[Congressional Record Volume 159, Number 29 (Thursday, February 28, 2013)]
[Senate]
[Pages S992-S994]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                             SEQUESTRATION

  Mr. GRASSLEY. Madam President, the last 2 days in the debate here, a 
lot has been said about the sequestration that presumably is going to 
happen tomorrow. I would like to speak on that subject because it is 
very important, particularly the history of sequestration and what has 
gone on here in recent weeks as we discuss this issue.
  In August 2011 a compromise was reached to grant President Obama's 
request to raise the debt ceiling by $2.1 trillion. I believe that was 
because we had a feeling that there ought to be a $1 decrease in 
spending for every $1 increase in the ceiling. So that adds up to $2.1 
trillion. In exchange for an increase in the debt ceiling, we 
Republicans in Congress asked for spending reductions. This all added 
up to the Budget Control Act passed on August 2, 2011. Decisions we are 
debating today were decided 18 months ago, so if you didn't like them 
in 18 months, you had an opportunity to change them. But here we are at 
the last minute talking about some changes.
  The Budget Control Act of August 2, 2011, included budget caps to cut 
about $900 billion in spending immediately--August 2, 2011--and then it 
set up a supercommittee to find at least $1.2 trillion in additional 
deficit reduction. History shows that the supercommittee could not 
reach an agreement. So the failure of the supercommittee to reach an 
agreement led to the sequestration we are now debating and facing 
tomorrow, which is, as we know, automatic spending reductions of $1.2 
trillion over the next 10 years.
  I didn't support the Budget Control Act. I don't criticize those who 
did, and to be fair, it was a bipartisan vote that got the Budget 
Control Act adopted. I knew at the time--and one of the reasons I voted 
against it--that the supercommittee was unlikely to reach an agreement 
and that it would ultimately only further delay difficult fiscal 
decisions that needed to be made. But at the end of the day the 
bipartisan majority in the Senate and the House passed and President 
Obama signed the Budget Control Act--a bill to bring about $2.1 
trillion in spending reductions over the next 10 years.
  Most believe sequestration is a terrible way to reduce spending. I 
agree. There are surely better ways to reduce spending by the $85 
billion that is going to happen this year--of which, by the way, only 
$44 billion is going to be spent between now and September 30.
  When that is done, we are going to have a situation where every year 
there is going to be some decision made on whether to continue the $1.2 
trillion, and I hope for the good of the country that continues, 
whether it is by across-the-board automatic cuts or maybe there will be 
a compromise that can be reached to do it in a more studied way.
  The Republican-led House of Representatives, soon after the 2011 
decision, recognized that the automatic reductions weren't the best way 
to do it. So last year they passed two bills to reorganize those cuts 
in a more structured way. Did the Senate consider those two bills? No. 
The Democratic-led Senate produced or considered no bill prior to today 
to avert the sequester.
  So I think it is fair to say that for the 18 months we could have 
been working together to find an agreement, nothing was done after the 
House of Representatives worked that agreement. Now we have all these 
crocodile tears flowing from the majority here in the Senate because of 
the terrible hardship this sequester may cause. Well, where have they 
been for the last 18 months? Why have they not proposed a single piece 
of legislation to avert sequestration until this very last minute? The 
two votes we just had today are an example.
  Why has the Senate avoided regular order with such vigor? In other 
words, regular order--let the committees hold hearings; let the 
committees debate, amend, vote a bill out; let it come to the Senate 
floor; debate, amend, and vote it to a conference with the House of 
Representatives. But no regular order. Under regular order, you work to 
compromise. But the Senate failed to act after the House acted. So here 
we are at the eleventh hour to consider an alternative.
  Just like their inability to produce a budget in nearly 4 years, this 
Senate majority has again failed to act. A budget is a very important 
part of fiscal discipline, but we haven't had a budget debate for 3 
years even though the 1974 law requires us to have such debate and 
passage.
  Tomorrow the President is going to meet with leaders in the Congress 
to see what can be done about sequestration, but why the very same day 
sequestration is taking place? What has the President been doing?
  Well, we have seen him traveling around the country generating mass 
hysteria about what might happen--and wouldn't have had to do it if we 
had regular order here in the Senate in the meantime.
  I would like to remind my colleagues that not only is the sequester a 
product that came from the White House, he explicitly pledged to veto a 
proposal to replace the cuts sometime when it was brought up in late 
2011 and 2012. This is what the President said on November 2011:

       Some in Congress are trying to undo these automatic 
     spending cuts. My message to them is simple. No. I will veto 
     any effort to get rid of those automatic spending cuts to 
     domestic and defense spending. There will be no easy off-
     ramps on this one.

  Now the President and the Democrats here in the Senate want us to 
agree to more tax hikes on the American people rather than to cut the 
$3.6 trillion budget by just 2.4 percent, which they agreed to as part 
of the 2011 deal. Tax hikes were not included in that deal. They 
weren't included because we know that spending is the problem, not 
revenues.
  The President must be absolutely frustrated. He apparently can't 
manage

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a meager 2\1/2\-percent reduction even though just a few years ago he 
stated:

       I want to go line by line through every item in the federal 
     budget and eliminate programs that don't work and make sure 
     that those that do work, work better and cheaper.

  He must not have had any success because once again he is asking for 
a tax hike to reduce the deficits rather than addressing the real cause 
of the problem, which is spending.
  Over the past several years we have heard a lot from the other side 
about increasing taxes on the so-called wealthy. The President and my 
Democratic colleagues argued that this was necessary to make the rich 
pay their fair share. Well, on January 1 the other side got their wish. 
The top statutory tax rate increased from 35 to 39.6 percent. When this 
statutory rate increase is coupled with the hidden rate increase from 
reinstituting the personal exemptions phaseout and the limitation on 
itemized deductions, the top marginal effective tax rate is not 39.6 
percent but near 41 percent.
  Not only did we see an increase in the income tax on January 1, but 
we also saw a significant tax increase on capital gains and dividends. 
The fiscal cliff bill instituted a top 20 percent tax rate on capital 
gains and dividends. However, this is not the whole story. A provision 
from the health care reform bill that imposes a 3.8-percent surtax on 
investment income also went into effect at the start of the year. Thus, 
the top rate has jumped not from 15 percent to 20 percent but instead 
to 23.8 percent. That, of course, is nearly a 60-percent rate hike. You 
would think, after securing these tax hikes on the so-called wealthy, 
the other side would claim victory and move on. At least one would 
think they would move on from the tired old rhetoric that the wealthy 
do not pay their fair share.

  Even before the most recent tax hikes, that claim was dubious at 
best. According to the Congressional Budget Office--remember, that is a 
nonpartisan study group that gives us basic information on changes of 
law--they say the top 1 percent already had an average Federal tax rate 
of 29 percent compared to 11 percent for the middle 20 percent of 
households. Yet the other side continues their politics of division. 
They continue to pit American against American and single out 
politically unpopular industries for tax hikes. While this may be good 
politics, it does not make good policy. You know, it is the other rule 
we ought to follow: Good policy is good politics.
  The other side has resurrected in addition as part of this package 
before us the so-called Buffett rule, which would phase in a minimum 
30-percent tax rate for taxpayers earning more than $1 million. This is 
despite the fact that this proposal was voted down by this body less 
than a year ago and they know there is no chance of it passing at this 
point. Moreover, their argument for this provision makes even less 
sense now, given the tax increases that went into effect on January 1.
  It also is not clear to me why, when we are talking about reforming 
the Tax Code, we are now seeking to add an additional layer of 
complexity onto a Tax Code we already agree is too complicated.
  At the end of the day, all the Buffett rule will accomplish is 
siphoning off more job-creating capital and investment for Main Street 
so that we can spend it here in Washington, DC. I hope we all know that 
government consumes wealth, it does not create wealth. The wealth is 
created outside of this city of Washington, the seat of our government. 
We have to take that into consideration. It takes capital to create 
jobs. If you want to get unemployment down, you do not take capital out 
of the private sector.
  In addition to the Buffett rule, the other side has resurrected 
another proposal voted down by this body less than a year ago. This 
proposal has to do with businesses deducting ordinary and necessary 
business expenses. The rhetoric from the other side is that their 
proposal would close a loophole that incentivizes companies to ship 
jobs overseas. The problem is no such provision exists. The deduction 
for ordinary and necessary business expenses is a mainstay of our Tax 
Code. It is an income-defining provision that accounts for the cost of 
doing business. What the proposal before us actually does is target 
companies doing business on a worldwide scale for a tax hike. This will 
not create jobs in America. It will not bring jobs that have relocated 
offshore back home. What it will do is punish businesses that seek to 
expand in the international markets, which in turn could actually cost 
us jobs here at home.
  The final tax increase included in the other side's proposal today is 
more of a budget gimmick than a serious proposal to help pay for the 
delay in the sequester. The proposal would subject oil from tar sands 
to taxes that support the oilspill liability trust fund. However, if 
the revenue raised from this proposal is dedicated to this trust fund, 
how can it at the same time be dedicated to deficit reduction? If we 
are going to get serious about deficit reduction, we need to put an end 
to this double-counting charade.
  The only spending the other side is willing to cut is farm subsidies. 
Using farm subsidies to help pay for sequester replacement puts the 
Agriculture Committee in quite a tough position. I want to remind my 
colleagues, though, that when we wrote a farm bill last year that 
passed the Senate by a bipartisan majority--it didn't pass the House of 
Representatives--but we cut $23 billion from that. We did away with 
direct payments, we maintained the crop insurance program, we put money 
in other programs and in food stamps as well.
  There is broad support for the farm bill here in the Senate from both 
Democrats and Republicans and there is broad support for making 
spending reductions. But for Democrats to include cutting subsidies 
outside the context of a farm bill will make it difficult for us to 
write a farm bill. As we all know, there has been a lot of history of 
rural and urban legislators working together on farm and nutrition 
issues in the farm bill. By cutting farm programs in this sequestration 
replacement, my Democratic colleagues are undermining the ability of 
the Agriculture Committee to craft a bill that will gain the needed 
support to move through the Senate in a bipartisan way as it did last 
June.
  I think the proposal will hurt our agriculture communities and I 
think those involved in American agriculture will oppose it.
  At the end of the day, though, there will be money saved in the farm 
bill. If, given that opportunity, we can provide savings from a lot of 
programs, we should. We showed that ability last year. We all know the 
farm bill faced big challenges in the House last year. The challenges 
probably still exist in that Chamber, but we should not put ourselves 
in a position where we cannot even get a bill through the Senate.
  For those of us who support the farm bill, we should be very 
concerned that this plan the Democrats are putting forward to avoid 
sequestration could seriously undermine the ability to pass a farm bill 
in either Chamber this time around. We just had an opportunity to vote 
on the Democrats' tax increase. This was the first vote in the Senate 
on an alternative to sequestration and the first alternative offered by 
the Senate majority. Over a period of 18 months, they had an 
opportunity to offer that alternative, just as the House Republicans 
offered us two alternatives we never took up.
  We also had the opportunity to vote on one alternative from the 
Republican side of the aisle, but both of these votes were for show. I 
hope we can now work together in a bipartisan way, in regular order, to 
make sensible spending reductions. It is time to end the incessant talk 
of more tax hikes on Americans when those tax hikes already took place 
on January 1, when we know that the problem is in fact runaway 
spending. It is time to end the constant campaigning and do the work 
the American people expect us to do so we can leave the next generation 
a better life than the present generation has.
  I yield the floor. I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  The PRESIDING OFFICER (Mr. Coons). The Senator from Ohio.
  Mr. BROWN. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. BROWN. Mr. President, I ask unanimous consent that the Senator

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from Louisiana, Mr. Vitter, be allowed to speak following my remarks.
  The PRESIDING OFFICER. Without objection, it is so ordered.

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