[Congressional Record Volume 158, Number 172 (Tuesday, January 1, 2013)]
[Senate]
[Pages S8611-S8615]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
THE FISCAL CLIFF
Mr. DURBIN. Madam President, it was after 2 a.m. this morning when
the Senate finally passed this historic measure which puts the fiscal
cliff behind us, if--if--the House of Representatives follows through
and passes it as well. I hope they take it up today or as quickly as
possible and pass it with the same bipartisan spirit and vote we saw on
the floor of the Senate last night. If
[[Page S8612]]
I am not mistaken, the final vote was 89 to 8, which was a significant
bipartisan vote.
It was a moment of high emotion in the Senate for several reasons.
First, on a personal level, many of our colleagues were casting their
final vote as Senators. Those who are leaving the Senate gathered in
the well and we wished them the best. It was also a moment of high
emotion because I cannot think of another vote in recent times the
American people followed so closely. I couldn't sit down on an airplane
or at a restaurant in Chicago without having somebody come up to me and
say: What is going to happen? They were very concerned, as they should
have been, because the so-called fiscal cliff is a threat to our
economic recovery and one that, I believe, finally mobilized the
majority necessary to pass this measure in the Senate on a bipartisan
basis.
The President showed extraordinary leadership on this matter. I know
he was personally invested in it. He thought about it long and hard. He
left his family vacation, which he looks forward to, and even more so
after the campaign, to come back to Washington and try to put together
a solution to this fiscal crisis. He was successful in the Senate, and
I hope he will be in the House as well.
The President also had the able efforts of his Vice President, Joe
Biden, to help in this effort. Last night, Vice President Biden came
back to his home, the Senate, where he served for 36 years, and spoke
to the Senate Democrats about the importance of this vote. It was for
almost an hour and a half on New Year's Eve, somewhat surreal, as we
gathered--some away from their spouses for the first time in decades--
for this important vote, and for an hour and a half we spoke and asked
questions of the Vice President and expressed our feelings. We could
sense during the course of that meeting an emerging consensus among the
Democratic Senators. In the end, all but three of the Democratic
Senators voted in favor of this measure.
There are parts of the bill many of us disagree with even today, but
we understand it is the nature of compromise that part of what we have
to accept may not be popular, but we have to be willing to compromise
to solve problems. When we look at the issues before us, I think we
made some significant progress. The most significant progress was to
protect 98 percent of American families from any tax increase. If the
Senate measure is approved in the House, we will see 98 percent of
American families spared a tax increase today.
The vast majority of working families, middle-income families,
struggle. They live paycheck to paycheck. The Pew Institute did a
survey within the last year or two asking working families a very basic
question: If an emergency came up, could you find $2,000, borrow or
find $2,000 to meet an emergency need? Two thousand dollars is not an
extraordinary amount of money until we consider that a simple trip to
the emergency room or urgent care clinic could result in a $2,000
medical bill. They asked working families, and barely half of American
families had access to $2,000. That tells us how close to the edge so
many families live.
Had we not acted on this measure early this morning, these middle-
income families would have faced an increase in their taxes of more
than $2,000 a year. That is not only in Illinois and California but
across the Nation. So we had to come together to protect those
families.
That was the starting point for the President's position on this
issue and the starting point for the Democrats. We passed, 6 months ago
in this Chamber, a measure which would have protected these families.
We sent it to the House. They never called it, and we had to renew our
efforts last night, and successfully we were able to achieve that by
the end of the evening.
We had to bargain, as usual, in the political atmosphere and had to
raise the exemption from $250,000 of family income to $450,000 of
family income. But, in so doing, we have protected working families
from this tax increase which otherwise would have taken place. These
families need the resources to not only meet the bills they face each
month but to try to save a little bit for the future, for their
families, and for some of their own dreams about a better life.
So that was the important first step in this package that was passed
early this morning.
The other thing that was part of it was a 5-year extension--I wish it
had been permanent--but a 5-year extension on the Recovery Act
expansion of the earned-income tax credit. The earned-income tax credit
is a measure passed during the Reagan administration which said we
would give working families a tax benefit for working: the earned-
income tax credit. That is probably, as President Reagan described it,
the best way to eliminate and reduce poverty in our Nation. So the
Recovery Act expansion of the earned-income tax credit has been
extended for 5 years.
The child tax credit, which does exactly what it says--it says to
families with children: We will give you a tax credit to help you raise
those children--that, too, was renewed for another 5 years at the
enhanced Recovery Act level. And a provision in the law, which was
added by Senator Schumer of New York years ago, which helps working
families to pay for college education, that, too, was included in this
measure.
So from a working family perspective, there were many good and
important elements that were included in this measure.
We also considered a lot of other tax measures, some of which I liked
and some I did not like. One of them in particular, the estate tax, is
a tax that is widely misunderstood. This is a tax which applies to a
very small fraction of a percentage of American families that when the
breadwinner passes away have a valuable estate that can be subject to
Federal taxation. It is a very small percentage. Some 3 percent might
be affected by an estate tax. At the higher levels that we have
discussed in our debate on this issue, less than 1 percent of estates
end up paying any tax whatsoever to the Federal Government.
The Republicans insisted on a provision which Senator Kyl of Arizona
had been championing for years, which would raise the exemption for
estates to over $5 million, which means a $5.1 million estate would not
be subject to any taxation, and over that amount would be subject to a
40-percent tax responsibility.
I personally think it should have been a lower figure. We are dealing
with the wealthiest people in America, again, and many of them make
plans, estate planning, to avoid this tax throughout their lives, and
it turns out that fewer than one-half of 1 percent of those who use
this benefit are actually small businesses or farmers. Most of them are
very wealthy people who have done well.
I can think of a friend of mine in central Illinois. Her father was a
farmer and started with very modest means, bought some land, and over
time the land has mushroomed in value to the point where his estate is
worth multimillions of dollars. She will have an estate that is huge
far beyond what she could imagine, and she would be subject to this
tax. She is not a farmer. I do not think she has ever been on a
tractor, unless she did as a child, and it is an asset which would be
subject to the estate tax.
So we have reached an agreement, albeit a reluctant agreement, to
establish this estate tax exemption of $5.1 million, subject to a tax
beyond that of 40 percent.
There were many other provisions related to the Tax Code, some of
them very esoteric, but that was an important starting point,
protecting working families, protecting the deductions and credits they
need the most, and making certain we have revenue coming in from this.
We anticipate some $600 billion in new revenue coming in to help reduce
our deficit as a result of this.
We also have something in law which the Acting President pro tempore
and I talked about for a moment: the alternative minimum tax. There was
a time when they took a look at America and said: How can this possibly
be that some of the wealthiest people pay no taxes? So we established
something called an alternative minimum tax, which said: If under the
regular Tax Code you escape all tax liability, you are going to be
subject to the alternative minimum tax, where you will pay something.
Well, it was not a bad idea 30 or 40 years ago when the debate
started. But
[[Page S8613]]
because we did not index the income that was associated with it, over
the years, this alternative minimum tax hit not only the wealthy, but
it started hitting those in middle-income categories. So each year we
had to kind of postpone the impact of this tax on middle-income
families--let's say, families in the $100,000 to $200,000 range. This
has been vexing us for decades.
Last night, in the Senate--or this morning, in the Senate--with the
passage of this legislation, we have dealt with the problem once and
for all. We have a permanent fix on the alternative minimum tax. It is
something I am sure most American families are probably puzzled over,
but it is an important element in getting this behind us which was
critically important as well.
We also managed to extend the doc fix. What is that all about? Over
10 years ago, we said we are going to save some money in Medicare. We
are just going to take a little percentage cut each year in how much we
would pay doctors and hospitals who treat Medicare patients; therefore,
we will reduce the cost of Medicare and be done with it.
Well, guess what. We had a great idea, but when it came to imposing
the law, the doctors and hospitals pushed back and said: Wait a minute.
We need this compensation for our care of Medicare patients. Therefore,
we postponed it. Every year we postponed it, what we were supposed to
save we had to come up with from other sources. The so-called doc fix,
SGR, is another one like the alternative minimum tax, which has haunted
us as we have done these budgets year in and year out. We did not solve
this problem permanently.
We solved it for 1 year. Otherwise, what would have happened is,
starting today, doctors and hospitals would have seen a reduction of
over 25 percent in their government reimbursement for treating
patients. The net result would have been, in Springfield and Chicago,
IL, and across the Nation--in Ohio and California--many doctors and
hospitals would have said: We can no longer afford to treat these
patients, and the people--the 50 million-plus Americans who depend on
Medicare--would have had fewer choices for treatment. So we have
resolved that issue. In the early morning hours, with this vote, for 1
year we have solved that problem.
Another thing we have done, which is critically important, is extend
unemployment benefits for 1 year. Two million Americans--2 million--
would have lost their unemployment benefits this morning as a result of
this so-called fiscal cliff if we had not taken action.
I can tell you that it means an awful lot in my State of Illinois. As
I mentioned, 2 million on a nationwide basis, but we also have 88,000
in my own State who face the same basic problem. These are people who
have been out of work for a long time. Some of them are in school. Some
are taking courses for retraining. All are trying to keep their family
together, not lose their home while they are unemployed.
So the extension of these unemployment benefits was the President's
second highest priority, after protecting middle-income Americans, and
it was included in this package. It is an important element.
One last point. When you ask the Congressional Budget Office: If you
had to spend one tax dollar to help the economy, where would you spend
it, they will tell you over and over again, it is clear: Unemployment
benefits. The $1 you spend on unemployment benefits goes directly back
into the economy. These people are not salting it away for a rainy day.
They are not investing it. They are spending it on goods and services
to get by--utility bills and rent and mortgage payments and food and
clothing, the basics of life.
As they spend it back into the economy, it is respent. So each $1 has
kind of a multiplier effect behind it of $1.60, ultimately, into the
economy. So not only is it the humane and right thing to do for those
who are out of work and struggling, but it is also a good thing for
boosting economic growth. That is an important part.
One of the real disappointments last night--and I have to tell you,
it really is sad that it has come to this--relates to the farm bill. We
have a chairman of the Agriculture Committee in the Senate, Senator
Debbie Stabenow of Michigan. Past chairmen who are serving here all
acknowledge, as we do, she has done such an extraordinary job. Her
leadership in constructing a farm bill this year was masterful.
I have been around Congress for 30 years--the House and Senate. You
can pick out the real legislators, and Debbie Stabenow is a real
legislator. She sat down and crafted a farm bill.
Now, you may not think of Michigan as a farm State; it is. And she
looked at this bill in terms of its entirety. In its entirety, the farm
bill is about more than farmers and ranchers. It is also about
nutrition and food programs and school lunch and food stamps. They are
all included in this bill.
She tackled it with the ranking Republican member, Pat Roberts of
Kansas, and came up with an amazing work product. She had over 63 votes
in the Senate for this farm bill--bipartisan support for this farm
bill.
Let me tell you what it did. We not only ended up with a bill that
had the support of every major farm organization, which is no mean
feat, it saved over $23 billion in deficit reduction in 5 years. She
went after some of the indefensible programs, such as the direct
payment program to farmers, which they readily acknowledged needed to
go away, took those programs aside and put the money to deficit
reduction.
She went to the nutrition programs, which are critically important in
a struggling economy, with families facing income inequality, and she
protected those. Those are important to me, and I have worked with her,
and I think we came up with an honest, balanced approach when it came
to nutrition programs.
We passed the bill. We passed it months ago in the Senate, and we
sent it to the House of Representatives. They not only could not pass
their own farm bill--never did--but they would not even consider
calling the bipartisan Senate bill. The farm organizations were begging
them: Call it. We need a 5-year program on farming. They would not do
it. They never did it.
So there was a lot of frustration over here that we did good work on
a bill, the House could not put a bill on the floor, and would not take
up our bill.
The thing that brought it together, incidentally, at the last
minute--why it was included in this emergency package--it turns out
that under the law, if we do not pass a new farm bill, we revert to the
1949 farm bill. Talk about going back in history and picking up a law
which has little application to today's world, that is what happens.
One particular issue jumped off the page: dairy support.
Now, last night I bid farewell to Senator Herb Kohl of Wisconsin. I
am going to miss him more than most people can imagine because Herb
Kohl spent the time and understood America's dairy program.
Madam President, I confess, I do not understand this program.
Vaguely, yes; but if it was on the final, I would flunk. So I used to
go, on dairy issues, to Senator Kohl. Wisconsin dairy farmers and
Illinois dairy farmers always saw eye to eye.
I said: Herb, you are my dairy expert. You tell me. You are my
adviser. Well, Herb is retiring. I will need a new adviser. But we
found out that if we had not passed a new farm bill, and reverted to
the 1949 dairy program, the price of milk would double to $10 a gallon.
That, to me, was unacceptable. It was unacceptable to the White House.
As a result, we had to come through with an emergency measure to avoid
that possibility.
We should have taken the bipartisan Senate farm bill. Senator
Stabenow begged for us to do this, could not get that into the
negotiation.
I will say one thing that really disappointed me last night. At the
last minute, they had one aspect of the dairy program they needed to
take care of. It costs $60 million to $100 million.
We needed to find a pay-for and, unfortunately, the other side of the
aisle insisted that the pay-for for this dairy support come from the
Federal Food Stamp Program. That is just--that is sad. We had so much
waste in our agriculture programs that we identified in our farm bill.
The fact that they would turn to the Federal Food Stamp Program, the
SNAP program, to come up with this money, to me, is difficult to
understand, explain or defend. I am saddened by that. I guarantee we
will return to that.
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What we did in the early morning hours is important for us. It isn't
the end of the story. There is more we will face. In 60 days, if we
don't take care, we are going to face another cliff of our own making
because in 60 days three things come together.
The debt ceiling, what is the debt ceiling? America's mortgage. When
we spend money for a war, for the Department of Agriculture, whatever
it happens to be, ultimately, we borrow 40 cents for every $1 we spend.
So every President is forced to renew the mortgage, the debt ceiling of
the United States.
I think of President Ronald Reagan. It was done over and over again
many times without even a record vote. But now it has become a
political hot potato, and in a matter of 60 days or so we will be
facing another need to renew America's mortgage. In other words, this
is the full faith and credit of the U.S. Government, and that is going
to be contentious, a matter of debate.
At the same time, the continuing resolution, our temporary spending
bill, expires. At the same time, the sequestration kicks in, which is
automatic spending cuts. So we will have, in 60 days, if the House
follows the Senate lead on the fiscal cliff, another challenge. Let us
hope we have learned a lesson from this one.
The American people are sick and tired of incompetence, political
posturing, and failure of Congress to come together on a bipartisan
basis to solve a problem and they want us to get the problem solved and
get this Nation moving forward.
In the early morning hours in the Senate, we finally achieved it. It
should have been done long ago, I understand, but we achieved it. Now I
hope the House will do the same, follow the Senate example, and 60 days
from now we can approach this problem in a sober, honest, mature way
instead of a partisan fashion. That is what the American people expect.
I took a look, incidentally, at the specific impact of this morning's
vote on my State of Illinois. For the record, over 5 million Illinois
families will be spared a tax increase under the agreement we passed in
the early morning hours. Many of them, almost all of them, the working
families whom I described earlier, without an agreement, the average
family in Illinois would have faced an increase in taxes of more than
$2,000.
Half a million families in my State will continue to receive college
tuition tax credits, making it easier to send their kids to college.
This could be as much as $1,000 of assistance each year, which I am
sure is a helping hand.
Also, 1.5 million Illinois families raising children will continue to
benefit from the child tax credit, a yearly savings of about $1,000, on
average, for each of these Illinois families with kids. Working
families in Illinois will continue to receive the earned-income tax
credit. Over 230,000 Illinois families benefited from that tax credit
last year.
More than 1 million Illinois taxpayers are protected from an increase
in taxes under the alternative minimum tax, which I mentioned earlier.
Thousands of Illinois children will continue to have access to school
readiness programs such as Head Start. Low-income families will
continue to benefit from low-income home energy programs, LIHEAP.
The deal, the agreement, protects funding for nutrition assistance
for women, infants, and children and prenatal care, so we can have more
healthy babies and healthy moms. The elderly, disabled, low-income
families and veterans will continue to receive housing assistance. Over
88,000 Illinoisans will continue to receive the unemployment benefits I
mentioned earlier, and Illinois businesses will benefit from more than
$8.5 billion in consumer spending by middle-class families, families
spending more on goods and services at a time when we desperately need
this in our economy.
Let me say one last word. I have been involved in this deficit
discussion for a long period of time. This is not a deficit-reduction
measure, period. It does reduce it in some aspects, but the arcane
scoring by the Congressional Budget Office will not give us any credit
for reducing the deficit. We do have more revenue coming in toward
deficit reduction, but some of the other measures I mentioned would be
scored as expenditures.
Having said that, we still have a deficit issue. We still have a
deficit problem.
What we tried to establish this morning in this vote is revenue has
to be part of every solution on deficit reduction. The other side of
the aisle reluctantly, after years of resisting, came to our side in
the early morning hours. That is No. 1.
No. 2, we need to take an honest look at entitlements. Here are what
the facts are. Social Security untouched, unamended, unchanged will
make every promised payment for 20 years. We can't say that about any
other Federal program, 20 years of payments, with cost-of-living
adjustments every single year. But on the 21st year there will be a
dropoff of 30 percent in terms of Social Security benefits. We have 20
years. We can wait. We can wait 5, 10 or 15 years to do something or we
can do it soon, maybe even this year, 2013. That is what I would like
to see.
I am preparing legislation to be introduced shortly, which will call
for the creation of a commission with a very simple assignment, come up
with a plan for 75-year solvency of Social Security. When they have it,
and it has been certified to be a valid plan, report it to Congress to
be considered, without debate--I shouldn't say without debate--without
filibuster, without delay. When it comes to the floor, any Member who
can offer a substitute amendment that achieves 75 years' solvency may
also call their measure at the same time. Let us have a chance to have
this debate and make sure we have solvency for Social Security that
will affect not only all our lives but the lives of our children and
beyond. That, to me, is the responsible thing to do.
Medicare is much tougher. Medicare goes broke in 12 years--12 years.
Why? Because, lo and behold, today, 10,000 Americans reached the age of
65, and 10,000 reached that age yesterday and will tomorrow and for the
next 10 or 15 years. The baby boomers have arrived.
We knew it was coming. But as they show up, their demands for
services that they have paid for and invested in throughout their
working lives are going to continue to grow. Those people who say:
There is too much government spending; we have to stop the government
spending, I want to ask them: So are you going to say to the millions
of Americans who paid into Social Security for a lifetime, paid into
Medicare for a lifetime, that we are going to walk away from our
obligations? Of course not.
What we have to do on Medicare is find a way to meet this growing
population with demands and the mushrooming costs of health care. We
can do it. There are ways to save money, humane ways to save money and
protect the integrity and the future of Social Security, Medicare, and
Medicaid. I think the President's ObamaCare, as it has been
characterized, or Affordable Care Act, is a step in that direction, but
we need to do more when it comes to Medicare.
I see my friend and colleague from Ohio on the floor. I yield to him
and thank him for his friendship and his leadership on these important
issues.
I yield the floor.
The ACTING PRESIDENT pro tempore. The Senator from Ohio.
Mr. BROWN of Ohio. I thank the senior Senator from Illinois, the
assistant majority leader.
I concur in the remarks Senator Durbin just made, especially about
the vote last night. The primary thing we did was we spared that $2,000
tax increase for so many families in California, Illinois, Ohio, and
across this country. I remember the Presiding Officer telling a group
of us last night how many hundreds of thousands of Californians would
have lost their unemployment insurance if we had not acted last night
the way we did.
My fundamental criteria on voting on this issue and voting for this
issue was we were able successfully to stop cuts in Social Security to
pay for some of this plan or raising the retirement age for Medicare or
not doing the unemployment insurance in the way we did. So all those
were victories last night.
I also concur with Senator Durbin that while adding 5 years to the
earned-income tax credit, locking in one of the best poverty-fighting
programs to be begun by Ronald Reagan, suggested, I believe, by Milton
Friedman--supported by both parties for
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many years--we are not seeing that the way we used to with the earned-
income tax credit. It rewards families that work, a family making
$30,000 a year. This is not a whole lot more than the minimum wage, $3
or $4 more, maybe, than the minimum wage but not a livable wage, and
they get significant tax credits. This is sort of what Friedman called
a negative income tax, and this works so well for encouraging work in
this country.
We did that only for 5 years, while bringing the estate tax up to a
$5 million exemption, which I thought was far too generous because it
is only paid by far fewer than 1 percent of the American people. That
was made permanent while the earned-income tax credit was only made for
5 years.
The tax credit for college students, for families, was so important
in this legislation too. Much of what we did was simply ask the wealthy
to pay a little bit more, to bring tax rates, as the Presiding Officer
knows, back to the levels of the 1990s.
I think it is important to put this in a little historical
perspective. In the 1990s, tax rates were a little bit higher for upper
income people. We saw in those 8 years in the 1990s, from 1993 to
2000--the Presiding Officer's first year in the Senate, 1993, my first
year in the House--we saw incredible economic growth. Wages went up for
the average American, average Ohioan, average Californian, average
American. We saw 21 million private sector net jobs created, and
President Clinton left office with the largest budget surplus in
American history.
We know what happened the next 8 years, where we saw very little
economic growth, only about 1 million--being generous--only about 1
million private sector net jobs created in those 8 years.
In what hit my State particularly hard, we saw a real decline in
manufacturing. From 2000 to 2010, we lost, in this country, net, 5
million manufacturing jobs--manufacturing jobs. Maybe people who dress
like this around here don't think much about that. I know the Presiding
Officer does because her State is the No. 1 manufacturing State in the
country.
It is especially important in my State. We lost hundreds of thousands
of manufacturing jobs. While we lost 5 million manufacturing jobs
nationally, tens of thousands--I believe 60,000 is the number--of
manufacturing plants closed in those 10 years.
But the good news is that since the auto rescue, we have seen what is
beginning to be significant manufacturing job growth, some 500,000 new
manufacturing jobs since 2010. Almost every month--not quite every
month but almost every month--an increase in manufacturing jobs. We
know what a manufacturing job does in a community. For workers earning
$20 or $25 an hour, that worker is spending money in that community.
That worker is buying things, buying a home, buying a car, putting
people to work creating jobs at restaurants and creating jobs at the
hardware store. Those workers are paying property taxes to hire
teachers and paying the local city income tax to hire firefighters and
police. So we know what manufacturing jobs do as we see that increase.
In fact, since the auto rescue, in my State, the unemployment rate
went from 10.6 percent soon after the auto rescue sort of took effect,
if you will, and now the unemployment rate is under 7 percent. It is
not what it ought to be, but I think that is what last night's vote,
ultimately, was a recognition of; that the people here with this 89-to-
8 vote--89 votes yes, 8 votes no, with strong bipartisan support, which
I hope we see this afternoon in the House--I think it was a recognition
that we don't grow the economy by tax cuts for the rich and trickle-
down economics. We tried that in the last decade. It didn't work. We
understand, historical evidence shows--and I think we recognized it
last night--by focusing on the middle class, tax cuts for the middle
class, investments in schools, and investments in infrastructure and
unemployment insurance for people who have lost their job, keeping
Social Security and Medicare strong, investing in college credits, and
rewarding work through the earned-income tax credit, we grow the
economy from the middle class out. That succeeded in the 1990s. There
were 20 million-plus new manufacturing jobs. Trickle down didn't do so
well the 10 years after.
Now we are coming back and recognizing, with this overwhelming vote
last night, both parties are recognizing we grow the economy from the
middle class out.
I think that is why last night was a huge victory, surely,
politically for the President. But what it was a victory for, truly,
was a victory for the middle class and a victory for those who want to
join, aspire to the middle class, and a victory for this country, for
our economy, for our economic growth and for our future.
I yield the floor.
The ACTING PRESIDENT pro tempore. The Senator from Wyoming.
____________________