[Congressional Record Volume 158, Number 25 (Wednesday, February 15, 2012)]
[Senate]
[Pages S682-S685]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
THE BUDGET
Mr. PORTMAN. As the Presiding Officer knows, this week the President
sent his budget to Congress. This happens every year. The budget is a
document that determines what the spending will be and what the
revenues will be not just for the next fiscal year but for a 10-year
period. So it is a document about what the direction of our country
ought to be. It is a vision for the country, if you will.
It is being sent to the Congress at a time when we face extraordinary
fiscal challenges. We have a record debt of over $15 trillion. We have
deficits that have been over $1 trillion a year for the last several
years, and it looks as though this year, once again, it will be well
over $1 trillion.
In comparison to previous years, we have a debt that is now as large
as our entire economy, which is larger than at any time since World War
II. In fact, as a country, we are spending more money at the Federal
level than we ever have before--as a percent of GDP, more than we ever
have since World War II. So these are times when we have a true fiscal
crisis at our doorstep and we need to handle it.
We are borrowing over 35 cents of every $1 we spend at the Federal
level. In that context, I have to say I am very disappointed in the
budget proposal that was sent to us because it is simply not up to the
challenges we face. It taxes too much, it borrows too much, and it
spends too much. Unfortunately, it adds another $11 trillion to the
national debt over this 10-year period--again, a debt that already tops
100 percent of our country's economy. It does nothing to change the
fact that Social Security and Medicare are in trouble--very important
programs, of course, but by not addressing them in this budget document
it means what everybody knows, which is that unless we do something
that will head toward solvency, this will continue to be the case.
Remarkably, I thought, the President proposes another $350 billion in
a so-called stimulus bill within this budget and pays for it either in
red ink, with more borrowing, or by raising taxes. It actually raises
taxes by nearly $2 trillion over this 10-year period. This is despite
the fact the Congressional Budget Office has told us that by raising
taxes, we are going to hurt the economy. In fact, it would result in
higher unemployment next year than this year.
We all know the long-term driver of these deficits is entitlement
spending. These important programs, Social Security, Medicare, and
Medicaid, along with interest on the debt, are called the mandatory
spending part of the budget. That is now a bigger and bigger part of
the budget and the fastest growing part of the budget. It is 64 percent
of the budget this year.
Under what the President has proposed, for the next 10 years, that
mandatory spending--which means it is not subject to annual
appropriations by Congress; again, important programs but not on a
sustainable path--this mandatory spending will grow from 64 percent of
the budget--where it is today, which has grown and grown over the
years--to 78 percent of the budget in 10 years, under the budget
proposal the President has put forward.
Republicans, Democrats, Independents alike, we know this is not
sustainable. It is not sustainable and, unfortunately, it is going to
hurt these programs in a way that is going to make it very difficult
for our seniors and others who rely on them.
Overall, the President's promise of deficit reduction also does not
look like it works. The budget claims $5.3 trillion in deficit
reduction over the next decade. However, if we look at it, that $5.3
trillion does not come from spending cuts. Looking at a budget table,
table 3--and I ask folks at home to take a look at this--99.9 percent
of that $5.3 trillion in so-called deficit reduction does not come from
spending cuts, it comes from tax increases--almost $2 trillion--a
savings that is considered to be a gimmick of saying we are not going
to spend as much in Iraq and Afghanistan. Everybody knows we are not
going to spend as much there. Yet they take credit for that. Already
enacted spending caps--remember, the discretionary spending caps were
put in place, the so-called sequestration or across-the-board cuts,
they take credit for those which have already been enacted and then,
finally, the net interest savings from all those policies, which is
about $800 billion, they say.
So again, almost all that so-called deficit reduction over the next
decade comes not from spending cuts but, in fact, from either gimmicks,
tax increases or things Congress has already done. That leaves very
little--about $4 billion out of the $5.3 trillion--that is truly
spending reductions.
By the way, on top of that, in the so-called baseline that the
President bases his numbers off of--in other words, we have to
determine what would the spending otherwise be--in that baseline, there
is another $479 billion in new spending on Pell grants, the Medicare
doc fix, and so on.
So the spending savings completely vanish when we put all that
together. That is not the kind of budget we need right now.
Last year, the President submitted a budget that I thought was a good
political document, also, but did not address our budget problems, and
we took it to the floor of this Senate for a vote. In the Senate, last
year, the President's budget was voted on by Republicans and Democrats,
and it lost by a vote of 97 to 0.
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I do not know how this budget would do if it came to the floor, but I
am not sure it would fare much better because, frankly, when we look at
this objectively, it is hard to say it addresses the very real problems
we face. These are problems that relate to our spending and relate to
the fact that we have these big deficits and debt, but also it relates
to what is going on at kitchen tables all over America, which is people
are having a harder time finding work, keeping jobs, making ends meet.
The economy is tough in my own State of Ohio. We not only have high
unemployment, but we have record numbers of weeks where people have
been on unemployment--approximately 40 weeks now. We have a lot of
people who have given up looking for work altogether. Unless we get
this budget deficit and debt under control and add more predictability
and certainty to our economy and to what is going to happen with these
huge deficits and debt that seem to be taking us toward what is
happening in Greece, Italy or Spain--unless we do that, we are not
going to be able to turn this economy around and give people the kind
of confidence they are looking for to be able to make investments and
move our country forward.
There are some other folks who are with me in the Chamber today. I
would like to ask them if they would not mind talking about their
budget perspective, what they see in this budget, the concerns they
might have, and the ideas we have to try to improve our fiscal
situation, therefore, our economy.
I see the ranking member of the Budget Committee is here.
I say to Senator Sessions, I know he wants to speak briefly on this
issue.
Mr. SESSIONS. Mr. President, I thank Senator Portman for his comments
and for his leadership on the Budget Committee. We have three fabulous
new members on the Budget Committee in Senator Toomey, Senator Portman,
and Senator Ron Johnson, who are with us and will share their
perspectives as new members on the Budget Committee.
At a time of fiscal crisis, as Senator Portman has described, it is
very important the leadership of America speak honestly to the American
people about the challenges we face and how we plan to go about fixing
them. That is right. That is fair. That is just. It is wrong, it is
unfair, and unjust to spin plans, to misrepresent the impact of
policies in a way that confuses the American people and our colleagues
in Washington about what is going on.
So our colleagues who are here understand the numbers. They are going
to make some very good points. I will just say, as a member of the
committee and the ranking Republican, I am disappointed the budget does
virtually nothing to change the debt trajectory we are on from the
agreement we had last year and, in the course of it it raises taxes
considerably and raises spending considerably, although the Budget
Director was so reluctant yesterday to acknowledge it raises spending.
But it does raise spending in any fair and objective analysis of the
situation we are in today with the current trajectory in the Budget
Control Act we agreed to last year.
So we are at a crisis, and we need to have leadership that looks the
American people in the eye and tells them of the crisis we are facing,
the difficult challenges, and lays out a plan on how we can fix it. We
can fix it. If we put ourselves on a sound path, we will have more
growth and prosperity than a lot of people predict.
I thank Senator Portman for the opportunity to share these few
moments and for the contribution he and our other colleagues are making
to this important national debate.
Mr. PORTMAN. Mr. President, I thank the Senator for his leadership on
the Budget Committee.
I see we have also been joined by one of our new Members, a freshman
Member, who comes from the business side of things. He ran a
manufacturing company, so he has an interesting perspective on Federal
budgeting. I love to ask folks who are in business: Could you see doing
business where you were borrowing 35 cents of every $1 you spent? The
answer is: I wouldn't stay in business very long.
With that, I would like to hear from Senator Johnson of Wisconsin.
Mr. JOHNSON of Wisconsin. Mr. President, I thank Senator Portman.
Again, I so value his experience. Being the head of OMB himself, he
understands these numbers.
What I have been trying to do over the last couple days is, I have
been trying to figure out where is this $4 trillion worth of deficit
reduction.
I have a chart on the debt in the Chamber. I have shown this chart in
the past. I like this--I do not like it, but I like this depiction of
the debt. It goes back to 1987, when our Federal debt was $2.3
trillion. It took us 200 years to incur that much debt, and we just
entered an agreement--I did not vote for it, but we entered an
agreement to increase the debt ceiling by $2.1 trillion, and we will
blow through that in about 2 years.
But if we take a look at the debt President Obama in his latest
budget is projecting 10 years into the future, it is $25.9 trillion. In
last year's budget, it was about $26.3 trillion. Again, I am trying to
do the math. If we reduce the deficit by $4 trillion, one would think
that final debt figure would also be reduced, and it simply is not.
I realize the President is talking about a balanced approach. But you
know as well as I do we have a spending problem, and that is what the
next chart is trying to portray.
If we take a look at 10-year spending, in the 1990s, our Federal
Government spent $16 trillion in total. In the last decade, we spent
$28 trillion. In President Obama's budget for last year, he was
projecting spending over 10 years of $46 trillion. In his new budget--
just 1 year further into the future--he is projecting $47 trillion over
10 years.
Again, I do not see where there is $4 trillion worth of deficit
reduction. I am an accountant. I am going to continue to look through
the budget. I am afraid I am not going to truly come up with it.
I think what is very disappointing about President Obama's budget is
that he simply is not grappling with what we all realize. I think
everybody in Washington realizes what is driving our debts and deficit
long term is Social Security and Medicare spending.
Just a quick little chart in terms of where we are in terms of Social
Security. In 2010, we went cash negative, which means the amount of the
payroll is not covering the benefits--by $51 billion in 2010, $46
billion last year. By the year 2035, we will accumulate $6 trillion in
deficit spending in Social Security alone, and the President's budget
is silent on Social Security. The President's budget is silent on
Medicare.
He has had 4 years. Why doesn't he propose something? The only thing
he is proposing is a tax on millionaires. He is asking Congress to hop
on board and let's pass corporate tax reform. Why doesn't he propose
it? There is actually a growing consensus about progrowth tax reform.
I want to agree with this President on something to enact something.
But he needs to lead, and he is not leading on these issues.
I want to finish my little part by talking about those millionaires
on whom President Obama wants to raise taxes.
I have been doing an awful lot of telephone townhall meetings. Last
week, we had a very interesting call. After a couple of my constituents
from Wisconsin asked me why I would not support a millionaires' tax, we
had a call from an elderly woman, and I could tell she was afraid. She
was scared. She said: Senator Johnson, I am so concerned about what is
going to happen to our taxes. My husband and I have been building a
business all our lives. All our assets are wrapped up in that business,
and now my husband has been sick for 2 years. He has not been able to
work in the business. I have been trying to make a go of it, and now we
are going to have to sell the business. In maybe 1 year, when we sell
this business, I might report one million dollars' worth of income, and
I am so concerned: Am I going to be paying that 15-percent tax on my
retirement fund, which is my business, or am I going to be paying a 30-
percent tax?
The fact is, that is whom this President wants to punish--people such
as that woman in Wisconsin who has her entire retirement wrapped up in
her business, and she is going to sell it. That is on whom President
Obama wants to double the tax.
Again, I think that puts a face on the type of people President Obama
wants to punish. I think that is a tragedy. I
[[Page S684]]
would like to see the President lead on the debt and deficit issue far
better than he has.
Mr. PORTMAN. Mr. President, I thank Senator Johnson for his
perspective, and it is very helpful.
We are now going to hear from another colleague who also is a new
Member of the Senate but has a lot of experience in what makes the
economy work and has been promoting progrowth tax reform and progrowth
regulatory relief and other things to actually move the economy to
generate more revenue in the right way, which is through growth, Pat
Toomey from Pennsylvania.
Mr. TOOMEY. Mr. President, I thank Senator Portman for organizing
this colloquy and Senator Johnson for his contribution.
Let me start by making this point: It seems to me the two top
priorities the budget--and most of what we do--ought to have are, No.
1, policies that will help encourage strong economic growth, a recovery
that we need and the job creation that would come with it--that is No.
1--and No. 2, putting our Federal Government on a sustainable path
because we are not on a sustainable fiscal path now, and if we do not
get on a sustainable path soon, we are inviting a crisis. We are
inviting a disaster.
It is my view that the President's budget fails badly on both fronts.
On the economic front, there are a number of areas. First and foremost
is a budget that proposes a growing budget deficit. The President who
promised us in his first term he would cut the deficit in half, in
fact, is proposing in fiscal year 2012--this year--a deficit that is
bigger than last year and almost as big as the alltime record high--
nowhere near cutting these deficits in half. Huge deficits themselves
have a chilling effect on economic growth because they discourage
investment.
Everybody knows when we are racking up massive amounts of debt,
unprecedented amounts of debt--as we are doing right now--there is a
huge threat that the result will be either dramatic inflation or much
higher taxes or both. Given that threat, businesses and entrepreneurs,
understandably, are reluctant to take a risk, to make an investment, to
grow a business, to hire workers. So that is point No. 1.
Point No. 2 that I would like to make is a little bit more technical
and very specific; that is, the President's idea that we ought to tax
dividend income, which is to say investment in business, at ordinary
income rates instead of at the current 15-percent rate. I just want to
illustrate why I think that is a particularly bad idea and why it will
hurt our economy and weaken our ability to create jobs.
This little chart demonstrates what this means is, what the President
is proposing is effectively a 63-percent tax on investment in a
business. The reason I say that is as follows: If you can imagine,
let's say you have saved some money and you want to invest in a
business so that business can grow and hire workers. How will these
taxes be paid?
Right now, we have just about the highest corporate income tax rate
in the world. So if you make an investment in a business and that
business makes a profit, the first thing that company has to do is pay
$35 of every $100 it makes. Let's assume the company makes $100. At the
35-percent top income tax rate that the company pays, $35 is taken,
goes to the government. So the aftertax income for that business is
$65. That is what the owners of the business get, right? Not quite.
If the dividend is then paid to the owners of the business, the
President wants that to be taxed now at the ordinary income tax rate.
By the way, he wants that rate to go from the current rate of 35
percent up to 43.4 percent. A top marginal income tax rate of 39.6
percent, plus the 3.8 percent from the health care bill that was
passed, brings the top marginal income tax rate to 43 percent.
I know this gets a little bit confusing, but at the end of the day,
it is not that complicated. The $65 that is remaining after the
corporation pays its income tax--if that gets paid to the investor--
that now, under the President's plan, would be subject to a 43-percent
further tax.
That is another $28 that gets taken from that initial $100 of income,
leaving the investor with $37 out of the $100 this business makes. So
the President's plan is, if you want to invest in a business to help
grow this economy and create jobs, the business--your activity--will be
subject to having almost two-thirds of the income taken and you are
left with about one-third.
What is the net effect? It is a huge disincentive to invest, to grow
a business, to take a risk. Most of the rest of the world does not have
tax rates this high, does not have a corporate tax rate this high, and
therefore it is a further incentive for capital to move elsewhere.
I think we ought to pursue policies that encourage maximum economic
growth, not policies that absolutely discourage savings and investment
and the growth that comes with it.
If Senator Portman tells me I have a couple of other minutes, I will
make one more point; that is, to switch to the sustainable fiscal
profile which we are not on now.
The President, to his credit, has put his finger on precisely what is
the long-term problem we face. He has described it as the mandatory
health care spending, the entitlement programs, as a general matter. He
is exactly right. When we look at his budget, it is very revealing.
If we take just the following categories--Medicare, Social Security,
Medicaid, and interest on our debt, just those items--and look at what
the President has proposed for those items over the next 10 years, it
is an average annual increase of almost 8 percent--7.8 percent to be
precise. But he is only proposing that the economy is going to be able
to grow by about 5 percent.
Frankly, that is optimistic. So what happens if we have huge
government programs growing faster than the economy each and every year
for as far as the eye can see? That is the definition of unsustainable
because these programs consume ever more of the budget and ever more of
the economy until something has to collapse.
This is why I am so disappointed the President has not so much as
suggested an idea for how we might reform the long-term, totally
unsustainable path they are on. Most of us--Republicans in this body
and in the other body--believe we need to make some changes for future
retirees. We are not talking about changing the rules for people who
are currently retired or about to retire but people my age and younger
and my kids. When are we going to acknowledge that we have to fix this
so these programs can survive for the next generation?
If we refuse, if we continue to go on this path, we are going to face
the kind of financial crisis they are facing in Europe. We have a
limited window of opportunity to solve this. It is not too late for us
to avoid the fate of our friends on the other side of the Atlantic. But
I would suggest we do not have time to lose.
I think the President has missed the big opportunity to provide some
leadership. I hope we will make up for that in this body.
With that, I would be happy to yield back to my colleague from Ohio.
Mr. PORTMAN. Mr. President, I thank Senator Toomey. I appreciate his
focusing on the progrowth elements because, as I said at the outset, a
budget is an opportunity to set the Nation on a 10-year course, both on
the spending side--how much should the government spend--but also on
the revenue side. That means we are getting into how to grow the
economy because the right tax reform will generate more growth. That
growth will generate more revenue in the right way.
Unfortunately, if we look at the proposal the President has made, it
does nothing to help improve our economic growth. In fact, when the
dividend tax was moved down to 15 percent, it was done so because, as
Senator Toomey has rightfully pointed out, it is a double tax. In other
words, it has already been taxed once at the company level. So when we
get a dividend paid, we should not have to pay a high tax on it again.
In fact, because of that double taxation, as he has indicated, there
will be a tax--total tax of over 60 percent. By the way, in the
President's budget, the dividend tax was increased from 15 percent to
39.6 percent for some taxpayers. Then, as Senator Toomey has said, we
can add the surcharge that comes from the health care bill and get it
up into the forties for the individual.
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Most people did not expect that. It is an example where this budget
actually went further in terms of trying to, again, tax people more and
therefore have less growth than anyone expected. Most people thought it
would go from 15 percent to 20 percent or 25 percent, but not all of
the way to--almost tripling the tax on dividends.
So it is an example where, in this budget, there was an opportunity
to lay out a pro-growth path that included tax reform. Instead, we are
building on our current antiquated, inefficient tax system and just
lopping more taxes on top, including taxes on capital gains and on
dividends that will make it more difficult for us to have the kind of
investment we need to get this economy moving again.
The President, when he ran for election in 2008, pledged to reform
entitlements. Senator Toomey talked about the fact that he has
continued to talk about that, the need for it. I certainly agree with
that, as do, by the way, most of my colleagues in the Senate, Democrat
and Republican alike.
The budget, of course, does nothing to help. In fact, it increases
the cost significantly on entitlements, as Senator Toomey has said, an
8-percent increase on average for these important programs. But that
puts them on an unsustainable footing when the economy will not be
growing nearly that fast.
Instead of doing something to reform these programs, making them work
better, the President is just continuing to pile on more entitlements.
But in 2008 the President also said he was going to cut the deficit in
half. At that time the deficit that first year of his administration
was $1.4 trillion. He proposed to cut it in half over the 4-year term.
So now we are in 2012, the final of his 4 years--fiscal year--and their
estimate for the deficit this year--from the Office of Management and
Budget, from the Congressional Budget Office--is that we will be over
$1.3 trillion.
So it does not sound like he has cut the deficit in half. Some will
say, well, it is less as a percent of our economy. That is true. Our
economy has grown some. But it is still not close to cutting it in
half. A lot of things happen during a Presidential term. But I would
hope that the President, in putting forward a budget, would have put
forward a serious effort to reduce the deficit significantly, to get
this economy back on track and prepare for, again, this unsustainable
growth in entitlements by truly reforming the programs to make them
work better and to make them sustainable over time.
We still have the opportunity to do that in the Senate. It is an
election year, but we still have 8 or 9 months until the election. We
should get busy working together as Republicans and Democrats, not
follow the President's budget because, unfortunately, it does not
provide the guidance we need. But we need to follow what all of us know
in our hearts has to be done, which is grow the economy through pro-
growth, sensible approaches such as tax reform, regulatory relief, and
using more of our own natural resources in this country. We can help
grow the economy on the one hand and, therefore, create revenue.
Then, second, we ought to do everything we can to reform these
programs to make them sustainable, to reduce annually appropriated
spending in ways that are responsible--not just to our kids and
grandkids, as important as that is, but to today's economy to ensure
that we can, indeed, have a strong recovery that all of us hope for and
begin to bring people back to the workforce, create jobs, get this
economy moving again, and give people that dignity and self-respect
that comes from work.
I am glad to have had the opportunity to talk about this budget.
I yield the floor and suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The assistant editor of the Daily Digest proceeded to call the roll.
Mr. CORKER. Mr. President, I ask unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
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