[Congressional Record Volume 157, Number 107 (Monday, July 18, 2011)]
[Senate]
[Pages S4625-S4627]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                          BUDGET NEGOTIATIONS

  Mr. KYL. Mr. President, I wanted to speak for a moment here about the 
status of discussions that Members of Congress have been having with 
the President and others regarding the debt ceiling, the extending of 
the debt ceiling, and how we can solve the problem that confronts our 
country.
  Obviously, in 10 minutes, I will be brief and hit some of the 
highlights. But the first question I was asked on a program I was 
involved in was: Well, why wouldn't Republicans be supportive of 
raising taxes? So I want to answer that. There are three answers to 
that question. The first is, if you go to the doctor and he is going to 
treat you for what is wrong with you, he needs to figure out what is 
wrong and then treat that condition rather than something totally 
different. So the reason we are not going to want to raise taxes here 
is because it has nothing to do with the problem we have.
  I meant to have this chart blown up, but I wasn't able to do it in 
time, but this shows how much money we are

[[Page S4626]]

spending. As you can see, when President Obama came into office, the 
spending spiked dramatically. We have historically spent about 20 
percent of the gross domestic product of the country. With the Obama 
spending, we have gone straight up to about 25 percent of our gross 
domestic product. The problem, in other words, is not taxing; the 
problem is spending. So that is the first reason we should focus on 
spending, and reducing Federal spending, not focus on the Tax Code, 
which is not the problem.
  The second problem with raising taxes as a part of this exercise is 
the taxes the President is talking about are not just on millionaires 
and billionaires. There are 319,000 households that report income of 
over $1 million, so you can say 319,000 billionaires or millionaires. 
But there are 3.6 million households also in the same tax bracket that 
don't report incomes of even $1 million. So as we have done before, 
with the alternative minimum tax, for example, we aim at the 
millionaires and billionaires but we end up hitting a lot of other 
Americans. This isn't just about taxing millionaires and billionaires.
  Who are the other people who would be the target of the tax increases 
proposed by the President? Well, we know that 50 percent of all small 
business income is reported in those top two brackets. So the first 
thing you have to think about here is doing harm to the economy. If you 
are hitting the small businesses with more taxes--which, by the way, 
historically create two-thirds of the jobs coming out of a recession--
you are going to inhibit economic growth. That is a problem that is 
recognized even by the Obama administration and by the President. Last 
December, the President reached agreement with the Congress and we 
extended the existing tax rates--sometimes they are called the Bush tax 
cuts, but those tax rates have been in existence for a decade now--and 
they were extended another 2 years.
  At the time the President said: In the time of economic downturn, 
that is the worst time to raise taxes so we shouldn't do it.
  We are still in an economic downturn, one could say even worse than 
it was back then. We are now back up to 9.2 percent unemployment. The 
economy is not getting better; it is still sick, and the worst medicine 
for a sick economy, as even the President has said, is a tax increase.
  One of the taxes the administration sought to increase was the 
subject of a report by the Obama administration's small business 
agency, the SBA, and it said this particular tax increase ``could 
ultimately force many small businesses to close.''
  Why would you propose raising a tax which could ultimately force many 
small businesses to close? It doesn't make sense. That is the second 
reason we are focused on wasteful Washington spending, not on raising 
taxes.
  The third reason to talk about the problem of raising taxes is 
related to the second; that is, the effect it would have on job 
creation and the economy. If you add the tax rate that will result from 
the automatic tax increases in January of 2013 and the tax increases 
that are part of ObamaCare, the top rate in this country will be 44.8 
percent, and that is before your State income tax rates.
  Corporations pay 35 percent, and they get a lot of deductions, so 
they don't always pay 35 percent. So here you have a small business 
person who is paying 10 percentage points above what a big corporation 
pays, and the 35 percent is too high. The President himself has said: 
We should get rid of corporate so-called tax expenditures or loopholes 
so we can, with that savings, reduce the corporate rate in America to 
something closer to 20 or 25 percent, which would make American 
businesses more competitive with our foreign competitors.
  If we need to reduce the corporate rate down to 20 or 25 percent, it 
makes absolutely no sense for us to have the small business 
entrepreneurs in our country paying almost 45 percent. That is why we 
don't want to raise taxes on small businesses.
  Moreover, some of these taxes are not just on those who are in the 
top two income tax brackets but are in businesses that I mentioned, the 
retailers and manufacturers, that would be hit with one of the taxes 
the SBA says could ultimately force many small businesses to close.
  So those are the three key reasons why it is not the time to raise 
taxes, why we ought to be focused on spending. Spending is the problem. 
It has gone up from 20 to 25 percent of the gross domestic product in 
this country. We have had a deficit now of $1.5 trillion each of the 
years of the Obama administration.
  The Obama administration, in just 5 years--if it gets the first year 
of the second term--in 5 years would double all the national debt of 
this country all the way from George Washington to George W. Bush.
  So if you take all Presidents and the debt we have acquired and then 
you double it, that is what happens under 5 years of the Obama 
administration budget and then the second 5 years would triple it. That 
is the problem we have. It is not taxes; it is spending. Secondly, 
because you are not just hitting millionaires and billionaires, and, 
third, because it would be very bad for the economy.
  The administration has said: Well, it is just not fair. We need some 
``shared sacrifice'' is their term, some shared sacrifice. I have two 
answers to that.
  First of all, how about before we ask people to sacrifice, let's get 
rid of the waste, fraud, and abuse, and initiate savings that the 
Office of Management and Budget, the General Accounting Office, the 
CBO, all these groups have found exists in our budget, if we would just 
get about it.
  There is over $100 billion a year we could save by not making 
overpayments or improper payments in Medicare, Medicaid, and 
unemployment insurance, just those three alone. In unemployment 
insurance, $1 out of every $9 is improperly paid. What is wrong with a 
government that has that kind of error rate? That is $16.5 billion a 
year. In Medicare, the error rate is over 10.5 percent and Medicaid 8.4 
percent. You could save $87 billion a year just in those two programs. 
That is well over $100 billion a year.
  What does the administration say to that? No, we don't want to talk 
about that.
  That is not shared sacrifice. That is not any sacrifice. You are not 
taking any benefit away from any beneficiary by just enforcing the law 
Congress has passed. The administration says, no, it doesn't want to 
talk about those things.
  The other reason is, I am just asking here: What is fair? You have to 
admit, the top 1 percent of American taxpayers are wealthy people and 
so they pay twice as much in taxes. They represent 1 percent of the 
taxpayers, of course. So do they pay 2 percent of the taxes? How about 
5 percent? Does the top 1 percent pay 10 percent of all the taxes, 20 
percent, 30 percent? How about 38 percent? One percent of the people 
pay 38 percent of the taxes in the country. I would call that shared 
sacrifice. The top 10 percent pay almost 70 percent. So how much do you 
want the top 10 percent to pay, 80 percent, 90 percent?
  How fair is that, when the bottom 50 percent pay nothing and all of 
them receive benefits from the government and 30 percent of them 
receive an EITC benefit or payments back from the government in some 
other form, directly to them. So you have half the people who pay no 
Federal income taxes, the top 10 percent pay 70 percent of all the 
income tax.
  We have said that is OK; we want to have a progressive tax rate. The 
OECD--these are the developed countries of the world--have done a 
study, and they make the point we have the most progressive income tax 
system in the world. Of all the developed countries in the world, we 
make the wealthy pay the most. We have said that is OK.
  But how much more can this one group pay? They cannot carry the 
entire government on their back. So it is, frankly, political 
demagoguery for anybody to suggest that either we can solve the problem 
by taxing corporate jets or we can solve the problem by having 
millionaires and billionaires pay more than they already do. That only 
gets you a little bit.
  The people who end up paying the taxes are the broad middle class. 
That is the way it always is.
  So beware of the politician who says: I am just going to target the 
rich; you don't have to worry about it. The tax on millionaires was 
supposed to hit

[[Page S4627]]

about 125 millionaires, the AMT, that now hits somewhere between 20 
million and 30 million Americans.
  That is why I say we have to solve the problem. The problem is 
spending. It is not revenues. So when people ask me: Well, why aren't 
you willing to meet the President halfway and agree to raise taxes, 
those are the three reasons. It would stop our economy from creating 
the jobs it needs in order to get out of the economic doldrums we are 
in and begin to produce the kind of economic recovery that produces 
wealth. When you are unemployed, you are not working, you are not 
making money, you are not paying taxes to the Federal Government.
  We can pay the Federal Government a lot more in tax revenues every 
year if we go back to work and if we are making more money and we are 
more productive as a country. But as long as we are in the condition we 
are right now, the Federal revenues are going to decline.
  That is the answer. Get the economy moving again, and you don't do 
that by imposing another heavy burden of taxes on it. That is why we 
have to focus on spending. I hope my colleagues and I can work together 
in the days to come and reach agreement so we can actually get the 
country moving on a path toward economic recovery and sound fiscal 
future.
  The ACTING PRESIDENT pro tempore. The Senator from Virginia.

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