Congressional Record, Volume 158 Issue 151 (Thursday, November 29, 2012)

[Congressional Record Volume 158, Number 151 (Thursday, November 29, 2012)]
[Senate]
[Pages S7128-S7134]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

FISCAL CLIFF

Mr. McCONNELL. Mr. President, throughout the week, I have raised
questions about the President's level of seriousness and engagement
when it comes to resolving the short- and long-term fiscal challenges
we face. I have done this because, as I have said repeatedly, the
President is the key to success in all of these discussions. So I am
hoping that when Secretary Geithner comes up to the Capitol today, he
brings a specific plan from the President that the two parties could
agree to for the good of the country. I hope to hear the
administration's specific plans for protecting jobs and promoting
economic growth for middle-class Americans, while reducing the debt by
strengthening entitlements, reducing Washington's spending, and
preventing a tax hike on every American taxpayer.
Up until now, the White House has preferred talking points and an
appeal to the hard left to a serious discussion about how we fix the
economy, reduce the Federal debt, and return the country to a path of
growth and prosperity for all. They are stuck on the same old tired
slogans, and it is really completely counterproductive. So this morning
I would like to address one of these recurring talking points in a
little more detail in the hope that the White House puts it aside and
starts talking in a way that suggests they are actually serious over
there about finding a solution. I am referring to the oft-repeated
assertion by the White House and reporters alike that those of us who
insist on not raising income tax rates on anybody are doing so to
``protect the rich.'' I assure you, that has absolutely nothing to do
with it. Check the polling data. The super-rich vote for the Democrats.
We are not insisting on keeping tax rates where they are to protect
some tiny sliver of the electorate; we are insisting on keeping tax
rates where they are first and foremost to protect jobs and because we
do not think government needs the money in the first place.
The problem, as I have said, is not that Washington taxes too little,
but it is that it spends too much. But if more revenue is the price
Democrats want to exact for supporting other necessary reforms, then we
should at least agree that we do it in a way that does not cost jobs
and disincentivize work, as we all know raising rates would do.

[[Page S7129]]

A lot of people around here seem to have forgotten that we are still
in the middle of a jobs crisis. I can tell you that lots of folks are
hurting in my State of Kentucky. National unemployment is still just a
hair below 8 percent, and millions of Americans are still looking for
work.
So if it is an iron law of economics that you get less of what you
tax, why on Earth would we want to raise taxes on work? Rates matter
because they affect behavior. The higher the tax rate, the higher the
disincentive to work. This isn't just Republican orthodoxy, it is basic
economics. As the nonpartisan Congressional Budget Office recently put
it, ``Increasing revenues by raising marginal tax rates on labor would
reduce people's incentive to work and therefore reduce the amount of
labor supplied to the economy.''
That is the CBO, not the Republican National Committee. They go on to
say over at CBO, it would, by itself, ``decrease output in the medium
and long term.''
In the middle of a jobs crisis, that is the last thing we ought to be
doing. Shouldn't we at least agree on that? The negative effect raising
rates has on labor is so widely acknowledged that the Joint Committee
on Taxation actually has models that incorporate the effects of doing
it. They also know that higher rates increase the incentive to shelter
income from taxation. When rates are higher, the people paying them try
even harder to keep the government from taking what they earn.
In short, raising rates means less labor, less investment, and more
incentive for the wealthy to waste money in an attempt to shelter what
they have earned. We can quibble about the magnitude of these effects,
but everyone agrees they exist.
The problem is particularly acute for those thinking about taking a
second job in a household, which in many cases unfairly targets married
women looking to supplement the family income or someone considering a
promotion or starting a new venture.
Instead of raising rates, Republicans have proposed capping
deductions through tax reform instead. If the only way to get Democrats
to agree to progrowth tax reform and meaningful entitlement reform is
through more revenue, a smarter way to do it is by capping deductions.
Capping deductions, or tax expenditures as some people call them, is a
far less painful, more economically sound, way of closing deficits. The
Congressional Budget Office agrees. As the Congressional Budget Office
recently put it:

Increasing revenues . . . by broadening the tax base would
probably have a smaller negative effect, or even a positive
effect, on the amount of labor supplied.

The White House likes to say you can't come up with a realistic plan
to reduce the deficit without raising tax rates. It is not true. Not
only are there plenty of ways to do it, there are ways to do it that
minimize the disincentive to work, and they can be found right in the
President's own budget. In the President's own budget he proposes three
different ideas that, combined, dwarf the $442 billion revenue his own
Treasury estimates he could grab from increasing two rates. All of them
cap the amount that higher income Americans can deduct from their
income taxes, and all of them do it in a way that is far less damaging
than raising those tax rates while protecting middle-class taxpayers.

Look, I don't like any of these ideas. They all hurt somebody. The
government spent way too much money as it is. Frankly, I don't think
the Democrats are any more interested in using new revenue to lower the
deficit now than they have ever been. But don't tell me you have to
raise rates to do it. It is not true. The longer Democrats keep saying
it, the longer it is going to take to come up with an agreement.
The only reason Democrats are insisting on raising rates is because
raising rates on the so-called rich is the holy grail of liberalism--
the holy grail of liberalism. Their aim isn't job creation; they are
interested in wealth destruction--not job creation but wealth
destruction.
The President needs to realize that he wasn't elected President of
the hard left wing of the Democratic Party. He was elected President of
the United States. He is the steward of the Nation's finances. He has a
responsibility to everyone to work out an agreement, and that means he
has to come up with something that can get through a Republican House
of Representatives.
We are waiting on the President. We can still get there, but he is
going to have to lead. He can start by putting the campaign talking
points on the shelf. I know that whacking the rich works politically.
It worked pretty well for him in his campaign; I get it. But the
election is over, and it is time to lead.

Tribute to Tom Jurich

Mr. President, yesterday was an extremely happy day for my alma
mater, the University of Louisville, and I want to talk today about an
extraordinary individual who has achieved an incredible success at my
university over the last 15 years. It has been my privilege during my
career to get to know a number of people in all walks of life who have
been highly successful. However, I am hard pressed to think of a more
conspicuous example of success than what Tom Jurich has accomplished
for the University of Louisville in athletics in the last 15 years.
Membership in the ACC, announced yesterday, is the culmination of his
extraordinary leadership.
Tom Jurich has for 15 years served as the athletic director for the
University of Louisville, and yesterday it was announced that UofL, as
I indicated, will be joining the Atlantic Coast Conference. The ACC
will be a great home for UofL and the school's commitments to
academics, groundbreaking research, and top-ranked athletic teams.
Under Tom Jurich's leadership, student athletes at UofL have been
making and breaking records and stirring excitement deep in the hearts
of Cardinal fans all across Kentucky and all over the world. Since
joining the Big East Conference in 2006, Cardinal teams have won 50
championships, with 10 of those in the 2011-2012 season alone, 10
championships just this year.
Our men's basketball team ranks No. 2 in the Nation in total
attendance records. Our women's basketball team ranks No. 2 in the
Nation for average attendance per game. I think it is safe to say
Cardinal fans love their basketball.
Tom Jurich masterminded the hiring of legendary men's basketball
coach Rick Patino, who has led the Cardinals to three Big East titles
and two Final Fours, including one last season. Now ranked in the top
five nationally, this year's Cardinal team is well poised to make
another run for the Final Four.
Tom was also responsible for hiring head football coach Charlie
Strong, a legend in the making, who has revitalized the Louisville
football program by leading the Cardinals to two bowl games and a share
of the Big East championship in his short tenure there. Now in Coach
Strong's third year, the Cardinals are 9-2 and have been ranked in the
top 10 nationally this year and have a chance to win the Big East title
in a nationally televised game against Rutgers tonight.

Under Tom Jurich's tenure, Cardinal teams have been brought home
championships in sports as diverse as baseball, field hockey, men's
soccer, women's soccer, volleyball, men's cross country, men's golf,
women's golf, softball, men's swimming and diving, women's swimming and
diving, men's tennis, women's indoor track, and men's and women's
outdoor track and field, an extraordinary list of accomplishments.
Tom Jurich has grown the school's physical facilities to be, in my
view, the best in the country. Under his leadership the men's and
women's basketball teams began playing in a new state-of-the-art KFC
Yum! Center in downtown Louisville in 2010. It is an arena equal to any
college basketball facility, college or professional, in our country.
Under Tom Jurich, an expansion of Papa John's Cardinal Stadium was
completed in 2010, giving UofL football fans one of the best stadiums
in the country in which to watch a game, seating 55,000. Tom Jurich
also oversaw the construction of an extensive sports park that includes
new softball and field hockey stadiums, a soccer field surrounded by a
track, fitness trail, and playground.
Tom has increased participation for women's athletics, upgrading
funding and support staff for existing women's programs and adding four
new women's sports: softball, golf, rowing, and lacrosse. He
transitioned field hockey and women's soccer and baseball to

[[Page S7130]]

fully funded programs. For his accomplishment, he received the Citizens
for Sports Equity 2000 Sports Leadership Award.
For his success as an athletic director, Tom was honored as the
Louisvillian of the Year in 2005 by the Louisville Urban League, and he
was nationally recognized in 2007 as Street & Smith's Sports Business
Journal and Sports Business Daily Athletic Director of the Year. The
university also recognized his enormous contribution to the institution
by appointing him vice president for athletics in 2003.
Yesterday, the totality of Tom Jurich's accomplishments was
recognized when the ACC voted unanimously to accept the University of
Louisville as its newest member. This is an exciting time for Cardinal
sports fans. We relish the opportunity to play in the strongest league
in the Nation and show that Cardinals are able to compete and beat
anybody.
To my good friends from the fine States such as North Carolina,
Virginia, New York, Pennsylvania, Florida, Indiana, Georgia,
Massachusetts, and South Carolina, I say ``look out.''
I have been pleased to get to know Tom well over the years, as well
as his wife Terrilynn and their wonderful family. I don't think I have
ever met anybody who has done a better job building an enterprise than
he has, given what he had when he came to the university in 1997, and
then look at it today. He has built an athletic department that boasts
a budget in the top 20 in the country, championship football and
basketball teams, record-setting men's and women's basketball
attendance at our new downtown arena, and enormous success for all the
other school sports that may not get as much attention but are just as
vital to the students and the community in Louisville. He has done all
this while increasing academic success for student athletes with a
record 21 of 23 Cardinal athletic teams producing a 3.0 or higher
grade-point average in the most recently completed semester.
It is a truly extraordinary accomplishment. I am proud of my friend
Tom Jurich and what he has done. I want to extend to him my heartiest
congratulations from the Senate floor.
Go Cards.
I yield the floor.
The ACTING PRESIDENT pro tempore. The Senator from Texas is
recognized.

Fiscal Cliff

Mrs. HUTCHISON. Mr. President, I rise today to talk about the need to
address entitlement reform as part of the impending fiscal cliff.
I am not just going to talk about the macro issue, I am going to talk
about specifics on a way that we can at least do one entitlement
reform, Social Security, and make a difference for the long-term future
of Social Security and the millions of Americans who depend on it and
have earned it.
It is so important that it be part of the discussion today. So much
of our short-term consequences and needs for the fiscal cliff have
dominated the discussion. Well, that is okay; we are 1 month away,
after all, from dire circumstances. However, we cannot avoid talking
about the long term because that is what we have been doing that has
caused us to reach a fiscal cliff. We need to look at entitlements.
According to Medicare trustees, for instance, Medicare paid $35 billion
more to beneficiaries than it took in last year in payroll taxes, and
its trust funds will be depleted 12 years from now if we don't act to
save Medicare in a responsible way.
The other issue that is not being talked about very much at all is
Social Security. In 2010 and 2011, Social Security expenditures, the
benefits paid to retirees and the disabled, exceeded payroll tax
revenue for the first time since 1983. So as a practical matter, we
know the Federal Government is borrowing to pay the Social Security
needs of today.
Last year, 2011, the Social Security trustees reported that with
benefits paid continuing to exceed payroll, the trust funds would be
depleted in 2036, after which the program would have a net unfunded
obligation through the end of Social Security's 75-year valuation
window, and that net unfunded obligation would be $6.5 trillion. After
reading the trustees' report last year, I drafted the Defend and Save
Social Security Act to preserve and strengthen Social Security for 75
years. The longer we delay, the longer and more painful the fix will
be.

I keep hearing Members of Congress, and even the President, saying
Social Security is off the table; we are not going to talk about it
when we are talking about the fiscal cliff. That is an astonishing
statement for the President and Members of Congress to say, that we are
not going to talk about 56 percent of the spending in this country,
that it is off the table, because that is what mandatory spending is--
56 percent of our spending in this country on an annual basis. Of that,
let's take out Medicare, Medicaid, and Social Security, which is 44
percent of the total spending of our country.
According to the Social Security trustees--1 year after the 2011
report--the Social Security trust fund reserves, because we waited 1
year to do anything about it, will now be depleted in 2033. That is 3
years earlier than was estimated just 1 year ago. And the unfunded
obligation for the 75-year window has now grown to $8.6 trillion.
So we can see what happens with just 1 year of delay to the security
of Social Security and the capability to keep it going. In 21 years, if
we don't do something there will be severe cuts or severe increases in
taxes that will be automatic. Without any act of Congress, they will be
automatic. Talk about a fiscal cliff now, think about the cliff Members
of Congress will face then because we didn't do our job in addressing
this issue when the solutions were there in a relatively clear glide
path that would be relatively unnoticed in most households.
Let me lay out what will happen: There will be a 25-percent automatic
cut to the retirement payments and the disability payments that are
going out now in Social Security. That would be an average of $308 per
month.
The Social Security trustees put it straight out there. They have two
ideas to shore up Social Security right now: One is to immediately and
permanently increase the combined payroll tax on employees and
employers from 12.4 percent to 15.01 percent. That would be a one-fifth
increase in the payroll taxes that are, in the norm, being paid today.
The other alternative they suggested is to cut core benefits right
now by $200 per month. They said that would do it--$200 per month in
cuts to Social Security checks.
I don't think anyone in America believes that is feasible or even
desirable--either of those options. So what can we do? We can act now.
We can reform Social Security without cutting core benefits and without
increasing taxes on people who are working today.
I introduced a new version of my Defend and Save Social Security Act
after the 2012 report came out from the trustees, and it covers the 75
year window and the shortfall of $8.6 trillion which is estimated, and
it doesn't raise taxes on the people working today.
Here is what it does: It increases the age of retirement very
gradually. When I introduced my bill just last year, it wouldn't have
affected anyone who was 58 years old or older. But in just that 1 year,
because the deficits in Social Security payments going out have
occurred, today it is 59 years of age. No one 59 years of age or older
would be affected. For everyone else it would be a very slow increase
of 3 months per year. For instance, the normal retirement age would
reach 67--going from 66--by 2019, 68 by 2023, 69 by 2027, and 70 by
2031. The early retirement age would be increased to 63 by 2019 and 64
by 2023.
The second point: The COLA--the cost-of-living adjustment--would be
reduced slightly when inflation is 1 percent or more. Inflation has
averaged about 2.5 percent, so there would be a COLA, but it would be
about $12 less if inflation is kicking in above 1 percent.
There would be no core benefit cut at all, just a slightly smaller
COLA increase if inflation goes up, and then we would have a secure
system. It would be a system that would last 75 years. We would not
have the $8.6 trillion added to our deficit and no core benefits would
be cut.
Mr. President, I ask unanimous consent for 2 more minutes.
The ACTING PRESIDENT pro tempore. Without objection, it is so
ordered.
Mrs. HUTCHISON. Mr. President, let me just say that is not the only
thing we could do. We could change the cost

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of living to the chained consumer price index. That would be OK. It
wouldn't get us as much of a deficit reduction over 75 years--a chained
CPI--but it would get us at least into a better position if we
increased the age rate.
I just want to give a note of history. When President Reagan was
facing the same issue, and the Senate was one-party dominated and the
House the other, he got together with House Speaker Tip O'Neill, and
they formed a commission which started the increase in age that we have
today because people were living longer and they were working longer.
We can do the same thing President Reagan and Tip O'Neill did, because
our government is a similar configuration, by coming together and
acknowledging that people are living longer and are working longer.
We can make accommodations for people who are in particularly
physically strenuous jobs. I think all of us understand people in those
jobs may not be able to work as long. We can do those things and fix
this issue in a responsible way. Let's do it now. One more year is
going to make it that much worse. We have added $2.1 trillion to the
deficit in just 1 year. We can do this.
Mr. President, I thank the Senator from Arizona for giving me the
extra 2 minutes to say let's do it now. In fact, the Senator from
Arizona has been a cosponsor of my bill to fix Social Security. We
cannot address the fiscal cliff without talking about entitlements and
mandatory spending, which is 56 percent of our spending. Anybody can do
the math on that.
I yield the floor.
The ACTING PRESIDENT pro tempore. The Senator from Arizona.
Mr. KYL. Mr. President, first, let me thank my colleague from Texas
for her leadership on this and so many other issues that we have worked
on over the years. One of my regrets in leaving the Senate is that I
will not be able to work with her, and she has said the same thing
about me. We will be off doing something else, but we are not going to
give up on some of the fights we have been engaged in during these
years.
I want to just begin where my colleague left off, about the meaning
of this fiscal cliff and what is being proposed as alternatives to
going over the fiscal cliff. I was interested this week that the
President has embarked on what one newspaper referred to as ``the
fiscal cliff campaign trail.'' We have seen the pictures. He is out
speaking as if the campaign were still going on, and the centerpiece of
his pitch--and I heard him say it on TV again last night--is that the
House of Representatives should pass a bill that was passed in the
Senate related to 2001 and 2003 income taxes.
The President is a constitutional scholar, and he served in the
Senate. He knows that can't be done. It is unconstitutional. The
Constitution requires that all revenue measures must be initiated in
the House of Representatives. That is one reason the bill got through
the Senate, because everybody knew it couldn't pass. It was simply a
statement by our Democratic colleagues. It wasn't serious legislation.
But if we look at the legislation itself, we begin to see why
Republicans are so opposed to what the President is proposing--because
of the job-killing policies contained in that bill the President would
ask the House of Representatives to pass.
What are we talking about specifically? I don't like to get into this
kind of detail very often, but somebody has to at some point just
discuss the actual facts of what this bill would do. It would raise the
marginal income tax rates from 33 percent to 35 percent in the fourth
bracket, and in the fifth bracket from 36 percent to 39.6 percent--
almost 40 percent.
Well, what is the problem with that? Let's start with the fact that
53 percent of all income from so-called flowthrough businesses is
subject to these higher tax rates. That is because most small
businesses are not corporations. They are called flowthrough entities--
subchapter S corporations, limited partnerships, and those kinds of
entities that pay their income taxes as if they were individuals. So
they are governed by the top two marginal rates.
Well, they are governed by all the marginal rates of the income-tax
code. So when we raise those rates, we are raising taxes on much of
small business income. In fact, almost 1 million small business
owners--940,000 to be exact--would be hit by the higher taxes caused by
the President's proposal. That is an average, by the way, of well over
18,000 per State of the Union.
What else would it do? It goes directly to business taxes, such as
capital gains taxes. It raises that from 15 to 20 percent, which is why
we are seeing a lot of activity right now taking advantage of the lower
rate, and we are going to find virtually none of that after this rate
is increased to 20 percent. It is one of the reasons we will go back
into recession, as the Congressional Budget Office has pointed out.
It also raises taxes on qualified dividends from 15 percent, where it
is today. The problem of raising taxes on qualified dividends is, as
the Wall Street Journal has reported over and over again, that
companies that are paying dividends are dumping them all right now so
they will all be paid out before the end of the year.
If you are a retired teacher or a retired fireman or have a pension
and you are counting on your investments to pay dividends in the
future, forget it. Once the dividends rate goes back up, corporations
are not going to plow their earnings back into dividends to the
shareholders as they do today. But these don't even tell the whole
story because, of course, once you are taxed as a corporation--and this
pertains just to the corporations, not the flowthrough entities I
mentioned--you are doubled-taxed if you also pay a dividend or you have
a capital gain. You have to pay not only your corporate income tax but
the tax on the gain, or the individual pays the tax on the dividends
that are paid out by the corporation.
So we already have the fourth highest integrated capital gains and
dividends rates in the industrialized world at over 50 percent. Why
would we want to make ourselves even less competitive by raising these
taxes? We would fall even further behind our international competitors
with the second highest capital gains rate, 56.7 percent.
Talk about a blow to the economy--which is the way the President put
it 2 years ago when he decided not to raise all of these rates. Of
course, we all agreed with him on that. It would be an even bigger blow
to the economy to do so today. Our growth rate today is less than it
was 2 years ago when the President himself said these very policies he
is advocating would be a blow to the economy.
The last thing I would mention, everybody knows about the death tax.
We have forgotten about what would happen with the death tax. The death
tax rate would go to 55 percent, up from 35 percent today. A lot of
people think 35 percent is way too much and would like to see it
eliminated. I would. But think about this. You would only have $1
million of the farm or the business or the estate exempted from the
tax. After that, over half--55 percent--of everything you have worked
for all your years would have to go to Uncle Sam, leaving your heirs
frequently with the requirement of selling off all or part of the
business or the farm, whatever it is, in order to pay for the estate
tax.
It would increase the number of estates hit by the death tax from
3,600 this year to over 55,000 next year. There would be 24 times more
farm estates that would be hit, 13 times more small businesses, 15
times more taxable estates.
This is not good for our economy, and it is not good for our
families. The estate tax raises about 1 percent of all the tax revenue.
To hurt the small businesses again by raising this death tax rate is
just unconscionable.
People need to stop and think. This is not just about hitting the
rich; this is about hitting small business folks, the very people we
anticipate will create the jobs coming out of the economy.
Let's turn to job creation issue for just a second. Ernst & Young,
the respected accounting firm, released a study recently that estimated
the long-run effects of a plan very similar to the Senate bill that the
President is advocating--the top two rates increasing, combined with
the ObamaCare tax rates taking effect, all of this together, that study
found that 710,000 jobs would be lost just as a result of this, 710,000
jobs.
The President likes to brag every now and then that we have an
increase

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of 100,000 or 115,000 jobs in a month. Here is 710,000 jobs they say
would be lost just from the increase in these tax rates. Our gross
domestic product would decline by $200 billion, and wages would fall by
1.8 percent.
I know these statistics make our eyes glaze over sometimes, but these
are the facts; these are the results. And poorer families and a weak
economy and a lot of joblessness are the result.
To put these numbers into perspective, 42 business organizations
representing tens of millions of American employees--including those in
wholesaling, air conditioning, retail, franchising industries, and
others--recently sent a letter to the congressional leadership urging
Congress not to raise income taxes during negotiations over the fiscal
cliff and instead to pursue comprehensive progrowth tax reform.
I ask unanimous consent to have this letter printed in the Record at
the end of my remarks.
The ACTING PRESIDENT pro tempore. Without objection, it is so
ordered.
(See exhibit 1.)
Mr. KYL. I will conclude by quoting one sentence from it.

We call on Congress to avoid raising marginal tax rates on
employers, either as part of negotiations over the fiscal
cliff, or as part of a larger effort to reform the tax code.
Instead, Congress should seek to enact comprehensive tax
reform that simplifies the tax code and encourages economic
growth for both passthrough businesses and corporations.

As I said, the passthrough entities are those small businesses, and
the corporations are those that pay under the corporate tax rate. So I
think the data, as well as the voices from employers around the
country, make it clear that the Senate bill, combined with the tax
increases from ObamaCare, would have a devastating effect on economic
growth and our ability to create jobs.
What should we do instead, just to summarize? I think the better
approach is the one the Republicans have been proposing. We actually
have a plan, as opposed to the administration's plan--the only part of
which I can discern is to pass the Senate bill, which raises tax rates.
Our plan is to avoid the tax rate increases that would otherwise
automatically occur on January 1 and commit to tax and entitlement
reform that raises revenue through economic growth, eliminates wasteful
credits and deductions and loopholes, and cuts spending in the future.
Recall that, in 1986, President Reagan signed into law a historic tax
reform bill that lowered corporate and individual tax rates and
eliminated a lot of loopholes. It wasn't a perfect bill, but the 1986
reform package can serve as a guide for revenue-neutral tax reform
moving forward. Cutting our corporate tax rate--which had a combined
rate of 39.2 percent as the highest in the industrialized world--would
dramatically boost American competitiveness and improve our standard of
living.
Many studies have found that lowering our corporate rate will
increase growth, including one which found that cutting the corporate
tax rate by 10 percentage points can increase the annual growth rate by
around 1.1 percent. Since we are only a little over 1.1 percent as it
is, cutting it by that much would have a dramatic impact.
Comprehensive tax reform also means lowering tax rates on
individuals, including the 95 percent of passthrough entities that file
as individuals.
The Reagan tax reform also provided relief for businesses that are
not structured as C corporations. During Ronald Reagan's 8 years, 20
million new jobs were created. More specifically, after tax reform
became law, inflation and unemployment fell.
The ACTING PRESIDENT pro tempore. The Senator's time has expired.
Mr. KYL. Mr. President, I ask unanimous consent to proceed an
additional 1 minute.
The ACTING PRESIDENT pro tempore. Without objection, it is so
ordered.
Mr. KYL. If we are interested in growth, Congress must avoid raising
tax rates in the lameduck session and instead pursue tax reform, which
sends a signal to the world that we are open for business.
Short of going off the fiscal cliff entirely, passing the Senate tax
increase instead of pursuing these progrowth and fiscal reform ideas is
the worst idea on the table. Raising the top two marginal rates would
reverse longstanding tax policy and hit nearly 1 million business
owners in the process, and it would eliminate over 700,000 jobs.
So if the President is genuinely interested in economic growth and
higher tax revenues that come from it, he should drop his demands for
the Senate bill and listen to the growing bipartisan consensus that
higher taxes hurt growth and lower taxes help create jobs and
prosperity.

Exhibit 1

November 27, 2012.
Hon. Harry Reid,
Majority Leader, U.S. Senate, Capitol Building, Washington,
DC.
Hon. Mitch McConnell,
Minority Leader, U.S. Senate, Capitol Building, Washington,
DC.
Hon. John Boehner,
Speaker of the House, U.S. House of Representatives, Capitol,
Washington, DC.
Hon. Nancy Pelosi,
Minority Leader, U.S. House of Representatives, Capitol,
Washington, DC.
Dear Congressional Leadership: As organizations
representing millions of pass-through businesses employing
tens of millions of workers, we strongly urge Congress to
pursue comprehensive tax reform that lowers rates on all
forms of business income while enacting significant
entitlement reforms that put the federal budget on a
sustainable fiscal path.
Congress faces two fiscal challenges in the near future.
First, it will need to take action on the ``fiscal cliff'' of
expiring tax provisions and automatic spending cuts. Second,
it will need to raise the debt ceiling.
In taking on these challenges, we call on Congress to avoid
raising marginal tax rates on employers, either as part of
negotiations over the fiscal cliff, or as part of larger
effort to reform the tax code. Instead, Congress should seek
to enact comprehensive tax reform that simplifies the tax
code and encourages economic growth for both pass-through
businesses and corporations.
Raising rates on individuals and employers will harm hiring
and investment now and into the future. According to the
Congressional Budget Office, allowing top tax rates to rise
to their pre-2001 levels and beyond will result in 200,000
fewer jobs early next year. Ernst & Young has estimated that
the impact of these higher tax rates will be to reduce long-
term employment levels by more than 700,000, while also
lowering overall investment and suppressing wage levels.
The prospect of higher marginal tax rates is already having
an adverse impact on the economy. According to the National
Federation of Independent Businesses, two-thirds of business
owners cite the uncertainty over future fiscal policy as
making it more difficult for them to grow their businesses
and increase employment. At the same time, the rate of
business creation is at its lowest level in two decades.
Although some have asked Congress to enact corporate-only
reform in the coming year, there is no economic or political
justification for reform that lowers marginal tax rates on
corporations while raising either marginal or effective tax
rates on the 95 percent of businesses structured as pass-
through entities who employ more than half of the U.S.
workforce.
Finally, we are eager to see Congress enact permanent,
comprehensive tax reform, but this alone will not solve the
long-term fiscal imbalance. The Trustees to Social Security
and Medicare have made clear that, absent reform, these
programs are unsustainable. While Congress should commit to
tackling comprehensive tax reform, it is also imperative that
Congress agree to develop a long-term plan to address
America's entitlement programs as well.
Simply put, we need to reform our tax code and we need to
reform our entitlements.
Sincerely,
Air Conditioning Contractors of America, American Council
of Engineering Companies, American Farm Bureau
Federation^', American Foundry Society,
American Supply Association, American Trucking
Association, AMT--The Association For Manufacturing
Technology, Associated Builders and Contractors,
Associated Equipment Distributors, Associated General
Contractors of America, Automotive Aftermarket Industry
Association, Financial Executives International, Food
Marketing Institute, Heating, Air-conditioning &
Refrigeration Distributors International, Independent
Insurance Agents & Brokers of America, International
Foodservice Distributors Association, International
Franchise Association, Metals Service Center Institute,
National Apartment Association, National Association of
Convenience Stores, National Association of Wholesaler-
Distributors.
National Automobile Dealers Association, National Beer
Wholesalers Association, National Electrical
Contractors Association, National Federation of
Independent Business, National Grocers Association,
National Lumber and Building Material Dealers
Association,

[[Page S7133]]

National Marine Manufacturers Association, National
Multi Housing Council, National Restaurant Association,
National Retail Federation, National Roofing
Contractors Association, National Small Business
Association, National Utility Contractors Association,
Printing Industries of America, Professional Beauty
Association, S Corporation Association, Service Station
Dealers of America & Allied Trades, Tire Industry
Association, Truck Renting and Leasing Association,
United States Chamber of Commerce, Wine & Spirits
Wholesalers of America.

The ACTING PRESIDENT pro tempore. The Senator from Alabama.
Mr. SESSIONS. Mr. President, I appreciate Senator Kyl's comments, and
I share them. We are going to miss the most knowledgeable fiscal tax
expert in the Senate, and his long career includes time on the Finance
Committee. I thank Senator Kyl.
I want to express some reservations about the negotiations that have
been going on, as I understand it from reading the paper, involving the
fiscal cliff.
Over the last 2 years, Congress and the President have held an
endless series of negotiations. There have been Gangs of 6 and 8, a
supercommittee of 12, talks at the Blair House and the White House. But
the only thing these secret talks have produced is a government that
skips from one crisis to the next. Everything has been tried but open
production of a 10-year plan from this Senate that is required by law,
that would allow us to openly debate and discuss concretely the
financial challenges we face today.
All of this secrecy allows the President to position himself as being
in favor of a balanced plan--which is what he says: I favor a balanced
plan--while the only comprehensive proposal, to my knowledge, he has
actually laid out was in January or February of this year when he laid
out his budget. Of course, it was voted down unanimously. In both the
House and the Senate not a single person voted for it. But he did lay
out a financial plan for the country. He put it on paper.
Basically, it increases taxes to fuel more spending. That is what the
plan did. It increased taxes $1.8 trillion and increased spending $1.4
trillion over the agreement we just reached under the Budget Control
Act in August, a year ago.
So we reached agreement on 10 years of spending limits in August, a
year ago. Then January, 6 months later, he proposes a budget that would
increase taxes $1.8 trillion and spending that would increase another
$1.4 trillion over that BCA baseline: tax and spend. Not taxes to
reduce deficits but taxes to fund new spending. That is why the budget
puts us on track to have $25 trillion in total debt at the end of 10
years--another almost $10 trillion in debt added to the current debt
level.
Insofar as I can see, that tax-and-spend policy remains his goal
today. The White House isn't planning to raise taxes to reduce the
deficit. It raises taxes, under their plan, to expand government. That
is not acceptable. I don't believe Congress will accept such a deal if
that is what is going on in these secret negotiations.
President Obama campaigned on tax increases just on the wealthy, just
on raising their rates, just only $800 billion in tax increases. But
now the White House is demanding $1.6 trillion in tax increases. Don't
the American people have a right to see where those taxes fall, who
they will impact, and how much they are?
Shouldn't the President lay out his plan? He is the President of the
United States and the only person who represents everybody in the
country. Will that remain a secret? Will it just be revealed to us on
the eve of Christmas or the eve of the new calendar year? We will be
asked to vote for or to ratify like lemmings, I suppose.
The White House has repeatedly asserted they believe in $2.50 in
spending cuts for every $1 in tax hikes, which does not reflect
sufficient spending cuts. But if the White House now wants $1.6
trillion in new taxes, where are the $4 trillion in spending cuts? Have
those been laid out? Do we know what they would be? And this is over 10
years. These spending cuts would be very achievable if we put our minds
to it.
The ACTING PRESIDENT pro tempore. The Republican time has expired.
Mr. SESSIONS. Mr. President, I ask unanimous consent that I be
allowed to have the full 10 minutes.
The ACTING PRESIDENT pro tempore. Is there objection?
Without objection, it is so ordered.
Mr. SESSIONS. I thank my colleagues for their courtesy.
In fact, the President has given speeches calling for more spending.
On Tuesday, he gave a speech in which he said he wants to use the tax
hikes to ``invest in training, education, science, and research.''
When you are in a deep hole and you are borrowing almost 40 cents of
every dollar you spend, shouldn't you constrain yourself and not start
new programs? Or if you start a new, needed program, shouldn't you
reduce some less valuable program to pay for it instead of just taxing
to create more programs?
Not once in the speech did he discuss entitlements. That is the
largest item in our government, entitlements. Not once did the
President of the United States discuss with the American people the
problem that Social Security, Medicare, and Medicaid are on an
unsustainable path and are at great risk. Shouldn't the President
honestly talk to the American people about that?
He didn't discuss our $16 trillion debt and how the Debt Commission
he appointed indicates that we are on an unsustainable path, heading to
a fiscal crisis. He did not discuss the economic catastrophe that could
occur if we don't get off this unsustainable path.
The President should lead on these things. I don't think this is a
partisan complaint. I am saying the President of the United States
should be discussing with the American people the great danger of our
time: the debt.
The President will go out to the press and use the buzz words that
say he has a balanced plan or a responsible path to deficit reduction.
But where are the spending reductions? What is the plan?
It seems to me the plan is to talk in general, to meet in secret day
after day, week after week, the deadlines getting closer, the fiscal
cliff getting closer. Then, under threat of panic, force through some
deal that maintains the status quo: more taxes, more spending, more
debt. And it will be presented to the Senate in a way that, if it is
not adopted immediately, the country will be in great fiscal
danger. This process needs to be taken out of the shadows. We need
public debate, and then people would know the facts that are now being
hidden from us, hidden from Members of Congress. We don't know what is
going on. The latest article in Politico today said the deal--the so-
called deal has been negotiated by the Speaker of the House and the
President. Not even Harry Reid is in the meetings, apparently--
certainly not the Members of the Senate or the Members of the House of
Representatives.

If we had a public debate, people would discover that according to
the CBO, mandatory spending is going to increase nearly 90 percent over
the next 10 years. To get the country under control requires some real
tough focus, but it does not mean we are going to have to cut spending
dramatically, just reduce the growth of spending. Expenses on welfare
are particularly interesting. Mandatory spending, that is, the
entitlement programs of all kinds, is set to automatically increase 90
percent over the next decade. That is over half of our budget. We
already spend $2.3 trillion on mandatory costs today in our budget--
this year we will spend 2.3 trillion--but we will spend $4.12 trillion
in the 10th year from now. Those are the projected growth patterns we
are on. This is a huge increase, and we do not have the money.
People would also learn from public debate that welfare costs are now
the single largest item in the budget, exceeding Medicare--larger than
Medicare, larger than Social Security, larger than the defense budget.
We spend enough on these poverty programs to send every household
beneath the poverty line in America a check for $60,000, each family.
That is how much we are spending. The President's plan apparently would
not deal with that at all. Indeed, the Budget Control Act of 15 months
ago that was passed explicitly failed to address some of the biggest
items in that budget.
I do not see how we can support a plan that does not at least begin
to reform these programs and improve their operation. Is this going on
in the secret talks? Are they talking about it or, like the Budget
Control Act, is this off-

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limits, not to be discussed? Will welfare reform be a part of the
framework of the settlement that will be dropped on the Senate? We do
not know.
Meanwhile, the President demands more taxes and refuses to do
anything about waste, really. I have not seen any strong management
leadership from this White House that gives me confidence that we
should send more money. There are lavish conferences, duplicative
programs, billions in refundable tax credits being mailed every year to
illegal aliens or children not even in the United States--billions from
their own department, the reports tell us. No one is managing this
government effectively. Why should the American people send one more
dime in taxes to Washington when we will not reform and manage the
money we are already getting from them? The American people should not
send more money to this dysfunctional government. They should insist
that we fix what is going on here first.
The ACTING PRESIDENT pro tempore. The time of the Senator has
expired.
Mr. SESSIONS. Mr. President, I appreciate the opportunity to share
these remarks. I ask for 1 additional minute to wrap up.
The ACTING PRESIDENT pro tempore. Without objection, it is so
ordered.
Mr. SESSIONS. I thank my colleagues.
I would say I am concerned about the nature of these secret talks,
the fact that the Senate is really not participating. From the reports,
it is only the Speaker and the President of the United States
discussing it, and that appears to be--from what I picked up--to be
true. Apparently, the majority leader is not intimately involved, the
chairman of the Budget Committee is not involved, and the chairman of
the Finance Committee is not involved. These are Democratic leaders in
the Senate, certainly not Republican leaders in the Senate.
The Senate is a great institution. We ought to be engaged, and the
engagement of the Senate allows the American people to know what is
happening. They are entitled to that. I really believe we can do
better. We must do better.
I yield the floor.
I suggest the absence of a quorum.
The ACTING PRESIDENT pro tempore. The clerk will call the roll.
The legislative clerk proceeded to call the roll.
Mr. UDALL of Colorado. Mr. President, I ask unanimous consent that
the order for the quorum call be rescinded.
The ACTING PRESIDENT pro tempore. Without objection, it is so
ordered.

____________________