[Congressional Record Volume 159, Number 21 (Monday, February 11, 2013)]
[Senate]
[Pages S590-S594]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. LEVIN (for himself and Mr. Whitehouse):
  S. 268. A bill to reduce the deficit and protect important programs 
by ending tax loopholes; to the Committee on Finance.
  Mr. WHITEHOUSE. Mr. President, I am going to be joined fairly soon by 
the distinguished chairman of the Armed Services Committee, Senator 
Levin, to discuss the upcoming sequester and the impact the sequester 
will have on this country if it is allowed to go forward. Chairman 
Levin has been pretty clear about this, as have our national security 
officials on the defense

[[Page S591]]

side. It is equally harsh on the nondefense side. But most important, 
it will be a real blow to the economy. The economists now are saying if 
we let the sequester kick in as scheduled, it will cost us 1 million 
jobs. One million Americans will lose their jobs because we let the 
sequester hit.
  Other things--cuts to education; 70,000 young children kicked off of 
Head Start; 10,000 teacher jobs at risk; funding for up to 7,200 
special education teachers and aides and staff could be cut. Food 
safety--2,100 fewer food inspectors. Research--several thousands of our 
researchers who are doing cutting-edge research in all sorts of areas 
from electronics to finding cures for diseases could lose their jobs. 
Up to 373,000 seriously mentally ill adults and seriously emotionally 
disturbed children could go untreated at a time when we are talking 
about the need for more treatment in the wake of the terrible tragedy 
in Newtown, CT. In law enforcement we could see a lowering of capacity 
equivalent to more than 1,000 Federal agents. Nutrition assistance--
600,000 women and children would be dropped from the Department of 
Agriculture's nutrition programs. More than 100,000 formerly homeless 
people, including veterans, would be removed from their current housing 
and emergency shelter programs because they would no longer be funded 
under these cuts.
  It is a deadly serious thing, the sequester that is coming at us. 
There are much better alternatives. What I am doing today is filing two 
pieces of legislation that would completely eliminate the sequester and 
pay for the elimination of the sequester, not by running up the debt or 
the deficit, but by repealing tax giveaways, giveaways in the Tax Code. 
One of the bills would put in enough tax giveaways that we could get 
rid of the sequester for about a year, which would allow the budget 
process we are embarked on now to conclude and then we would be ready 
to go with the new budget and go forward in the regular order that way, 
letting the budget process drive the decision.
  The other way is simply to get rid of the sequester for the full 10 
years, just get rid of it for once and for all; do it now and the other 
bill I proposed would do that. Both bills do this without raising 
taxes, by going after tax giveaways, and by avoiding these kinds of 
Draconian defense and nondefense cuts that have been now--I guess 
``estimated'' is probably the right word but I think they are pretty 
confident would cost America a million jobs. A million American 
families would lose their paychecks because we did this.
  The first point I want to make as I go about this is these tax 
expenditures are no small thing. Here is what we collect through the 
income tax every year from individuals: $1.09 trillion; round numbers, 
$1 trillion. Here is what we give away in tax deductions, loopholes, 
different expenditures and deductions: $1.02 trillion. So on the 
individual side what we pass through the Tax Code and back to people is 
almost as big as what we actually collect.
  When you look at the corporate income tax revenue, the corporate 
income tax revenue is $181 billion in 2011. Here is what went back 
through to corporations in tax expenditures: $157 billion.
  Another way to look at it is there is $2.1 trillion of tax liability 
in this country. One trillion dollars of it comes back to the 
government in the form of actual revenues and another trillion of it 
gets distributed through the gimmicks and loopholes and deductions and 
tricks and so forth in the Tax Code. On the corporate side there is a 
total of $338 billion in tax liability, of which only $181 billion 
actually appears as revenue to the government, and the other $157 
billion gets distributed again because of tricks and gimmicks and 
loopholes and provisions in the Tax Code.
  What some of our colleagues want us to do is say: Well, we raised tax 
rates once--just now. We raised them on only the wealthiest families in 
America. We only raised them back to where they were under President 
Clinton when the economy was booming, but we did that and we should 
look no further.
  The problem with that analysis is that only looks at the revenue that 
is actually collected. It doesn't look at the loopholes. It doesn't 
look at the tax expenditures either on the individual side or on the 
corporate side.
  It is also worth noting that if we add these two up and we get $2.1 
trillion or, more likely on the corporate side, if we add these up and 
we get $338 billion, there is more money out there which that doesn't 
count. That is the money that never shows up for taxation in the first 
place because it has been hidden in offshore tax refuges. People have 
pretended their income is in funds in the Cayman Islands, and they have 
pretended their intellectual property is in a five-person office in 
Ireland. There are a lot of gimmicks by which a lot of the money never 
even gets into this calculation. When we look at the pain the sequester 
is going to cause, it makes a lot of sense to look at the tax 
expenditures, which amount to a total of $1.17 trillion, and use that 
to offset.
  Another thing worth looking at, just to remember where we are, is 
that in the last 2 years on this question of reducing the deficit, we 
have reduced the deficit by $2.4 trillion, and $1.7 trillion of that 
came in spending cuts and $700 billion came in the form of new 
revenues. In terms of a balanced approach to deficit reduction that 
looks at both spending cuts and revenues, we are not balanced yet. We 
are nearly $1 trillion ahead on the spending cut side. So when 
Republicans say we are only going to look at spending cuts going 
forward, they are not just saying that all those goodies in the Tax 
Code that go to wealthy individuals and corporations as tax deductions, 
loopholes, and expenditures are off limits, they are also saying that 
we are going to make it even more unbalanced than it is now.
  By the way, the way I get to $1.7 trillion is by taking $1.46 
trillion, which is the actual cuts, and then adding the interest 
savings that are associated with it. And I take the same interest 
savings on the revenue side, so it is even, the way we have allocated 
the interest.
  I see Chairman Levin is here, so I am going to yield to him when he 
returns.
  Let's look at one more graph while we are here. As we saw here, a lot 
of this is corporate tax expenditures. Every year there is $157 billion 
in corporate tax expenditures, which calls to mind, how are we doing in 
terms of a fair balance between individuals and corporations in the 
American tax system? Well, we have done some research, and it turns out 
that corporations are providing less and less of our revenues.
  When we go back to 1935, this chart shows that for every $1 of 
revenue the U.S. Government got from an individual, it got $1 from 
corporations. It was 1 to 1--individuals $1, corporations $1. By 1948 
it became 2 to 1. For every $1 that a corporation contributed to our 
Nation's revenues, individuals had to kick in $2. In 1971 we had 3 to 
1--$1 from corporate America, $3 from individuals, regular Americans. 
By 1984 that was up to 4 to 1--$1 from corporate, $4 from individuals. 
The ratio as of 2011 is 6 to 1, which means the amount of tax burden 
individuals in this country bear has climbed sixfold compared to 
corporations meeting their responsibilities. One of the reasons is that 
so many American corporations are hiding money offshore and away from 
the taxman. Now, whether these are the kinds of accounts we heard about 
during the Presidential campaign, such as in the Cayman Islands and so 
forth, or whether it is locating intellectual property in some faraway 
country and using internal transactions to move revenue to avoid the 
taxman over and over, Chairman Levin and his committee on 
investigations have looked into this and over and over again, and they 
have shown this is a really strong area in which an enormous amount of 
money can be raised.
  The problem with doing it the other way--going after Americans again 
and asking them to kick in even more in spending cuts rather than going 
after the corporate high jinks in the Tax Code--is that leads us down 
this path of austerity that Republicans have championed. The problem 
with that austerity path is that when we get into a recession--as we 
have been in--we should try to cut our way out of it. The problem with 
that is it has not worked. We argued against that theory from the 
beginning because it seems wrong, it doesn't make logical sense, and it 
runs against a lot of principles of economics.
  Over and over again, our colleagues said: No, no, no. We just need to 
cut

[[Page S592]]

our way out of this, and that will be our solution. When we get in 
trouble with the economy, we cut spending.
  That has proven to be a disaster. Where they have gone to austerity 
in Spain, the unemployment rate is 26.6 percent, and GDP growth is 
negative. Their economy is actually shrinking. Greece has an 
unemployment rate of 26.8 percent, and their GDP growth is negative 6 
percent. Their economy is shrinking even more rapidly. In Portugal, the 
unemployment rate is 16.3 percent, and the GDP growth is negative 3 
percent. By comparison, the United States, although things are not 
right yet, is doing much better.
  I see that the distinguished chairman of the Armed Services Committee 
is here on the Senate floor, so I will yield at this point.
  The PRESIDING OFFICER. The Senator from Michigan.
  Mr. LEVIN. I thank my good friend from Rhode Island, who has done 
good work in trying to increase revenues, to close some of the 
egregious loopholes which have allowed the draining of revenues to the 
Treasury.
  A few moments ago, the Senator made reference to the offshore tax 
havens as a way to avoid paying taxes. There was an article in the Wall 
Street Journal--I don't know if my friend saw this article--about 
pharmaceutical companies that were transferring intellectual property 
to Ireland to avoid paying taxes.
  There was an earnings call by the chairman or the CEO of the Gilead 
company. He was telling investors and stockholders that there is a 
significant reduction in their tax liability because they had 
transferred the intellectual property rights to a compound to deal with 
hepatitis C. He announced that the rights of the hepatitis C compound 
are now domiciled in Ireland. It is not that his company is domiciled 
in Ireland, it is that the intellectual property has been transferred 
to a company they own in Ireland. The intellectual property they used 
to own--it is still owned by them, of course, and is now a wholly owned 
subsidiary, but the hepatitis C compound is now domiciled in Ireland. 
So intellectual property is now shipped around the world to various 
domiciles.
  We have had hearings in our Permanent Subcommittee on Investigations 
on the way in which tax revenue is lost to the Treasury and tax 
responsibility is avoided by these transfers of intellectual property 
to those wholly owned shell companies that perform no economic function 
except tax avoidance. We have to end it, and we can end it. If we do 
end it, it will provide a significant amount of revenues for our 
Treasury.
  Today, with Senator Whitehouse, I am introducing the Cut Unjustified 
Tax Loopholes Act, or CUT Loopholes Act, which is S. 268. This bill 
outlines what I believe is a crucial element to the solution to our 
fiscal problems. It would raise revenues to reduce our deficits and 
preserve critical programs by cutting loopholes in our Tax Code that 
allow multinational corporations and wealthy individuals to avoid 
paying their fair share of the tax burden.
  Now, we are just a few weeks away from sequestration, and the 
Presiding Officer has spoken very eloquently about what would happen if 
sequestration hits. This collection of mindless, across-the-board cuts 
is going to severely hurt our economy, it is going to undermine our 
national security, and it is going to threaten programs vital to 
seniors, children, middle-class families, workers, and businesses. 
These cuts, if they occur, will hurt every single American.
  I have said repeatedly for more than 2 years that any deficit 
reduction effort must pass the test of balance. Balanced deficit 
reduction requires three elements: cuts to discretionary spending, 
additional revenues, and entitlement reforms. As the Senator from Rhode 
Island has pointed out, we have enacted $2.4 trillion in deficit 
reductions. The vast majority of the deficit reduction achieved so 
far--more than $1.7 trillion--has come from spending cuts. So while 
further cuts may be necessary, we must renew our focus on the other two 
categories: additional revenues and entitlement reforms. The CUT 
Loopholes Act can help us produce the required revenue. According to 
estimates in the Joint Committee on Taxation, this legislation would 
yield at least $189 billion in deficit relief.
  I hope no Member of this body doubts the damage sequestration would 
do to our Nation and to our people. The Congressional Budget Office 
warned us just last month that the enactment of these cuts would likely 
reduce GDP growth by 1.25 percent. George Mason University economist 
Stephen Fuller has estimated that these cuts in this year alone would 
reduce GDP by $215 billion and cost the jobs of over 2 million American 
workers.
  Tomorrow the Armed Services Committee is going to meet to hear from 
Defense Department officials and members of the Joint Chiefs of Staff 
on the potential effects of sequestration on our national security. 
Just last week, in his final appearance before our committee as 
Secretary of Defense, Secretary Panetta warned us of a ``readiness 
crisis'' that would impair our forces' ability to respond to crises. 
Sequestration will also prevent investments needed to protect us in 
emerging areas of concern, such as cyber security. It will threaten our 
ability to keep faith with the most important national security asset 
we possess: the men and women of our military and their families.
  Secretary Panetta has pointed out that sequestration's ills will not 
be limited to defense. In a speech last week, he said:

       It is not just defense, it's education, loss of teachers, 
     it's child care . . . It's about health care, 700,000 women 
     and children will no longer receive nutritional assistance. 
     It's about food safety, it's about law enforcement, it's 
     about airport safety.

  Today we are introducing the CUT Loopholes Act to protect those and 
other important priorities.
  Over the last 50 years, Federal revenues have averaged approximately 
18 percent of GDP. Over that time, our budget has been balanced only a 
handful of years. Each of those years that had a balanced budget, 
revenues exceeded 19.5 percent of GDP, but in recent years revenues 
have fallen off to about 15 percent of GDP.
  One significant factor in our revenue shortfall is a massive plunge 
in the share of the stocks burden borne by corporations. Corporate tax 
revenue amounted to as much as 7 percent of GDP in the 1950s, 2.7 
percent of GDP just 7 years ago, and in 2012 it amounted to just 1.2 
percent of GDP. Corporations today pay an average tax rate--a real 
effective tax rate--of 12 percent. How is that possible when the 
statutory tax rate on corporations is 35 percent? Through loopholes in 
the Tax Code is how it is possible.
  One of the key abuses is when companies use these various gimmicks 
and tax loopholes to shift their assets offshore. The Permanent 
Subcommittee on Investigations, which I chair, has spent more than a 
decade investigating offshore tax loopholes. We have shown how 
companies such as Enron used offshore schemes to avoid billions of 
dollars in taxes. Just last year we showed how companies such as 
Microsoft and Hewlett Packard used tax rules to avoid taxes on billions 
of dollars in income. These gimmicks cost us that much income even on 
products developed in the United States and sold in the United States 
to U.S. customers. They often do this by transferring intellectual 
property rights and other intangible property developed in the United 
States to wholly owned subsidiaries and tax havens, thereby avoiding 
U.S. tax.
  How big is the problem? According to the Congressional Research 
Service, American multinationals in 2008 claimed to have earned profits 
in Bermuda amounting to 1,000 percent of Bermuda's GDP. Multinationals 
reported earning more than 40 percent of their offshore profits in five 
tax haven countries, despite the fact that just 4 percent of their 
overseas workforces and 7 percent of offshore investments were located 
in those five tax havens.
  The CUT Loopholes Act will end abuse of so-called ``transfer 
pricing'' agreements. It will allow companies to transfer revenue for 
products developed in the United States to tax haven countries. It 
would strengthen enforcement tools so our tax authorities can 
investigate and rectify tax avoidance offshore. It would end the 
taxpayer-funded subsidy to corporations for expenses in moving jobs and 
operating facilities overseas.
  It would stop corporations from manipulating rules on foreign tax 
credits to avoid taxes. It would end the ``check

[[Page S593]]

the box'' loophole that allows multinationals, by a stroke of a pen, to 
cloak offshore income from taxation.
  Here at home, the CUT Loopholes Act would eliminate a loophole that 
allows large corporations to exploit what is in effect a Federal 
subsidy that helps pay for the compensation awarded to their 
executives. When companies award stock options to their top executives, 
they are allowed under law to record that expense in two totally 
different ways--one for their books and one for tax purposes. They 
report one amount to their investors on their annual financial reports, 
but they can report a much larger expense--often orders of magnitude 
larger--to the IRS and claim a tax deduction for that much larger 
claimed expense.
  One company, Facebook, used this loophole as part of its initial 
public offering last year. Facebook will use this loophole to claim a 
$16 billion tax deduction. It would then seek a $\1/2\ billion tax 
refund for taxes paid in past years, and then avoid taxes for up to as 
many years into the future. That is just one company. The amount it 
showed in its books for that same cost for executive compensation was 
about 5 percent of what it told Uncle Sam the cost was, and then it was 
able to deduct a much larger cost--20 times as much of its income 
taxes. So this legislation would end that. By the way, that was just 
one company.
  This legislation would also end two Wall Street tax loopholes. It 
would end the derivatives blended rate loophole, which gives 
preferential tax treatment in the form of long-term capital gains rate 
for speculative trades in certain derivatives--derivatives sometimes 
bought and sold in fractions of a second.
  Now, we have to understand the amazing part of that is these 
derivatives that are sometimes sold in one-millionth of a second--
bought and sold in one-millionth of a second--are given long-term 
capital gains treatment. We can imagine the amount of money that is 
involved in that and the loss to the Treasury.
  Another loophole the CUT Loopholes Act would address is in the energy 
sector. Because of a three-decade-old IRS decision, oil produced from 
tar sands, as opposed to traditional oil extraction, is not subject to 
the tax that funds the Oil Spill Liability Trust Fund. If spilled into 
the environment, oil produced from tar sands is just as damaging as oil 
produced by other means, as residents along the Kalamazoo River in 
Michigan learned in 2010. Cleanup of that oil spill is still underway 
nearly 3 years later. Surely producers of oil from tar sands should 
help contribute to the costs of cleaning up these spills--ust like 
producers of other oil must do.
  The CUT Loopholes Act also would tighten rules that combat tax-
shelter promoters, stiffen penalties on those who aid companies or 
individuals who seek to shirk their fair share of the tax burden, 
strengthen our ability to collect taxes from tax avoiders when we catch 
them, and modernize the IRS tax lien process.
  I know these issues can be complicated. But the American people are 
seeing through that complexity.
  Americans support these reforms not just because of the great fiscal 
challenges before us. People recognize that these loopholes are not 
fair. They are wrong in every sense that a policy can be wrong--wrong 
fiscally, wrong economically, wrong ethically.
  Even if one disagrees with the American people, and sees these 
egregious loopholes as somehow justified, how can one argue that 
preserving them is more important than avoiding the damage of 
sequestration? How are these loopholes more important than preventing a 
recession caused not by the ups and downs of the economic cycle or by 
the reckless behavior of financial speculators, but by sequestration?
  I offer these ideas in the genuine belief that they can help bridge 
the gap, and in the urgent belief that we cannot leave that gap 
unbridged. I urge my colleagues to adopt them for the good of the 
millions of Americans whose prospects will dim if we cannot reach 
agreement.
  I will close with this: There was a survey completed last month which 
shows that two-thirds of Americans believe corporations need to bear a 
larger share of the tax burden. Eight in ten say closing corporate tax 
loopholes should be an important priority for Congress. Seventy-three 
percent approves of efforts to stop corporations and individuals from 
avoiding taxes by shifting income offshore.
  So this is what the survey shows:

       Do you approve or disapprove of the following policies? 
     Prevent corporations from avoiding taxes when they award 
     executives millions in stock options: That is 73 percent. In 
     terms of closing loopholes, allowing corporations or the 
     wealthy to avoid U.S. taxes by shifting income overseas: That 
     is 63 percent.

  By the way, that percentage applies across the board. Americans of 
all political persuasions agree with these points. Mr. President, 8 out 
of 10 Republicans--8 out of 10 Republicans--agree the amount of revenue 
which will be saved by ending these kinds of loopholes should go to 
either deficit reduction or to public investments, and only 11 percent 
believe the revenue should be used to reduce tax rates on corporations.
  So I think we have to act to avoid sequestration. Senator 
Whitehouse's bill is directly aimed at that. Our bill, if we can get 
this passed and get some of these loopholes closed, will clearly help 
to avoid sequestration. There is some overlap between the bills, but 
the point is the same.
  These loopholes are draining our Treasury. This is not like 
increasing tax rates, to say we ought to close these kinds of egregious 
loopholes. These loopholes shouldn't be there. If we had a surplus, we 
ought to close these loopholes. These loopholes have helped to shift 
the burden in this country to middle-income families from corporations, 
and these corporations that avoid these taxes, in many cases, are 
extremely profitable corporations. It is an absurdity that we allow 
money to be drained from our Treasury to go to these offshore tax 
havens where no or little taxes are paid.
  We can end it. We can end that kind of loophole. We can close it, and 
we can do a lot of good for our country, both in terms of avoiding 
sequestration in the short term, as well as to help reduce our deficits 
in the long term.
  I wish to thank Senator Whitehouse again for the leadership he has 
shown and continues to show in this area. Some of these issues are 
extremely complex. We know that. One of the reasons they are difficult 
to end is that these loopholes are very difficult to explain. So we 
just hope our colleagues will follow the instincts of the American 
people who know these tax havens are wrong.
  We should put them out of business in terms of their drain on the 
American Treasury, and we can do so. In fact, then-Senator Obama was a 
cosponsor of much of this legislation when he was in the Senate.
  So I am going to close here, but I will again thank the Senator from 
Rhode Island for the leadership he is showing for his bill, which I am 
proud to cosponsor.
  The PRESIDING OFFICER. The Senator from Rhode Island.
  Mr. WHITEHOUSE. Mr. President, I thank the distinguished Senator from 
Michigan. I appreciate very much that he has signed on as a cosponsor 
of both my 1-year and full 10-year--9 now--sequestration alternatives 
that avoid a calamity for our economy, the potential crash of 1 million 
jobs, by looking exactly where Senator Levin suggests--at the tax 
loopholes.
  As I showed a moment ago, it used to be, back in 1935, a ratio of 1 
to 1 of dollars paid by individual Americans in taxes compared to 
dollars paid by corporations in taxes. Now it is 6 to 1--$6 out of a 
family's pocket for every $1. What has allowed America's corporate 
world to lower their tax liability by so much--down to one-sixth of 
what it used to be relative to what regular Americans pay? Well, the 
biggest chunk of it is all the money that flows out through the Tax 
Code. We have virtually the same amount flowing out through the Tax 
Code as we actually keep our hands on as revenue. So for $2 trillion in 
tax eligibility, half of that goes right back, on the personal side, 
and out here, it is $338 billion, and $157 billion that goes back. It 
never sees the tax man. It goes straight back through the Tax Code.
  Lobbyists have been here for years working on those loopholes and 
making sure different industries and interests get those benefits. That 
is where it

[[Page S594]]

all goes. That is why we are in a situation in which we have what the 
distinguished Senator from Michigan has talked about--all of these 
disgraceful loopholes.

  I echo his point of view. Now is an important time to do this because 
the alternative, which is more spending cuts, pushes us down the 
austerity path that has failed in Europe and that is projected by the 
Bipartisan Policy Center to cost us 1 million jobs. There is an 
alternative: to go after all of these tax loopholes which, as the 
chairman said--as Senator Levin said--we should be going after those 
anyway. They are just plain wrong on their own.
  If we had a balanced budget, we should be going after them. It is 
simply not fair. These are relics of power and lobbying and special 
influence and special pleading in the Tax Code, and we need to be rid 
of them. Now is a very good time to be rid of them to avoid pitching 
the economy into recession.
  I know my two pieces of legislation are not going to pass. We are not 
going to pass a bill that has the sequester 100 percent paid for by new 
revenues from closing tax loopholes. I wish we would, but I know we are 
not going to. My point in filing the legislation is to prove that it 
could be done. It could readily be done. It could be done with pieces 
of legislation that Senators in this body have supported over and over 
and over again. So it is not necessary to walk into the fiscal band saw 
of sequestration: to have our national defense take the hit it is going 
to take; to have regular American families take the hit they are going 
to take; to have the economy, with 1 million jobs lost, take the hit it 
is going to take, all for what? To protect the big oil companies so 
they can keep getting subsidies from the American people? Is that the 
choice we want to make? So that a billionaire who puts his name on a 
museum gets more charitable tax bang for his charitable buck than a 
regular family when they just give money to their church every week? Is 
that the stuff we want to protect at that cost?
  That is the question we will have to answer. I am very grateful to 
the chairman, Senator Levin. He has been working on this for years. His 
Subcommittee on Investigations has been looking into this in detail. 
His legislation is a part of what I am proposing as one of the pay-
fors. I look forward to continuing to work with him.
  The American people have our back on this one. This is a starker 
contrast between where the American people want to go and how to 
protect them and our economy versus special interest politics in this 
town that has carved out all of these loopholes that allow corporations 
to effectively cheat on their taxes. Effectively. It is not technically 
cheating because they have gotten the law written so it allows that 
practice. But if a person is a regular American who doesn't have a 
lobbyist to get them that same sort of treatment, it looks an awful lot 
like cheating.
  Let me close by saying if we go the other path--if we follow this 
austerity route we have seen to be so calamitous in Europe--here are 
some quotes:

       If the full sequester takes place as scheduled, 1 million 
     jobs may be lost.

  That is the Bipartisan Policy Center.
  Paraphrasing: Growth in real GDP would be about 1\1/4\ percentage 
points different, depending on which path we choose.
  We lose 1.25 percentage points GDP growth by hitting this sequester. 
That is from the Congressional Budget Office.
  If we look at the American Enterprise Institute, hardly a leftwing 
group:

       An abrupt spending sequester at a rate of about $110 
     billion per year--

  Which is what we are looking at--

     scheduled to begin March 1 could cause a U.S. recession.

  Robert Frank, a very well regarded economics professor at Cornell, 
has said:

       The cuts scheduled are not a way to run a rational 
     government. Cuts of any kind at this time are not a good 
     idea. It is recessionary. It would slow growth for sure and 
     put people out of work.

  Another organization not known for its leftwing views, the Wall 
Street Journal, says this austerity method ``threatens to create a 
vicious cycle, as mass layoffs to meet budget targets spark a deeper 
contraction, reducing tax revenue and increasing welfare costs as well 
as damping consumption.''
  That is exactly what has happened in other places.
  Look at what they say in England where they have done this. The 
conservative Daily Telegraph's Jeremy Warner describes what is going on 
over there. ``This is a truly desperate state of affairs. . . . We seem 
to have the worst of all possible worlds, with nil growth, some very 
obvious cuts in the quantity and quality of public services, but pretty 
much zero progress in getting on top of the country's debts.''
  That is not the way we want to go. That is the wrong way to go. There 
is another way, and it is to look at that vast part of the Tax Code 
both for corporations and, primarily, for wealthy individuals that 
allows literally nearly half of what would be tax revenue to flow back 
through the loopholes. That is where we should be doing our work. That 
is where we should be looking. I applaud and appreciate Senator Levin 
for his long and expert leadership in this area.
  With that, I yield the floor.

                          ____________________