[Congressional Record Volume 163, Number 206 (Monday, December 18, 2017)]
[Senate]
[Pages S8054-S8056]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]



                         Tax Cuts and Jobs Bill

  Mr. CORNYN. Mr. President, listening to my friend, the Democratic 
leader, leads me to conclude that he and his party have given up on the 
American dream. They want to settle for the status quo, which is 
stagnant growth of our economy and jobs where people haven't seen an 
increase in their wages for years. They even seem to be rooting for 
failure. That seems to be the attitude of our missing-in-action 
congressional Democrats on the Tax Cuts and Jobs Act.
  We, on the other hand, think American families need more take-home 
pay, higher wages, more jobs, and a competitive economy, and we believe 
they shouldn't have to settle for less. I will come back to that in a 
moment.
  I do want to talk about tax reform and make the perhaps obvious 
statement that tax reform is hard. That is the reason it hasn't been 
done since 1986. It is even harder when we have a political party that 
is determined to fight against every single proposal we have made in 
our tax cut and tax reform bill, including ones they themselves have 
championed in the past.
  I have heard the ranking member of the Senate Finance Committee, 
Senator Wyden, talk about corporate giveaways, and the Democratic 
leader just alluded to the same thing. Yet we are embracing the same 
sort of approach they took in previous proposals and that President 
Obama advocated for in his State of the Union Address in 2011, when he 
asked Republicans and Democrats alike to work together to lower the 
highest corporate tax rate in the industrialized world because he knew 
it was chasing jobs overseas, and he knew it was important to bring 
that investment and those jobs back to the United States. That is 
exactly what our bill does.
  My friend Kevin Brady, the chairman of the House Ways and Means 
Committee, called tax reform a Rubik's Cube. He is right, but now, 
thankfully, we have figured out how to solve that Rubik's Cube.
  We confess that this legislation is not perfect, but it is good, and 
it is much better than the status quo, which our Democratic colleagues 
seem to have settled for. Last week, the conference committee met 
between the House and the Senate, and members, including myself, had 
many difficult conversations about how to reconcile the differences 
between the two bills. Those discussions were necessary, they were 
prudent, and they were productive. We now have a consensus about how to 
get this bill across the finish line and to the President's desk before 
Christmas.
  We will vote on this final bill after the House does tomorrow--
hopefully by tomorrow night. Perhaps it will carry over into Wednesday 
morning, but we will get it on the President's desk for him to sign 
into law before Christmas, as we pledged.
  I want to talk for just a few moments about why I am so excited at 
the prospect--and so are so many other people across the country--
because oftentimes their words get lost in the chatter, some of which 
is designed to mislead and presents an inaccurate picture of just how 
consequential this tax reform will be. Their voices--those who believe 
this good bill will help them--deserve to be heard.
  Let me first talk about manufacturing. There was a survey released 
last week that showed historically high optimism among 14,000 small and 
large employers in the manufacturing sector. How long have we heard 
that we need to bring manufacturing back to the United States rather 
than outsourcing it to Mexico or China or other places around the 
world? Well, we tried to address that, and I think we met with some 
success because more than 94 percent of manufacturers are now positive 
about their company's outlook. Nearly 64 percent said that tax reform 
would encourage their company to increase capital spending. Capital 
spending is what goes into infrastructure, equipment, and things that 
allow them to become more productive and to create more jobs. A 
majority of these manufacturers said that they would indeed expand 
their businesses and they would hire more workers after this bill is 
signed into law by the President. In fact, manufacturers predict that 
the number of jobs could surge to 2 million by the year 2025. Now there 
are roughly 350,000 American manufacturing jobs, so a leap to 2 million 
is almost fantastic--hard to contemplate--but very exciting if true.

  The second group I want to mention that is very excited about the Tax 
Cuts and Jobs Act is small businesses. We know small businesses are the 
economic engine of the country. Indeed, 70 percent of new jobs are 
created not by Fortune 500 company businesses but by small businesses. 
As one piece in the Houston Chronicle recently pointed out, the 2.6 
million small businesses that call Texas home are enthusiastic because 
tax reform will provide them much needed relief.
  Small businesses, of course, all have to pay taxes, which is 
burdensome enough, but they also have to spend hours and money to 
comply with our unnecessarily complex tax laws. According to a 2017 
survey by the National Small Business Association, 58 percent of small 
businesses reported that the administrative burden of Federal taxes 
posed a greater challenge than the cost of the taxes themselves. The 
burden of compliance was worse than the check they had to write to the

[[Page S8055]]

Federal Government. The Houston op-ed put the matter succinctly. It 
said:

       For large corporations that can afford a small army of 
     lawyers and accountants, the tax laws are a nuisance. For 
     small businesses, they are a nightmare.

  Now that situation will change. Our bill will simplify the Tax Code 
by eliminating many special deductions and credits while broadening the 
base and bringing down rates.
  To those cynics here inside the beltway who roll their eyes, who 
think that changes to the business provisions of the code don't matter, 
I would point out two more important pieces of news. First, the Federal 
Reserve, an independent government institution, recently said that this 
tax package is one of the factors that led them to increase their 
projections for growth next year. That is welcome, to say the least. 
Tax reform, said Federal Reserve Chair Janet Yellen, last appointed by 
President Obama, will boost spending and could do the same for 
productivity. So the Federal Reserve has raised its growth projections 
for next year, particularly in response to what we are doing.
  For those who worry about deficits--that we are cutting taxes too 
much--and who don't believe the economy will grow to compensate for 
those cuts in taxes, all they need to do is look at the projection of 
the Federal Reserve. They currently project the economy to grow at 2.1 
percent, but she said that next year it could go to 2.5 percent. So 
even if you believe that very conservative estimate, that is enough 
growth to compensate for the cut in taxes and the loss of revenue next 
year, but we expect that will continue and will grow over the next 10 
years.
  It is another thing to note how the rest of the world is reacting to 
what we are doing here. To name but one example, China is worried, 
which should tell us something. According to a Wall Street Journal 
story printed last week, China sees these tax plans as making the 
United States a much more attractive place to invest, which means less 
investment will occur in China. One official in Beijing has called our 
tax plan a huge and imminent danger that can't be ignored. China is 
worried that job creators will relocate here in America, which is a 
well-founded concern and one of the goals of this tax bill. That is 
exactly what they will do when we lower the corporate rate and go to a 
territorial system. Rather than taxing these businesses twice and 
encouraging them to keep the money they earn and the jobs they create 
overseas, we encourage them to bring them back to America by making our 
businesses more internationally competitive.
  So to summarize what we are seeing already, and we haven't even 
passed the bill yet--the conference report, at least--we have passed 
the Senate bill, the House bill, and now the conference report, which 
is the reconciled version between the House and the Senate versions, 
was released Friday.
  To summarize what we have seen already, nationally, manufacturers are 
raving about the tax plan. In places like Texas, small businesses 
desperately need the relief this bill offers. The Federal Reserve, an 
independent financial body of the Federal Government, has increased 
their growth estimates, in part, based upon the tax relief provided in 
this bill. And our chief competitor in the global economy is startled 
by what we are doing and afraid of what it might mean in terms of 
America's competitiveness globally.
  Put all this together and what do you have? A brief snapshot of the 
huge economic impact of the tax overhaul that will be signed by the 
President in the next few days. Signs of that impact are all around us, 
almost everywhere I look.
  I know of at least one major airline--Southwest Airlines--that has 
already announced big plans as to what they plan to do with their tax 
savings. With the benefits afforded by this tax reform, they said that 
they will purchase new aircraft. Well, this means more jobs for the 
people who build those aircraft. It means more jobs for the pilots and 
the flight attendants who travel on them. It means better customer 
experiences, and it may even mean lower fares for consumers.
  Let's talk about what this bill does for Americans who get up and go 
to work every day and just try to eke out a living, providing for their 
families. Well, I will tell you, for those worried about how tax reform 
will affect real people's actual lives, let me give you a couple of 
concrete examples. Let's take a single teacher making $50,000 a year. 
She will see a significant reduction in her tax burden--between 17 and 
20 percent--less taxes that she will have to pay. This comes from a 
lower marginal rate and a higher standard deduction. How about a 
married couple with three children and with median earnings of $75,000 
a year? Well, their tax bill will decrease, as well, by as much as 
$2,000 from a lower rate and a higher child tax credit.

  As I have said before, maybe some of our Democratic friends don't 
believe this is a big deal; maybe they don't care about those American 
families living paycheck to paycheck, who would welcome an additional 
$2,000 each year. Their actions make me think they are OK with the 
status quo because they have refused to even participate in the 
process, and they have been rooting for failure every step along the 
way.
  Well, we saw the latest example of this over the weekend when a 
leftwing website, masquerading as a legitimate news outlet, led by a 
former staffer of the junior Senator from Vermont, published what it 
advertised as a breaking news story about the final bill. This story 
breathlessly claimed, without a shred of evidence, that a provision had 
been airdropped into the final draft in secret in order to secure the 
vote of a Member who would supposedly personally benefit from it. This 
is a salacious tale from beginning to end. It was also completely false 
and invented.
  As a member of the Senate Intelligence Committee, I have joined with 
my colleagues over the last year to investigate the efforts of Russian 
intelligence operatives to undermine public confidence in our last 
elections. Well, the way this phony news story broke and was picked up 
on social media and in the mainstream media would make a Russian 
intelligence officer proud. The whole purpose of this exercise--this 
false and invented story--was to undermine public confidence in this 
tax reform package that we will pass, perhaps as early as tomorrow, to 
be signed by the President, perhaps before Christmas.
  Some of our friends on the other side of the aisle and their allies 
in the so-called mainstream media ran with it in a dishonest attempt to 
derail us from passing the bill and undermine the reputation or 
integrity of one of our fellow Senators--all from a made-up story. 
Again, the Russian intelligence officials--it is well-documented by 
now--through a combination of cyber theft, propaganda, creative use of 
social media, and a gullible mainstream media, undermined American 
confidence in our most basic obligation, an institution of our 
government, which is our election system. But what we saw happen this 
weekend, as I said, would have made a Russian intelligence officer 
proud.
  As a letter from Chairman Hatch, who is chairman of the Senate 
Finance Committee, makes clear today, this website, which, by the way, 
also posted a false report about an amendment I had introduced several 
weeks ago and later had to correct it, spread a false story 
irresponsibly and dishonestly. In his letter, Chairman Hatch writes:

       It takes a great deal of imagination--and likely no small 
     amount of partisanship--to argue that a provision that has 
     been public for over a month, debated on the floor of the 
     House of Representatives, included in a House-passed bill, 
     and identified by [the Joint Committee on Taxation] as an 
     issue requiring compromise between conferees is somehow a 
     covert and last-minute addition to the conference report.

  It reminds me of another quote sometimes attributed to Mark Twain, 
perhaps apocryphally, who supposedly said: A lie can travel halfway 
around the world while the truth is still putting on its shoes. Well, a 
lie can travel even faster than that today because of social media.
  Shame on those who would perpetuate lies in an effort to deny the 
American people a much needed tax cut and tax relief. Thank goodness 
that attitude isn't shared by most Americans and by the Texans I 
represent who want and deserve much better than the same old same old. 
They don't believe we have to settle for the status quo. We are going 
to give them something better. We are going to keep our promise, and I 
can't wait until this bill gets on the President's desk.
  Let me just close by saying that I am a proud son of a World War II 
veteran.

[[Page S8056]]

My dad was in the Army Air Corps, flew B-17s out of Molesworth Air 
Force Base in England over Nazi Germany during the end of World War II. 
He was a member of the 8th Air Force, 303rd Bomb Group. On his 26th 
mission, he was shot down and captured as a prisoner of war. Thank 
goodness he survived, came home, met my mom, married, raised a family, 
and became a productive member of civilian society after his military 
service. But I remember, as if it were yesterday, what my parents said 
they wanted for me, my brother, and my sister. It is what parents of 
that entire generation wanted for their children and grandchildren. 
They wanted to know that their sacrifice, their willingness to fight 
and win America's wars against terrible tyrants, such as Adolph 
Hitler--that the consequence of their sacrifice and their service would 
be a better standard of living, a safer world, and a better quality of 
life. In short, what they wanted for us and what I want for my children 
and what I believe every American parent wants for their child or their 
children is exactly what my parents wanted for me and my sister and my 
brother. We sometimes call that the American dream.

  Some of us believe that the American dream is still alive, that we 
don't have to settle for second place. We don't have to settle for the 
status quo. We don't have to settle for flat wages and fewer jobs. We 
can do better. We believe we have done better in this piece of 
legislation, which will help reawaken the slumbering giant of the 
American economy. It will put Americans back to work. It will mean more 
take-home pay. It will mean a better standard of living, but, 
surprisingly--and disappointingly--our colleagues across the aisle want 
no part of it. I hope they haven't given up on that American dream. I 
haven't given up, and I don't believe Americans have given up on that 
dream.
  I yield the floor.
  I suggest the absence of a quorum.
  The PRESIDING OFFICER (Mrs. Ernst). The clerk will call the roll.
  The bill clerk proceeded to call the roll.
  Mr. CORNYN. Madam President, I ask unanimous that the order for the 
quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. CORNYN. Madam President, I ask unanimous consent that the letter 
from Chairman Hatch be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                                      U.S. Senate,


                                         Committee on Finance,

                                Washington, DC, December 18, 2017.
     Hon. Bob Corker,
     Washington, DC.
       Dear Chairman Corker: Thank you for your letter dated 
     yesterday.
       I am disgusted by press reports that have distorted one 
     particular aspect of the conference agreement on H.R. 1, the 
     Tax Cuts and Jobs Act. The reports have focused on the final 
     version of the 20 percent pass-through deduction, the 
     proposed new Section 199A. As the author of this provision 
     and the vice chairman of the conference committee, I can 
     speak with authority about the process by which the 
     conference committee reached its final position.
       There are two false assertions contained in these reports, 
     and I would like to correct the record on both.
       First, some have asserted that a new provision was crafted 
     for real estate developers and was ``airdropped'' into the 
     conference agreement. Second, reports have implied that you 
     had some role in advocating for or negotiating the inclusion 
     of this provision.
       Both assertions are categorically false. With respect to 
     the second, I am unaware of any attempt by you or your staff 
     to contact anyone on the conference committee regarding this 
     provision or any related policy matter. To the contrary, 
     virtually all the concerns you had raised in the past about 
     the treatment of pass-through businesses in tax reform were 
     to voice skepticism about the generosity of various proposals 
     under consideration.
       The first claim--that a new pass-through proposal was 
     created out of whole cloth and inserted into the conference 
     report--is an irresponsible and partisan assertion that is 
     belied by the facts. For more than a year, tax-writers in the 
     House and Senate have worked to craft legislation that not 
     only provided relief for ``C'' corporations, but also 
     delivered equitable treatment for pass-through businesses. 
     Though the two chambers came at this issue from different 
     angles, our goal was the same: To provide tax relief to pass-
     through businesses at a level similar to that provided to 
     regular ``C'' corporations. This policy goal was confirmed in 
     the Unified Framework for Fixing Our Broken Tax Code, which 
     provided in part:
       ``TAX RATE STRUCTURE FOR SMALL BUSINESSES The framework 
     limits the maximum tax rate applied to the business income of 
     small and family owned businesses conducted as sole 
     proprietorships, partnerships and S corporations to 25%. The 
     framework contemplates that the committees will adopt 
     measures to prevent the re-characterization of personal 
     income into business income to prevent wealthy individuals 
     from avoiding the top personal tax rate.''
       The House Ways Means Committee and the Senate Finance 
     Committee achieved this mutual goal by different means. 
     Section 1004 of the House bill provided a special tax rate 
     for pass-through income and included a ``prove-out'' option 
     for capital-intensive businesses. Chairman Brady unveiled 
     this approach on November 2nd, more than six weeks ago.
       The Senate took a different approach, achieving the 
     intended rate relief through a deduction patterned after 
     current law Section 199. We also included measures to ensure 
     that compensation could not be easily gamed into business 
     income in order to qualify for the deduction. Similar to 
     Section 199, the deduction in the Senate bill excluded 
     compensation and guarantee payments to owners and was limited 
     to 50 percent of compensation paid to employees, with an 
     exception for small pass-through businesses, including 
     service providers. The Senate bill did not include a prove-
     out option for capital-intensive businesses like the one 
     contained in the House bill.
       The Joint Committee on Taxation (``JCT''), the non-partisan 
     congressional scorekeeper for tax legislation, released a 
     side-by-side summary of the two bills for conferees. That 
     summary, dated December 7, 2017 and available on JCT's 
     website (JCX 64-17), described the House position in part:
       ``In the case of a capital-intensive business, a taxpayer 
     may ``prove out'' a capital percentage by electing the 
     application of an increased percentage for the taxable year 
     it is made and each of the next four taxable years. The 
     applicable percentage is determined by dividing (1) the 
     specified return on capital for the activity for the taxable 
     year, by (2) the taxpayer's net business income derived from 
     that activity for that taxable year.''
       It takes a great deal of imagination--and likely no small 
     amount of partisanship--to argue that a provision that has 
     been public for over a month, debated on the floor of the 
     House of Representatives, included in a House-passed bill, 
     and identified by JCT as an issue requiring a compromise 
     between conferees is somehow a covert and last-minute 
     addition to the conference report.
       I have sat on a number conference committees, too numerous 
     to remember. In each case, conferees have come into the 
     conference expecting to achieve their chamber's position or 
     negotiate a reasonable compromise. This conference committee 
     was no exception. The House entered the conference with an 
     interest in preserving, in some form, the prove-out 
     alternative as an option for capital-intensive taxpayers. 
     Through several rounds of negotiations, the House secured a 
     version of their proposal that was consistent with the 
     overall structure of the compromise.
       The prove-out alternative included in the conference report 
     was derived from the House provision and is the product of a 
     negotiation between the House and Senate tax-writing 
     committees. It is that simple.
       If you have any further questions, please feel free to 
     contact me.
           Very Truly Yours,
                                                   Orrin G. Hatch,
                               Chairman, Senate Finance Committee.

  Mr. CORNYN. Madam President, I yield the floor.
  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. KING. Madam President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.