 1996, 
Congress later extended the borrowing authority for an additional 2 
weeks.
  I believe we should use what we know works and not play games with 
Social Security benefits. So I am introducing some legislation, and I 
am introducing it today. It is called the Social Security Benefit 
Protection Act. What it suggests is the way we ought to go. Now, I know 
we are not going to take up and pass this legislation, but I have a 
means by which I can get this idea out. What it does is guarantee that 
the Social Security Administration will be able to continue paying 
Social Security benefits to retirees, survivors, and disabled workers 
regardless of what happens to this political gridlock here in 
Washington.
  Similar to the 1996 legislation, this legislation gives the Treasury 
Department temporary authority to issue new debt to ensure the payments 
can be made to Social Security beneficiaries, but only to the extent 
necessary to cover the needs of the Social Security Program.
  I urge our colleagues to try to come together and give the assurances 
to millions of retirees that they are not going to be whacked and, 
especially so, they are not going to be whacked out of political 
gridlock by all the rest of us for these excessive reasons. I urge my 
colleagues to take a look at the ideas in this legislation that I have 
filed.

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