[Congressional Record (Bound Edition), Volume 153 (2007), Part 1]
[House]
[Pages 613-619]
[From the U.S. Government Publishing Office, www.gpo.gov]




                              {time}  2130
                             TAX INCREASES

  The SPEAKER pro tempore. The gentleman from Pennsylvania (Mr. 
Shuster) is recognized for 60 minutes.
  Mr. SHUSTER. Mr. Speaker, it is certainly an honor to be here on the 
House floor, and it is a great opportunity to follow the Blue Dogs 
tonight, that coalition on the Democratic side that are talking about 
fiscal responsibility, because that is what I want to also talk about 
tonight. It is an extremely important issue. It is a pocketbook issue. 
And one I didn't hear mentioned too frequently by my friends in the 
Blue Dog Coalition has to deal with taxes and what we are responsible 
for here in Washington, which is spending, and also making sure we are 
not reaching too deep in the pockets of the American people and 
spending their money.
  Quite frankly, Mr. Speaker, I am very concerned that the American 
people are unaware of what is going to happen here in Congress in the 
next 4 years. There is a countdown. The countdown begins. It is 1,452 
days, and we will see over that period of time the tax cuts that we put 
in place as a Republican majority, they will expire. So the American 
people, over the next 4 years, will see a $200 billion tax increase, 
money that will be taken out of their pockets.
  The Democratic majority doesn't even have to act. They can just run 
out the clock. I am not sure the American people realize that, that if 
the Democrats don't act to extend these tax breaks, that they will see 
this $200 billion tax increase occur, as I said between today and 
January 1, 2011. As I said, I appreciate the Blue Dogs coming here and 
talking about fiscal responsibility, but unless they act and they join 
with the Republicans to see these extended, that is what the American 
people face.
  What do these tax cuts mean? They mean that over the last 4 years we 
have seen 7.2 million jobs created in this country because of those tax 
cuts. Just in the month of December, 167,000 jobs were created in this 
country. The unemployment rate in this country is down to 4.5 percent. 
That is the lowest average it has been in four decades, and that is 
directly attributable to the tax cuts that we passed over the last 4, 
5, or 6 years in this Congress. Again, if we don't extend them, if we 
don't do the responsible thing and let the American people keep more of 
their money, there will be dollars taken out of their pockets.
  Now, what has happened with those tax cuts is that the American 
people have gotten to keep more of their hard-earned dollars. The 
American people, from Pennsylvania, to Arkansas, to California, to 
Arizona get to keep their money in their pockets and get to decide how 
that money is going to be spent. It is not going to be spent in 
Washington by bureaucrats. When you get $2,000 or $4,000 more in your 
pocket a year because of these tax cuts, you decide whether you will 
use it as a downpayment on a car, save the money for your children's 
college education, or buy a new washer and dryer or refrigerator for 
your home. These are the things the American people want to be able to 
purchase, and they can do it with these tax cuts.
  As I said, I am very, very concerned that we are going to see this 
$200 billion tax increase if we don't move forward to expand that. We 
had four major tax relief packages since 2001. We cut taxes on the 
American taxpayer in every walk of life. Across the board, every 
American has benefited by this. We eliminated the marriage penalty tax. 
We stopped penalizing people in this country for being married. We 
should be encouraging that in America: marriage. We doubled the child 
tax credit from $500 to $1,000. If we don't act to extend that, that 
will be cut in half over the next 4 years.
  We removed 10.6 million low-income Americans from paying taxes all 
together. People are not paying taxes because we lowered those tax 
rates. We lowered tax rates on our small businesses and employers.
  I know every single district in this country has numerous small 
businesses. It is the backbone of the American economy. And we have cut 
taxes for those people in small business, and they have been able to 
take that money and reinvest it in their businesses and their 
employees. I know full well because before I came to Congress I didn't 
serve in the State legislature, I wasn't a trial attorney, I was a 
small business owner, and I worked to employ between 30 and 40 people. 
I know what it is like to meet a payroll, and I know what that burden 
is like to have to pay crushing taxes. I know what it is like to make 
sure my bills are being paid every month.
  So as a small business owner, I know firsthand. As a family man, as a 
father of two children, and a daughter that will go to Penn State 
University next year, I know it is important to save for college. Every 
American wants to save money to help their children get educated. As I 
said, I think it is extremely important that we here in Congress act 
responsibly to keep those tax cuts in place and there is record revenue 
coming into Congress.
  I hope that the Democrats will take a lesson from history, from one 
of their own, Jack Kennedy, in the 1960s. President Kennedy did the 
right thing. He cut taxes. What happened? Revenues increased to the 
government. What happened in 1980, when Ronald Reagan did the same 
thing? He cut taxes and revenues increased to the Federal Government. 
And we did that again in 2001 and 2003. And what happened? History has 
repeated itself. Revenues are at the highest levels that they have ever 
been to the Federal Government.
  So once again, I am absolutely committed, and we are going to be 
coming to the House floor week after week talking to the American 
people, reminding them that if the Democrats do not act, do not 
aggressively pursue the extension of these taxes that the American 
people will be penalized.
  And I think that here in this next hour I am going to be joined by 
many of my colleagues who want to stand up and talk about this. And the 
folks coming down to the floor, most of them, if not all of them, are 
former small business owners or still own small businesses and have 
families and raised families, so they can talk to the issues that we 
are here talking about tonight: what it means to get $2,000 more a year 
in your pocket, or $4,000 or $5,000, or have lower tax rates, if you 
are running a business.
  I will now invite some of my colleagues up, the gentleman from 
Tennessee (Mr. Davis). I yield to him.
  Mr. DAVID DAVIS of Tennessee. Mr. Speaker, I thank Mr. Shuster for 
giving me this opportunity. I too am a father of two and a small 
business owner, and I am truly honored to have this occasion to discuss 
my ideas. This open discussion is part of what makes us so great as a 
Nation.
  I am from the First District of Tennessee. It is a place of 
beautiful, majestic mountains, thriving communities, and a growing 
economy. Northeast Tennessee has unrivaled beauty and unsurpassed 
potential. However, the beautiful First Tennessee District and our 
country could be headed toward economic danger. For instance, in the 
last week, the three-fifths majority required to raise our taxes has 
been removed by the Democrat Party.
  Tax cuts are not permanent. Seemingly, it is only a matter of time 
before these massive tax increases are put in place. It is our 
responsibility to protect the American people from these unnecessary 
tax burdens. If the tax cuts that are in place are allowed to expire, 
some

[[Page 614]]

families could see an increase in taxes up to 39 percent. Married 
couples and families will once again be subject to the tax penalty.
  As I speak tonight, time and time again history has proven that tax 
reductions have spurred economic resurgence. Our current economic 
figures once again prove this fact. With the tax cuts in place, real 
after-tax income has risen 9.6 percent since the year 2000. The United 
States has grown faster than any other G-7 industrialized nation over 
the past four quarters. The time to control spending and to make tax 
cuts permanent is now.
  I will be joining many of my colleagues in signing a letter to 
President Bush encouraging him to veto any legislation implementing tax 
increases on working people and on the businesses of America. It is not 
the time to place greater financial burden on the families of the First 
District of Tennessee nor the many other people of this great Nation.
  Mr. SHUSTER. I thank the gentleman from Tennessee and would just 
point out that, as the gentleman said, he is a father, and I understand 
that he was a hospital manager before he started his own business. So 
he knows firsthand what it is like to be out there meeting a payroll, 
facing the tax burden of this country. So I really appreciate not only 
that you are here in Congress and you bring a commonsense, a small 
business owner's perspective to the legislative process, but you are 
here tonight talking about these issues that are going to be vital to 
not only people in Tennessee and Pennsylvania but across this country. 
Every American is concerned about their tax bill.
  It was interesting, the Blue Dogs were down here talking this evening 
earlier and they said America voted for a change. America did vote for 
a change, I believe. But I don't believe that I heard anybody in 
America, at least not in my congressional district in Pennsylvania, or 
across Pennsylvania, who said they wanted to vote for higher taxes. I 
am very concerned.
  As you mentioned, they changed the rules. We had the rules in place 
where we had to have a three-fifths majority to pass tax increases. 
They have reduced that to a simple majority. That obviously means they 
need only 218 votes. The Blue Dogs were talking tonight there are 
between 40 and 50 members of the Blue Dogs. I hope they hang with us as 
we try to push the agenda to keep the American taxpayers, keep the 
American people with those tax cuts in place.
  Again, Mr. Davis, thank you very much for coming down tonight.
  Mr. DAVID DAVIS of Tennessee. Thank you.
  Mr. SHUSTER. Mr. Speaker, it is now my pleasure to yield time to the 
gentleman from Texas (Mr. Neugebauer), who again comes from a business 
background, somebody who has raised a family and brings a businessman's 
common sense here to the legislative process.
  Mr. NEUGEBAUER. Well, I thank the gentleman from Pennsylvania, and 
just like him, I haven't been in the State legislature. I have been a 
small businessman all of my life.
  What we know about small businesses is that they are the number one 
job creator in America. As we heard the gentleman say awhile ago, over 
nearly 7 million new jobs have been created in this country in the last 
3\1/2\ years. Quite honestly, most of that has been from small 
businesses all across this country.
  One of the things that a lot of people don't know that have not had 
their own business is that small businesses are also big taxpayers. 
What they do not also realize is that in some cases we ask our small 
businesses to pay more taxes than we do other folks. That is because 
our small business people, in addition to income tax, have to pay self-
employment tax.
  The way you build a business in America is that you do it by taking 
money that you are making and reinvesting it in your business, and that 
is the way you grow your business. It is these growing businesses in 
America that have been growing America.
  When I first got in the home building business, I had a young man who 
was a plumbing contractor, and he too was starting his new business. 
And he was starting it with basically one truck and a helper. So when 
we started together, I had a small building business and he had a small 
plumbing company. What I watched my friend Bobby do over the years is 
build his business one truck at a time. He would work hard and pretty 
soon he had built up his business and he had to go buy another truck. 
You know what happens when a plumbing company buys another truck? They 
have to hire what? More people. And pretty soon he worked hard and he 
had to buy another truck. And you know what happened when he bought 
another truck? He had to hire more people.
  But Bobby couldn't have bought those trucks if he hadn't been 
building his business, having money and capital in his business to be 
able to go to his banker and say, you know, I am building a business 
here and I have equity in my business. But what happens is the American 
Government says, oh, Mr. Small Businessman, you are making money, so we 
are going to reach in there and in some cases take half of that small 
business's money. So that causes the business to grow at half the rate 
as it could if it wasn't paying exorbitant taxes.
  I would say to the gentleman from Pennsylvania, as you know, it is 
not just Big Government taxing, but it is the regulation that also our 
small businesses all across the country are worried about. When you add 
onto small businesses not only the carrying of a tax burden, but all of 
the burdens of regulation that we put on these small businesses, and on 
top of that you put a lawsuit environment in this country that on any 
given day a small businessman can lose his business, I say to my friend 
that small businesses are about to be entered onto the Endangered 
Species List.

                              {time}  2145

  Because, quite honestly, we have policy in this country that is not 
friendly to small businesses, the very businesses, the very people that 
have built this great Nation. And so when I hear folks on the other 
side of the aisle talk about we have a plan, well, I hope that plan is 
not to continue the trend that they have done in the past, and that is 
taxing small businesses out of existence. And you get a little nervous 
when they change the rules in this House that, as the gentleman said a 
while ago, that instead of taking three-fifths of this body, it only 
takes a simple majority to increase taxes.
  Now, I do applaud our friends, the Blue Dogs, for one of the things 
that they said tonight, and that is that we do need to do something 
about deficit spending in this country. And I am ready to join across 
the aisle with my friends and say, let's do that by addressing 
spending.
  If you really want to do good things for America in the future, you 
don't do it by taxing our small businesses out of existence. You do it 
by making America a more fiscally sound country. You ask the American 
Government to do the same thing that these small businesses do. They 
are not able to, whenever they need more money, to go get it from 
somebody else by just reaching in. You don't go to a customer after you 
finish the job and say, ``you know, what, I told you it was going to be 
one price, but I am going to charge you another price.'' You don't keep 
your business very long. So I want to join our friends to do that. But 
I do not want to join our friends on a path of taxing because I would 
tell you, in 2003, the unemployment rate in America was 6.1 percent. 
Today it is 4.5 percent. More people are employed today in America than 
any other time in the history of this Nation. More people own homes 
today than any other time in the history of this Nation. This is a 
prosperous time. And we got here by leaving the decision on how people 
spend their money to the people who make the money and not big 
government. Big government doesn't grow America. Americans grow 
America.
  I thank the gentleman for having this time tonight, and I look 
forward to continued dialogue with my colleagues as we really talk 
about making

[[Page 615]]

sure that our American businesses don't end up on the endangered 
species list.
  Mr. SHUSTER. I thank the gentleman from Texas. And when you talk, I 
think a lot of folks here in Congress, I think, forget about the 
stories that you talk about, the plumber who starts out with a truck 
and all of a sudden he has enough business, he buys two trucks, then 
three trucks. And that is what small business in America has been doing 
over the last couple of decades. That is where most of the jobs are 
created in this country, in small business by that plumber or that 
person who has an idea that works hard and puts together a plan and 
goes to the bank and borrows some money. And I know when I first went 
into business back in 1990, I bought an existing business, borrowed a 
lot of money, went into debt, worked hard. And something that I learned 
in college in accounting is that cash and profits aren't the same 
thing. And a lot of people, I think they say, and I realized that 
lesson, I learned it in accounting, but it really didn't make an impact 
on me until my first year I had a profit in business and thought, oh my 
goodness. We had a great year. And then I realized that I had to pay 
this tax bill, but all my cash was tied up in my inventory and 
improving the physical plant and doing things to make business continue 
to grow. But I didn't have the cash. So I had to keep the debt up; had 
to figure out how to get that money to pay taxes. So it really puts a 
tremendous burden on small business when you have a high tax burden.
  And, as you pointed out, American business, small business, is really 
the backbone of this country. So I appreciate the fact that you are 
another small business owner and that you, like myself, didn't serve in 
the legislature before, and you bring that perspective of a small 
business owner, of a business owner of someone that has been out there 
meeting payrolls and creating jobs in this economy.
  It is now my pleasure to yield to another great Texan, Mr. Conaway, 
from Texas, who is the resident CPA in the House tonight. So I am sure 
we can learn a few lessons from him. So with that, Mr. Conaway, thank 
you.
  Mr. CONAWAY. I thank my colleague for doing this hour tonight. And if 
I really want to put the colleagues in the House to sleep, we can talk 
about Internal Revenue Code sections and those kind of things. I will 
have you dozing off quickly.
  Mr. SHUSTER. But I would ask the gentleman at some point to talk 
about cash flow and the difference between profit and cash because that 
is an awakening process.
  Mr. CONAWAY. Exactly, something that most everybody understands.
  When I came to Congress, actually, my first race was against my good 
colleague, Randy Neugebauer. He and I campaigned against each other 
and, quite frankly, campaigned the way Republicans ought to campaign 
against each other, and that is why you should vote for me, and he 
stuck to why you should vote for him. And one of the reasons that I 
thought folks should vote for me was that I thought the small business 
mind set or experiences were underrepresented in Congress. Now, I 
hadn't done any empirical research. I just made that up. It sounded 
good. I thought, from having watched the way things going on out here, 
I just thought it was the case. But Randy won the first one. He was a 
small business guy. He won that first race, and then I was fortunate 
enough to win a race, and we now serve together. And I suspect he has 
found, like I did, that that was a lot truer than I had even thought 
about; that there really is a real lack of appreciation of how hard it 
is to make a buck.
  Not to denigrate anybody's path to this place, but I think folks who 
have worked in the real business world, who have, as you said, met 
payrolls and been responsible for both sides of a budget; it is easy to 
budget if you are in government and all you are worried about is how 
much you spent because you know that you can collect it from somebody. 
You have got a sheriff someplace that will go collect it if need be. We 
have got a big gun that we will point at folks and take that money away 
from them.
  But in business, you have got to worry about both sides. You have got 
to figure out how to do some service or put together some product that 
you can sell to somebody else for a profit. And then you have got to 
hold your costs down and all those kinds of things, all those decisions 
that go into that.
  I had 32-plus years in business as a CPA. I had a, from a variety of 
clients, from really big clients to really small mom-and-pop shops.
  We have got a colleague that is going to talk in a little bit that is 
a doctor. One of the closest things that I had to being a doctor-like 
experience and telling somebody they have had a terminal illness was 
each year when I would have to go to my dad, who ran a small business 
in the oil field service company, and tell him what his taxes were 
going to be. I dreaded that like the plague because it was my fault. I 
was his accountant. And even though the Congress and the Internal 
Revenue Code were done by Congress and implemented by the Internal 
Revenue Service, I was the bad guy. I had to go tell my dad that he 
owed more money in taxes than he really wanted to pay. And he would 
constantly say, well, how do I not pay those taxes? How do I get out of 
doing that?
  I heard an interesting phrase the other day that fines are a tax on 
criminal activity; taxes are fines on successful activities.
  Every time we spend a buck in here, and we spend a lot of bucks, $2.7 
trillion, I try to not lose sight how hard it is for us to, for whoever 
that taxpayer out there that we collected that buck from, how hard it 
was for them to make that money.
  I live in West Texas where oil and gas is a big deal. And part of my 
background is working as a rough neck on drilling companies for 
drilling rigs. And when we spend money, I think about that rough neck 
working morning tower for a drilling company. In the winter, it is cold 
and miserable and wet and nasty, and in the summer time, it is hot and 
dry and miserable. Hard work. I am talking labor. Now we sometimes 
refer to what we do in this body as work. But folks, this is not work. 
This is a job. This is something we do. Work is when you are outside 
doing physical labor. And I have done some of that, and I went to 
college so I didn't have to keep doing that.
  But I think about how hard that person works to earn the money that 
we then take taxes away from him to help do whatever it is we do. Most 
of what we do appears important. Some of what we do is not important, 
and we shouldn't do it. And that is where we ought to be about the 
process of reducing the amount of money that we take away from people 
and spend. But I keep thinking about that guy working morning tower and 
how hard it is for him to earn a dollar so that we can take $0.20 of it 
or $0.50 of it, whatever it is we decide to take in our infinite wisdom 
from him as a result of his or her hard work.
  We will hear over the next 2 years as we talk about this stealth tax 
increase that is coming, that is either the capital gains rate going up 
or the various family-friendly things that we did in 2001, 2003, or the 
death tax that comes roaring back in 2011; we will hear the Democrats 
talk about, ``well, we are going to fix it for the little guy. We are 
going to not raise taxes on the small taxpayer and all those kinds of 
folks.'' That is a class warfare issue that I think is unworthy of us. 
As we begin to kind of differentiate between good folks who make money 
and bad folks who make money based on the amount of money they make, I 
think it is unworthy of us. Let's try to not do that because successful 
people are the ones who invest. They are the ones who create 
businesses. They are the ones that make money that can provide jobs.
  The times that I have had to go look for a job, it has been very few, 
but the times I have gone to look for a job, I have not gone to 
somebody that was losing money to ask for a job. Only the Federal 
Government can lose money and still hire new people. Every small 
business out there, every medium-size business, most big businesses 
quit hiring people if they are not making

[[Page 616]]

money. Only in the Federal Government do we have the luxury of 
continuing to hire folks when in fact we are in a deficit spending that 
we have been on in the last several years.
  In an attempt to, well, before I start that, I spent 2 years on the 
Budget Committee and listened to some of our good colleagues on the 
other side talk, day after day in those hearings about their proposals 
for PAYGO, their proposals for reducing the deficit, all those kinds of 
things. Every single one of those conversations, either overtly or as a 
sub plot to those conversations, was a tax increase. It wasn't about 
spending less money, because at the same time they were talking about 
reducing the deficit, they would propose billions of dollars of 
additional spending within the budget that we were trying to pass. So 
the idea that we can only fix the deficit by raising taxes is 
misplaced.
  We don't have a tax revenue problem in this Federal Government. We 
collected a record amount of revenues for the Federal Government in 
fiscal year 2006, up double digits from the collection record in 2005, 
which was up double digits from the collections in 2004. We have got a 
spending problem. And I have got some, a couple of proposals that I 
want to talk about which may not be exactly on point with what Mr. 
Shuster wants to talk about tonight. But one of them is a ``no new 
programs'' agenda. This was a rule to the House rules that, you know, I 
hate to whine like the rest of us, but we had no input in the House 
rules. But I introduced a House rule the other day that said, if you 
are going to propose a new program of some sort, then, as a part of 
that enacting legislation, you actually have to eliminate another 
program of equal or greater spending; the idea being that if we have 
come up with the newest great new idea, that I ought to find somewhere 
else in the Federal activities that there is a program that is less 
important than my new one. The idea being is, if I can't find something 
that is less important than my new program, then what I am effectively 
telling the taxpayers of this country is this new program is the least 
important thing the Federal Government could do. And for goodness sake, 
why would we do that?
  And so the idea is to help us begin to set priorities. Talk is cheap, 
and we all, both sides, talk about setting priorities and all those 
kinds of things. But this would help put some teeth in the idea of 
forcing Congress to make choices between two good things. I am not 
talking about good and bad. Anybody can make those decisions. But we 
have got to make choices between two good things a lot of times as to 
where we spend our money. Families do that. Businesses do that. And all 
of us have to do that, except at the Federal Government level. So in an 
attempt to help us learn how to set priorities, this ``no new 
programs'' would be a small step in that direction.
  The other thing that I have done and I have actually got two of the 
Blue Dogs to cosponsor, original cosponsors on my savings and 
appropriations concept. If we come in here, and our experiences so far 
with the Democrats is that the rule under which we debate things that 
we are passing has not provided us opportunities to amend them. I mean, 
it is a closed rule. We did it to them; they are doing it to us. That 
is just kind of the way it works. But on appropriation bills, those are 
the one opportunity that we have where the Rules Committee is not in 
between us and what needs to get done. And with all due deference to my 
former member of the Rules Committee, this is an opportunity for those 
of us on the floor to suggest changes in the appropriations process 
that we think are appropriate.
  Under the current scheme, if we amend an appropriations bill to 
reduce the spending in that bill, common sense would say that that 
money doesn't get spent. That is not how this system works. That money 
goes back to the committee and is spent somewhere else. So while we are 
able to get an amendment that the 218 of us would agree that spending 
shouldn't occur, it gets spent somewhere else.
  So what this law would say is that when that happens, if we are able 
to overrun the appropriators, and the appropriators legitimately hate 
this idea, but if we are able to get 218 of us, whether it is, in our 
case now, it has got to have some Democrats now to help us out, but we 
are able to reduce an appropriations bill by some amount, that that 
will actually reduce the 302A and 302B allocations and all of that 
machination that goes on so that we would actually not spend that 
money.

                              {time}  2200

  It would reduce the deficit or increase a surplus, if we ever got to 
that particular place. I have got a couple of Democrats who have agreed 
to cosponsor, so I am encouraged by that, that we can, in fact, begin 
to work on the spending side of what we have got going on here.
  I want to again thank Mr. Shuster for having this out here tonight.
  When Congress saw fit to increase the section 179, throwing a little 
code at you, section 179 deduction for businesses or small business 
deduction where you can immediately expense up to $100,000 of business 
property that you put in service, that was a huge boon to small 
businesses.
  It allowed them to immediately write off the cost of having to put 
new equipment into service, and as Mr. Neugebauer has already said, 
when his plumber friend bought a new truck, he had to have somebody 
drive that truck. In all likelihood there was a swamper on that truck 
so he put two more people to work.
  That happened thousands of times across this great country. It was 
part of that impetus, part of this push to get us out of this recession 
that we were in 2001, 2002 and 2003, that single piece was a great part 
of what helped do that. That was directly positive for small 
businesses, and it is one of those that we continue to extend, but will 
go away unless this Congress acts to keep renewing it.
  One final story. In talking with folks about the death tax back in 
the district, I tell them that probably the most dangerous week for 
anyone who has assets and beneficiaries is the week between Christmas 
of 2010 and New Year's Day. Here is why:
  If you have got assets that you have worked hard for your life, but 
you got beneficiaries, you are going to get those assets when you die, 
if you are still breathing on January 1 of 2011, then those 
beneficiaries immediately have a 55 percent partner called the Federal 
Government.
  My advice to those folks is to go ahead and have Christmas with your 
family, but then you probably ought to make yourself real scarce 
unless, if the current law stays in place where the death tax goes 
completely away in 2010, and the Federal Government has no claim on 
your assets when you die, to January 1 of 2011, when the Federal 
Government gets a 55 percent claim on those assets. So those of you who 
have assets, if we aren't able to get the laws changed and effect that, 
you probably ought to make yourself pretty scarce around your 
beneficiaries post-Christmas and January 1. Good luck with that.
  I would like to thank my good colleague, Mr. Shuster, for having this 
hour tonight, sponsoring it. I hope to participate with you in the 
future.
  Mr. SHUSTER. I want to thank the gentleman from Texas. I think you 
bring up a very good point on the spending side. As you know, as an 
accountant, anybody that has been in business, two sides to the income 
statements, there is revenues and costs.
  Costs are important. You have to control your costs. You can't spend 
more than you bring in. Of course, we have done that over the last 
couple of years, because we are at war, we have seen a recession. But 
the revenue side is equally important, and there are two ways to do it 
in the Federal Government. We have found that you can increase taxes, 
which gives you increased revenue for a while, but eventually the 
economy turns down, and then revenues go down; or you can do as Jack 
Kennedy, President Kennedy, did in 1960, Ronald Reagan did in the 1980s 
and we did in the early 2000s, we cut taxes and revenues grew. There 
are record levels of revenue coming into the Federal Government.

[[Page 617]]

  Don't listen to Bill Shuster about how it works when you cut taxes. 
Look at the record, look at the history record, and you will see it is 
quite clear.
  You mentioned the death tax, yes. The gentleman has another point to 
make.
  Mr. CONAWAY. Let me just, on your point, most business, every 
business, has to decide what they are going to charge for their product 
or their service. It is one of those key decisions every business 
manager has to make.
  Because if they set their prices too high, they will not sell enough 
units. Obviously if they set it too low, they will not make as much 
money as they should. So most times the businesses decide to lower that 
price in order to get volume up, in order to sell more.
  The Federal Government doesn't exactly do that; but the truth of the 
matter is, if we do raise taxes, you will get a short-term blip; tell 
people, until that begins to act, in effect a fine on doing well, and 
having a negative impact on the economy. Businesses have to make that 
decision, and I think the Federal Government ought to be in that same 
mind-set as well.
  Mr. SHUSTER. That is a great point. It is great to have people like 
you in Congress to bring that common sense and know what it is like, 
and what really happens when prices go up and taxes go up and the 
response you get from people.
  You also mentioned that January 1, 2011, the death tax expires. You 
also have the capital gains tax will expire January 1, 2009. The taxes 
on dividends will increase January 1, 2009. I think it is record 
numbers of American people that have investments in the stock market 
through their mutual funds. Over 60 percent of America has invested. 
Folks that are getting dividends from those investments are going to be 
taxed at higher rates.
  We are going to again lose the child credit that will be cut in half 
over the next couple of years, the marriage tax, the penalty will be 
put back in place. Low-income taxpayers will go from that 10 percent 
tax bracket up to 15 percent tax bracket if we don't act.
  Just to remind the American people that are watching tonight, it is 
14,052 days in the countdown for the Democrat tax increase. They don't 
have to act. All they have to do is sit on the clock, run out the 
clock. When it runs out, we are going to see over the next 4 years a 
$200 billion tax increase.
  Another thing you mentioned about job increases, I saw over the last 
6 years, one of the sectors in the economy that saw one of the larger 
increases percentage-wise in jobs was the government, and over 4 
percent increase in government jobs. You know, we see that in other 
sectors of our economy. We have seen many of them increase double 
digits, but that is one that was discouraging to me to see the Federal 
Government, when we were at these times when we were trying to cut 
spending. We need to cut some of that and curtail some of these 
government jobs.
  Mr. CONAWAY. Let me mention one other tax that is out there; we will 
talk about the national sales tax on another night. But the alternative 
minimum tax is another tax that we in the Republican majority basically 
kicked the can down the road a year at a time; this Congress under the 
Democratic leadership will have to do the same thing because it is a 
tax increase that is on the horizon that requires Congress to do 
something or the tax comes in.
  We were unable to put a permanent fix in place, and full or fair 
disclosure. I actually had to pay the alternative minimum tax this 
year, and it ticked me off.
  Mr. SHUSTER. That is like 20 million Americans, or something like 
that.
  Mr. CONAWAY. Yes, and that number grows. So in addition to these 
taxes expiring on their own, the fix on the alternative minimum tax has 
got to be removed and/or a permanent fix put in place, which will be 
quite daunting for anyone to get done, particularly in a Congress, 
which my sense is they would rather increase taxes than deal with the 
tough decisions of cutting spending.
  Mr. SHUSTER. I thank the gentleman. The last point you make, we 
talked about it earlier, I think Mr. Davis brought it up, they 
decreased the number of Members of the House that had to vote in favor, 
three-fifths down to a simple majority. It seems pretty clear to me 
what they are doing.
  Over the last 4 or 5 years, 6 years since I have been in Congress, I 
haven't seen a budget proposal by the other side that hasn't increased 
spending significantly, and there are some estimates that in these 
first 100 hours the proposals that they are putting forth over the next 
several years are something to the effect of an $800 billion increase 
in spending.
  Again I think it is quite clear what the Democrats intend to do. We 
need to stay together as Republicans and join together with the Blue 
Dogs to fight that.
  Mr. CONAWAY. Let me add one point to what you just said. The bill we 
passed this evening to make the world quote, unquote, a safer place, 
which I voted against, one, in my view, of the fatal flaws to that is 
we don't know how much that costs. There were open- ended blank check 
authorizations in that bill for so much money and for such time as is 
needed.
  So the first rattle out of the box, the first substantive piece of 
legislation that the other side proposed and put forward had these 
open-ended spending issues in there. You know, the cost is not 
necessarily always the determinative factor, but I grew up in a world 
where I had to ask what things cost, and I suspect most folks do. I 
factor that into a cost benefit analysis that we all make every single 
day.
  It is one of those fatal flaws to the very first piece of legislation 
that our colleagues on the other side put forward today, of substance. 
The rules we did last week, that is one thing. But today's piece, 
couldn't score it from CBO. They don't have a clue what we authorized 
in terms of new spending, new programs, new dollars that we have to 
take away from good hardworking Americans. I appreciate the time.
  Mr. SHUSTER. I thank the gentleman. It is discouraging to see the 
Blue Dogs here tonight. I think most of them, if not every single one 
of them, voted for that program. They were talking about fiscal 
responsibility tonight; they have no idea how much it is going to cost. 
It is going to be a big cost. They all know that.
  But it is my pleasure to yield to the gentleman from Georgia, Dr. 
Phil Gingrey, who I know is an old pro at these Special Orders and does 
a great job. It is something that I think a lot of Americans, myself 
included, as I was growing up, we tried to put this group together as 
we talked. We wanted small business people, people from the business 
background, to be on the floor.
  When you introduce a guy, Dr. Phil Gingrey, and say he is a 
physician, a lot of Americans like myself in my younger days didn't 
realize a physician is a small business owner. He is a man or a woman 
who is running a practice. You call them patients, but they are 
customers. But it is a practice, and it is a business.
  You have to meet a bottom line, and you have to do what many do, the 
plumber, the car dealer or the computer business operator, you are 
meeting that bottom line and making sure it is profitable.
  Mr. GINGREY. I thank the gentleman. No question about it, physicians 
are small businessmen and women. I do feel a little bit like a fish out 
of water with the economic competitors caucus. Most of my colleagues 
who have spoken here are, indeed, without question, small businessmen 
and women, and, in fact, of course, Representative Conaway from Texas 
is a CPA.
  But as Representative Shuster is saying, physicians are small 
businessmen and women. Even a small practice like the one I was in with 
the four or five OB/GYN doctors, we probably had 40 employees, nurses, 
front office people, lab people.
  Bill Shuster is absolutely right: we had to meet a payroll, we had to 
provide health insurance, we had to provide benefits. We had to worry 
about

[[Page 618]]

how we are going to have the money to expand and maybe bring in a new 
partner and grow the practice.
  My colleagues were talking about section 179 under the IRS Tax Code 
that under Republican leadership would increase the amount that could 
be deducted on capital improvements, bricks and mortar, putting in a 
new X-ray machine, whatever, from $25,000 to $100,000, and to allow 
that small businessman and -woman to write off an additional $300,000 
worth of capital improvement, investment, job growth, over an 
accelerated period of time.
  That has, Mr. Speaker and my colleagues on both sides of the aisle, 
without question, has stimulated this economy. As I listen to my 
colleagues in the first part of the Special Order talking about the job 
growth, the unemployment rate, the increase, the amount of revenue, 
particularly over the last couple of years, I think we are talking 
about maybe an additional $400 billion worth of revenue after these tax 
cuts that includes low and marginal rates for every single taxpayer, 
the increase in child tax credit from $600 a child to $1,000 a child, 
eliminating the marriage tax penalty that Mr. Conaway talked about, 
eliminating that death tax.
  We have, Mr. Speaker, created 7 million additional jobs since the 
spring of 2003. When I first got here in the early part of 2003, for 
months at a time I heard my colleagues on the other side of the aisle 
talk about, watch, we have lost another 30,000 jobs this month, we have 
lost another 40,000 jobs this month. Now they can't say that because I 
think we have gone something like 18 straight months with job growth.
  But what I do hear them saying is, oh, these are service jobs, these 
are minimum-wage jobs. They are not important. I didn't hear that 
argument when they were wailing away about the fact that we are losing 
jobs.
  We could have said, well, these are unimportant jobs, these are 
seasonal jobs, these are service jobs. They are not that important to 
the economy. They are important to the economy, and they create dignity 
of work and pride and an accomplishment, people putting out a day's 
work for a day's pay.

                              {time}  2215

  So that is really what we have done here. I think that what my good 
friend from Pennsylvania was saying cuts right to the chase: PAYGO 
rules as adopted in that omnibus rules package for the 110th Congress 
that was passed last week is a recipe for making it easier to raise 
taxes and more difficult indeed, Mr. Speaker, if not impossible, to 
lower taxes. And that is exactly what these new PAYGO rules do. Because 
under these rules, as my colleagues know, you can raise taxes without 
any offsetting cut by simply going through this process of 
reconciliation and raise all this entitlement spending, and that is 
exactly what will happen.
  Representative Shuster was talking, or maybe Mr. Conaway, a few 
minutes ago about this bill that we just passed in regard to completing 
the promises of the 9/11 Commission. It doesn't do that; it is an 
absolute farce to suggest that it does. But there is no question that 
inspecting every single piece of cargo, every single crate that comes 
into this country through a maritime port, can you imagine, Mr. 
Speaker, what the cost is? They totally ignored how we are going to pay 
for that.
  So this PAYGO business, it is not law. It is not in legislation. It 
does not have the force of that, and our colleagues on the other side 
of the aisle can simply waive a rule any time they want to in term of 
PAYGO. So we need to be truthful to the American people.
  It has been said during this hour that, in 1960, we had a Democratic 
President, President Kennedy, and he cut taxes, and we raised revenue; 
President Reagan did it in 1980; and President George W. Bush has done 
it in 2001 and 2003. We have not lost revenue because of lower rates 
and tax incentives mainly for small businessmen and women; we have 
created an additional 7 million jobs. And, yes, they are paying taxes 
at a lower rate. Yes, they are getting to deduct certain things to help 
them be able to grow their businesses. And so you have a lot more 
people, 7 million, indeed who are paying taxes or paying at a lower 
rate. But when you crunch the numbers, and I am not a math major, but 
that is where you come up with an additional $450 billion. Whereas, on 
this static scoring system that we get from OMB and CBO, they say, 
well, because you have cut the rate here and you cut the rate there and 
you have given $1,000 instead of $600 per child and you are finally 
getting rid of the death tax, over 10 years, this is going to cost $1.3 
trillion. Well, yes, if it didn't work, it was going to cost $1.3 
trillion. But the fact is, it did work. Instead of costing money, we 
raised revenue, as Representative Shuster has pointed out.
  But I will guarantee you one thing, Mr. Speaker and my colleagues, if 
you let these tax cuts expire, and there is no question about the cost 
to the American taxpayer and it is real, it will be an additional $2.4 
million.
  Mr. Speaker, with that I am going to turn it over to the real experts 
on business. But I appreciate the opportunity of joining them tonight 
and weighing in on this.
  Mr. SHUSTER. I thank the gentleman. And as you pointed out, the PAYGO 
rules, the decrease from a three-fifths majority to a simple majority 
to pass tax increases, that should make every American sit up and say, 
my goodness, the Democrats do plan on raising taxes. But if they still 
aren't sure about it, I have got just a couple of quotes here.
  The incoming chairman of the Ways and Means Committee told Bloomberg 
News that he cannot think of one of the tax cuts passed under President 
George Bush that merits renewal. He also told the Congressional Daily 
when he was asked whether he considered tax increases across the income 
spectrum, and his quote was, ``No question about it.'' He said, 
``Everything has to be on the table.'' ``Everything'' would mean 
repealing the 10 percent low income tax bracket, the child tax credit I 
talked about, the marriage penalty, all of which was passed in 2001 
and, of course, the death tax. And my good friend from Texas knows full 
well what it is going to do to a lot of business owners on Main Street. 
We are not talking about Wall Street, we are talking about Main Street 
America and in the farms of the Midwest.
  So with that, I yield to my good friend from Texas.
  Mr. NEUGEBAUER. The gentleman from Pennsylvania is correct. I think 
one of the concerns I have about the death tax is, in many cases, it 
has the potential to rob some of the smaller communities in America 
from some of the mainstays in their community. I think about the farmer 
who worked for 20, 30, 40 years putting together pieces of land, making 
his operation a little bit larger so that he can compete today in a 
global economy and wants his son, our sons to be a part of that 
business in the future. But as the gentleman, my good friend Mr. 
Conaway, my neighbor to the south, said: Depending on what day he dies, 
he may not have any land to leave his sons, or they may have a new 
partner.
  I do a number of town hall meetings as I travel through out my 
district. I have a very large district, 29,000 square miles, 27 
counties. And one evening I was talking to a group of citizens in a 
little small community, and after that was over, I had a young woman 
come up to me and say, ``You know, Congressman, we have had this ranch 
in our family for nearly 100 years, and recently my father passed away, 
and we are faced with the fact that we may have to sell a part of this 
ranch to keep some of it.'' And I think about a small auto dealership 
that the founder of that built up over the years, worked hard, paid 
taxes already.
  I think the egregious thing about this death tax is we have been 
talking about the taxes that have been imposed on these small 
businesses over the years, and they work hard and in spite of paying 
all those taxes, property taxes, income taxes, employment taxes, then 
at the end, we say, ``You did such a great job of building that 
business, we are going to tax it one more time.'' And in many cases, it 
has the potential to put those businesses

[[Page 619]]

out of business and take away in some cases a fairly major employer in 
that community.
  So I think one of the things that we have been kind of saying 
tonight, and my colleagues, is that we are at a crossroads here, and we 
have some very important decisions to make on behalf of the American 
people here for the next few years, and I am concerned, as many of you 
are, that some of these businesses, if we don't act in a way to be 
friendlier to small business, keeping many of these tax cuts permanent, 
and if we don't look at permanently eliminating the death tax, that 
again we could really penalize these small businesses.
  Mr. CONAWAY. Let me just add a little bit to what my good friend is 
talking about.
  In 2011, the portion of your estate that is not taxable drops back to 
$1 million. You know, $1 million sounds like a lot of money, and it is, 
don't get me wrong. I had a staffer the other day who made the comment 
that $12 million wasn't much money. And I said, ``Well, who has got a 
checkbook?'' So one of them got out a personal check, and I said, 
``Tear a deposit slip out of that checkbook.'' So they tore it out, and 
I handed it to the staffer, and I said, ``Put $12 million on that 
deposit slip.'' And they said, ``Well, it won't fit.'' I said, ``Okay, 
well, $12 million is a lot.''
  One million dollars is a lot of money. But in today's environment, 
with property values having gone to what they are, it doesn't take a 
super successful individual to get at that $1 million and much above 
that when you add in their house and life insurance and those kinds of 
things. So when the other side talks about the death tax, they 
typically throw out Warren Buffett or Bill Gates or these other 
bazillionaires as examples why we need to redistribute that wealth.
  The truth of the matter is this tax hits smalltown America. I was at 
dinner tonight with an individual who had some property west of Fort 
Worth, west of Aledo, actually, maybe in your district, that 4 or 5 
years ago was selling for $750 an acre. And because of the growth in 
population, growth of Aledo and other areas, now that land is $46,000 
an acre, and so that family has suddenly gone into a pretty good 
sizeable estate.
  Now, it is their money. They took the risk of owning that property. 
They took the risk of trying to make a living off that property, paying 
the property taxes year after year after year on that property, and now 
the Federal Government in January 1, 2011, becomes a 55 percent partner 
in that deal.
  This is the one tax that I think is just fundamentally wrong. We are 
always going to have taxes collected in some way or another. We have 
got to find the minimum amount of money needed to fund the Federal 
Government, and that has got to be taxes. But the death tax ought to be 
one that we wean ourselves from and get away from it because it is 
fundamentally flawed. It is unfair, and it is really one that hurts 
small America, and it has generational ripple effects. You and I both 
have constituents who tell us time and again they are paying for their 
own property a second and third time because when grand-dad died, they 
had to borrow money to pay it off. They just got that paid off, and 
then their dad died and passed it down, they had to borrow money to pay 
the estate taxes, and now they have got it paid off. So that cycle is 
just flat out fundamentally unfair.
  Mr. NEUGEBAUER. The gentleman makes a great point. Not only does, in 
many cases, it affect the families that own that property, but in many 
cases, let's say you have got a heating and air conditioning business 
here that employs 50, 60 people. And all of a sudden the founder passes 
away, and the next day the family has to come and say to these 
employees, ``I don't know whether we are going to be able to continue 
this business or not because we are going to have to borrow a bunch of 
money to pay the taxes.'' And in many cases, putting a bunch of debt on 
a new business or even an existing business requires servicing that 
debt and has an impact. And so then it is a ripple effect because that 
tax base that has been in that community for a number of years is in 
jeopardy, and the commitment and the contribution that that small 
business has made to that community sometimes disappears.
  I think the fact that we said earlier, and I think all of us said, 
that America was built by these small businesses, small ranchers, 
doctors, entrepreneurs all across this country, we built this country 
that way, but we have the danger of tearing it down with a poor taxing 
policy.
  Mr. SHUSTER. I would like to recognize the gentleman from Tennessee.
  Mr. DAVID DAVIS of Tennessee. I think it is vitally important that it 
is individuals and small business owners and businesses across this 
country that pay these taxes. And I want to put a personal face on 
this.
  If the majority party allows taxes to be increased, it will cost us 
nearly $2.4 trillion in new taxes to American taxpayers. What does that 
mean to people across America tonight and the people in the First 
Congressional District of Tennessee? It means that there will be 115 
million taxpayers who would pay an average of $1,716 more each year. It 
means that 48 million married couples would pay an average of $2,726 
more every year; and it means that 17 million seniors would pay an 
average of over $2,000 more a year. It is real people paying real 
dollars, and I hope the people in this body will remember that as we 
move forward.
  I am disappointed that we changed the rules last week with the 
majority vote to decrease the amount of people that it takes to 
increase taxes. I think it should have been left at three-fifths, not a 
simple majority. I think that was a mistake last week when the majority 
party did that. I hope they will protect taxpayers in America over the 
next 2 years.
  Mr. SHUSTER. I thank the gentleman from Tennessee.
  Our time is running out, but I want to just talk about a real world 
experience. There is a family, Mr. and Mrs. Smith living in my hometown 
of Hollidaysburg or maybe even Youngstown, Ohio, or a small town in 
Florida or California; that person, Mr. and Mrs. Smith making $40,000 
combined income, if these tax cuts are allowed to expire, they are 
going to pay about $2,100 more in taxes a year. And there are some 
people in this country who may think that $2,100 isn't a lot of money; 
but for that family struggling in Youngstown, Ohio, $2,100 a year, if 
you put $2,100 in the bank every year, at 5 percent interest return on 
that $2,100 and you invested it every year for 10 years, that turns 
into over $30,000. That is a good nest egg for that family to put their 
son or daughter through college or pay a good chunk of that if you are 
going to a great State school. So these things are serious, they are 
real life, and I just want to thank all the Members who came down here 
tonight who come from, whether it is a home care business, as Mr. 
Davis, or CPA or Mr. Neugebauer being a builder and a developer, myself 
running an automobile dealership, people just like us all across 
America that have to be concerned about what is going to happen here in 
the next 2 years. And all Americans need to understand that they have 
to talk to their Members of Congress and put the pressure on them to 
make sure that these tax cuts stay in place so that the American people 
can keep more of their hardearned dollars in their pockets and they can 
spend it as they see fit and not send it here to Washington, DC to be 
spent by faceless, nameless bureaucrats in many of these agencies.

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