[Congressional Record Volume 159, Number 162 (Thursday, November 14, 2013)]
[Senate]
[Pages S8035-S8036]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                            TAX EXPENDITURES

  Mr. WHITEHOUSE. Mr. President, I am here because I serve on the 
conference committee that is charged with negotiating a bipartisan 
budget deal. The Democrats have come to the table with a Senate-passed 
budget. The Presiding Officer will remember the long all-night ordeal 
of that budget.
  Our budget replaces the dumb and harmful sequester cuts with balanced 
deficit reduction. If fact, you do not get much more balanced than the 
Democratic program. It is half from spending cuts and half from closing 
loopholes in the Tax Code. Our proposal would add almost $2 trillion 
more of deficit reduction to the $2.5 trillion we have already done so 
far.
  Let's look at what we have done so far. Of the $2.5 trillion in 
deficit reduction to date, about $1.5 trillion has come from cuts in 
what we call discretionary spending; the spending that Congress 
approves each year that funds most government operations including our 
military. This is the $1.5 trillion in cuts out of all of the $12.6 
trillion in spending.
  We got another $600 billion in revenue, mostly from letting the Bush 
tax cuts expire for very high-income taxpayers. So this thin red line 
is the additional $600 billion in revenue compared to the existing 
revenue of the country. As you will see, we have cut far more in 
spending than we have added in revenues going into this budget 
discussion.
  The remainder of the $2.5 trillion comes from the interest savings 
that are associated with those, just to make the numbers true up. This 
circle is here to demonstrate that to date we have yet to touch one 
dime in the other big budget item, which is loophole spending in the 
Tax Code.
  This is a pretty good-sized chunk of annual spending, about 12 
percent of the levels projected in 2010. The fiscal cliff bill that 
restored the Clinton-era rates to families making over $450,000 added 
about 2 percent to other revenue projections, to the loophole category 
which is worth at least $14 trillion, conceivably a lot more, because 
some of the loopholes are so wide you do not even know what is going 
through them. The money just shows up in the Cayman Islands. We do not 
know what we have lost. That remains totally untouched.
  What we want to do is take just 7 percent, a tiny slice of this 
loophole revenue, and bring it back and use it for deficit reduction. 
That touching the loophole nerve is what has brought the Republicans to 
a screeching halt. In contrast to our exactly balanced approach--50 
percent spending, 50 percent loopholes--Chairman Ryan's budget would 
100 percent go after the programs on which low-income and middle-class 
Americans rely, without touching a single Tax Code giveaway--no balance 
at all.
  But, of course, unbalanced is the Republican way in budgets. For 
instance, the Republican budget changes Medicare into a voucher 
program. That is not very balanced. That is not what the American 
people want. The Republican budget cuts nondefense discretionary 
spending to levels lower than anything the American public has ever 
seen since OMB started keeping track. That is an extreme budget and not 
a balanced approach.
  The Republican budget would set annual domestic spending levels below 
1962. If you think back to what America was like in 1962, there were no 
Pell grants. So if any of the pages were thinking of someday getting a 
Pell grant, that is gone. It did not exist in 1962. In 1962, 30 percent 
of American seniors lived in poverty. That is the level of spending the 
Republican budget would take us back to.
  The rhetoric has been just as unbalanced as the proposals. Speaker 
Boehner has said talk about raising revenue is over--over. We have not 
even started and he says it is over, zero percent out of loopholes. He 
says the conversation is over. I do not think so. The conversation has 
not even begun.
  But true to the Speaker's rhetoric, the Republican budget puts the 
burden of deficit reduction back onto Americans who can least afford 
it, while preserving for corporations and for the people who get the 
benefit of Tax Code giveaways every single dollar. In his conference 
committee opening remarks, Chairman Ryan said: If this conference 
becomes an argument about taxes, we are not going to get anywhere.
  Let's take a look at the so-called taxes in this loophole area that 
Democrats would like to discuss. By the way, we get $975 billion out of 
that, which is a slice slightly larger than this one and considerably 
smaller than that one. So where do we get it from? We go to what I 
refer to as the Republican treasure trove. We go to their Ali Baba's 
cave of treasure carved aside and saved for corporations and the rich.
  We go to the tax earmarks and the special deals, the special 
interests which year after year have been squirreled away into the Tax 
Code through their lobbyists and through their numbers. How big can Ali 
Baba's cave be? Seriously? How much money goes out the backdoor of the 
Tax Code through these loopholes and deductions? I will show you.
  This bar represents $1.13 trillion, which is the amount of revenue 
collected by the government through the individual income sections of 
the Tax Code. That is what goes into Uncle Sam's pocket from the Tax 
Code. Here is what goes out the backdoor in loopholes and deductions: 
$1.02 trillion. So for every $1 that actually gets collected under the 
individual income tax, 90 cents goes out the backdoor through the 
loophole circle.
  That is off-limits? Oh, I do not see why. It is a grand total every 
year of more than $1 trillion. Do not tell me we cannot touch it at 
all. By the way, when you are talking budget numbers, you multiply by 
10. So $1 trillion over 10 years becomes $10 trillion. That is talking 
some pretty serious money, to pretend, as Chairman Ryan said: If we are 
going to have an argument about taxes, we are not going to get 
anywhere. You are not even going to look at $10 trillion and not get 
anywhere?

  On the corporate side, for every $1 in revenues the United States 
collects, here it is, $242 billion that we actually collect, that goes 
into Uncle Sam's pocket from corporate income tax revenue, here is what 
goes out the bookdoor of the corporate Tax Code: $148 billion.
  So like individual income, when it comes to corporate income, for 
every $1 Uncle Sam actually gets in revenues through the Tax Code, 60 
cents-plus goes out the bookdoor through loopholes and deductions and 
other tax gimmicks. So, again, we budget for 10 years. So $148 billion 
becomes pretty close to $1.5 trillion. That is big bucks. If you add 
the two together and do it for 10 years, which is what we do in the 
budget world, and account for modest growth over those 10 years, we are 
talking about $14 trillion.
  We need to do $975 billion in deficit reduction out of loopholes from 
a $14 trillion number. Do not tell me we cannot find it there. Of 
course, the $14 trillion does not even count the billions of dollars 
that corporations and wealthy tax avoiders hide offshore. They do not 
even go through the gateway of the Tax Code and then out the backdoor.

[[Page S8036]]

They do not even get counted in the first instance. They go off to the 
Cayman Islands, to tax havens, they get hidden in Swiss bank accounts, 
who knows what, but they do not get subjected to American taxation.
  By the way, that is pretty big business. Chairman Conrad, who was our 
predecessor chairman on the Budget Committee, used to have a slide he 
would show that showed a picture of a rather bland-looking four- or 
five-story building, the building in the Cayman Islands that did not 
look like much, not very big. You could drive by it, you would not 
particularly notice it. But he would point out in that little building 
over 18,000 companies claim to be doing business.
  He would point out that the kind of business they were doing was 
monkey business with the Tax Code because nobody could put 18,000 
businesses in that little building. None of that stuff gets counted in 
the $14 trillion, the stuff that goes through the front and then out 
the backdoor.
  So the spending--the earmarks--that gets done through the Tax Code is 
a very big treasure trove. While much of this tax spending helps low-
income and middle-class families, too much of it goes to high-income 
taxpayers who do not need it but who are clever and connected enough to 
get special deals, to get their tax earmarks into the Tax Code.
  But, of course, the Republicans do not want us to look into their 
treasure trove. Ali Baba's cave of tax tricks is where the juicy 
earmarks are for the special interests. If you remember back to the 
last Presidential campaign, it became public that Mitt Romney had to 
fiddle his taxes in order to get his tax rate up to a 14-percent tax 
rate.
  Some people gimmick their taxes to try to get their rates down. The 
rates for people such as Mitt Romney are so low to begin with that he 
had to play tax games to get his rates up to 14 percent so he would not 
look too bad as a Presidential candidate. Fourteen percent is a lower 
tax rate than a solitary hospital orderly pays. The guy who is walking 
down the linoleum hallways of Rhode Island Hospital at 2 o'clock in the 
morning delivering supplies pays a higher tax rate than that.
  We cannot do anything about that? That is a tax question we cannot 
discuss? How do Romney and the hedge fund billionaires get away with 
that? Look in Ali Baba's cave of tax treasures for the carried interest 
exception. If you want to know where ExxonMobil, which is one of the 
richest and most profitable corporations in the history of the world, 
gets its hands into the American taxpayer's pockets and pulls out oil 
and gas subsidies, look for those Big Oil subsidies in Ali Baba's 
treasure cave.
  Do you want to know why Amazon, Boeing, Carnival Cruise Lines, Duke 
Energy, PG&E, all companies making billions of dollars in profits per 
year, pay effective tax rates well under 10 percent? Look at the $150 
billion in corporate tax giveaways there in Ali Baba's treasure cave.
  Do you want to know how it is that corporate jets get special favored 
tax treatment compared to the commercial jets that ordinary mortals fly 
around in? Look at the accelerated corporate jet depreciation schedules 
in Ali Baba's tax treasure cave.
  When the Speaker says that talk about raising revenue is over, look 
at what he is protecting? The Republican treasure trove of corporate 
and special interest earmarks heaped up like gold and jewels in the old 
illustrations in Ali Baba's cave of tax treasures.
  We Democrats are knocking at that door. We are saying: Americans pay 
in deficit reduction $1.5 trillion already. We are offering another 
$975 billion on top of that.
  We are saying that $600 billion came out of tax increases. What about 
loopholes?
  Now we want to go into the cave. The Republicans are getting very 
anxious. The alarms are ringing at the special interests, and our 
colleagues are rushing to the trenches to defend the special interests 
and to defend their cherished tax earmarks. That is why they want to 
keep revenue--loophole closing--out of the debt and deficit discussion. 
They know that once we start taking a real look into Ali Baba's cave, 
some of that stuff will be impossible to defend to the American people.
  It wasn't fair when it first went in, it has never been fair through 
its sordid history in the Tax Code, and it is not fair sitting in the 
Tax Code now. These are things we should get rid of even if we didn't 
need it for the debt and deficit. This is special interest crony 
capitalism at its worst. We intend to have a look at it in these 
discussions.
  If we listened in the Budget Committee, the Republicans said it 
plainly: Not a penny of tax loopholes can go for deficit reduction. 
They have said they are willing to move the treasure around a little 
bit in Ali Baba's cave as long as it all still gets used for 
corporations and the wealthy. That is not a guess; that is the way the 
Republican budget is structured. Those are their budget numbers, all of 
it to lower tax rates for corporations and the rich. They are willing 
to spread the wealth around as long as it stays in the same hands.
  We are at the gates of Ali Baba's cave, this special treasure trove 
of Tax Code special deals and earmarks for the rich and well connected. 
We are at the place where the lobbyists wheel the sweet corporate tax 
deals. We are knocking on the door of the $14 trillion in tax spending 
that has been left completely untouched in the deficit reduction so 
far. Our Republican colleagues are getting a little twitchy.
  Come on, fellas. Out of nearly $14 trillion in tax spending and 
earmarks, can't we put just 7 percent of it toward the debt and the 
deficit? Our proposal is to leave 93 percent of the treasure in the 
cave. That is not unreasonable. What is unreasonable, what is 
unbalanced is the Republican desire that not a nickel in loophole 
closing can go toward our debt and deficit.
  I could go through innumerable comments by our Republican colleagues 
warning us about the dire danger of our debt and deficit, warning about 
the terrible injustice to future generations, warning about the threat 
to our national security and to our national welfare; dire, serious 
warnings about the epic nature of the danger of our debt and deficit 
and the importance of curing it. When we actually stack it up, it is 
less important to them than every loophole in the Tax Code.
  My point is that people can't have it both ways. They can't be 
telling the American people that the debt and the deficit is the No. 1 
threat to the well-being of our beloved country but is also less 
important than every deduction every lobbyist ever squirreled away for 
every special interest in the Tax Code. Both of those cannot be true.
  We must persevere to get into Ali Baba's cave of tax treasures in the 
loophole side of this equation. I hope very much that we will. I think 
that is nothing more than reasonable, nothing more than balanced. 
Indeed, one could argue it is actually a lot less than balanced because 
we only want 7 percent and we would be letting them keep 93 percent. We 
would be doing far more on spending than we would on revenue and 
loopholes combined. It is not balanced in the even-steven sense of the 
word, but at least it is generally fair. The Republican proposal that 
it should be all spending and zero loopholes is what is unbalanced and 
what I object to.
  I yield the floor, and I suggest the absence of a quorum.
  The PRESIDING OFFICER (Mr. Markey). The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Ms. HIRONO. I ask unanimous consent that the order for the quorum 
call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.

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