[Congressional Record (Bound Edition), Volume 151 (2005), Part 19] [Senate] [Pages 25432-25433] [From the U.S. Government Publishing Office, www.gpo.gov]RECONCILIATION TAX CUT BILL Mr. VOINOVICH. Mr. President, I rise to comment on the reconciliation tax relief bill that will most likely come before the Senate next week. I felt it necessary to come and speak on this topic because I am thinking of not only our generation but of the generations of our children and grandchildren and the legacy we leave them. How do the decisions we make in the Senate today affect their lives after we have long left this body? That is a question I will be asking should the Senate, as I expect it will, begin debate on reconciliation for tax cuts. Last week, Alan Greenspan testified before the Joint Economic Committee and told Congress: We should not be cutting taxes by borrowing. We do not have the capability of having both productive tax cuts and large expenditure increases, and presume that the deficit doesn't matter. I do not know how anyone can say with a straight face that when we voted to cut spending last week to help achieve deficit reductions we can now then turn around 2 weeks later to provide tax cuts that exceed the reductions that we made in spending. It just does not make any sense, and I think it does not make any sense to the American people. Well, I for one am taking Chairman Greenspan's warning seriously. Last week, I voted to cut spending. And should tax cuts come to the floor next week, I will vote against them. I believe it is the only responsible course of action. There are three reasons we should oppose tax cuts at this time: No. 1, we cannot afford these tax cuts; No. 2, we do not need these tax cuts; and, No. 3, we should be working on tax reform rather than tax cuts. In case anyone has forgotten, the deficit for fiscal year 2005 was $317 billion. That was the third largest deficit in our Nation's history. The first and second largest deficits occurred in 2004 and in 2003. On October 20, the gross Federal debt climbed past $8 trillion. Looking at this chart, you can see what is happening. This is the combined debt, the public and the Government debt. It climbed to over $8 trillion. And according to the Congressional Budget Office, in fiscal year 2005, interest on the public debt grew more rapidly than any other major spending category, rising 14 percent above the fiscal year 2004 level. So we can see that this debt is escalating rapidly, and it is something about which we should all be very concerned. Let me put this in perspective. Just the interest payments on the public debt are more than $1,600 for each tax-paying American--more than $1,600 for each tax-paying American. If we could wave a magic wand and stop adding to the deficit today--which we won't--the Federal debt would still be about $28,000 for every person in the United States, and close to $1 million each if it is left to those who are under 20 years of age. And even if we were to start running surpluses as large as last year's deficit, it would still take us 14 years to pay off just the debt held by the public. It is time to recognize a simple fact of life. Contrary to what some of my colleagues seem to believe, tax cuts do not pay for themselves. We have heard about the impact of the previous tax cuts, how in the past few months revenues have exceeded expectations, and how economic growth would pay for all the tax cuts Congress enacted in 2003. But as this chart shows, exceeding expectations does not mean there was no revenue lost as a result of the tax cuts. As shown on this chart, the red bar indicates what our revenues would have been had we not had the tax cuts. The blue bar shows what the projected revenue was as a result of the tax cuts. The green bar shows what we actually received as a result of the tax cuts. Now, we can see there is a difference between if we had not had the tax cuts and having the tax cuts. Now, let's go to 2004. Shown in red is what we would have expected in revenues in 2004 had we not had the tax cuts. We had the tax cuts, and shown in blue is what was expected as a result of them. The good news is, we did receive more money than we anticipated from the tax cuts, as shown in the green. Now, let's go to 2005. Again, the red bar shows what the projection was of what we would have had without the tax cuts. The blue bar shows what the projection was of the revenues we would have because we had the tax cuts. And the green bar shows actually what the revenues were that came in. The fact is, tax cuts are never free. All during this time, we were adding to the national debt. Now, I voted for tax cuts in 2001, 2002, and 2003 because the country needed stimulative medicine, and it worked. But like any other medicine, an overdose of tax cuts can, and in my opinion will, do more harm than the original disease. In 2003, I said that $350 billion in tax cuts would be enough to get the economy moving, and now I am saying that any more would be an overdose. It is time to put the tax cut medicine back on the shelf, particularly in light of the war in Iraq, our spending on homeland security, and Hurricanes Katrina and Rita. Just today, the Senate increased mandatory spending over the next 10 years by $9.5 billion. The second reason to put the tax cut medicine back on the shelf is that most of the provisions included in the reconciliation package do not have to be extended now. In fact, most of the tax cut provisions included in the reconciliation package, including the reduced rates on dividends and capital gains, do not expire until 2008--over 2 years from now. So here are the provisions of the economic growth plan that we worked on during the last several years. You can see that one of the provisions of the proposal for next week is ``reduced rate on dividends and capital gains.'' This is not going to expire until 2008. Another one is ``section 179 expensing,'' which many of us supported in the bill we passed last year, the JOBS bill. That is not going to expire until 2007. So the point I am making is, there really is not any need for us to pass these tax cuts next week because most of them are not going to expire until years in the future. As my colleagues can see, most of the core provisions of the President's tax reform plan, as I mentioned, do not expire until 2010. A handful expire in 2007 or 2008, and only one expires next year. When Alan Greenspan testified before the Joint Economic Committee last week--I think this is really telling testimony on the part of Chairman Greenspan--a member of the committee asked if he supported extending the 15-percent tax rate for capital gains and dividends. Chairman Greenspan replied [[Page 25433]] that he could only support extending these tax cuts if they were paid for. According to Chairman Greenspan, large budget deficits will drive up interest rates over time, raising the Government's debt service costs. I think, as we watch what is happening to interest rates, they are starting to creep up. What we forget is, as they creep up, interest costs are going to take a larger and larger percent of our Federal budget. I quote Alan Greenspan again: Unless the situation is reversed, at some point these budget trends will cause serious economic disruptions. I will repeat it again. Alan Greenspan: Unless the situation is reversed, at some point these budget trends will cause serious economic disruptions. The fact is, if these tax cuts are so important, we should pay for them, which is why I supported the pay-go amendment to the budget resolution in March, and supported it again last week. My third reason for opposing piecemeal tax cuts at this time is that the President's Advisory Panel on Tax Reform just released its final report. All of us have heard from families and businesses in our respective States lamenting the complexity and frustration with the current Tax Code. Well, thanks to our former colleagues, Connie Mack and John Breaux, it seems to me we have a chance to finally do something about it. Why extend tax deductions piecemeal when we should be considering fundamental tax reform? Our tax structure should be simple, fair, and honest. Our current Tax Code achieves none of these objectives. I used to prepare my own tax returns and made out tax returns for my clients. I would not touch my tax return today with a 10-foot pole because of the complexities. I am with the 55 percent of other Americans who have to hire professional help to make out our tax returns. Last year, it is estimated that Americans spent more than 3.5 billion hours doing their taxes, the equivalent of hiring almost 2 million new IRS employees, more than 20 times the agency's current workforce. If the money spent every year on tax preparation and compliance was collected, about $140 billion each year or over $1,000 per family, it could fund a substantial part of the Federal Government, including the Department of Homeland Security, the Department of State, NASA, the Department of Housing and Urban Development, the Environmental Protection Agency, the Department of Transportation, the U.S. Congress, our Federal courts, and all the Federal Government's foreign aid. Individuals, businesses, and nonprofits must pay these compliance costs, but the Federal Government cannot use them for any useful purpose. Individuals and businesses lose money that they could otherwise save, invest, and spend on their children's education, buy a home, or simply enjoy an extra evening out with the family. But the Federal Government gets nothing. That is the equivalent of stacking money in a pile and lighting a match to it. We all recognize the need for a simple, fair, and honest Tax Code. This is a win-win goal for everyone. Simply cutting tax compliance costs in half from 20 percent to 10 percent would have the same impact as a major tax cut. Just cutting the compliance costs would be the equivalent of a major tax cut for most Americans, but it would be a tax cut that does not reduce Federal revenues but would guarantee that people are paying their fair share and bring more money into the Federal Treasury. We all know that fundamental tax reform is critical and that President Bush will be sending us his recommendations in February. I simply cannot understand why some of my colleagues want to make so many provisions of the current Tax Code permanent or add new tax cuts, when next year we very well may be eliminating the same provisions as part of fundamental tax reform. Why do it now when we are expecting the President to come back with a fair and simple, honest tax reform package? Again, this is not the time for piecemeal tinkering. No homeowner would remodel their kitchen and bathroom the year before tearing down the house to build a newer and better one. That is, in effect, what we would be doing next week if we vote for these cuts. In closing, I reiterate the three reasons we should oppose tax cuts at this time. No. 1, we cannot afford them because of our soaring deficit and national debt. Putting our spending on the credit card of our kids is unconscionable, particularly because they will have to work harder and smarter to compete in the global marketplace to maintain our current standard of living and quality of life. Two, we do not need these tax cuts at this time. If this body believes we must have them, we should follow Alan Greenspan's advice and pay for them. If these tax cuts are so important to the economy, then let's pay for them. And third, from a public policy point of view, these tax cuts are premature because in the very near future, we may well change them as part of fundamental tax reform and simplification. I thank my colleagues for their attention and urge them to vote against the tax cuts proposed next week. I reaffirm a Republican principle we have held dear over the years and one that I adhered to as mayor of the city of Cleveland and Governor of Ohio; that is, balance budgets and reduce deficits. I yield the floor and suggest the absence of a quorum. The PRESIDING OFFICER. The clerk will call the roll. The bill clerk proceeded to call the roll. Mr. VOINOVICH. Mr. President, I ask unanimous consent that the order for the quorum call be rescinded. The PRESIDING OFFICER. Without objection, it is so ordered. ____________________