[Congressional Record Volume 163, Number 159 (Wednesday, October 4, 2017)]
[Senate]
[Pages S6295-S6298]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
Tax Reform
Mr. President, on one final matter, the Republican tax plan, we
Democrats have long said that we are willing to work with our
Republican colleagues on tax reform, and we laid out our principles
early on so that there would be no mistake about them. We wanted tax
reform to be deficit neutral. It shouldn't increase the deficit. For
every reduction in rate, they ought to close a loophole. We wanted it
to go through regular order, not the way healthcare did, not
reconciliation, but work with us. You would get a much more sensible
product. Most importantly, we didn't want to give a tax cut to the top
1 percent. They are doing great already. God bless them. They don't
need any more tax relief. It is the middle class that does. But the
framework the GOP released last week violates all three of these
commonsense principles, vastly favoring the wealthy over working
Americans.
I have spoken several times about tax breaks for the rich included in
this package--lowering the top rate from 39 to 36 percent, repealing
the estate tax, opening up a gaping tax loophole for hedge fund
managers, wealthy Wall Street firms, lobbyists, and law firms by
lowering the rate on passthroughs so that these rich people would pay
only 25 percent on their personal income tax while other people pay a
lot more.
This morning, I want to highlight not only how the Republican plan
favors the rich but also sticks it to the middle class. This is
something that the Acting President pro tempore has brought up.
Just this week we found a bombshell contained within the GOP
resolution they are using to pass tax reform. The Republicans plan to
cut Medicare by $473 billion and Medicaid by more than $1 trillion. It
can be a little hard to find, but it is right there in the GOP budget--
$473 billion for Medicare, $1 trillion for Medicaid.
If you are an older American, if you have a family in a nursing home
or someone in treatment for opioid addiction and you think the GOP plan
doesn't affect you, think again. The AARP--not a political
organization, it simply represents the interests of the elderly--sent a
letter yesterday opposing this Republican plan, the one in the House,
and I think we have one in the Senate as well. It is the same group
that represented senior citizens and fought the debacle on healthcare
that the Republicans proposed.
The Republicans are proposing to pay for their giant tax cut to the
rich by gutting Medicare and Medicaid. That is the bombshell this week.
That is the nugget that will destroy their whole plan. Americans are so
against those kinds of cuts.
Amazingly, it is just like the inverse of the Republican plan on
healthcare. In each case, they gut healthcare for Americans who need it
most to pay for taxes for Americans who need it the least.
The healthcare plan focused on cuts to Medicaid but snuck in tax cuts
for the rich. This plan focuses on tax cuts to the rich and sneaks in
cuts to Medicare and Medicaid.
The GOP budget is another page out of the same playbook. The GOP plan
contains another punch to the gut of the middle class.
This is what the Acting President pro tempore, I believe, spoke about
yesterday.
In the form of the repeal of the State and local deduction--44
million Americans take the State and local deduction. That is one-third
of all taxpayers. This is not just a small, rarified group in
California or New York. It is across the country. They get an average
of several thousand dollars off their taxes each year. That includes 40
percent of taxpayers making between $50,000 and $75,000 per year and 70
percent of taxpayers earning from $100,000 to $200,000.
This is a middle-class tax deduction worth several thousand dollars a
year, and the GOP tax plan yanks it away. Taking it away means double
taxation on middle-class families.
For many families, this will not be offset by a larger standard
deduction in the GOP plan. Largely due to the elimination of State and
local, the Tax Policy Center estimates that 30 percent of those making
between $50,000 and $150,000 and 60 percent of those making between
$150,000 and $300,000 will see a tax increase with the GOP plan, and
that is after doubling the standard deduction. By the way, don't think
that it is just a few States; the numbers are astounding across the
country, as folks in every State claim this deduction. I say to my dear
friend the chairman of the Finance Committee that 35 percent of Utahns
take this deduction, 33 percent of Georgians, and 32 percent of
Coloradoans.
Mr. President, I ask unanimous consent to have printed in the Record
a list of how many taxpayers are affected in every State by removing
State and local deductibility and how much it will cost them on
average.
There being no objection, the material was ordered to be printed in
the Record, as follows:
FIGURE 7.--PERCENTAGE OF TAX UNITS THAT USE THE SALT DEDUCTION AND THE
AVERAGE DEDUCTION BY STATE
------------------------------------------------------------------------
% with SALT Average SALT
State Deductions Deduction*
------------------------------------------------------------------------
MD...................................... 46 $12,931
CT...................................... 41 19,664
NJ...................................... 41 17,850
DC...................................... 40 16,442
VA...................................... 37 11,288
MA...................................... 37 15,571
OR...................................... 36 12,616
UT...................................... 35 8,291
MN...................................... 35 12,954
NY...................................... 35 22,169
CA...................................... 34 18,437
GA...................................... 33 9,158
RI...................................... 33 12,434
CO...................................... 32 9,017
DE...................................... 32 9,194
IL...................................... 31 12,523
WI...................................... 31 11,653
NH...................................... 31 10,121
WA...................................... 30 7,402
IA...................................... 29 10,163
HI...................................... 29 9,905
NC...................................... 29 9,587
PA...................................... 29 11,248
AZ...................................... 28 7,403
MT...................................... 28 9,357
ID...................................... 28 8,862
ME...................................... 28 11,431
NE...................................... 28 11,088
SC...................................... 27 8,765
VT...................................... 27 12,407
MI...................................... 27 9,648
MO...................................... 26 9,886
OH...................................... 26 10,444
KY...................................... 26 9,955
AL...................................... 26 5,918
[[Page S6296]]
KS...................................... 25 9,425
NV...................................... 25 5,989
OK...................................... 24 8,201
MS...................................... 23 6,302
LA...................................... 23 6,742
TX...................................... 23 7,823
IN...................................... 23 8,756
FL...................................... 22 7,373
NM...................................... 22 7,091
AR...................................... 22 9,116
WY...................................... 22 6,306
AK...................................... 21 4,931
TN...................................... 19 5,611
ND...................................... 18 6,864
WV...................................... 17 9,462
SD...................................... 17 6,098
------------------------------------------------------------------------
* Calculated as SALT deduction amount divided by number of SALT
deductions.
Mr. SCHUMER. I urge my colleagues to look in the Record and see how
it affects them. You are fooling yourself if you think that you are not
affected by the State and local deductibility.
Of course, if you are a family of four in one of those States, the
repeal of State and local could be a killer because, again, you would
lose the personal exemption. The larger the family, the greater the
loss of exemption.
I want to make one final point on tax reform. This is related to two
people whom I know, and I knew one of them before he ever arrived in
Washington. I have to make this point because what I heard them say
over the weekend just turned my stomach. It was astounding. It was
awful.
Over the weekend, we heard some pretty extraordinary claims from
Republican legislators and Cabinet officials about what the GOP tax
plan was all about, but Gary Cohn and Secretary of the Treasury Steve
Mnuchin deserve a special admonition.
Chief White House economic adviser Gary Cohn actually said: ``The
wealthy are not getting a tax cut under our plan.'' That is not a
surmising of what he said; that is a direct quote. ``The wealthy are
not getting a tax cut under our plan.'' Comments like that should make
everyone's head spin. According to the Tax Policy Center, the top 1
percent would reap 80 percent of the benefits of the GOP plan. The top
0.1 percent--the folks who make more than $5 million a year--would get
a break of more than $1 million a year.
Some might argue, of course, that it will cause economic growth. I do
not think that it will, but at least make your real argument. Do not
hide it. You know that the American people do not agree with you. That
is why you hide it.
Only in Wonderland, where down is up and up is down, could Gary
Cohn's comments be believed. It is something like out of the Ministry
of Truth from George Orwell's ``1984,'' which would be to cut the top
rate by 4 percent and repeal the estate tax--yes, no tax cuts for the
wealthy. Bunk. It is why the Washington Post gave Gary Cohn four
Pinocchios for his statement. If they had allowed more Pinocchios on
the scale, I am sure he would have gotten them. He earned them,
unfortunately.
What about Secretary Mnuchin? His lack of credibility resembles Gary
Cohn's. He said that he believes the GOP plan would reduce deficits by
$1 trillion. ``We think there will be $2 trillion of growth. So we
think this tax plan will cut the deficits by a trillion dollars.''
Mnuchin's claim is fake math at its worst. As was written in the
Washington Post, no serious economist, liberal or conservative,
believes that a tax cut boosts economic growth so much that the tax cut
pays for itself, let alone adds $1 trillion in revenue as Mnuchin
claims. Four Pinocchios were given by the Washington Post. I am sure
that he too--Steve Mnuchin--would have earned more Pinocchios.
Gary Cohn and Steve Mnuchin claim to be economic experts, and they
both used to work at Goldman Sachs. If they had used this kind of math
at Goldman Sachs, they would have been shown the door a long time ago.
As I said before, they should know better, and they do know better.
They ought to stop deliberately misleading the American people. It
demeans them. It demeans the administration. It demeans the debate in
this country.
Mr. President, I ask unanimous consent that the time during the
quorum calls be divided equally between both sides.
The PRESIDING OFFICER (Mr. Cotton). Without objection, it is so
ordered.
Mr. SCHUMER. Mr. President, I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The bill clerk proceeded to call the roll.
Mr. WYDEN. 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. WYDEN. Mr. President, I did not get a chance to hear the
distinguished Democratic leader's remarks, for Chairman Hatch and I
were in the Senate Finance Committee. We managed to pass, by an
overwhelming bipartisan vote, the Children's Health Insurance Program--
a vital program for 9 million kids. So that is a bit of good news in
that this important piece of legislation is advancing. I do know that
the Democratic leader touched on a number of very important issues,
particularly some of these comments that have been made by top advisers
to the President with respect to taxes.
I am struck by the fact that Mr. Gary Cohn, the President's top
economic adviser, said last week that middle-class folks were going to
get $1,000 in tax relief--set aside the fact that that does not look to
be true for a number of middle-class folks who have kids. I am also
struck by the comment that followed. Mr. Cohn said that not only are
middle-class families going to get $1,000 worth of tax relief but that
they would be able to go buy cars or remodel their kitchens. You just
think to yourself, with that kind of tax cut, that you would be buying
a very small car or remodeling a very small kitchen. The fact is, that
is not, in my view, a comment that reflects a real understanding of
what middle-class folks in America are going through. I don't see very
many of them buying cars for $1,000 or remodeling their kitchens for
$1,000.
That comment was accompanied by the comments of Treasury Secretary
Steve Mnuchin, who not only said a couple of days ago that tax cuts
would pay for themselves--a statement that was contradicted by
Republican economists yesterday in the Senate Finance Committee--but
that there would be something like $1 trillion left over. Mr. Mnuchin
continues to make the case that there is somehow a magical growth fairy
here in the American economy that nobody else knows about, including
Republican economists.
I am one who believes that behavior does matter, and I am going to
talk about a bipartisan approach to taxes in a minute--a responsible,
bipartisan approach to taxes, not one that helps the 1 percent or
creates a huge new deficit or that kind of thing. I think that you will
generate some revenue, and Doug Elmendorf said that when he was the
head of the Budget Office, but it is not going to generate hundreds and
hundreds of billions of dollars, as in the case of what Mr. Mnuchin is
talking about, which is something like $2 trillion. There is no
economic support for that.
You have the President's economic team and his top advisers trying to
defend the indefensible, and I will go into that more a little bit
later today.
Right now, I think it is important that we have a response that I am
going to deliver to the distinguished majority whip, who is a member of
the Finance Committee, who made some comparisons between the Republican
plan and the bipartisan legislation that I wrote--after months and
months of hard work--with two of our former Republican colleagues,
Senator Gregg and Senator Coats. Senator Coats is now a member of
President Trump's Cabinet.
The comparison that somehow the Republican plan is like the
bipartisan approach that I wrote--these extreme ideas in the Republican
plan--is not just a bit of a stretch or a little off base; there is
absolutely no comparison--none--between the bipartisan proposal and the
extreme Republican plan. The distinguished majority whip, in my view,
offered a complete and total misrepresentation of what the two
proposals are all about, and I am going to illustrate this in two
ways--first, with respect to the policy.
The Republican tax cut framework green-lights the entire wish list
for major multinational corporations and the wealthy. There is a
massive corporate tax cut that overwhelmingly benefits shareholders.
When it comes to international taxes, there is a pure territorial
system with barely a nod to
[[Page S6297]]
the kind of tough rules that are needed to protect workers and the
middle-class folks in the center of our tax base.
There is, in the Republican plan, a brand-new passthrough loophole.
It is as big as the Grand Canyon. It is the Grand Canyon of loopholes
in the Republican tax proposal, which invites tax cheats to skip out
from paying their fair share to Social Security and Medicare.
The Republican plan eliminates the estate tax, which today only
touches estates worth more than $11 million or $5.5 million for a
single individual. The top rate goes down, and the bottom income tax
rate goes up. When doing the math on what the Republicans have on
offer, we are looking at upwards of $4, $5, $6, or $7 trillion in tax
giveaways to the most fortunate.
It is a different story under the Republican proposal if you are
middle class. You probably have a lot of unanswered questions. All you
know right now is that it virtually guarantees that, in order to pay
for the giveaways to the wealthy and corporations, current middle-class
tax breaks are going to be on the chopping block--the personal
exemption, incentives for retirement savings, education, and home
ownership, to name just a few. From everything we know, when you set up
these kinds of extreme approaches, when you raise the parts of the Tax
Code that are a giveaway to those at the top, what you see is the
middle class getting hurt.
Instead of tripling the standard deduction, which is what we did in
our bipartisan bill, the Trump people double it, but then they take
away the personal exemptions for working-class folks. So unlike our
proposal, where the middle class can count on hundreds and hundreds of
dollars in their paycheck when you triple the standard deduction, under
the Republican proposal, they give it with one hand by doubling the
standard deduction and take it away with the other hand by eliminating
the personal exemption. So you have a very stark difference between the
bipartisan proposal that I offered with Senator Coats, a member of the
President's Cabinet, and what the Republican extreme plan is all about.
The bottom line is that the Republican plan seeks to raise those
parts of our Tax Code that are all about the middle class, and they are
doing it to pay for the giveaways for those folks at the top. That is
not what we did in the bipartisan plan at all. Any middle-class person
can sit at their kitchen table and look at the bipartisan plan that I
was involved with and see how the middle class wins. They get hundreds
and hundreds of dollars more in every paycheck by tripling the standard
deduction, and they can see how they as middle-class folks--say, who
make $70,000 and have a couple of children--lose under the Trump
proposal.
Now there are other differences between our bipartisan plan and what
the Big 6 and the Trump administration want. The bipartisan plan was
scored as revenue neutral by authoritative independent tax experts. It
made the Tax Code more progressive. The fact is, what we offered--
Senator Coats, Senator Gregg, and I--was an actual bill. It was the
product of weeks and months of work.
Senator Gregg and I--and I think it is fair to say that all Senators
may not be aware of this, but Senator Gregg was a top economic thinker
with whom the majority leader consulted--sat next to each other for
months in order to put together what is still the first and only
comprehensive Federal bipartisan tax reform plan since 1986. It was an
actual bill. It wasn't four pages of rhetoric.
In the spring we got one page. It was shorter than your typical
drugstore receipt. Now I guess we are up to four pages, when you take
out all this kind of white space. Our bill was an actual bill and was
designed to give everybody in America a chance to get ahead, not just
those in the 1 percent, not just those who have real clout and power.
I have always said that this is the heart of the difference. We have
two Tax Codes in America. We have one for the cops and the nurses. It
is compulsory. Their taxes come right out of their paychecks--no Cayman
Islands deal for them. Then we have another Tax Code for the high
flyers--the fortunate and well-connected. They can pretty much pay what
they want when they want to. The bipartisan proposal that I wrote with
Senator Gregg and Senator Coats helps the first group, the cops and
nurses, but it was also fair to everybody. It gave everybody a chance
to get ahead. The Republican plan is another big gift to that second
group, the group that can decide what they are going to pay in taxes
and when they are going to pay it. So we really couldn't have two
proposals that are more different.
The fact is, the Republican framework looks less like a real effort
at tax reform than a shameless attempt, in effect, to accommodate the
President's boast about the biggest tax cut ever. The bottom line is
that it is a giveaway to those at the top, and it robs from the middle
class.
The differences don't just end with these specifics that I have
described here. We took a fundamentally different approach. With
Senator Gregg and Senator Coats, we were digging into the cobwebs of
every dark corner of the Tax Code. We brought together principles on
which both sides had to find common ground with a lot of sweat equity.
If you are going to write a partisan bill, you can go off on your own
and do your thing. The fact is, if Senators Gregg, Coats, and I had
written separate bills on our own, they would have looked very
different, but the bill we wrote together, starting with Senator Gregg
and I, was the first comprehensive bipartisan tax proposal in a quarter
century. Senator Coats, to his credit, did yeoman's work in updating
it. There is no comparison from a process standpoint between that
bipartisan work that was done to update the system of more than a
quarter century ago and the Republican tax cut framework.
The majority leader said from day one, at the beginning of the year,
that he didn't want Democratic input on tax reform. He said: We are
just going to do it on the ``our way or the highway'' approach with
reconciliation. Reconciliation is a rejection of bipartisanship through
and through.
I note that the Presiding Officer is the tallest Member of the
Senate, along with Senator Strange, and I talked fairly frequently with
our former colleague Senator Bradley, who was another tall Democrat on
the Finance Committee with a much better jump shot than me. He has
described the bipartisan efforts of 1986, with key officials in
President Reagan's administration, Jim Baker and Don Regan, who spent
months talking to Democrats--months and months--before anything
happened. That is not what happened here. The specifics are very
different, and the process is very different.
Recently, my Democratic colleagues and I came forward with our
principles for reform, and it was just a matter of a few hours before
Leader McConnell rejected them in the media. One administration
official actually said that tax reform would be worse if it included
Democratic ideas, and the ``go it alone'' mentality is pretty obvious
when you look at the framework that came out last week.
The tough questions haven't been answered. For those at the top, it
is all sweet and no sour. There was not a single shred of Democratic
input in the framework--not one Democratic fingerprint anywhere to be
found. The administration officials in charge of selling it to the
public are, in my view, executing a con job on the middle class.
So I wanted to come here today to highlight some of the recent
comments that the Senate Democratic leader has made with respect to
some of these out-of-touch comments we have heard recently from key
administration officials, like Gary Cohn and Steve Mnuchin, and I
wanted to make sure that Senators heard--after the comments of the
Senate Republican whip--that they now know that there is no comparison,
none, between the bipartisan proposal that I had the honor to write
with Senators Coats and Gregg, which brought the two parties together,
and the framework that came out last week that forced even more
polarization between the parties. The reality is that this Republican
proposal, this tax cut framework, is so radically skewed toward the
wealthy and the big corporations, that it makes Ronald Reagan's
landmark reform look like the work of rabid socialists.
[[Page S6298]]
So I appreciate the chance to set the record straight by outlining
the differences between a recent bipartisan bill with two influential
Republican Senators with whom I had the honor to work and the extreme
Republican framework that came out last week. These plans are not just
trillions of dollars apart based on the numbers. It is clear they are
written with entirely different goals in mind.
Our view is that tax reform ought to be about giving everybody in
America the opportunity to get ahead. What we have said is that,
instead of it being an ``our way or the highway'' partisan approach, we
ought to be doing--particularly in the area of tax reform--what has a
storied history. The key to a successful tax reform, based on that
history, is working in a bipartisan way.
I will close with the comments about the Democratic principles, which
is that we are not going to give relief to the people at the 1 percent,
we are not going to break the bank, and we are going to focus on the
middle class. Those principles don't even go as far as ideas advanced
by President Reagan, where he said that we are going to treat income
from a wage and income from investment in the same way.
I close by way of saying this. No. 1, the distinguished Republican
whip is wrong when he compares the bipartisan bill I have been a part
of to what the administration's tax framework is all about. No. 2, the
right way to do this is to focus in a bipartisan way, not through
partisanship only. The principles that we have outlined on our side,
when you compare them, do not even go as far as some of the ideas
embraced by the late President Reagan.
I yield the floor.
I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The senior assistant legislative clerk proceeded to call the roll.
Mr. BURR. 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. BURR. Mr. President, I ask unanimous consent that we start the
scheduled 11 a.m. vote now.
The PRESIDING OFFICER. Without objection, it is so ordered.