[Congressional Record Volume 164, Number 58 (Wednesday, April 11, 2018)]
[Senate]
[Pages S2063-S2066]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
Tax Reform
Mr. TOOMEY. Mr. President, it was about 2 weeks ago that I had the
opportunity to tour a steel plant in Redding, PA. The plant is owned by
Carpenter Technology. It is a company that was founded in 1889. It is
quite extraordinary. It is a vast complex in Redding, PA. They have
2,000 employees in Berks County, which is where Redding is located, and
they have an additional 1,200 or so folks throughout other parts of
Pennsylvania.
Carpenter Technology is a leading producer and distributor of
specialty metals, including what they call soft magnetics. As I
understand it, soft magnetics increase the efficiency and the power and
the battery life of electric motors. That is one of the main
applications of these soft magnetics. It is a feature in steel and
other metals that allows the magnetic properties to be turned on and
off very rapidly. It is an amazing technology. It is an absolutely
essential component for all kinds of products, including aircrafts,
electric cars, even medical devices. It is quite a range of products.
One of the things I learned, of the many things I learned while I was
at Carpenter Technology, is that tax reform is working for Carpenter
Technology.
While I was there, the CEO announced a $100 million investment, right
there in Redding, Berks County, PA, to upgrade their capabilities and
their capacity to produce these soft magnetics. To be more precise,
they are buying an entire new hot rolling steel mill in Redding, PA. It
is a $100 million investment in a new mill that will allow them to
expand their output and meet increasing demand for this really
fascinating product that they make.
One of the things the leadership of Carpenter Technology made
abundantly clear in their press release and in their public statements
was that they were able to purchase this mill and make this $100
million investment in their company now because of the tax reform we
passed. This is exactly the type of capital investment we envisioned
when we passed the tax reform bill. It was exactly for this kind of
economic activity and expansion that we wanted to lower the cost of
deploying this capital and expanding business and generate the economic
growth and prosperity that comes with this.
By the way, Carpenter Technology is not an outlier. This kind of
investment is consistent with the sentiment we are seeing all across
the country.
Just at the end of the first quarter--the quarter that just ended--
there was a large survey of American chief financial officers--CFOs--
across the country. It was carried out by Deloitte LLP. It was
exploring the question of growth expectations for capital expenditure.
The fact is, their conclusion is that these CFOs anticipate greater
growth and more hiring. In fact, the sentiment is at a multiyear high.
Why is that? Here is what Deloitte had to say about it:
Clearly, there's a high desire for investment in the U.S.,
and that is coming from just the structure of tax reform.
[CFOs] are expecting higher domestic wages, almost 40 percent
are anticipating and planning for higher and front-loaded
capital investments, and about a third higher research and
development. What they've said is because of tax reform
they're going to take those actions.
It is very straightforward. It is very clear.
So here we are, just 3\1/2\ months since passage, and the tax bill
has already and continues to benefit workers and businesses, and, boy,
these are not the crumbs some of our friends on the other side of the
aisle have tried to suggest they are. There are over 500 businesses
that we know of--businesses that are sufficiently high profile that we
have read about and we can track their announcements. These 500-plus
businesses employ over 4 million workers. Over 4 million workers across
America have already received bonuses, wage increases, enhanced
benefits, and increased contributions to their pension plans. It has
already happened, and it is attributable entirely to the tax reform. So
the benefits from this tax reform are clearly already flowing to the
very workers we intended to benefit from it.
So my friends on the other side have had some struggles in thinking
about how they can disparage this tax reform. They have come to realize
that calling $1,000 bonuses and multi-thousand-dollar pay raises crumbs
is probably not such a good idea. So they have shifted the argument to
be a kind of class warfare argument.
I hear two varieties of this most frequently. One is this idea that,
well, the benefits all flow to the rich. The second is this idea that,
well, these are greedy corporations that get this tax savings, and they
just use the money to buy stock back.
Let's unpack this a little bit. What about this argument that it all
flows to the rich? Well, there is one problem with that argument. That
problem is it is not true; it is not true at all because when we did
this tax reform, we did it in a way that makes the Tax Code more
progressive. What does that mean? That means that upper income
Americans--the wealthiest Americans--have an increased percentage of
the total tax burden. So while everybody gets a savings in percentage
terms, the savings disproportionately go to lower and middle-income
workers and a disproportionately small amount of the savings go to
upper income workers. So when the dust clears, the net effect is
wealthier people are paying a larger percentage of the total tax bill
than they paid beforehand.
So, clearly, the benefits of this tax reform are flowing to everyone
and disproportionately to low- and middle-income people.
What about this idea that stock buybacks are such a terrible thing?
There have been some stock buybacks. What does that mean? That means
companies have taken the additional pretax cash flow they have, and
they have decided in some cases that they will take a portion of it and
return it to the owners of the company.
It just so happens that about 40 percent of the owners of the public
companies in America are the people who have saved in their retirement
plans--401(k) plans, IRA savings accounts, 529 plans, defined benefit
pension plans. These are middle-income Americans whose savings are
invested in the stocks of companies.
In some cases, yes, there have been stock buybacks. That means these
savers have had cash introduced into their accounts, which then can be
deployed by the managers of these accounts into new investments, which
is what happens for anyone who is selling their stock in response to a
buyback. They get cash.
What do they do with that cash? They get the chance to reassess where
they invest their money, making new
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investments, making different investments, reallocating capital, and
shifting capital to where there is the greatest demand for it. This is
exactly the way a free enterprise system should work. This is exactly
the mechanism that allows capital to flow to its highest use and helps
to encourage still more economic growth.
Better still, this is just the beginning. We are only 3\1/2\ months
into this. We haven't yet even begun to reap the benefits--as a
country, as a society--of this reformed Tax Code. Businesses are
already responding to the incentives, and with the lower after-tax cost
of capital we have created, we are seeing increased investment. Whether
it is a tractor or a new factory or a piece of machinery or a steel
mill in Redding, PA, that investment invariably requires workers to
produce that investment, so there is greater job security and more
opportunities for those workers. But then the company that actually
deploys that investment, such as Carpenter Technology in the case I
just mentioned--their workers become more productive; their workers
have new tools that allow them to command higher wages and a better
standard of living. That is what is happening, and that is going to
continue to develop as companies are just now beginning to have the
opportunity to deploy that capital only 3\1/2\ months into this new tax
regime.
I am just delighted that every week that goes by, I learn about more
Pennsylvania workers and more American workers who are working for
businesses that are benefiting and enhancing their investments. It is a
really good-news story.
Now I will shift a little bit to the CBO report that came out earlier
this week, which said a few things worth noting. One should be on all
of our radars, and that is the fiscal challenge we face. We have too
much debt, and that number is growing too rapidly.
This fiscal year, the gross amount of Federal debt is $21 trillion.
By the end of this 10-year window, CBO contemplates that number will go
up to $33 trillion. This is a huge problem. But I think it is important
that we stress where this problem comes from. This is a spending
problem; this is not a revenue problem, and we can see this in CBO
numbers.
In June of last year, almost a year ago, CBO projected that over the
10-year window they were considering at the time, we would have $43
trillion of tax revenues flowing into the Federal Government, with $53
trillion of spending--a net deficit over that period of $10 trillion.
One year later, CBO has updated its projections, and now it is
calling for $44 trillion in revenue over the current 10-year window. So
there will be $1 trillion more in revenue, but $56 trillion in
spending--$3 trillion more in spending. So we go from a 10-year window
that looks as though the CBO is projecting a $10 trillion deficit to a
$12 trillion deficit. Clearly the deficit is growing, and clearly it is
driven by the increase in spending.
The bottom line is, whether it is $10 trillion or $12 trillion, this
deficit is way too big. But tax reform is going to enhance the revenue
collected by the Federal Government by helping us create a larger
economy to tax. The spending is our fault. That is something we have to
get under control.
CBO has observed a couple of other things. They talk about our tax
reform, and they talk about terrific things. They say in the report
that the tax reform results in ``higher levels of investment,
employment, and GDP.'' We can see dramatically different projections of
economic growth post-tax reform, according to the CBO, than we had pre-
tax reform, according to the CBO.
In January of 2017, they projected that this year the economy would
grow 2 percent. But after tax reform passed, they reassessed this year.
They took the projection of 2 percent for this year, and they said that
now it will grow 3 percent based on tax reform. That is a 50-percent
increase in the growth of our economy. That is huge.
For next year, 2019, they were projecting 1.7 percent growth. Now,
post-tax reform, they are estimating 2.9 percent growth--1.2 percentage
points--again, an almost 50-percent increase. These are huge increases,
and they explain it. They say: ``The largest effects on GDP over the
decade stem from the tax act . . . boost[ing] the level of real GDP by
an average of 0.7 percent . . . over the 2018-2028 period.''
The fact is, this tax bill is already working. It is making the
structural changes in the Tax Code that create a greater incentive for
businesses to invest. It is making American companies and American
workers more competitive than we have been in a very, very long time.
It is going to increase the capital stock, the invested assets in our
businesses that allow our workers to become more productive, and it is
going to continue to allow those more productive workers to earn higher
wages.
Let's be honest. No one can prove with certainty what the future
holds, so it is worth looking at what is happening in the present. As a
result of our tax reform, what is happening today, what is happening in
the present is this: Millions of Americans have been receiving bonuses;
millions of Americans have been receiving pay raises; millions of
Americans have seen increases in their pension contributions; millions
of Americans have seen an increase in the value of their pensions; and
millions of Americans--like the workers at Carpenter Technology--have
seen greater job security and greater opportunity as their employers
are investing in their companies, and that is already beneficial for
all of us.
I yield the floor.
The PRESIDING OFFICER. The Senator from South Dakota.
Mr. THUNE. Mr. President, as my colleague from Pennsylvania has
pointed out, the recently passed tax bill is already having a profound
impact on the economy, and, as the Congressional Budget Office report
points out, over the course of the next decade, it will significantly
increase economic growth in the economy and increase the number of
jobs. It said that over 1 million jobs would be created as a result of
the passage of the tax bill.
To his point, as well, they talk about deficits and debt projected
out into the future, which clearly are major issues but, again, I would
point out, are a result of the rate of growth in spending and not of
the impact of the revenues generated by lowering taxes because when you
get greater growth in the economy, it means that more people are taking
realizations and more people are paying taxes. The Congressional Budget
Office, as a rule of thumb, suggests that for each percentage--a 1-
percent increase in growth of the economy--you get about $3 trillion in
additional revenue over the course of a decade.
If we assume, and I believe we will--even the CBO, which I think is
very conservative in terms of growth estimates, suggests that there is
higher growth attributable largely to the changes we made in the Tax
Code, reducing taxes on families in this country and reducing taxes on
our small businesses, which incentivize them to expand and grow their
operations and, therefore, create better paying jobs and higher wages,
but also will generate more revenue coming in to the Federal coffers.
Clearly, the issue that we have in terms of the debt picture in the
long term is not about revenue; it is about spending, which is growing
dramatically over that next decade, particularly in what we refer to as
mandatory spending or entitlement programs. This cries out, I would
argue, for reforms in entitlement programs. But to say that somehow tax
reform is contributing to that is a far cry from the truth, and I think
the Congressional Budget Office numbers bear that out. Again, I would
argue that in terms of what they suggest we are going to see in growth
as a result of the changes we made in the Tax Code, I believe it is
going to be dramatically understated.
When it came time to draft tax reform, Republicans really had two
goals in mind. First, we wanted to put more money in the pockets of
hard-working Americans, and we wanted to do that right away. Second, we
wanted to create the kind of economy that would give Americans access
to economic security for the long term.
Less than 4 months after we passed this bill, I am proud to report
that the Tax Cuts and Jobs Act has already achieved the first goal and
is well on its way to achieving the second.
To put more money in Americans' pockets, we lowered tax rates across
the board for American families, nearly doubled the standard deduction,
and
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increased the child tax credit to $2,000, doubling the amount that
families can deduct per child in terms of the child tax credit.
In February, that relief started to show up in Americans' paychecks.
According to Treasury Department estimates, 90 percent of the American
people are seeing bigger paychecks this year, thanks to the Tax Cuts
and Jobs Act. And thanks to the IRS's new withholding calculator,
families with children can adjust their withholding to take into
account the individual tax relief provided in the new tax law, in
particular, the increased child tax credit. That means even more in the
paychecks of hard-working Americans without their having to wait until
they file their 2018 tax returns next year.
When it came to our second goal, we knew that the only way to give
Americans access to real long-term economic security was to ensure they
had access to good jobs, good wages, and real opportunities. We knew
that the only way to guarantee access to good jobs, wages, and
opportunities was to make sure businesses had the ability to create
them.
Before the Tax Cuts and Jobs Act, our Tax Code wasn't helping
businesses to create jobs or to increase opportunities for workers. In
fact, it was doing the exact opposite. Large and small businesses were
weighed down by high tax rates and growth-killing tax provisions, and
all the regulatory and compliance burdens that came along with them.
Our outdated international tax rules left America's global businesses
at a competitive disadvantage in the global economy. That had real
consequences for American workers. A small business owner struggling to
afford the annual tax bill for their business was highly unlikely to be
able to hire a new worker or to raise wages. A larger business
struggling to stay competitive in the global marketplace while paying
substantially higher tax rates than its foreign competitors too often
had limited funds to expand or increase its investment here in the
United States.
When it came time for tax reform, we set out to improve the playing
field for American workers by improving the playing field for
businesses as well. To accomplish that, we lowered tax rates across the
board for owners of small and medium-sized businesses, farms, and
ranches. We lowered our Nation's massive corporate tax rate, which
until January 1, was the highest corporate tax rate in the developed
world. We expanded business owners' ability to recover investments they
make in their businesses, which will free up cash that they can
reinvest in their operations and their workers. We brought the U.S.
international tax system into the 21st century by replacing our
outdated worldwide system with a modernized territorial tax system so
that American businesses are not operating at a disadvantage next to
their foreign competitors.
The goal in all of this was to free up businesses to increase
investments in the U.S. economy, hire new workers, and increase wages
and benefits. I am happy to report that this is exactly what they are
doing. Since tax reform became the law of the land, we have seen a
steady drumbeat of businesses announcing good news for American
workers. So far, more than 500 companies, and counting, have announced
pay raises, bonuses, 401(k) match increases and other benefits,
business expansions, and utility rate cuts: Starbucks, McDonald's,
Jergens, McCormac & Company, Apple, Best Buy, Walmart, Bank of America,
ExxonMobil, Hormel Foods, UPS, and American Express. And the list goes
on and on.
I don't need to tell anyone that Americans had a tough time during
the last administration or that our economy had stagnated. But under
Republican leadership, we are finally starting to see the economy turn
around, and tax reform is playing a very big part. Unfortunately,
Democrats seem unable to accept the fact that tax reform is benefiting
middle-class Americans. In fact, Democrats recently introduced an
infrastructure plan that they want to pay for by repealing features of
the tax law that are producing so many new benefits for American
workers.
Republicans wanted Democrats to join us in the process of drafting
tax reform. After all, a lot of the provisions in the final bill were
the result of years of work by Republicans and Democrats. I was a part
of that process. We had working groups that spent a good amount of time
looking at every element and feature of the Tax Code--bipartisan groups
of Republicans and Democrats, working together, making recommendations
about things that we could do to reform our Tax Code in a way that
would incentivize greater growth and expansion and better jobs and
higher wages.
Democrats had previously expressed their support for things that
became key parts of the bill, like lowering our Nation's massive
corporate tax rate. Unfortunately, instead of working with us,
Democrats chose to play politics. Apparently, it was more important to
them to attempt to score political points against Republicans than to
work on a bill that they knew had the potential to help the American
people. Almost 4 months after the bill's passage, they are still
playing politics, despite the fact that in the face of the bill's
success, their attempts to criticize it are sounding pretty desperate.
Take their attempt to portray the bill's benefits for workers as
``crumbs.'' Let me tell you that a worker whose salary just increased
by $3 an hour does not see that additional $500 a month as crumbs,
especially when you combine it with the rest of the tax relief in the
new tax law. A worker who gets an increased match in her 401(k) account
will see her retirement savings increase significantly as a result of
the Tax Cuts and Jobs Act, and she will not see that benefit as crumbs.
It is too bad that Democrats can't accept the fact that the Tax Cuts
and Jobs Act is working. At the very least, they should stop trying to
undo the benefits that it is bringing to the American people. Over 500
companies across this country have announced increases in wages,
increases in benefits, and bonuses--direct benefits to American
workers, to the tune of over 5 million Americans who already have
benefitted from this. That is the short-term impact that we have seen
already.
The American people spent long enough in a stagnant economy. It is
time to get this economy jump-started and to see those wages and those
good-paying jobs come back into this economy so that American families
can benefit, can experience, and can enjoy a better standard of living,
a higher quality of life, an opportunity to do more for their children,
to help them with their college education, to set aside a little bit
for retirement, and to take care of those day-to-day bills.
Fifty percent of the American people, according to polls, say they
are living paycheck to paycheck. One thing we can do to help them is to
make that paycheck bigger and, hopefully, to put them in a position
where they can put aside a little bit for retirement and where, maybe,
they can help save up for their kids' college education, and maybe take
a vacation with the family.
There are so many ways in which the benefits of this bill are
delivered to the American people and to American families and can help
them in their daily lives. We shouldn't try and go back. We ought to
try to go forward and recognize that the near-term benefits of this
bill are very real to American workers. The long-term benefits are
going to be, I think, even more beneficial to American workers, to
American businesses, and to American families because not only now will
they benefit from the lower tax rates that are delivered to the entire
tax table, but they are also benefiting from the doubling of the
standard deduction, the doubling of the child tax credit, and all the
other benefits that are included in this bill. American businesses,
small and large, are also seeing those benefits on a daily basis, so
much so that they have already made these commitments to over 5 million
Americans. That is 500 companies that are paying out bonuses, higher
pay, and bigger benefits for their workers. That is only going to
increase over time as this economy starts to take off because they now
have an incentive to expand and grow their operations through reduced
rates, when it comes both to large and small businesses, through the
ability to recover their costs more quickly and to free up that capital
with which they can invest in and expand and grow this economy and
create those better paying jobs.
This is a win-win for the American people. It is a win-win for our
country.
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I hope our colleagues on the other side of the aisle will quit
referring to it as ``crumbs'' because I know the American people don't
see it that way.
I yield the floor.
I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The assistant bill clerk proceeded to call the roll.
Mrs. MURRAY. Mr. President, I ask unanimous consent that the order
for the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mrs. MURRAY. Mr. President, I come to the floor today to oppose in
the strongest terms the nomination of Patrick Pizzella as Deputy
Secretary of Labor.
With this nomination President Trump is once again breaking his
promise to put workers first. Mr. Pizzella has a record that is time
and again at odds with the goals of the very Department he would help
to lead as Deputy Secretary. His track record is one of not merely
failing workers but of failing to enforce laws to protect the health
and safety of workers, seeking to diminish workers' rights and
protections, and undermining the unions that represent and fight for
them.
In fact, his record includes working with convicted lobbyist Jack
Abramoff on behalf of causes that are counter to the mission of the
Department of Labor.
In the 1990s, Congress was moving to expand labor and immigration
protections to the Northern Marianas Islands, a U.S. Territory, to end
the operation of sweatshops that did not follow Federal labor laws. The
law at the time let companies bring in foreign workers to toil under
inhumane conditions. The workers were underpaid. They were forced to
sign contracts signing away their rights to protest labor conditions,
and some were even coerced to have abortions.
The companies operating under these inhumane conditions were able to
print the words ``Made in the U.S.A.'' on their products.
While Congress was looking to take action to change the law so we
could better protect workers, Pizzella was working with Abramoff to
coordinate all-expense-paid trips for dozens of Republican lawmakers
and staff and seeking to maintain the sweatshop status quo.
Patrick Pizzella chose not to work for workers but for corporations.
These efforts are not just counter to the mission of the Department of
Labor, they are counter to our national values.
The rest of Mr. Pizzella's record shows that he has taken equally
extreme positions throughout his career. Take, for example, his radical
record as the sole employee of the Conservative Action Project, a far-
right group funded by billionaire donors like the DeVos family, or his
record when he last served in the Department of Labor. Under his
leadership, the Department of Labor cut its budget in part by cutting
down its own employees' collective bargaining rights and decreasing
official time.
Then there is his long record championing anti-union policies and
arguing to limit collective bargaining rights.
At the Federal Labor Relations Authority, Pizzella not only ruled
consistently against workers and unions, but he repeatedly broke with
longstanding policy by calling out the names of individual workers in
his decisions. He chose to call out defendants by name and put them in
the public spotlight. The pattern of Mr. Pizzella's anti-worker
ideology is clearly unchanged today. Throughout his career, Mr.
Pizzella's record has been alarmingly consistent. From his years
serving as the right hand to Jack Abramoff until now, he has shown that
he is not going to fight for workers. He will fight against them.
It would be irresponsible to put a man with such a strong track
record of anti-worker conviction a tweet away from leading the
Department of Labor. It is unconscionable that someone of Mr.
Pizzella's background would be the No. 2 leader at the Department of
Labor. It is unacceptable that he could be in line to serve as Acting
Secretary should Secretary Acosta leave the Department.
I strongly oppose his nomination. I will be voting against him, and I
encourage our colleagues to do the same.
Thank you, Mr. President.
I yield the floor.
The PRESIDING OFFICER (Mr. Lee). The Senator from Colorado.