[Congressional Record (Bound Edition), Volume 154 (2008), Part 10]
[Senate]
[Pages 14025-14026]
[From the U.S. Government Publishing Office, www.gpo.gov]




                             TAX EXTENDERS

  Mr. HATCH. Mr. President, I rise to discuss a very important issue. 
First, I compliment the Senator from Texas. I agree with virtually 
everything he said. There are so many things we need to do around here, 
and we are not doing them.
  I will discuss an issue that each day becomes more troubling to me 
and also to many businesses and individuals in my home State of Utah--
and I am sure yours as well--the fact that this Congress has not yet 
acted to extend the tax provisions that expired at the end of last year 
and those that are set to expire at the end of 2008. This failure to 
act is rapidly reaching a state of crisis in some industries, and our 
continuing inability to take care of this basic problem only reinforces 
the public's low opinion of this institution.
  I believe that every member of this Senate recognizes the importance 
of the expired and expiring tax provisions. While there may be some 
items on the growing list of extenders that do not enjoy universal 
support, there are clearly plenty of votes to easily provide a majority 
or even a super-majority to pass them all, if it were not for the 
divisive question of offsetting the revenue loss.
  The list includes some important items for individuals and businesses 
in every State. For families, there is the election to deduct State and 
local sales taxes, the deduction for higher education expenses, and the 
deduction for the out-of-pocket expenses of school teachers.
  For businesses, expired or expiring provisions include those allowing 
faster depreciation write-offs for retail stores, restaurants, and 
other investment properties, a variety of important incentives that 
address our energy crisis, and the vital research credit, which I have 
championed here for many years.
  The expiration of the energy provisions and the research credit are 
particularly troubling, for they signal the loss of economic growth and 
jobs at the worst possible time. As with many of my colleagues and 
their constituents, I have Utahns telling me that important research 
and energy-related projects are going to be cancelled if these 
provisions are not quickly extended.
  Well, here we have a group of tax provisions that enjoys wide 
bipartisan support, and an economy that really needs to have access to 
these provisions at a time of slowdown and job loss. Many of my 
constituents do not get it. They are asking, why can't Congress just 
get it done? What is the problem?
  The problem is, as we all recognize, that my colleagues on the other 
side insist on attaching to the bill tax-raising measures in order to 
offset the revenue loss of the expiring provisions. And most Senators 
on my side of the aisle believe that tax increases are unnecessary and, 
in fact, ill-advised and harmful to our economy, both today and in the 
future. Unfortunately, we appear to have reached an impasse on this 
point.
  Contrary to what some proponents of offsets are saying about 
Republican motives in this matter, our stance is not about trying to 
protect a few wealthy hedge fund managers who are parking billions of 
dollars offshore in deferred compensation. Rather, we believe that this 
debate is about America's future prosperity.
  Democrats are saying that in order to be fiscally responsible, taxes 
need to go up to pay for the loss in revenue from keeping these tax 
provisions in place. Their so-called ``pay-as-you-go'' or ``pay-go,'' 
rules call for all revenue losses to be matched with revenue increases, 
or spending decreases, from somewhere else. Forget spending decreases; 
it just means tax increases.
  In theory, this sounds pretty good, and quite responsible. I am a 
strong believer in being fiscally responsible, and I am as loathe to 
pass on our huge national debt to our children as anyone in the history 
of the Congress.
  The problem is that to most Democrats, the word PAYGO is nothing more 
than a synonym for more taxes. We seldom, if ever, see the idea of 
reducing spending brought up by the other side as a way of offsetting 
the loss of revenue from extending these important tax provisions.
  In fact, there is a major flaw in the Democrats' pay-go requirement 
that you never hear them mention. Pay-go applies only to the revenue 
loss from extending the tax cuts, but not to the revenue loss from 
extending spending programs that expire. You might never know it from 
listening to the debate around here, but it is not just tax provisions 
that expire. Extending both tax benefits and spending programs costs 
Federal revenue. Why should not both be offset?
  However, the budget rules assume that the expiring spending 
provisions are automatically renewed as a matter of course, with 
absolutely no requirement that the lost revenue be offset. This 
mismatch in budget policy produces a huge bias toward bigger Government 
and more taxes--something my colleagues on the other side just love.
  Some may well ask, why shouldn't we pay for the lost revenue from 
extending the expired and expiring tax provisions?
  My answer to Utahns who ask me this question comes in three parts:
  First, it is wrong to raise taxes on one group of taxpayers in order 
to prevent another group of taxpayers from suffering an increase in 
taxes. Democrats and Republicans alike have resoundingly agreed with 
this principle in connection with the alternative minimum tax. Both 
parties in both Houses last year overwhelmingly passed the so-called 
``AMT patch'' without offsets, and it is widely expected that we will 
do the same thing again this year.
  Second, it is wrong to offset temporary extensions of current law 
with permanent tax increases. The fact that this has been done year 
after year does not make this practice a sound one. In fact, using 
permanent tax increases to offset temporary extensions simply means 
that, in the long run, the extenders have been paid for again and 
again.
  Finally, why should we increase taxes when we are already collecting 
more taxes as a percentage of gross domestic product than the 
historical average? Despite the large tax cuts passed by Congress and 
signed by the

[[Page 14026]]

President in the early part of this decade, the amount of tax collected 
as compared to the size of the economy just keeps increasing; yet, the 
majority insists on expanding the Government's pocketbook even further. 
At a time when gas prices have increased by 10 cents over the past two 
weeks to a national average of $4.07 and home foreclosures are on the 
rise, I believe we need to put money back in the taxpayer's pockets, 
not take more out.
  According to the other side, the pay-go rules require us to provide 
tax increases in order to keep the deficit from increasing. Time and 
again, however, the Democrats themselves admit that the pay-go rules 
are not practical. We all know that.
  For example, it was not deemed necessary to offset the revenue loss 
of the economic stimulus package we passed early this year. We did not 
offset the package of tax benefits for military personnel that was 
recently enacted. And there has been a long internal debate on the 
other side about whether unemployment benefits need to be offset. It 
appears to me that the Democratic pay-go requirement is more a slogan 
of convenience than a bedrock principle.
  Many in the business community are frustrated by our lack of action 
in extending the expired tax provisions. I understand and share this 
frustration with them. I have fought for years to improve, extend, and 
expand many of these provisions, such as the research credit.
  However, I believe those in the business community who are 
encouraging us to simply go along with the flawed bill the House of 
Representatives has sent us are being very shortsighted. Many in the 
business lobbies have looked at the offsets in that bill and have said 
that since they do not affect them very much, that we should go ahead 
and approve them.
  If we go along with these offsets to extend the expired provisions 
until the end of this year, what are we going to use to pay for next 
year's extension? Sure, the business community might be fine with these 
offsets now, but how long until we get to the offsets that really hit 
them hard? All of us, including the business community, need to take a 
longer view of this and examine the principles involved.
  We cannot drive our economy into the ground in the name of false 
fiscal responsibility. Tax increases are not the prescription to what 
ails our economy, particularly during this downturn and especially when 
revenue is already higher than the historical average. Yes, we should 
pass the extenders, but let us not sacrifice jobs on the altar of a 
flawed pay-go requirement in the process.
  The cost of living for Americans is becoming unbearable. In my home 
State of Utah, the average price of gas is $4.07, construction of new 
homes has ceased, and unemployment is on the rise. We should be 
spending less and lowering taxes, not holding back tax incentives that 
are vital to economic growth and job creation while raising taxes.
  If my colleagues on the other side want to be fiscally responsible, 
then I am all for it. Let us work together to identify enough spending 
cuts to offset the cost of extenders. But if we cannot do that, let us 
not hold these important tax provisions hostage to a false sense of 
fiscal responsibility.
  I notice the distinguished majority whip is here, so I will try to 
finish as quickly as I can.

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