[Congressional Record (Bound Edition), Volume 154 (2008), Part 3]
[Senate]
[Pages 3763-3793]
[From the U.S. Government Publishing Office, www.gpo.gov]




 CONGRESSIONAL BUDGET FOR THE UNITED STATES GOVERNMENT FOR FISCAL YEAR 
                            2009--Continued

  The PRESIDING OFFICER. Who seeks recognition?


                           Amendment No. 4160

  Mr. BAUCUS. Mr. President, I send an amendment to the desk.
  The PRESIDING OFFICER. The clerk will report.
  The assistant legislative clerk read as follows:

       The Senator from Montana [Mr. Baucus], for himself, Mr. 
     Bayh, Mr. Pryor, Mr. Nelson of Florida, Mr. Salazar, Mr. 
     Rockefeller, Mr. Tester, Mr. Brown, Mr. Menendez, Mr. 
     Bingaman, and Mr. Conrad, proposes an amendment numbered 
     4160.

  Mr. BAUCUS. Mr. President, I ask unanimous consent that the reading 
of the amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

  (Purpose: To provide tax relief to middle-class families and small 
 businesses, property tax relief to homeowners, relief to those whose 
homes were damaged or destroyed by Hurricanes Katrina and Rita, and tax 
                relief to America's troops and veterans)

       On page 3, line 11, decrease the amount by $1,755,000,000.
       On page 3, line 12, decrease the amount by $1,730,000,000.
       On page 3, line 13, decrease the amount by $28,324,000,000.
       On page 3, line 14, decrease the amount by 
     $167,072,000,000.
       On page 3, line 15, decrease the amount by 
     $141,689,000,000.
       On page 3, line 20, decrease the amount by $1,755,000,000.
       On page 3, line 21, decrease the amount by $1,730,000,000.
       On page 3, line 22, decrease the amount by $28,324,000,000.
       On page 3, line 23, decrease the amount by 
     $167,072,000,000.
       On page 3, line 24, decrease the amount by 
     $141,689,000,000.
       On page 4, line 5, increase the amount by $22,000,000.
       On page 4, line 6, increase the amount by $97,000,000.
       On page 4, line 7, increase the amount by $846,000,000.
       On page 4, line 8, increase the amount by $5,664,000,000.
       On page 4, line 9, increase the amount by $13,496,000,000.
       On page 4, line 14, increase the amount by $22,000,000.
       On page 4, line 15, increase the amount by $97,000,000.
       On page 4, line 16, increase the amount by $846,000,000.
       On page 4, line 17, increase the amount by $5,664,000,000.
       On page 4, line 18, increase the amount by $13,496,000,000.
       On page 4, line 23, increase the amount by $1,777,000,000.
       On page 4, line 24, increase the amount by $1,827,000,000.
       On page 4, line 25, increase the amount by $29,170,000,000.
       On page 5, line 1, increase the amount by $172,736,000,000.
       On page 5, line 2, increase the amount by $155,185,000,000.
       On page 5, line 8, increase the amount by $1,777,000,000.
       On page 5, line 9, increase the amount by $3,604,000,000.
       On page 5, line 10, increase the amount by $32,774,000,000.
       On page 5, line 11, increase the amount by 
     $205,510,000,000.
       On page 5, line 12, increase the amount by 
     $360,695,000,000.
       On page 5, line 16, increase the amount by $1,777,000,000.
       On page 5, line 17, increase the amount by $3,604,000,000.
       On page 5, line 18, increase the amount by $32,774,000,000.
       On page 5, line 19, increase the amount by 
     $205,510,000,000.
       On page 5, line 20, increase the amount by 
     $360,695,000,000.
       On page 26, line 16, increase the amount by $22,000,000.
       On page 26, line 17, increase the amount by $22,000,000.
       On page 26, line 20, increase the amount by $97,000,000.
       On page 26, line 21, increase the amount by $97,000,000.
       On page 26, line 24, increase the amount by $846,000,000.
       On page 26, line 25, increase the amount by $846,000,000.
       On page 27, line 3, increase the amount by $5,664,000,000.
       On page 27, line 4, increase the amount by $5,664,000,000.
       On page 27, line 7, increase the amount by $13,496,000,000.
       On page 27, line 8, increase the amount by $13,496,000,000.

  The PRESIDING OFFICER. The Senator from Montana.
  Mr. BAUCUS. Mr. President, this is the amendment about which I spoke 
this morning. This amendment would take the surplus in the budget 
resolution and give it back to the hard-working American families who 
earned it. It would make permanent the 10-percent tax bracket. It would 
make permanent the child tax credit. It would make permanent the 
marriage penalty relief. And it would make permanent the changes to the 
dependent care credit. Further, it would make changes to the tax law to 
honor the sacrifices our men and women in uniform make for us every 
day. We lower the estate tax to 2009 levels. And it would allow middle-
income taxpayers who do not itemize their deductions to nonetheless 
take a deduction for property taxes.
  I offer this amendment on behalf of myself, Senator Bayh, Senator 
Pryor, Senator Nelson of Florida, Senator Salazar, Senator Rockefeller, 
Senator Tester, Senator Brown, Senator Menendez, and Senator Bingaman.
  The amendment shows our commitment to American families. The 
amendment takes the surplus and returns it as tax relief to those hard-
working families. I urge my colleagues to join me in supporting this 
amendment.
  I spoke at length about this amendment earlier today. This is a very 
brief summary, now that we are on the amendment.
  The PRESIDING OFFICER. The Senator from North Dakota.
  Mr. CONRAD. Mr. President, I ask the chairman of the Finance 
Committee, Senator Baucus, if I might be listed as an original 
cosponsor as well.
  Mr. BAUCUS. Mr. President, I make that request.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. CONRAD. Mr. President, I thank the chairman of the Finance 
Committee, Senator Baucus, for this excellent amendment. This will 
extend the middle-class tax cuts, the 10-percent bracket, the childcare 
credit, and the marriage penalty relief provisions. All those tax cuts 
will be extended.
  In addition, as I understand it, the chairman of the Finance 
Committee has crafted an amendment that will include significant estate 
tax reform because we are now in this unusual situation of where, under 
current law, the estate tax will go from a $3.5-million exemption per 
person in 2009 to no estate tax in 2010, and then in 2011, the estate 
tax comes back with only $1 million exemption per person. The amendment 
of the Senator from Montana would make certain it stays at $3.5 million 
and is allowed to rise with inflation.
  The Senator from Montana has also added provisions for those who are 
serving in the military and also has provisions that will provide for 
property tax relief because we know that across the country, at the 
very time house prices are falling, property taxes in many 
jurisdictions are rising, and people don't get the benefit of the 
deduction because of the formalities of the current Tax Code. All these 
items are addressed in the amendment of the chairman of the Finance 
Committee.
  I wish to express my appreciation. This will still permit the budget 
to be in balance by the fourth year and to stay in balance in the fifth 
year. The President's budget, by contrast, balances in the fourth year, 
but then it quickly slips right back out of balance again. Ours does 
not.

[[Page 3764]]

  I take this moment to again thank the chairman of the Finance 
Committee for his work on this amendment and to thank his staff as 
well. I know they put a great deal of time and effort into this 
amendment, meeting with many interested parties, as one can imagine 
with an amendment of this magnitude. It makes a very, I think, 
important contribution to the consideration of this resolution.
  The PRESIDING OFFICER. The Senator from Montana.
  Mr. BAUCUS. Mr. President, there is one point in this amendment that 
needs explanation, and the Senator from North Dakota touched on it. It 
is basically this: Under our tax laws today, only those tax filers who 
itemize their deductions can take advantage of the property tax 
deduction. Only those Americans who itemize their deductions can take a 
property tax deduction which, therefore, lowers their income taxes. 
About two-thirds of Americans do not itemize. Two-thirds of Americans 
take the standard deduction. If they take the standard deduction, they 
cannot, therefore, deduct their property taxes from their income taxes.
  This amendment says all homeowners can take the standard deduction; 
that is, it makes no difference whether you itemize or whether you take 
the standard deduction. In either case, you are able to take full 
advantage of the property tax deduction to lower your property taxes.
  This will help in some small way to prevent the reduction of housing 
prices in some parts of the country where it is a real problem. It is 
clearly not the full answer, but it at least is a way to help and also 
gives tax relief to middle-income taxpayers because those taxpayers who 
do not take the standard deduction, those taxpayers who itemize are 
probably a little bit wealthier than are taxpayers who take the 
standard deduction.
  We are saying, if you take the standard deduction, you now can 
itemize this one item; that is, your property taxes. Technically, it is 
called above the line. Basically, it means if you take the standard 
deduction, you get full benefit of your property taxes; you can take 
the deduction against your income. And that is in this amendment.
  The PRESIDING OFFICER. The Senator from North Dakota.
  Mr. CONRAD. Mr. President, I thank the chairman of the Finance 
Committee. I also ask him, as I understand it, the Defenders of Freedom 
Tax Relief Act is also part of this package.
  Mr. BAUCUS. That is correct. Basically, it is in this amendment, 
honoring our men and women who are standing up for us in Afghanistan 
and Iraq.
  Mr. CONRAD. And that package would provide, as I understand it, 
significant tax relief for our fighting men and women overseas, and it 
will continue to help them save for retirement and expand their 
opportunities for home ownership. It will also help the employers of 
reservists and National Guard who are called to Active Duty. This is a 
package that passed the Senate last year by unanimous consent. It did 
not get to the President's desk but is included in this package, which 
I think will make it even more attractive to our colleagues.
  Mr. President, I know Senator Murray was here seeking recognition. 
Then I think Senator Cornyn would like to be recognized.
  I will conclude, if I may, on this matter. This amendment is an 
important amendment, and I hope my colleagues will support it.
  The PRESIDING OFFICER. The Senator from New Hampshire.
  Mr. GREGG. Mr. President, this amendment is a game. Last year, we saw 
the same game. Last year, the Democratic Congress was in its first year 
of having the majority in both the House and the Senate, so people gave 
it the benefit of the doubt. They said: OK, you claim you are going to 
do something, we certainly hope you will.
  So last year they once again set up a false surplus and then they cut 
taxes and then they brought forward the Baucus amendment to pick up all 
that surplus as part of the tax cut, claiming both a surplus and a tax 
cut, which was good talking but a little inconsistent.
  Their tax cut last year, the Baucus amendment had in it the extension 
of the 10-percent bracket, the extension of the $1,000-per-child tax 
credit, and the extension of the marriage penalty. I believe it had 
some estate tax language in it. It might have. But I know it didn't 
have this property tax itemizer in it. It had those four items in it 
for sure. So all the Members voted for it and took credit: Oh, we are 
for these tax extenders because we think they help middle Americans, 
which they do, obviously, which is why President Bush proposed them 
originally, and that is why it passed under a Republican Congress.
  So what happened after this amendment was voted for and everybody 
sent out their press releases from the other side of the aisle saying: 
My goodness, we are for these tax cuts, we are going to vote for them 
right here on the floor of the Senate--even though they could have put 
them in the original Senate bill, which they didn't do because they 
wanted to have a bill reported out of committee with a big surplus so 
they could talk about that, knowing when they got to the floor they 
were going to eliminate these surpluses for the tax cuts--what happened 
after they put out all their press releases? Where are these tax-cut 
extenders they claimed they were going to pass last year? They don't 
exist. They never marked them up. They never voted on them. The real 
action of extending these tax cuts never occurred, even though they 
took credit for them last year.
  They said: My goodness, that is a great idea, we get a press release 
out saying we are for cutting taxes; let's do it again. They did not 
cut the taxes because the taxes are still there, so they say let's do 
it again. So we see the same cynical action brought forward in this 
amendment. They are offering this amendment to cut the same taxes they 
cut last year--at least they took credit for cutting last year but they 
actually didn't cut.
  It is to say the least a game--a game. That is why I call this the 
``fudge it'' budget because so much of it is built around this 
gamesmanship in language and setting up false hopes and then proceeding 
with the press releases and then proceeding with not following through 
on what they claim they were going to do.
  It also should be noted that left out of the Baucus amendment are a 
lot of fairly important issues of tax policy. For example, the present 
rate on capital gains and dividends is not in the Baucus amendment. So 
they are presuming it will go back up. That is a pretty stiff hit for a 
lot of Americans, especially senior citizens. Ironically, senior 
citizens benefit uniquely from capital gains rates being at their 
present level. Senior citizens benefit uniquely from dividend rates 
being at their present level because much of a senior citizen's retired 
individual income is capital gains income or dividend income to the 
extent they have some income beyond their basic pension, and many of 
their pensions are, of course, based off capital gains and dividends. 
So they are going to raise those rates. They are going to double the 
capital gains rate, essentially. The dividend rate will not only 
double, it goes up by 2\1/2\ times for some Americans under their 
proposal.
  The deduction for qualified education expenses is not extended. Small 
business expensing--that is a pretty important item, especially in an 
economic slowdown that should be extended--is not extended in this 
bill.
  Other extenders that are left out of the Baucus amendment include the 
research and development tax credit, that is pretty important; the 
energy tax credit, that is pretty important; State and local tax 
deduction, some people think that is important. AMT relief is left out.
  The practical effect is even though they make this representation 
they are going to reduce taxes, the exact same representation they made 
last year on these ``motherhood'' tax extenders, let's call them, which 
they never followed through on last year, they leave on the table 
massive increases in taxes--massive increases in taxes--which will fall 
on working Americans.
  We hear all this gobbledygook from the other side of the aisle that 
they are

[[Page 3765]]

just going to tax the rich, we are taxing the rich, we are taxing the 
rich. I bet I heard their Presidential candidate, Senator Obama, use 
that term to justify his spending policies probably 15 times in the 
last debate I listened to in which he participated. We are just going 
to tax the rich, the wealthy Americans. Well, fine, OK. The only 
problem is they cannot raise enough money to pay for their budget by 
just taxing the rich. If you take the basic rates and you move them 
back to the Clinton days, when we had high tax rates in this country, 
you take the top rate on the high-income individual, 35 percent, and 
you raise it back to 39.6 percent, what do you generate in income in an 
annual year? About $25 billion.
  Mr. GREGG. What do they plan to spend? Senator Obama plans to spend 
$300 billion under his plan. In order to reach the numbers they want to 
spend in this bill, there is a lot of spending in this bill. There is 
$200-plus billion in discretionary spending increases.
  There are $400-plus billion entitlement increases in this budget. 
There are big holes that we know are going to have to be filled, or at 
least we hope they will be filled, because otherwise you are going to 
end up with our troops stuck overseas without being able to get home, 
because their budget does not fund the cost of bringing them home, much 
less supporting them while they are in the field.
  We know these expenditures are going to occur, and those expenditures 
have to be paid for, and the way they are paying for them is by 
increasing taxes, not on the wealthy--they do on the wealthy too, but 
on every American. The average American's taxes will go up about $2,400 
under this bill. Senior citizens' taxes will go up about $2,100; small 
business taxes will go up about $4,700; $2,400 for an individual family 
with $50,000 of income. That is what their tax increase goes to: for 
seniors, about $2,100; for small businesses, about $4,700.
  That is a lot of money. You can buy a lot of groceries and at least 
get some relief from the cost of energy if you get to keep that money 
rather than have it taxed away as is proposed in this bill. It should 
not come as a surprise to people that they are doing this in their 
budget, because that is what they do well; they like to spend money and 
they love to raise taxes.
  Then they claim, well, we are going to tax the rich. It turns out 
they are not only taxing the rich, they are taxing senior citizens, 
working Americans, small business Americans, Americans who get their 
income from small businesses, they are taxing R&D, they are taxing 
energy, the production of energy.
  In addition, there is a little game being played here on their own 
rules. We hear the sanctimonious discussion about how they are going to 
use pay-go to discipline the budget. They are going to use pay-go to 
make sure we stay within our spending priorities, and that we do not 
raise taxes without offsetting these taxes.
  Well, this amendment is set up to game pay-go. Pay-go is not going to 
apply when this amendment is passed or, if it does apply, it is going 
to be structured in a way that it can be waived. There is no 
expectation that there will be any pay-go applied to the Baucus 
amendment, should it ever actually be brought to the floor.
  It is a game. It is, of course, one of the reasons why I think the 
American people get a little cynical about their Government. Here is 
the second year in a row that we are going to have press releases 
flying out of the Democratic Senatorial Committee claiming that they 
voted for these tax cuts. And then what happens? The tax cut never gets 
passed. This is a nice charade; that is all it is. We wish they were 
sincere when it came to cutting taxes.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from North Dakota.
  Mr. CONRAD. Mr. President, first, I recognize the ranking Republican 
on the Budget Committee, Senator Gregg, to thank him for his 
cooperation in bringing this budget resolution to the floor. While we 
have serious substantive differences, and we will be discussing those, 
I do have a high regard for the Senator from New Hampshire for the way 
he conducts himself.
  He, in the Budget Committee, did something I want to recognize 
publicly. One of our members was ill. We have a rule in the Senate 
Budget Committee that Senators are not allowed to vote by proxy. We are 
the only committee in the Senate that has that rule. We have that rule 
because we are the only committee with the power to bring a fast track 
vehicle to the floor for immediate vote. That rule has been a long-
standing rule in the Senate Budget Committee. Senator Gregg and Senator 
McConnell, when we told them of the problem we were confronted with, 
one of our members was ill--with only a 12-to-11 margin on the 
committee, that would have meant we could not report a bill to the 
floor.
  In a gracious way, in a way that I think reflects well on the Senate, 
in fact, makes me proud to be a Member of this body, Senator Gregg and 
Senator McConnell allowed a unanimous consent motion to come to the 
floor of the Senate so all Senators could pass judgment on whether we 
should exempt one member from the requirement to be present because he 
could not be.
  I want to start by thanking Senator Gregg for that professionalism, 
for that graciousness, and I do. I give my appreciation to Senator 
McConnell as well.
  Now, on the substance of what the Senator has said: I do not think 
anybody would be surprised that we have a strong disagreement with 
respect to the way he characterizes this amendment. This amendment is 
to a 5-year budget resolution. This amendment specifically extends the 
middle-class tax cuts and provides for estate tax reform and for 
provisions that are of assistance to our men and women in uniform, and 
will provide for certain property tax relief as well.
  With respect to the middle-class tax cuts, it is true we offered a 
similar amendment last year. It is true we offered it containing estate 
tax reform as well. It is true that final action was not taken because 
there was no need to take final action in 2007. There is no need to 
take final action in 2008. There is no need to take final action in 
2009, because all of these tax cuts under current law do not expire 
until 2010.
  It is not a game; it is reality. The reality simply is, this is a 5-
year budget resolution that is recognizing that we will extend those 
tax cuts, we will do it in a way that still allows the budget to be 
balanced in the fourth year, and remain in balance in the fifth year, 
and there is no need to take the final action, because all of those tax 
cuts exist until the end of 2010. That is a fact.
  The second point the Senator makes and makes repeatedly is all of 
these tax increases in this budget. No, there are not. He made the 
exact same speech last year. Second year, second verse. He said we were 
going to increase taxes last year $1 trillion. Now we can go back and 
look at the Record. We do not have to resort to rhetoric, we do not 
have to resort to projections, we do not have to resort to forecasts; 
we can look at the Record of the Congress last year and the beginning 
of the year.
  What has happened? Taxes did not increase by the trillion dollars the 
Senator warned about last year. In fact, taxes have been cut by $194 
billion. This is with offsets of $8 billion. So on a net basis, taxes 
have been reduced by $186 billion by this Democratic Congress that my 
colleague claimed last year would increase taxes by $1 trillion. Those 
words ring pretty hollow when you compare them to the actual record.
  Now, how did Democrats cut taxes by a net of $186 billion since last 
year? In two ways: No. 1, the stimulus package. The stimulus package, 
supported by the President of the United States, passed by the House of 
Representatives, passed by the Senate, and the alternative minimum tax 
relief provided last year. That combination has provided a net 
reduction in taxes to the American people of $186 billion. Not a tax 
increase, a tax cut. When the Senator says this budget is going to 
increase individual taxes $2,400, no. With the adoption of the Baucus 
amendment, which virtually every Democrat will support, we will extend 
the middle-class tax cuts.

[[Page 3766]]

  When he says: You are going to increase taxes on this category and 
that category, the fact is, you could accomplish the revenue numbers in 
our budget, which is 2.6 percent more revenue than is in the 
President's budget--that is how much more revenue we have, 2.6 
percent--we believe that amount of revenue can be achieved not by tax 
increases--in fact, I think it would be unwise to ask the American 
people for a tax increase before going after three other categories of 
revenue: No. 1, offshore tax havens. Offshore tax havens, according to 
the Permanent Subcommittee on Investigations, are now causing us to 
lose $100 billion a year. Offshore tax havens. That abuse is 
proliferating.
  No. 2, abusive tax shelters. Let me give you an example. Right now we 
have the spectacle in the United States of U.S. companies buying 
foreign sewer systems, not because they are in the sewer business but 
because they want to depreciate those systems on their books for U.S. 
tax purposes. They then lease the sewer systems back to the European 
cities that built them in the first place. They are not just doing it 
with sewer systems, they are doing it with European city halls. 
Companies and wealthy investors in this country are buying European 
city halls, writing them off on the books in the United States to 
reduce their tax obligation here, and then turning around and leasing 
them back to the European cities that built them in the first place. 
That is a scam. It ought to be closed down. The estimates are that is 
costing us $40 billion a year.
  On top of that, the tax gap, which in 2001 was identified at over 
$300 billion a year, the difference between what is owed and what is 
paid--while the vast majority of us pay what we owe, we have a number 
of people, unfortunately an increasing number, who do not pay what they 
owe, companies and individuals. Before we ask for a tax increase from 
anybody, we ought to go after those folks.
  Now we will have a debate on these issues, but to suggest there is a 
massive tax increase here, no, there is not a massive tax increase 
here. The exact same speech was given last year, $1 trillion of tax 
increases. What happened? On net, this Congress reduced taxes by $186 
billion. That is a fact.
  The PRESIDING OFFICER. The Senator from New Hampshire.
  Mr. GREGG. First, let me thank the Senator from North Dakota for his 
kind comments relative to our efforts to make sure that the unfortunate 
situation with one of our members did not inappropriately impact the 
majority position on the committee. We were happy to do that as a 
courtesy, because it is part of the proper comity of the Senate, quite 
honestly.
  To move on to the substance of his comments, his actual praise of me 
was not inconsistent; I thought it was brilliant. But there is such 
inconsistency in the substance of what he said that I am amazed. I 
mean, first, the argument is made: Well, the reason the Baucus 
amendment did not have to be actually executed is because we did not 
need the money or we did not need to extend those tax cuts because they 
do not lapse until 2011 or 2012.
  Well, why did you offer the amendment then? To put out the press 
release? It appears that is the only purpose of the amendment. Why are 
you offering the amendment this year? To put out the press release 
again? It appears that is the only purpose of the amendment.
  What he is basically saying, if you read between the lines, is last 
year we did not execute on that, we did an amendment here, we got a 
press release--in fact, I have the press release here from last year: 
March 10, 2007. Baucus budget amendment funds children's health, tax 
relief for America's working families. That is the title of the release 
that was put out last year when this amendment was offered.
  Of course, it never happened because the tax relief never occurred 
because the amendment was never passed.
  This year, I guess we will get another press release from Members on 
their side saying: Senator so-and-so voted for tax relief for American 
families and for health care for American families by voting for the 
Baucus amendment which will not ever be executed on. It is a touch 
inconsistent, to be kind, to first claim that you didn't need to do the 
extensions until the year 2010 or 2011 or 2012, and therefore, last 
year, when you passed the amendment, it didn't mean anything, and then 
to bring the amendment forward again and take credit for cutting taxes. 
At what point does the American public simply shake their heads and 
walk away?
  Mr. CONRAD. Will the Senator yield for a question?
  Mr. GREGG. I will finish my statement, and then I will yield.
  Mr. CONRAD. I thank the Senator.
  Mr. GREGG. The second point the Senator makes is that there are no 
tax increases in this budget. That is true if you look at this year. 
But this is a 5-year budget. It assumes revenues over 5 years and takes 
credit for those revenues which exceed the President's number and which 
reflect an increase in taxes of about $400 billion. That is their 
number. I actually believe it is higher.
  Giving them the benefit of the doubt, they have a $400 billion tax 
increase built into their budget. That tax increase is built in on the 
assumption made by OMB that the capital gains rate will go back up, 
that the dividend rate will go back up, that the basic rates will go 
back up, that other expiring tax provisions will go back up, R&D, 
energy, qualified education spending, that those tax extenders will go 
back up. So you won't see a dramatic increase in taxes as a result of 
this budget because they turn around and spend the money. It is not 
that they not only increase the taxes and presume those tax revenues 
will come in, they spend the money.
  Then the argument is made: But we don't really have to do it by 
allowing those provisions to expire. We can raise it all from this 
infamous tax gap, which last year they also took credit for for $300 
billion, or claimed they would, if they were successful. Then they 
ended up cutting the IRS accounts. So the IRS not only did not collect 
this additional money, they didn't even have the resources to collect 
what they were supposed to collect the first time around.
  So the tax gap is mythical. It is virtual. It may exist. It does 
exist. But the collecting of it has been proven to be a lot more 
difficult than just putting it in a budget and claiming you will get 
it. In fact, the IRS Commissioner, when he testified before our 
committee, made it very clear that he felt the maximum amount, even 
with all the resources he asked for, which he never got, that we would 
be able to collect out of the tax gap was somewhere between $20 and $30 
billion. That is over 5 years, as I recall.
  So if the Senator's position is that we don't need to raise dividend 
taxes to get the $400 billion, we don't need to raise taxes on capital 
gains to get the $400 billion, we don't need to raise taxes on the 
estate and death tax to get the $400 billion, we don't need to raise 
the brackets back up in order to get the $400 billion, I know that in 
order to stand behind that position, he is going to want to vote for 
the amendment which Senator Cornyn or I will offer which will do 
exactly that. It will say: Don't raise the dividend rate. Don't raise 
the capital gains rate. Don't raise the brackets. Because the Senator 
from North Dakota said we don't need to do that, he will want to be 
with us on that.
  I am happy to yield to the Senator for a question.
  Mr. CONRAD. I would just ask the Senator----
  Mr. GREGG. My question is, You will be with us on that amendment, 
won't you?
  Mr. CONRAD. I have not yet had a chance to study the amendment. I 
would be happy to do so and give you an answer after I have had a 
chance to review it.
  Let me ask the Senator, did your budget resolution in 2006 extend the 
middle-class tax cuts?
  Mr. GREGG. They didn't expire within the budget window.
  Mr. CONRAD. You mean the same argument I have just made with respect 
to ours?

[[Page 3767]]


  Mr. GREGG. Reclaiming my time, the point is, there is a 5-year budget 
window. They start to expire in 2010, not in 2007; therefore, your 
budget has to deal with that expiration. My budget didn't have to deal 
with that expiration because it was not within the 5-year window.
  Mr. CONRAD. Did you not assume in your 2006 budget resolution the 
extension of all the President's tax cuts?
  Mr. GREGG. I would certainly hope I did, but I don't recall.
  Mr. CONRAD. Well, the answer is, you did. And the second question 
would be, Did you then execute on extending those tax cuts in 2006?
  Mr. GREGG. I would certainly like to have. But unfortunately, at the 
time, again, we were not within the budget window. But you are within 
the budget window, and you are taking credit for those tax extenders 
lapsing. Are you not taking credit for $400 billion under the baseline? 
That number is reached by CBO by presuming that the tax extenders on 
cap gains, dividends, and rates will expire? Are you not taking credit 
for that in your budget resolution?
  Mr. CONRAD. For precisely the same reason that the Senator has given 
for his including extending the middle-class tax cuts when he last 
wrote a budget resolution in 2006. It would have covered the years 
2007, 2008, 2009, 2010, 2011. The Senator included the extension of 
those middle-class tax cuts, just as I have done, because it was a 5-
year budget resolution, and then the Senator's side did not execute, 
just as we did not last year, because there was no necessity to do it 
because those tax provisions do not expire until 2010.
  This is a case of the pot calling the kettle black. You extended the 
middle-class tax cuts in your 2006 resolution and then did not execute 
because there was no need to do so because those tax cuts don't expire 
until 2010. That is precisely what we have done.
  Mr. GREGG. Mr. President, reclaiming my time, there is a pretty 
significant difference. We are talking about 3 years, which is massive 
amounts of revenue. Secondly, you spend the money. The difference is 
pretty significant. We are talking about this budget at this time, and 
you can try to go back to other budgets, which I am happy to do. We can 
obviously debate old budgets. But the budget that is on the floor right 
now--and it appears the Senator is agreeing with my assessment--has a 
$400 billion tax increase, which tax increase CBO assumes will be 
accomplished by not extending the rates on dividends, capital gains, 
and the basic rates, along with research credit, energy credit, the 
qualified educational expenses, and the small business expensing. That 
is where you generate your revenue from. That is a tax increase. That 
translates into $2,400 per family. That is your budget. You are in 
charge of the budget. You brought the budget forward. You have a 
$2,400-per-family increase in here.
  The PRESIDING OFFICER. The Senator from North Dakota.
  Mr. CONRAD. Mr. President, we have no such tax increase assumption in 
our budget. Here are the facts. It is true we have $400 billion more in 
revenue over the 5 years than the President has in his budget. That is 
a difference of 2.6 percent. We believe that revenue can be attained 
without a tax increase. How? The pool of money I am talking about is 
the tax gap, the difference between what is owed and what is paid. The 
vast majority of us pay what we owe, but we have a group of people who 
don't. No. 2, offshore tax havens. The Permanent Subcommittee on 
Investigations has told us we are losing $100 billion a year to 
offshore tax havens. I have shown many times on the floor the Ugland 
House in the Cayman Islands, a little five-story building that claims 
to be the home to 12,600 companies. How can that be, that a five-story 
building in the Cayman Islands can be the operational home to 12,600 
businesses? They are not engaged in business out of that building. They 
are engaged in monkey business. That monkey business is costing us a 
lot of money.
  Now we have new evidence from the Boston Globe of another building in 
the Cayman Islands, this time a four-story building. In that building, 
they are also engaged in massive tax fraud. How? The company that is 
hiring the contractors for the United States in Iraq, KBR, is using 
that operation in the Cayman Islands to avoid paying their Medicare and 
Social Security taxes in the amounts of hundreds of millions of dollars 
for one company.
  The New York Times has just reported in Liechtenstein that they have 
uncovered massive tax fraud.
  I would say to the American people, before we ask for a tax increase 
from anyone, we ought to go after these tax scams. What is the amount 
over 5 years? The estimates are at least $2.7 trillion. If we get 15 
percent of that--not 50 percent, 15 percent of the abuse in tax havens, 
the abuse of tax shelters, the tax gap, 15 percent of it--we can 
balance this budget with no tax increase. Yes, additional revenue, 
revenue acquired by going after people who are cheating.
  Senator Dorgan and I are perhaps the only two Members who have 
actually audited the books and records of major corporations, because 
we used to be the tax commissioners for our State. I have looked at the 
books and records. I have audited the books and records. I found tens 
of millions of dollars from my little State of North Dakota. One of the 
things I learned when I did it and actually examined the books and 
records is how much fraud is going on. This is fraud not just from my 
conclusion or Senator Dorgan's conclusion, this is what has happened as 
a result of investigations by our own Permanent Subcommittee on 
Investigations that have uncovered massive fraud, massive cheating. We 
ought to go after it.
  The PRESIDING OFFICER (Mr. Sanders). The Senator from New Hampshire.
  Mr. GREGG. Mr. President, CBO scores zero in this budget for money 
coming from the tax gap that is represented by Senator Conrad as 
existing. The point being, of course, that you can talk about the tax 
gap all you want; it would be nice if we could generate some money from 
the tax gap. But IRS gives us no credit for generating money. They 
claim you can't generate the type of dollars the Senator has been 
talking about, and CBO doesn't give us any score for tax gap unless we 
significantly increase IRS funding, which we do not do.
  Mr. CONRAD. Will the Senator yield?
  Mr. GREGG. Just a second. Furthermore, what you have to recognize is 
CBO does score the $400 billion, which the Senator refers to as 
revenue, I refer to it as a tax increase--I mean, it is a tax 
increase--and CBO gets that $400 billion number because they assume the 
tax rates on capital gains, dividends and the personal rates, along 
with the other items I have listed, will go back up when they expire. 
That is how the number comes about. It doesn't come about from the tax 
gap.
  You can say: I am going to get money from Liechtenstein as a way to 
cover the American tax gap, and therefore no Americans are ever going 
to have to pay any more in taxes. You can make that statement, but that 
is not the way the budget works. CBO tells us how they are going to 
score it. We all work off of the CBO baseline. The CBO baseline 
assumes, under the Democratic budget, that taxes will go up above what 
the President asked for. That is clearly because they want to repeal 
the tax rates that are in place today and were put in place by 
President Bush. I don't know why they resist so aggressively admitting 
to this. Their Presidential candidates, that is all they talk about. So 
clearly, that is the game plan. Why try to obfuscate it with this tax 
gap debate?
  In addition, we have this issue of what happened under our budget 
versus what happened under their budget. This is their budget. It is 
not our budget. They are responsible for this budget. The U.S. Congress 
has to pass a budget. The President doesn't sign it. Congress passes 
it. This is what they have brought forward. Their budget assumes, 
takes, and spends--and that is the important part--a tax increase which 
results from basically raising the tax rates on capital gains, raising 
tax rates on dividends significantly, which will dramatically impact 
all Americans, raising rates, raising a variety of other taxes such as 
R&D and

[[Page 3768]]

energy. That is where they get the revenue which they then turn around 
and spend. We didn't do that in our budget. We accepted a higher 
deficit and didn't raise the tax rates. So there was a difference. It 
is substantive between the two. The core of it goes to the fact that 
they need revenue to spend, and to get that revenue, they are going to 
aggressively raise taxes $2,400 on working Americans.
  The tax gap is a smokescreen for what is really going on. I don't 
even know why they put it up because there is no contention out there 
in the public arena about what the game plan is.
  Senator Clinton and Senator Obama have said over and over and over 
again they intend to raise taxes. They claim it is just going to be on 
the wealthy, but they cannot get where they want to go by just raising 
taxes on the wealthy because, as I pointed out before, if you raise the 
marginal rates on the highest earners from 35 percent to 39.6 percent, 
you do not generate anywhere near the amount of money you would have to 
generate to cover all the spending that is proposed in this budget and 
has been proposed for new programs by Senator Obama and Senator 
Clinton, as they have been campaigning.
  It will be, and this budget is, a general increase on the taxes of 
working Americans--to the tune of $2,400 for most families in the 
$50,000 range, to the tune of $2,100 for 18 million seniors, and to the 
tune of $4,700 for 24 million small businesses. There are no two ways 
around it. That is what is going to happen if this budget is extended 
throughout the 5-year experience it is planning to budget for.
  The PRESIDING OFFICER. The Senator from North Dakota.
  Mr. CONRAD. Mr. President, I know the Senator insists on his point of 
view on this, but I have to say there is another point of view which I 
have articulated and have articulated repeatedly. There simply is not 
an assumption that there is a tax increase embedded in this budget. In 
fact, what is included, after the Baucus amendment is adopted, is 
significant additional tax reduction: tax reduction for middle-class 
families, tax reduction for estates, tax reduction for those who would 
otherwise be subjected to the alternative minimum tax--some 20 million 
families.
  So that is the fact. If you go to the record of what this Congress 
has done so far, after the Senator gave his same speech last year, 
almost verbatim, saying we are going to increase taxes by $1 trillion, 
which is his favorite number--I tell you, I do not think it would 
matter what document we brought to this floor, the Senator would say 
there is a trillion dollar tax increase because that is what he said 
last year. Let's go back and check the record. What happened?
  Since last year, this Congress, controlled by Democrats, has reduced 
taxes on a net basis by $186 billion. It is not a statement. It is not 
a speech. It is a fact. This Democratic Congress--after all the 
warnings last year: We are going to increase taxes $1 trillion--has 
reduced taxes, in 1 year, by $186 billion.
  Now, the Senator says: The CBO does not score tax gap provisions. 
Well, let's be clear. The CBO does not score tax provisions. That is 
the job of the Joint Committee on Taxation. That is not the job of the 
Congressional Budget Office. All of us who serve on the Finance 
Committee know that is the case. CBO does not score tax provisions. 
That is the responsibility of the Joint Committee on Taxation.
  The Senator has asserted we have a $400 billion tax increase. No, we 
do not. We have $400 billion more in revenue over 5 years than the 
President has. That is a difference of 2.6 percent.
  As I have asserted repeatedly, I believe additional revenue could be 
obtained by going after the tax gap, by going after these tax havens, 
by going after abusive tax shelters--a pool of money over this 5 years 
that is some $2.7 trillion--$2.7 trillion. And that is probably a 
conservative estimate. So we would only have to get $1 in every $7 in 
that pool to balance this budget, with no tax increase on anyone.
  I believe the first thing that ought to be done is to go after those 
abusive tax havens, those abusive tax shelters, and that tax gap, where 
the vast majority of us pay what we owe, but some number of us do not.
  One other thing: The Senator referenced his budget. The fact is, he 
has no budget. They have no budget. If our budget is so egregious, why 
haven't they offered a substitute budget? They have not. They have not 
offered a budget. They did not offer a budget in the committee. They do 
not have a budget on the floor. They do have the President's budget, 
and we have compared, repeatedly, our budget to the President's budget 
because it is the only alternative that is out there. They have chosen 
not to offer an alternative. That is their right.
  The majority has the responsibility to offer a budget, but the 
minority, if they feel it is grievous, can offer a substitute, and they 
have not.
  I thank the Chair and yield the floor.
  The PRESIDING OFFICER. The Senator from New Hampshire.
  Mr. GREGG. Mr. President, we will go to the Senator from Texas.
  The PRESIDING OFFICER. The Senator from Texas.
  Mr. CORNYN. Mr. President, I think people watching this on C-SPAN or 
wherever they may be watching--from the Galleries--can be forgiven if 
their head is spinning after this back and forth of how their tax 
dollars are being spent.
  At a time when our economy has undergone tremendous growth over the 
last 5 years but has now hit a soft stretch, particularly in the 
housing area, where we are talking about the credit crunch coming from 
the subprime credit crisis, we have acted in a bipartisan way to try to 
get the economy moving again by passing a stimulus package. The 
Speaker, the Republican leader of the House, and the White House have 
joined to try to do what can be done on a bipartisan basis to get the 
economy moving again.
  But the fact of the matter is, there is no better stimulus for the 
American economy other than leaving people with their own hard-earned 
money to spend it as they see fit. That is what helps create jobs in 
this country. The last thing we would want to do or should do is to see 
taxes be increased, particularly on small businesses, which are the 
primary job generator in this country, because it is through jobs and 
opportunity that people are able to achieve their own life and their 
own dreams and not depend on Government.
  We ought to aspire to be a country where everyone can declare their 
own independence on Government and not say we must be more dependent on 
Government, which seems to be the conflicting visions we see play out 
on the Senate floor.
  Mr. GREGG. Mr. President, will the Senator yield for a parliamentary 
question?
  Mr. CORNYN. Mr. President, I will.
  Mr. GREGG. I apologize for interrupting the Senator.
  Mr. President, I ask unanimous consent that we proceed to the time on 
the resolution so the time during the debate will run against the 
resolution.
  The PRESIDING OFFICER. The Senator has that right.
  The Senator from North Dakota.
  Mr. CONRAD. Mr. President, I ask unanimous consent that, unless 
stated otherwise, the time comes off the resolution.
  The PRESIDING OFFICER. Is there objection?
  Without objection, it is so ordered.
  Mr. GREGG. Mr. President, I thank the Senator from Texas for his 
courtesy.
  Mr. CORNYN. Mr. President, so the question presented by this budget 
is whether we are going to make it easier for the average American to 
meet the obligations of their family budget or whether we are going to 
grow the size of the Federal Government to the point that it makes it 
virtually impossible for them to balance their own budget. This budget, 
unfortunately, does nothing to bring down the price of gasoline at the 
pump or to make it more affordable to buy your own health insurance, 
which are the two primary cost drivers which are making it harder and 
harder for people working in this country to make ends meet.

[[Page 3769]]

  Instead, what this resolution does is, it adds additional burdens 
onto the average taxpayer. I know, as I said a moment ago, the heads of 
the people who are listening must be spinning trying to keep up with 
the various arguments that are being made back and forth. But the fact 
of the matter is, this budget resolution is the blueprint which 
authorizes additional activity, such as tax cuts.
  The Baucus amendment is nothing more than an authorization, which if 
there is no action to actually cut those taxes, nothing will happen. 
That is what happened, that is what occurred last year. Under the very 
pay-go principles, the pay-as-you-go principles--which is sound, 
certainly, in theory, which says the Federal Government will not spend 
money it does not have, that it will pay as you go--that is a promise 
made to the American people that is honored more in the breach than in 
the observance.
  I agree with the Senator from New Hampshire, the ranking member of 
the Budget Committee. This class rhetoric of: Well, we are just going 
to tax the rich--let me give you an example of how that usually turns 
out. The best example I can think of is the alternative minimum tax, 
which back in the 1960s was designed to target about 155 taxpayers who 
did not otherwise pay Federal income tax because of deductions they 
had.
  Well, as a result of the failure to index that tax, 155 taxpayers 
turned into, last year, 6 million taxpayers and would have turned into 
23 million middle-class taxpayers if we had not acted to provide some 
temporary relief on a 1-year basis last year.
  That is exactly what happens every time the Federal Government says: 
We are just going to tax the rich. Because people will be amazed at how 
much the Federal Government considers ultimately the middle class, 
those people who are the most productive in our society, those people 
who create the jobs--by creating the small businesses that produce that 
opportunity--those are the producers who basically the Federal 
Government all too often seems at war with in the way we spend their 
hard-earned money.
  Now, this budget does set out the framework over a period of 5 years. 
It contemplates a source of revenue in order to pay the bills. Under 
the pay-go principles that Congress has embraced, the only way those 
bills can be paid is if you have additional revenue or taxes to pay for 
them. So that is why, under this resolution, you will see, for example, 
18 million seniors who will incur an additional tax burden of $2,200 
each. You will see 43 million families incur an additional tax burden 
of $2,300 each. You will see the small businesses--27 million small 
businesses--incur additional tax obligations of $4,100 each.
  Now, if our goal is to create jobs, it ought to be to lower the 
burden, to lower taxation, to lower the regulatory burden, and to 
reduce frivolous litigation to the point that small businesses can 
prosper and create jobs, not add to their burden. Additional taxes for 
each of these categories of taxpayers will do nothing but depress job 
creation in this country, not encourage it.
  But I have to tell you, the most discouraging part of this budget is 
not what it does but what it fails to do. As the distinguished chairman 
of the Budget Committee knows, because he is the chief sponsor, along 
with the ranking member, of a bill that creates a task force to deal 
with runaway entitlement spending, this budget does nothing to deal 
with $66 trillion of future obligations of the American Government 
under entitlement spending, under Medicaid, Medicare, and Social 
Security.
  As a matter of fact, if we do nothing, within the next decade we will 
see both Medicare and Social Security become insolvent. That is 
because, irresponsibly, we are spending the surplus of Social Security 
today to try to balance the books of the Federal Government, by 
spending Social Security taxes that are paid by average American 
workers. We are spending that in order to try to fund the operations of 
the Federal Government today.
  So what this plan does, by inaction, is it creates the additional 
debt for our children of $27,000 each. I believe, if I am correct, the 
unfunded liabilities going into the future of $66 trillion, if you 
divide that by each and every American man, woman, and child, would 
result in $175,000 of debt for each of those men, women, and children. 
This budget does exactly zero to address that.
  I don't blame people across this country who look at Washington and 
are absolutely convinced that Washington is broken, because rather than 
solving problems, rather than trying to work together on a bipartisan 
basis to address these legitimate concerns, all they hear is more and 
more talk and precious little action, and particularly when it comes to 
the growing threat of entitlement spending and the increased debt that 
is passed down to our children and grandchildren.
  I know we didn't get here overnight. This has been a long time 
coming, but I hope we have the courage to deal with this today because, 
frankly, it is no mystery why change is the most dominant word in our 
political discourse today. The status quo is broken because Washington 
is not working, and people increasingly are turned off by what they see 
coming out of our Nation's Capital. They feel as if it is absolutely 
irrelevant to their lives or, if relevant, that Washington is burdening 
them and not helping them with their day-to-day concerns.
  By raising taxes by $1.2 trillion over the next 5 years, by 
dramatically increasing spending, by growing debt by $2 trillion, by 
playing gimmicks with things such as pay as you go, which is more 
honored in the breach than in the observance, by ignoring $66 trillion 
in unfunded liabilities into the future, this budget resolution is a 
failure. We can and we should do better. We should focus on what we can 
do to help the average American balance their family budget and not 
present a budget that is a train wreck upon delivery. This budget will 
not work. If the average American tried to conduct their business--if a 
small business man or woman tried to conduct their business as the 
Federal Government, they would find themselves bankrupt or else they 
would find themselves in jail. It is only the Federal Government that 
can operate this way. It is only the Federal Government that can 
operate in a way that every man, woman, and child in this country 
cannot, and we can do better. I urge my colleagues to do better by 
turning down this budget and coming up with one that will help the 
average American balance their budget and not wreck the Federal budget 
in the process.
  The PRESIDING OFFICER. The Senator from North Dakota is recognized.
  Mr. CONRAD. Mr. President, I ask unanimous consent that the Joint 
Committee on Economics be recognized at 5 o'clock for 1 hour for their 
Humphrey-Hawkins testimony--5:15 I am now told--that the Joint Economic 
Committee be recognized for 1 hour at 5:15. That would involve both the 
chairman of the committee and the ranking member of the committee for 
that 1 hour.
  Mr. GREGG. And the time would be equally divided.
  Mr. CONRAD. And it would count against the resolution. That would be 
correct.
  The PRESIDING OFFICER. Is there objection?
  Without objection, it is so ordered.
  Mr. CONRAD. Mr. President, the Senator held up a chart about the 
growth of the debt. The exact same chart applies to the President's 
budget--precisely the same. In fact, his is worse in terms of 
additional debt burden put on the American people by the President's 
budget compared to ours.
  The Senator also raised the point, as did the ranking member earlier, 
of why we have not addressed in this 5-year budget resolution the long-
term entitlement challenges that we face as a nation, the shortfall 
between what we are spending and what we are raising, and the 
entitlement obligations this country has made but has not funded. Let 
me say I have never believed that the long-term entitlement challenges 
that are 10, 15, 20-year problems are going to be resolved in a 5-year 
budget resolution. That is why I joined with the ranking member of the 
committee on something where we do agree, which

[[Page 3770]]

is an approach to address these long-term imbalances by creating a 
working group of 16 Members--8 Democrats, 8 Republicans--given the 
responsibility to come up with a plan to deal with our long-term 
challenges, and only if 12 of the 16 could agree would legislation 
advance. If they could agree, 12 of the 16, then we would have a 
circumstance in which there would be a vote in both Houses of Congress. 
Not only would it involve Congress, it would also involve the 
administration, because if we are going to address these long-term 
challenges, it has to be done with all of the players at the table.
  This is something Senator Gregg and I are advancing. I believe it is 
very important. I believe it is the only way we are going to deal with 
these long-term challenges. I don't believe it is ever going to happen 
in a 5-year budget resolution. No. 1, it is too short term. No. 2, it 
is typically carried just by one party. That is the way budgets are 
around here. These longer term challenges can only be addressed by both 
sides coming together and grappling with it in a joint way.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from New Hampshire is recognized.
  Mr. GREGG. Mr. President, I appreciate the chairman outlining for the 
body the initiative which he and I have pursued in the area of 
entitlement reform. I appreciate his leadership on that and I look 
forward to continuing to work with him on it. I certainly hope we can 
pass it. It is one way to get at the fundamental fiscal imbalance our 
country is facing and the threat it represents to our children having 
an affordable government. But that should not mute or sideline 
legitimate efforts to try to begin the process of controlling 
entitlement costs in a way that is fair and does not unfairly impact 
beneficiaries.
  The President did make suggestions in this area. The President's 
budget is not on the floor. I would note that the reason we don't offer 
a budget is for the same reasons the Senator from North Dakota didn't 
offer a budget when I was the chairman and the Republicans controlled 
the Senate. In fact, I will quote him. He said:

       The chairman--

  At that time he was referring to myself--

     well knows the majority has the opportunity to offer a 
     budget, and our responsibility is to critique the budget.

  That is the way the Senator from North Dakota viewed the budget 
process and it is the way I view this budget process. But independent 
of that, the President's budget, as he sent it up, at least had 
guidelines which I thought were very constructive in the area of trying 
to control our costs in Medicare specifically. He had three different 
proposals. The first suggested that people with high incomes should pay 
a larger burden of the cost of their drug benefit, Part D premium. 
Today, if you are Warren Buffett--we use Warren Buffett because he is 
nationally known, obviously, and is extraordinarily successful--if you 
are Warren Buffett, you qualify for the Part D drug program, but you 
don't have to pay the full cost of that program. You don't pay a full 
premium. You pay about 25 percent of the cost of that premium. That 
means that John and Mary Jones, working at a restaurant in Epping, NH, 
or Sally and Fred Upton, working in a real estate firm in Concord, NH, 
are paying 75 percent of the cost of the drug benefit which goes to 
wealthy Americans, and specifically the example I used would be Warren 
Buffett. That seems totally inappropriate to me.
  So the President sent up a proposal which said if you make more than 
$80,000 as an individual--which is a good deal of income for an 
individual, a single individual, especially a retired individual--or if 
you make more than $160,000 jointly, you and your spouse, if you are 
retired and you qualify for the drug benefit, then you have to pay 
more. You don't have to pay the full cost even, you just have to pay 
more. It was a reasonable proposal and it would help with the imbalance 
of the Medicare accounts.
  He also suggested we should improve our use of technology within the 
health care industry, making more information more available to more 
people so they can make better decisions. That scores, interestingly 
enough, as a savings, not surprisingly, because if more people have 
more information about, first, the cost of a medical procedure and, 
second, the outcomes of a medical procedure at A hospital versus B 
hospital or at an A group of family practitioners versus a B group of 
family practitioners, they can make a thoughtful, intelligent decision 
as to which group they use, especially if they are a corporation with a 
fair number of people they are insuring or self-insuring. So that 
proposal was a step in the right direction toward cost containment and 
scored in a very positive way.
  The President sent up ideas--ideas that made sense--and they didn't 
impact ordinary beneficiaries. The only beneficiaries who were impacted 
under the President's proposals were high-income beneficiaries who 
would be asked to pay a fair share of the cost. I do think that type of 
reform should have been carried in this bill, and we will offer an 
amendment--I will offer it or Senator Ensign, I suspect, will offer it 
because he offered it last year, Senator Ensign from Nevada--asking 
that high-income individuals pay a fair share of their drug benefit 
costs, and that is only right. Hopefully that will be approved and put 
into this budget.
  So there are initiatives that can occur here which I think should 
occur and we should not simply leave this massive fiscal imbalance 
which we are facing in these entitlement accounts to be fixed by this 
task force which hopefully we will get in place, but we should start 
the process now. This budget unfortunately punts that issue and has 
zero--zero--savings in the area of Medicare--net savings in the area of 
Medicare. In fact, it ends up with an expansion in entitlement costs of 
about $466 billion.
  Mr. President, at this point I yield the floor.
  The PRESIDING OFFICER. The Senator from North Dakota is recognized.
  Mr. CONRAD. Mr. President, this is an area where there is agreement 
between the ranking member and myself.
  This is a statement Senator Gregg made in the Senate Budget Committee 
about the proposal he and I have made to deal with these long-term 
challenges. This is a quote from Senator Gregg, and one I agree with:

       We have come to the conclusion that everybody who puts 
     policy on the table first ends up getting it shot at by the 
     different interest groups, and that putting policy on the 
     table simply doesn't work in our institution; that the only 
     way to do this is--

  Talking about the long-term gap between spending and revenue and the 
commitment on entitlements--

     the only way to do this is to create a procedure which is 
     viewed as absolutely fair, absolutely bipartisan and that 
     that decision by that task force will then be voted up and 
     down by the Congress.

  The task force we are talking about which Senator Gregg and I have 
proposed would address the long-term fiscal imbalance, would include a 
panel of lawmakers and administration officials, 16 in number, with 
everything on the table, with fast-track consideration. That means 
Congress ultimately would have to vote, and that would require a 
bipartisan outcome because it would require a supermajority.
  The ranking member referenced what the President has called for. Let 
me put up what the President has called for in his budget. He has 
called for savings from Medicare and Medicaid of $536 billion over the 
10 years of his budget proposal, but at the same time he calls for $2.4 
trillion of additional tax cuts, most of which goes to the wealthiest 
among us. Those are priorities we don't share. I don't think the answer 
is to cut Medicare over $500 billion, Medicare and Medicaid, at the 
same time cutting taxes $2.4 trillion disproportionately on the 
wealthiest among us. Who would be affected by these Medicare 
reductions? I will tell my colleagues one group that would be affected: 
the rural hospitals I serve as a representative from the State of North 
Dakota in the Senate. Rural hospitals already on average have negative 
margins. That means they are losing money. Why? Because they get one-
half of the reimbursement rate of more

[[Page 3771]]

urban hospitals to treat the very same illnesses. In other words, if 
you have a heart attack, you go to an urban hospital, that hospital 
gets twice as much under Medicare to treat you as a rural hospital. 
Unfortunately, there are no rural discounts available to those rural 
hospitals. When they go to buy technology, they don't get a rural 
discount.
  When they go to attract a doctor, they don't get a rural discount. In 
fact, it costs more to attract doctors to rural areas than to urban 
areas. That is proven by the MediPAC studies.
  The proposal by the President would cut these hospitals. Can I tell 
you what that would mean in my State? Hospitals would shut down. We 
have more than 40 hospitals in my State. My State is a very large 
State, although sparsely populated. At least eight hospitals in my 
State would fail under these provisions. So, no, we don't support that. 
I certainly don't support it. I don't think most Democrats think this 
is the priority--cut Medicare, cut Medicaid, and at the same time you 
are cutting taxes on the wealthiest among us. I think many of the 
wealthy would say that should not be the priority.
  Warren Buffet points out that he pays a lower effective tax rate than 
the woman who is his secretary and than the woman who is his 
housekeeper. Why? Because most of his income comes from dividends and 
capital gains that are taxed at a 15-percent rate and his housekeeper 
is paying at a higher effective rate than that. How can that be fair? I 
don't think it is. So even Warren Buffet doesn't think it is fair. He 
has pointed this out on repeated occasions. He questioned, How can you 
have an equitable tax system in which he, the richest man in the world, 
is taxed at a lower rate than his own housekeeper and his own 
secretary?
  Mr. President, we talk about debt. Here is what happens if all of the 
President's tax cuts are extended without being paid for. The debt 
takes off like a scalded cat, the debt that is already out of control, 
already burgeoning, already burdensome to future generations. If you 
extend all these tax cuts without paying for any of it, what happens? 
The debt grows inexorably, and in a way that fundamentally threatens 
the economic security of this country.
  Mr. President, I hope very much that as we continue this debate we 
will focus not just on the 5 years of this budget resolution but also 
that we remind ourselves and the American people of the very daunting 
challenges we face long term. This is one place where I am in complete 
agreement with the Senator from New Hampshire, the ranking member of 
the committee.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from New Hampshire is recognized.
  Mr. GREGG. Mr. President, I appreciate that explanation on Warren 
Buffett because I think it confirms my prior representation, which is 
that this proposal increases capital gains and dividends. It is assumed 
by CBO that it does that. Language he has used relative to the view of 
the Senator from North Dakota would imply the same also. I think it is 
important to know--not important, but I think the record ought to show 
the charts that reflected the savings that were reflected in the 
President's proposals on Medicaid and Medicare were not reflective of 
the proposal that came up on Medicare in this budget. They were a prior 
proposal.
  Second, I think the proposals that came from the President involve 
the Part D premium, IT, malpractice reform, all of which were 
reasonable, all of which could be accomplished, in my opinion, without 
having any significant impact on beneficiaries. Yes, they would impact 
providers because, as a practical matter, the IT improvements would put 
more pressure on providers to basically deliver good-quality services. 
Essentially what the administration proposed was to take savings that 
occur from significant improvements in IT and those savings which 
basically end up in the pockets of the providers and say to the 
providers that we will split the difference; you get half and we get 
half, but you are still going to get half of the savings you create out 
of IT. I don't think it affects the actual providers. It affects how 
much they save.
  At this point, I see the Senator, the ranking member of the Finance 
Committee, the former chairman, so I will yield the floor.
  The PRESIDING OFFICER. The Senator from Iowa is recognized.
  Mr. GRASSLEY. Mr. President, I wish to discuss with my colleagues one 
of the sources of revenue that the chairman of the Budget Committee 
claims would bring in $100 billion per year to offset the cost of 
extending existing tax policy, and that would be the issue of shutting 
down offshore tax havens.
  I feel that I have been very aggressive as a member of the Finance 
Committee in combating abusive tax shelters offshore or otherwise, so I 
am not here to find fault with anything in the budget about going after 
abusive offshore tax havens. But I do have a degree of disagreement on 
the amount of revenue that will come in and whether this is the ``goose 
that laid the golden egg'' that will solve all of the problems we have 
with the budget.
  So I have worked hard on this subject for a long period of time. In 
fact, I would go to a bill that we passed in 2004 called the JOBS Act. 
It shut down the tax benefits for companies that enter into corporate 
inversion transactions and abusive domestic and cross-border leasing 
transactions. The JOBS bill also contained a package of 21 anti-tax 
shelter provisions--not just 1 or 2 but 21.
  Now, of course, I am ranking member of the Finance Committee, but 
having a good working relationship with Senator Baucus, we have been 
continuing to look at all these abusive parts of the Tax Code, or these 
parts of the Tax Code that are abused, and look at where we can get 
some additional revenue. We are not out to tax people who would not 
otherwise be taxed or to change the rate of taxation, and we are not 
out to get people who should pay more money than what we are paying if 
they are doing it in a legal way. We are after subverting the Tax Code 
in a way that wasn't intended by Congress.
  So in my role on the minimum wage small business tax relief bill that 
passed the Senate last year, we also included provisions that contained 
anti-tax loophole provisions, including shutting off tax benefits for 
corporations that inverted--after Senator Baucus and I issued a public 
warning on that issue that legislation would stop these deals, shutting 
off tax benefits from abusive foreign leasing transactions that weren't 
caught in the passage of the JOBS bill, and, of course, doubling 
penalty and interest for offshore financial arenas.
  In that particular bill, the minimum wage bill I referred to--it 
happened to be that the House Democrats rejected our offsets. It was 
kind of surprising to me, but they did that. I use it as one example 
that is a somewhat unrealistic account on these offsets in the budget 
resolution.
  The chairman of the Budget Committee went on and on yesterday about 
abusive foreign sewer systems and city hall leasing deals on which U.S. 
banks were claiming depreciation deductions. I didn't disagree. I led 
the effort to shut down these deals on a prospective basis, which we 
did in the 2004 bill, and I have continued to lead the effort to 
legislatively deny future tax benefits for deals that were entered into 
before the 2004 legislation. But here again, people, for reasons I 
don't know--and it was quite surprising to me--in the other body, the 
leadership of the Ways and Means Committee over there has continued to 
stop us cold. In fact, while the chairman of the Budget Committee was 
holding up a chart of a German sewer system during last year's budget 
debate--I am referring to last year's budget debate, but it is a prop 
that can be used this year as well--the chairman of the Ways and Means 
Committee at that time was holding a hearing that sympathized with U.S. 
banks that entered into these very same deals.
  So I sure hope this distinguished chairman, my friend, the Senator 
from North Dakota, is not counting on any revenue for doing something 
the House Democrats have rejected over and over again. But do you know 
what. My distinguished friend and chairman of the committee, it seems 
to me that he is counting on that revenue. Well, maybe

[[Page 3772]]

he will have better luck a second time. We didn't do very well the 
first time.
  The Budget Committee chairman is also continuously referring to the 
billions of dollars that the Permanent Subcommittee on Investigations 
says we can get through offshore tax scams. Well, those of us who have 
to do this heavy lifting in this area, by passing tax legislation, know 
that whatever numbers the Permanent Subcommittee comes up with have 
tended to be meaningless. We all know there is not a dollar's worth of 
tax legislation that can be based on the Permanent Subcommittee's 
estimates. That is not their expertise, nor their job. That falls into 
the area of the Joint Committee on Taxation.
  So having studied these issues and having legislated in these areas 
for a long period of time, I consider my views on tax policy directed 
at tax shelters and tax havens to be credible. From what I can tell, 
the chairman of the Budget Committee views the problem of offshore tax 
havens in two categories: one, the ability of U.S. multinationals to 
shift income to these tax havens, and two, the evasion by U.S. citizens 
who hide assets and income in these tax havens.
  We have seen Democratic Senators, including the chairman of the 
Budget Committee, hold up a picture of the Ugland House, a law firm's 
office building in the Cayman Islands, which is home to 12,748 
corporations. Senator Baucus and I asked the GAO to investigate the 
Ugland House. In fact, the Government Accountability Office is down 
there doing that right now. As often as that building is used to 
justify a pot of tax haven gold, it will be good to get an independent 
agency, such as the Government Accountability Office, to give us an 
objective perspective on this issue.
  I would like to give Senators some background on where that picture 
comes from and what issue it is aimed at. The picture comes from an 
article published in the Bloomberg Market, August 2004, titled ``The 
$150 Billion Shell Game.'' The article focused on the ability of U.S. 
multinationals to shift income to low-tax jurisdictions through 
transfer pricing.
  ``Transfer pricing'' is the term for how affiliated corporations set 
prices for transactions between those corporations. Transfer pricing is 
important because it determines how much profit is subject to tax in 
the different jurisdictions involved in related party transactions.
  The $150 billion figure is an academic estimate of the annual amount 
of profits that corporations shift outside the United States with 
improper--and I emphasize ``improper''--transfer pricing--in other 
words, trying to violate the law.
  One of the Democrats' revenue raisers that is still on the shelf 
purports to target this transfer pricing problem. But you would not 
know it by looking at the language of the proposal because it doesn't 
make any changes to our transfer pricing rules. Instead, the proposal 
would eliminate deferral for income of any U.S. multinational foreign 
subsidiaries incorporated in certain black-listed jurisdictions. It is 
called the tax haven CFC proposal.
  Deferrals have been part of our Tax Code since 1918. Deferral means 
that U.S. multinationals do not pay tax on the active income of their 
foreign subsidiaries until that income is repatriated to the United 
States. Passive income is subject to tax on a current basis. Deferral 
only applies to active income.
  I agree with the premise of this proposal that the U.S. 
multinationals should pay their fair share of U.S. taxes. I think I 
proved that with closing some of these tax shelters and improper 
offshore activities in previous legislation. I have already talked 
about that issue. U.S. multinationals who use improper transfer pricing 
do so to obtain the benefit of deferral on profits that economically 
should be subject to tax in the United States on a current basis.
  Here is my quote from this Bloomberg article:

       We have to get on top of corporate accounting and 
     manipulation of corporate books for the sole purpose of 
     reducing taxes.

  My view is that stronger transfer pricing rules and stronger 
enforcement of those rules is the way to target this problem in our 
current international tax system.
  The IRS is taking steps to tighten our transfer pricing rules. For 
example, the IRS has proposed regulations that would overhaul the rules 
for the so-called cost-sharing arrangements. These are arrangements by 
which multinationals of our country are able to transfer intangible 
property to subsidiaries in low-tax jurisdictions. Based on the volume 
of complaining I have seen from lobbyists and their leveling it at the 
Treasury and the IRS, the proposed IRS regulations would go a long way 
to prevent this artificial income shifting. I hope to see these 
regulations finalized soon, and I believe they will be. Others have a 
whole different view. They would eliminate deferrals altogether.
  Another quote in the Bloomberg article succinctly states this view. 
This is a quote from Jason Furman. He is a former aide to Senator 
Kerry:

       American companies should pay taxes on their profits in the 
     same way whether they earn them in Bangalore or Buffalo.

  That is where these proposals to eliminate or curtail deferrals on a 
piecemeal basis are headed. They are headed to the complete elimination 
of deferrals for U.S. multinationals.
  Without a significant corporate tax-rate reduction--and thank God 
some candidates for President are talking about that. There are Members 
of this body who believe we ought to reduce the corporate tax rate so 
we can be competitive on an international basis but without a 
significant corporate tax rate reduction. Eliminating deferrals 
altogether would have the effect of exporting our high tax rates and 
putting U.S. multinationals at a competitive disadvantage in the global 
marketplace.
  Understand, our corporate tax rate is the second highest in the 
world. We are not even learning from Germany yet, a socialist country 
that decided they have to reduce their marginal tax rate to be 
competitive in the world market. Ireland found that out in 1986 and has 
economically advanced since they did that. Everybody understands our 
tax rates make us uncompetitive. Do we want to make it worse so we lose 
more jobs? I don't think so, but I don't think people have thought 
about it.
  The Senate is on record as wanting to protect the competitiveness of 
U.S. businesses in the global marketplace. The Senate passed the 
American Jobs Creation Act of 2004. I referred to that bill before in 
my remarks this afternoon. That bill contains several international 
simplification provisions, and it passed with a vote of 69 Senators, 
including 24 Democrats. The Senate version of the JOBS bill, which also 
contained these provisions, received a vote of 92 Senators, including 
44 Democrats.
  There has been a longstanding debate about whether our international 
tax system should be fundamentally changed, and that is a legitimate 
debate. Some say the transfer pricing regime used by virtually every 
major country is broken and calls for taxing all foreign income on a 
current basis. Others argue for completely exempting active foreign 
income under a territorial system, as many of our trading partners do 
and, consequently, one of the reasons behind our uncompetitiveness. But 
we want to have that debate, and if we do, then it is a fair debate.
  The budget resolution does not contain specific proposals, but if the 
Democratic record is assumed on offshore tax issues, then we can count 
on a lively debate from this side to eliminate deferrals because we do 
not intend to do anything to make our businesses in America that create 
jobs more uncompetitive. We have to do things to make us more 
competitive.
  We have already seen what the House Democrats would do, and I am a 
referring to points I referenced already this afternoon. I may disagree 
with most of the international proposals in that bill that was referred 
to as ``the mother of all tax bills'' last fall--that is what the 
chairman of the Ways and Means Committee called his tax reform plan--
but at least the chairman of the Ways and Means Committee raises the 
issue in an

[[Page 3773]]

intellectually honest way, setting the stage then for fundamental 
reform and also proposes to lower the corporate tax rate to 30.5 
percent. That rate may still be too high, but at least the Ways and 
Means Committee chairman recognizes the concern that I laid out earlier 
about exporting our high tax rates.
  The piecemeal cutbacks on deferral for active foreign income that we 
have seen in the Senate would do nothing but complicate the Tax Code 
and create opportunities for tax planning around these cutbacks.
  The other offshore issue identified by the chairman of the Budget 
Committee is U.S. tax evasion by individual taxpayers who hide their 
assets and income in foreign bank accounts and foreign corporations. 
Let's go back to the beginning of the Tax Code in 1913. Our Tax Code 
has subjected U.S. citizens to tax on their income wherever it is made 
worldwide. No matter what the Internet purveyors of tax evasion say, 
this principle cannot be avoided by putting passive assets and income 
into foreign corporations. The Tax Code has rules to prevent that. 
Taxpayers who willingly violate these rules are guilty of tax fraud 
and, in many cases, criminal tax fraud.
  The problem of offshore tax evasion is not that our laws permit it; 
the problem is there are some taxpayers who are intent on cheating and 
hiding their income from the Internal Revenue Service.
  The IRS has been successful in catching many of these tax cheats, but 
more can be done. The IRS has difficulty detecting tax evasion and 
obtaining the information necessary to enforce our tax laws. One 
important tool for the IRS is information exchanged with other 
jurisdictions. Our double-tax treaties contain an article on 
information exchange designed to help the IRS obtain quality 
information to enforce our tax laws.
  In addition, administrations, past and present, have entered into 
over 20 tax information exchange agreements with jurisdictions that are 
often referred to as tax havens. We are seeing this information 
exchange network in action as we speak, providing the IRS and other 
countries with information related to the use of bank accounts in 
Liechtenstein. Sensible solutions to this problem should aim to improve 
on our tax information exchange network and not put that network at 
risk or the efforts at risk.
  Underreported income is the largest piece of the tax gap. We should 
keep in mind that hiding assets and income from the IRS is not just an 
offshore tax problem, it is not an offshore tax haven problem; it may 
also be an onshore problem. In fact, it is an onshore problem.
  An article in USA Today last year noted that ``there is a thriving 
mini industry that has capitalized on real or perceived gaps in 
domestic and corporation laws and virtually nonexistent Government 
oversight to promote some U.S. States as secrecy rivals of offshore 
havens.''
  The picture of the Ugland House in the Cayman Islands that I referred 
to earlier makes for good grandstanding, but as I am sure the 
distinguished chairman of the Budget Committee is aware, there are also 
office buildings in some States that are listed as addresses for 
thousands of companies that are incorporated in those States for 
similar reasons as those incorporated in the Cayman Islands: secrecy of 
ownership and a permissive regulatory environment. Whatever additional 
solutions the Finance Committee comes up with to shine sunlight on tax 
evaders will need to consider both offshore and onshore evasion of 
taxes.
  I emphasize that I am all for shutting down inappropriate tax 
benefits from offshore arrangements. The chairman of the Budget 
Committee has said he thinks we could get, I believe, $100 billion from 
this source. I have not seen any proposals scored by the Joint 
Committee on Taxation that come close to bringing in this kind of 
money, and the Joint Committee on Taxation is the official scorer. The 
last score I have seen for a tax haven CFC proposal is about $1.5 
billion per year. The more fundamental ``mother'' bill that I referred 
to from the chairman of the Ways and Means Committee in the other body 
would raise about $10 billion per year.
  I wish to emphasize to my colleagues another point. Each of these 
proposals that would eliminate or curtail deferral involve tax policy 
changes that raise taxes, which is the last place the distinguished 
chairman of the Budget Committee said he wanted to go to raise revenue.
  On the offshore evasion issue, Senators Levin, Coleman, and Obama 
have introduced a bill that contains several proposals, and these 
proposals are aimed at offshore tax havens. Yet, again, I have not seen 
a Joint Committee on Taxation score of that bill, and they are the 
official scorer.
  Once again, it will be the Finance Committee's responsibility to come 
up with real, sensible, effective proposals that combat offshore and 
onshore tax evasion, which I am glad to do, but the likelihood that 
they will be scored by the Joint Committee on Taxation to bring in the 
kind of money assumed in this budget resolution is very remote at best.
  Given these facts, it should be obvious how much of a shell game is 
going on and how unreal this budget resolution is.
  Mr. President, as my colleagues know, within the Finance Committee, 
we have jurisdiction over health care issues. I wish to address those 
health care issues in this budget resolution as well.
  The biggest health care issue in this budget resolution is a stealth 
provision--stealth. You cannot see it, but it is there. And I am going 
to talk about the issue of reconciliation, a process that was supposed 
to be used to save money, but I think in a stealthy way, before this is 
done and out of conference, it is going to be used to increase 
expenditures.
  It is true there are no reconciliation instructions for spending in 
the Senate resolution, but there is in the House version, and that is 
going to make it conferenceable.
  Last year there was a single committee instruction in the House-
passed resolution but not in the Senate-passed resolution. The final 
conference version last year deferred to the House, no reconciliation. 
So I am willing to bet that the House instructions will be the final 
budget that comes back from the House-Senate budget conference.
  Truthfully, it makes no sense for the House to have reconciliation 
instructions in the first place. The House does not need reconciliation 
protection. The Speaker and the Rules Committee make sure the House is 
strictly controlled by a majority vote. Reconciliation is only 
important for the purposes of the Senate to avoid filibuster, to avoid 
a 60-vote supermajority, to get to finality in the process, limiting 
the role of the minority. And, remember, the Senate is the only 
institution in our political system where minority rights are meant to 
be protected and are, in fact, protected.
  I do not think the other side wants a debate in the Senate about 
reconciliation, so they have hidden the reconciliation instructions in 
the House bill so they can drop it in their final budget. Since I am 
pretty confident it will be there in the final budget, I want to bring 
attention to the problems this creates as we consider all the work, and 
three-fourths of it comes out of the Finance Committee over the next 
few months of this session.
  It is true, of course, that reconciliation can be a very useful and 
powerful tool for actually making policy to reign in Government 
spending. Reconciliation can be used to pass controversial reductions 
in entitlement spending. By design, the reconciliation process greatly 
reduces the role of the minority, be it Democrats for 12 years prior to 
now or Republicans now. But let us review the basics on how to make law 
around here. To make law, not only does Congress have to pass it but 
the President has to sign it or you have to have votes to override a 
veto. In the last 20 years, precisely four vetoes have been 
overridden--not a very high percentage.
  Pursuing an override strategy is an uphill battle as anyone such as 
Senator Baucus and I, who have worked so hard on the SCHIP bill last 
year, found out. To have the President sign it means

[[Page 3774]]

the bill will have to be bipartisan. The President is not going to sign 
a partisan bill. The President will not sign a bill that lacks 
involvement and support from the minority as well as the majority.
  Since reconciliation cuts Republicans out of the process, it ain't 
going to work. Likewise, what do you have to have to override a veto? 
Republicans, of course. About 16 in the Senate and 60 in the House if 
you are going to get anything done. Since reconciliation is a partisan 
process, it is passed with only partisan support, it is pretty clear it 
will not work. It will be a pointless political exercise. It will not 
become law, plain and simple.
  If you want to make law around here, it has to be bipartisan. That 
means in this body involving the Republicans, and since you will need 
Republicans to make law, you do not need reconciliation to get a bill 
passed in the first place. If the effort is bipartisan, you do not need 
the restrictive rules of reconciliation to get it done. I think Senator 
Baucus and I, working together in this legislative process in this 
body, have proved that over and over and over in the 8 years we have 
been working together.
  What we are considering today is not about making policy. So what is 
the point of it? Well, I think it is about playing politics. We are in 
an election year. In fact, it is a Presidential election. We all know 
the stakes are very high. So why on Earth should anyone believe that 
trying to move a partisan Medicare and Medicaid reconciliation bill 
makes any sense at all?
  Exactly what bill does the majority want to pass that will not have 
broad bipartisan support? Fortunately, the chairman of the House Ways 
and Means Committee answered that question for all of us. He confirmed 
that he wants to include the House-passed Medicare bill from last year 
in reconciliation, a bill better known in the health care circles as 
the CHAMP Bill, acronym C-H-A-M-P, CHAMP.
  You may be wondering what it is in the CHAMP bill that would not pass 
unless it would be included in reconciliation. Fortunately, there is an 
answer. The House CHAMP bill includes drastic cuts to home health care, 
to hospital care, and skilled nursing care. The House CHAMP bill also 
would end availability of Medicare Advantage plans and their extra 
benefits in most of rural America. It would also drastically cut 
benefits for rural seniors who are enrolled in Medicare Advantage plans 
throughout the country. It would also cut other benefits such as 
preventive health benefits that seniors rely on when they enroll in 
Medicare Advantage plans.
  The House CHAMP bill would also result in higher out-of-pocket costs 
for lower income seniors who are enrolled in Medicare Advantage. The 
House CHAMP bill also has some changes in the State Children's Health 
Insurance Program that merit further discussion, to be sure. It would 
turn the capped SCHIP block grant program into an uncapped entitlement 
program. Childless adults would be allowed to stay on SCHIP 
indefinitely. Remember, we had that debate last year. Everybody said a 
children's health insurance bill is for children, not for adults. We 
did things in this body to make sure adults were not covered by the 
children's health insurance bill because it cheats children.
  So why would you want to go back to something we debated and carried 
by a two-thirds vote in this body? And it would add coverage for 
immigrants who have come here illegally to the SCHIP program as well.
  None of those provisions were included in the bipartisan package we 
worked out together last year. I have got a chart here that will 
emphasize this. It is the whole to-do list that is hidden in their 
agenda for the year. It is hidden in their stealth plan to do a 
reconciliation bill this year.
  One logical question you might ask is: Why would they be thinking 
about using reconciliation this year? The answer is simple. They know 
they do not have the votes to pass these kinds of dramatic Medicare 
cuts and they do not have the votes for these bad policies we changed 
in SCHIP last year. So they want to force it through the process by 
stuffing it into a partisan reconciliation bill.
  Now, focusing back on Medicare, let us consider what is at stake. We 
have until the end of June to pass a Medicare bill that the President 
signs into law. If the Democratic leadership insists on using budget 
reconciliation for this Medicare bill, they will fail to get a bill 
enacted. Failure to get this done by June 30 has serious consequences 
for seniors and disabled Americans who rely on this important 
Government program we call Medicare for their health care. Failure to 
get the bill done and signed means that severely disabled and injured 
Medicare beneficiaries will not be able to get the therapy they need 
beginning in July. Failure means that sorely needed doctors and other 
health care professionals in rural areas are going to see drastic 
reductions in their Medicare reimbursement. It means low-income 
beneficiaries who need help with their Part B premium will not be able 
to get it because the Qualified Individuals Program in Medicare will 
have expired. It means patients with end stage renal disease who need 
dialysis will still be in the system in need of payment reform. 
Necessary reforms are needed to improve how end stage renal disease 
facilities are paid so they have stronger incentives for improved 
critical outcomes and enhanced quality of care.
  Reforms are also needed to eliminate incentives for the overuse of 
drugs in that program. It means that seniors' reliance on ambulance 
services in rural areas will be put at risk because of underpayments 
for rural ambulances. It means that beginning in July, Medicare 
beneficiaries will have their health care threatened when family 
doctors, surgeons, medical specialists, and nurse practitioners all 
across the country will have Medicare payments cut by more than 10 
percent.
  I hope you realize how demoralizing that will be to doctors in this 
country when they face a 10-percent reduction. In many areas, doctors 
are already in short supply. With a 10-percent pay cut, some may solve 
their problem by not accepting Medicare beneficiaries. New 
beneficiaries may also have trouble finding a doctor.
  Failure also means other important initiatives will not get done. It 
means that legislation to strengthen incentives for physicians to use 
electronic prescribing will not happen. This means we will continue to 
have higher rates of dangerous medical errors, that people have their 
lives put at risk.
  It means our Nation's seniors and disabled Americans will still be in 
the health care system that rewards poor quality care, because enacting 
hospital value-based purchasing in Medicare is not going to happen. 
These are some of the reasons why we should not be thinking about 
reconciliation as a way to avoid this set of outcomes in July. I hope 
we can set aside this reconciliation charade. I hope we can continue to 
work in this body in a bipartisan way, as we have a reputation for 
doing in the Finance Committee, to get a Medicare bill passed and 
signed by the President by the end of June.
  It is quite clear: The stakes for failure are too high. So let us not 
kid ourselves about including a reconciliation instruction in the final 
budget, meaning what comes out of conference. It is not about making 
policy. No one should mistake it for a serious effort. It is about 
jamming a bill through Congress and forcing the President to veto it. 
It is about making politics that threaten the Medicare Program and the 
seniors who rely on it. I will have nothing to do with that sort of a 
process. I do not think very many people on this side of the aisle will 
either.
  What we are considering today is not about making policy. Then what 
is the point? It is politics. If we are going to have a serious effort 
at legislating, I hope the other side would decide not to pursue a 
partisan reconciliation bill. Instead we need to work out a bipartisan 
bill that can become law.
  The bottom line is that reconciliation is a bad idea. It is partisan. 
It will not become law. We have serious work to do before the end of 
June, and a sham political reconciliation exercise is not getting us 
any closer to getting the job done.
  While the stealth reconciliation instruction is the most disturbing 
facet

[[Page 3775]]

of this budget, it is not the only problematic health care provision. 
The budget misses the opportunity to continue the bipartisanship that 
was forged in the Senate over the State Children's Health Insurance 
Program last year that passed this body, sometimes with 69 votes.
  Last year, SCHIP reauthorization was a top health priority. It was a 
difficult and it was a bruising battle. But the $35 billion compromise 
bill garnered 68 votes in the Senate. It was a true show of 
bipartisanship.
  Now, rather than come back to the second session of this Congress to 
roll up their sleeves and finish the job, it looks to me as if the 
Democratic majority is abandoning that bipartisan work from last year.
  Now you might say, how do I know that? Well, it is very clear, 
because the budget before us returns to the $50 billion reserve fund 
for SCHIP from last year's Democratic budget, a figure that was soundly 
rejected by the Senate last year in the compromise that was put before 
us that got those 68 votes.
  My colleagues know that a key feature of last year's SCHIP deal was 
to cap spending at $35 billion. But they did not include the $35 
billion for SCHIP that had bipartisan support. So where, then, is the 
bipartisan spirit on SCHIP that was here last year? Why is it not here 
this year?
  Mr. CONRAD. Will the Senator yield on that point?
  Mr. GRASSLEY. Yes, I will yield.
  The PRESIDING OFFICER (Mrs. McCaskill.) The Senator from North 
Dakota.
  Mr. CONRAD. I asked that same question myself. Why do we not put in 
the $35 billion figure? And the answer was: It is up to $50 billion so 
it would accommodate the $35 billion compromise, but it also was with 
the understanding that a year later, maybe that would need to be $36 or 
$37 billion, to have the same force and effect.
  I would say to the Senator, there was no intention here to leave an 
impression that we were not eager to continue the bipartisan effort.
  I wish to salute the Senator. He made an enormous effort, as did 
Senator Baucus, Senator Rockefeller, and Senator Hatch. They spent many 
hours putting together a bipartisan agreement on SCHIP. We certainly 
don't want to in any way leave the impression that we don't want to 
pursue that again.
  Mr. GRASSLEY. The Senator from North Dakota backed us on that effort, 
and I thank him for that. And the extent to which you say you would be 
willing to work, I assume you are speaking as a person, for $35 billion 
instead of 50, I accept that. But I am saying for the public who is 
looking at this document we call the budget resolution, that has $50 
billion in it. You draw other conclusions.
  Mr. CONRAD. If the Senator will continue to yield, that is why the 
language in the resolution says up to 50. Again, I say to my 
colleagues, I have every intention to pursue again the effort that you 
and the chairman of the committee pursued so vigorously last year.
  Mr. GRASSLEY. I thank the Senator. I am happy to yield to the Senator 
from New Hampshire without losing my right to the floor.
  Mr. GREGG. In order to accomplish the goals the Senator wishes to 
accomplish and which have been subscribed to by the chairman of the 
committee, you wouldn't need reconciliation to accomplish that, would 
you?
  Mr. GRASSLEY. No, you would not. In fact, it detracts from it. 
Because too often reconciliation tends to be a partisan issue, and we 
will never get SCHIP through here that is not bipartisan. I think you 
are making the case that I have taken a long time to make, that 
reconciliation is not a process we need to accomplish most of the major 
goals in some of these areas that there is bipartisan agreement to 
reach.
  Mr. GREGG. That was my point. I think the Senator from Iowa has made 
an excellent case for why this reconciliation, I think he called it a 
stealth vehicle floating around here, should not be used. It is 
inappropriate and certainly undermines the integrity of the process to 
use reconciliation for this type of an issue.
  Mr. GRASSLEY. Based upon what the Senator from North Dakota said 
about SCHIP, I will not go on making my case about that. He has pointed 
out what the intention is, which is not to preclude something less than 
$50 billion, and that brings us back to the possibility of a bipartisan 
compromise, assuming we don't have reconciliation.
  I will go on then to certain CMS regulations and how they are treated 
in the budget resolution. I know some people have concerns with the CMS 
Medicaid regulations. I will not argue that these regulations are 
perfect. In fact, I have written for my constituents a lot of letters 
to CMS raising questions about some of these regulations. However, the 
regulations do address areas where there are problems in Medicaid. 
Somehow I read this budget resolution as not recognizing those real 
problems. States don't have clear guidance and could be inappropriately 
spending taxpayers' dollars. We ought to make sure that since Medicaid 
is a Federal-State program, that we have 50 States to deal with, they 
ought to have as much assurance as they can have in our basic law and 
regulations as to what they can do and not do. We ought to be concerned 
that they know that. Because if they do something wrong, we pay over 
half. In my State, we pay 62 percent of the cost of Medicaid. So let's 
talk about how many dollars might be involved.
  The budget resolution provides for $1.7 billion that is going to be 
addressed by these regulations. The amount is only to delay the 
regulations until the end of March of next year in hopes the next 
administration will pull back those regulations. Of course, that is 
what the people who are supporting this provision are hoping for. What 
would it cost if we tried to completely prevent these regulations from 
ever taking effect? Not the $1.7 billion that is in this budget 
resolution to get us through to March of next year. It would actually 
cost taxpayers $19.7 billion over 5 years and $48 billion over 10 
years. Let me emphasize that, $48 billion over 10 years. It is a farce, 
from my position, an absolute farce for anyone to argue that all those 
dollars are being appropriately spent and that Congress ought to walk 
away from these issues, forget about what CMS is trying to do to bring 
some rationale to the spending of taxpayer dollars.
  CMS still has a fundamental responsibility to combat fraud, to 
prevent inappropriate spending, and to protect the integrity of the 
Medicaid Program. This budget resolution tells CMS to stop your work. 
Take the rest of the year off. Your work is no longer necessary.
  This is a serious mistake. What we ought to do is have an instruction 
that requires the Finance Committee to replace the regulations. Instead 
of making the regulations go away, the Finance Committee ought to be 
tasked with replacing them with a policy that fixes the problems. That 
is what we should be doing for the American taxpayer.
  So let's review what we have in the budget resolution. First, we have 
a stealth reconciliation provision that promises to place politics over 
getting important policies accomplished. Second, we have an SCHIP 
provision that abandons the bipartisan progress made in 2007, 
recognizing the dialog I had with the chairman of the Budget Committee 
on that point, after I made my point. Third, we have a Medicaid 
provision that carelessly abandons the integrity of programs in several 
key areas, costing, if it would stay in place forever, $48 billion over 
10 years. With spring training in full swing, I would like to borrow a 
baseball analogy. That is one, two, three--well, you know all the rest.
  I have some comments I wish to make about the provisions that might 
be offered in what is called the tax relief measures and particularly 
those that might not be included in an amendment that is going to be 
offered from the other side of the aisle. I would like to define for my 
colleagues some of the widely applicable expiring tax relief provisions 
that are not going to be covered by an amendment that I think is going 
to be offered by my friend from Montana, Senator Baucus,

[[Page 3776]]

in an amendment he has. I know already that Senator Gregg, the ranking 
Republican on the Budget Committee, has pointed this out, that the 
lower rates on capital gains and dividends would rise after 2010, under 
the pending amendment. That means that lower income taxpayers', those 
in the 10- and 15-percent tax brackets, capital gains rates rise from 
the current zero rate to 10 percent.
  It means for dividends for the same group, the tax rate would go from 
zero rate to either 10 or 15 percent. Why would anybody want to 
discourage people who are in those brackets, usually lower income 
earning people, from having to pay a higher rate of tax on their 
savings, when the rate of savings in this country is at such a low 
level compared to other countries? In fact, last year it was a negative 
savings rate for all America. For all other taxpayers, though, the 
capital gains rate would go up 33 percent, from 15 percent to 20 
percent. For those taxpayers, the dividend rate would go from 15 
percent to as high as 39.6 percent on dividends as opposed to capital 
gains.
  As important are marginal tax rate hikes that would kick in after the 
year 2010. Here I am talking about all the tax brackets above the 15-
percent bracket. We have a chart that tells exactly what is going to 
happen with each of these and how many families and individuals are 
being affected by these tax rates--who are going to have the tax rate 
increase. The chart shows the current law brackets and the number of 
tax-paying families and individuals in each bracket. The data is the 
latest available from the Internal Revenue Service Statistics of Income 
Office. There are four brackets above 15 percent. The first is a 25-
percent bracket which contains 22 million families and individuals. The 
next bracket is 28 percent. There are almost 4 million tax-paying 
families and individuals in that bracket. The next bracket is the 33-
percent bracket. There are 1.5 million tax-paying families and 
individuals in that bracket. And the top bracket is 35 percent, and in 
that 35-percent bracket is almost a million people. This is a group 
whom you will hear most about from the other side. Even it is a sizable 
group, 963,000 people. It contains a lot of stable and long-term small 
business owners who create most of our jobs. The other side would like 
to leave the impression that these are nothing but Wall Street moguls.
  If we were to raise this rate, as proposed, to 39.6 percent, the 
small business owners would be facing a 13-percent penalty vis-a-vis 
the largest corporations in the land.
  Now where do you get the idea that is good for America, that small 
businesspeople, sole proprietors filing individual taxes and in the 
business of creating jobs, ought to pay 13 percent more than what 
corporations pay? In fact, the whole purpose of the 2001 tax bill was 
to make sure there was parity between sole entrepreneurships creating 
jobs and corporations creating jobs. We are talking about a small group 
of people, 963,000.
  If you total the number of tax-paying families and individuals 
affected by these marginal rate increases, it is a total of 28 million 
families and individuals. Keep in mind, as I said yesterday, that is a 
group of tax-paying families who start paying on taxable income of 
$63,000, and for individuals it starts for as low as $32,000 of taxable 
income. This large group of taxpayers would face various marginal rate 
hikes, if the policy underlying the pending amendment were to become 
law.
  The better way to deal with these current law levels of taxation 
would be to make them permanent because permanency of tax policy is the 
best tax policy that is going to create the most jobs.
  There will be an amendment to be offered by Senator Graham that 
ensures capital gains and dividend rates stay at the current low levels 
for lower income taxpayers. The Graham amendment will ensure that 
roughly 28 million families and individuals would not face marginal tax 
rate increases after that.
  For those Members waiting to speak, I have one more fairly short 
comment I wish to make on another provision in the bill that was put 
in, in committee. I come before you to discuss payment limitations, 
meaning payments to farmers.
  For years I have been leading an effort to put a very hard cap on the 
amount of Federal subsidies going to farmers. Last year, as everybody 
knows, I stepped aside. I wish to say I graciously stepped aside during 
the budget debate when--
  Mr. CONRAD. Madam President, will the Senator yield?
  Mr. GRASSLEY. Madam President, I will yield to the Senator.
  Mr. CONRAD. Madam President, let me say there have been a number of 
examples last year and this year of what I think distinguishes the 
Senate. The actions by the Senator from Iowa last year were an example 
of courtesy and graciousness that I will never forget. I want to say 
publicly, as I have said before, how very much I appreciate what the 
Senator did last year to withhold an amendment that would have 
otherwise taken down the budget. It was an act of great courtesy, and I 
thank the Senator for it.
  Mr. GRASSLEY. Well, Madam President, I appreciate the Senator's kind 
words. I am going to kind of use some words that I think he spoke to me 
last year, and I would not say they are an absolute quote, but it went 
something like this: Chuck--that is my first name. This was in private. 
You do not call us by our first name on the floor of the Senate. But 
something like this was said to me: Chuck, hold off on this. We will do 
this on the farm bill in 2007.
  Well, we did do the farm bill in 2007, but we do not have it done 
yet. Anyway: Chuck, hold off on this. We will do this on the farm bill 
in 2007. You know you have the votes there.
  So I backed off and I waited, as has been verified by the chairman of 
the committee. Everyone knows what happened. His colleague, Senator 
Dorgan of North Dakota, and I worked hard over a period of a couple 
years to be able to offer an amendment of a $250,000 hard cap to the 
commodity programs on the Senate floor to the farm bill. Do you know 
what. We had a majority. We had 56 Senators who voted to support this 
hard cap. I can tell by looking at some other Senators here, we 
probably had 58, but there were reasons otherwise for voting. But 
leadership--and all I can say is in a generic way--leadership imposed a 
supermajority requirement on the amendment. We did not have 60 votes. 
So if you do not have 60 votes around here, sometimes you do not get 
anything done.
  At this point there is no guarantee we are even going to have a farm 
bill. I think we will, but I cannot guarantee it. I do not like to say 
this because I am very hopeful that we will, but there are a lot of 
hurdles to jump before we get there. We have not been able to come up 
with acceptable offsets that the administration can agree to. We have 
not been able to find a structure for the Finance Committee's 
assistance that the House can live with. The House has not even named 
conferees, so we have not even begun to engage in the very serious, 
substantive policy issues that get us to finality, even though there is 
a lot of talk going on and there are a lot of meetings going on. So 
this year, we are back where I was a year ago on the budget. Last week, 
Senator Allard and I offered an amendment on payment limits during 
committee consideration of the budget resolution. This amendment would 
limit commodity payments and allocate the savings to nutrition. The 
amendment was agreed to by a bipartisan vote of 13 to 9.
  Here I am to put everybody on notice that this $250,000 hard cap 
should be carried through to the conference report. I want to have an 
adequate safety net for family farmers in the tradition of farm 
programs for six, seven, or eight decades, where it was targeted toward 
small- and medium-sized producers, people who maybe cannot ``weather 
the storm'' as the big gigantic farmers can. That storm can be natural 
or it can be politically instituted or it can be internationally 
instituted--a lot of things beyond the control of the family farmer. So 
we have had a safety net to guarantee a stable supply of food for our 
people, both for social cohesion as well as for national defense.

[[Page 3777]]

  Now, in recent years, however, assistance to farmers has come under 
increased scrutiny by urban communities and the press.
  Do we have a chart? Yes, we have a chart here I wish to have you look 
at.
  The law that is now being administered maybe has unintended 
consequences, but they are real consequences. The law creates a system 
that is clearly out of balance. If we look at the results posted on 
this chart, we have a system where 10 percent of the farmers--the 
biggest farmers--get 73 percent of the benefits out of the farm 
program, and the top 1 percent gets 30 percent. I am not saying these 
corporate farms should not have a safety net like everyone else. This 
amendment is not means testing anybody. But it is saying at some point: 
Enough is enough. We have to set a hard cap, a hard level of payments 
that is equitable to all producers, no matter their size, with emphasis 
upon helping small- and medium-sized farmers.
  My amendment adopted in committee and included in this resolution 
will help revitalize the farm economy for young people, at the same 
time saving taxpayers money or, better yet, using that money in 
nutrition where it will do some good for lower-income people.
  The amendment will put a hard cap on farm payments at $250,000. I 
want to make a very clear distinction here. Even if we have a farm 
bill--because the arguments are going to be made against this bill: We 
are in negotiations on a farm bill. Why mess with this in a budget? 
Well, if we do have a farm bill, I have a feeling it is going to end up 
relaxing payment limit laws that we have in the 2002 farm bill. The 
House of Representatives, in their farm bill, actually increases direct 
payment caps. And both the House and the Senate totally eliminate the 
cap on marketing loan gains, making them virtually unlimited.
  So you have farm bills passed by both Houses that you could drive a 
gigantic 9620 John Deere tractor through--and those are big tractors. I 
will support trying to lower the adjusted gross income limits, but I 
have seen a lot of data that suggests that not many farmers are going 
to be kicked out of the program if they are filthy rich, do not need 
the help, do not need the support, do not need to be subsidized to get 
bigger. They have the ability to get bigger on their own economic 
entrepreneurship. We should not have to subsidize them.
  In addition, I have evidence that the U.S. Department of Agriculture 
is not even enforcing current law, the current adjusted gross income 
cap of $2.5 million. So what makes us think they are going to enforce 
something at $500,000?
  This to me is more than just economics of the farm program. This is 
about good government. This is about responsibility to the taxpayers. 
Most importantly, this is about protecting the livelihood of America's 
small and midsize farmers who you might say are protected anyway 
because there is a safety net for them.
  But my point is, you pay these 10 percent of the biggest farmers 73 
percent of all the money out of the pot that is set aside for support 
for farmers, and we are going to lose urban support for the farm safety 
net, and small, medium, or big, there is not going to be any farm 
safety net, and someday you are going to wonder why there is not enough 
food in America.
  I want to take a minute to outline some of the folks who have 
supported this in the past. All 12 Democrats on the Budget Committee 
have voted to support this measure at one time or another. Last week, 
we had 13 votes in favor of a $250,000 hard cap, including a majority 
of Democrats. We have support from groups that are concerned about 
hunger in America or hunger in the world. We have the support of 
environmental groups. We have churches backing this. We have small and 
beginning farmer advocates.
  Let me remind this body of a report that was put out because of the 
2002 farm bill. Remember, we had this argument in 2002. We won 
overwhelmingly in the Senate. It was taken out in conference because of 
big corporate farm interests that were on the House Agriculture 
Committee, and they are probably still there, even though it is under 
Democratic leadership.
  We did not get these limits. So we had a commission report: Let's 
study this. Let's find out what we can do to make sure that 10 percent 
of the biggest farmers do not get 73 percent of the benefits out of the 
program.
  Well, do you know what the report said. After about 2 years of study, 
it said: Do exactly what was done in the Senate in 2002. And that is 
exactly what we got 56 votes to do a couple months ago when the farm 
bill was up in the Senate--but not 60 votes to get over that hurdle.
  The report also said that the 2007 farm bill is the time for these 
reforms to be made as part of a change in permanent law.
  Well, that time has come. By supporting the policies included in the 
Allard-Grassley amendment, we can allow young people to get into 
farming and lessen the dependence upon Federal subsidies. This will 
help restore public respectability for public farm assistance by 
targeting this assistance to those who need it.
  You might remember the last time we had a vote on payment limits was 
on the budget bill. Many of our colleagues said they agreed--no. The 
second time back we had a vote on this was on a budget bill. Well, at 
that time it was argued: Wait until the 2007 farm bill. It needs to be 
done on a farm bill. Well, you know what happened. You change the rules 
in the middle of the game. You think 51 votes will get an amendment 
adopted around here. Then somebody says: Well, we can't beat Dorgan and 
Grassley with a majority vote, so we will somehow scramble around and 
wiggle the rules--and I don't know what all it takes; and it will never 
be in the history books--but it happens that all of a sudden you need 
60 votes to get something done around here. We only got 56 votes, so we 
did not get it done.
  But to all my colleagues who said: Wait, a couple years back during 
the budget debate, we are done waiting. We will not be brushed off 
again. Payment limits must be done now, and waiting for a stalled farm 
bill is not an appropriate strategy. I call upon my colleagues to back 
this commonsense measure which a majority of this body has supported 
numerous times in the past. I hope we can count on our Senate 
colleagues to support the Senate position on payment limitations in 
conference.
  I yield the floor and thank all of my colleagues who were patient 
while I expressed my views.
  The PRESIDING OFFICER. The Senator from North Dakota.
  Mr. CONRAD. Madam President, I thank the Senator from Iowa. You do 
not have to agree with all the Senator has observed. I do not agree 
with everything he said here, but I do have great respect for him. He 
has conducted himself as a gentleman, especially with respect to these 
budget matters. I very much appreciate that. I want to make certain I 
say it publicly.
  I ask unanimous consent that Senator Stabenow, who has now waited 
well over an hour, be recognized for 15 minutes, to be followed by 
Senator Graham on the other side for 15 minutes, before we go to the 
joint economic presentation which has already been locked in at 5:15.
  The PRESIDING OFFICER. Is there objection?
  The Senator from Kentucky.
  Mr. BUNNING. Madam President, I was assured I would have time at 5 
o'clock to speak for up to 10 minutes.
  Mr. CONRAD. Madam President, why don't we go to Senator Stabenow for 
15 minutes, and then we will hopefully work out this matter with our 
other colleagues.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The Senator from Michigan is recognized for 15 minutes.
  Mr. CONRAD. I thank the Senator from Kentucky for his courtesy.
  The PRESIDING OFFICER. The Senator from New Hampshire is recognized.
  Mr. GREGG. Could we amend the unanimous consent to say that after 
Senator Stabenow speaks for 15 minutes we go to Senator Graham for 10

[[Page 3778]]

minutes and then to Senator Bunning for 10 minutes and the time that 
was supposed to start at 5:15 be moved to 5:20?
  Mr. CONRAD. Well, the only problem with that is I might need to 
respond. Why don't we do this: Why don't we proceed with the 
understanding of Senator Stabenow for 15 minutes--and then the desire 
is to go to Senator Graham; is that correct?
  Mr. GREGG. For 10 minutes, and then Senator Bunning for 10 minutes.
  Mr. CONRAD. I would like to reserve the right to be able to respond 
to Senator Graham, if I might. Will Senator Bunning be speaking on the 
same subject?
  Senator Bunning has been gracious. Why don't we do that. We will have 
15 minutes for Senator Stabenow, 10 minutes for Senator Graham, and 
then we will go to Senator Bunning for 10 minutes, and then I will 
reserve time in case it is needed to respond. We thank the Senator from 
Kentucky for his courtesy.
  Mr. GREGG. Then we will amend the agreement so the Humphrey Hawkins 
time will start at----
  Mr. CONRAD. At roughly 5:20. We pose that unanimous consent request.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The Senator from Michigan is recognized for 15 minutes.
  Ms. STABENOW. Madam President, as my friend from Iowa is leaving the 
floor, I thank him for his incredible leadership on children's health 
insurance and the bipartisan way we came together around that measure. 
We hope to be able to do it again because we have millions of children 
and families who are still waiting for children to be able to receive 
health insurance.
  I wish to speak, though, as a cosponsor of the Baucus amendment, to 
the middle-class tax relief amendment, which is so significant. I find 
it interesting: my friend from Iowa was referring to a chart that 
related to the payment limitation issue, with 73 percent of the 
benefits going to 10 percent of the farmers, where you could cross that 
out and put President Bush's tax cuts at the top, and you could have 
the very same kind of ratio or even more of a difference. You could 
take estate tax repeal and put that up there and have the very same 
kind of ratio. So I hope when we get to a debate of a permanent 
extension--which I understand is coming--of the President's tax cuts, 
that we will see that same kind of concern about where tax benefits are 
going in America. I have middle-class families, working families who 
are still waiting, frankly, to receive the benefits they have heard so 
much about.
  That is what this amendment, the Baucus amendment, is all about: 
focusing on the extension and addition of tax cuts for middle-class 
families and for our brave men and women who are serving in harm's way 
right now around the globe, particularly in Iraq and Afghanistan, and 
their families. This is a very important amendment.
  Let me start by saying what we want to address is the situation that 
is now occurring. We want to change what is now occurring as it relates 
to tax policy. Last year, in 2007, those who were earning more than $1 
million a year received a tax cut of $119,557. So, roughly, it is fair 
to say $120,000 in average tax cuts for somebody earning over $1 
million a year. That is more than twice what the average hard-working 
person in Michigan is earning, the paycheck that they are earning every 
single year.
  What we are seeing across the country are folks in the middle class 
being squeezed on all sides and actually seeing their incomes going 
down. Too many times we are seeing jobs being lost overseas. We are 
seeing people being asked to take less in terms of a paycheck. But 
gasoline now is projected to be inching up toward $4 a gallon, if my 
colleagues can believe it. Health care costs are going up. The cost of 
college is going up. Everything is going up, while wages, for most 
people, are either staying the same or going down.
  So when we talk about where we want to focus tax cuts for this 
country, it ought to be the folks who are working hard every day, who 
love this country and want to have the American dream available for 
themselves and their families but have not seen the tax cuts that have 
been talked about so much by the administration. So that is what this 
amendment talks about. Instead of $120,000 a year for somebody earning 
over $1 million, let's focus on middle-class families.
  The Baucus amendment would permanently extend the 10-percent income 
tax bracket. Everybody would get relief, but proportionately it would 
be relief for low- and moderate-income families. It would extend the 
refundable child tax credit. We want to make sure those families who 
have more than one child--two, three, four children or more--are able 
to benefit from the child tax credit. The marriage penalty--we want to 
make sure that is extended. Certainly, we ought not to be in America 
penalizing folks because they are married when it comes to their tax 
returns. This permanently extends marriage penalty tax relief.
  We also permanently extend the tax credit for childcare expenses. No 
one who has a child in America today will speak about childcare 
expenses as a frill. It is a necessity. If we care about children, 
children's well-being, and families, we need to make sure we are 
recognizing that childcare expenses are a very important and expensive 
cost for families, and we need to address that by permanently extending 
the tax credit for childcare expenses.
  We also permanently extend the increased adoption tax credit. We want 
to make sure families who are reaching out to children, who want to be 
able to adopt a child, have support and incentive to do that. 
Certainly, the biggest incentive is that beautiful baby, but we want to 
make sure the Tax Code will help them with their costs and expenses as 
well. Again, this is a pro-family, pro-children, pro-middle class 
amendment. I am hopeful it is one that we are all going to embrace.
  We all want to bring certainty to the estate tax law. No one, I 
believe, wants to see in 2010 the old law take place. We don't want to 
have uncertainty for families, for family farms, and small businesses. 
This permanently extends the tax relief that has already been adopted, 
the tax cuts that have already been adopted.
  Something else is very important for families right now as they are 
struggling to keep their homes. We are all very focused and have spent 
time on the floor talking about what we need to do. Senator Reid has 
put forward a very important proposal addressing what we can do to help 
with the home crisis and so many families losing their homes. This 
particular amendment includes a first of its kind standard deduction 
for property taxes for Americans who don't itemize on their Federal 
income tax returns but would allow them a tax deduction for their 
property taxes. This is a very important piece for supporting families 
who are working hard to be able to literally keep their home.
  The other provision that is so significant is to focus on those 
things that are needed in the Tax Code to support our brave men and 
women who are serving us in Afghanistan, in Iraq, and around the globe. 
We have men and women now who are on third and fourth redeployments. 
They have made tremendous sacrifices, and their families are as well, 
and we need to be doing everything we can to support them. So this does 
a number of things. It has a permanent allowance for soldiers to count 
their nontaxable combat pay when they figure in the earned-income tax 
credit, so they can get the benefit of the earned-income tax credit for 
low-income working families. We provide a tax cut for small businesses 
that are paying some of the salary of the members of the National Guard 
and Reserve who are called to duty. Again, we have families now that 
are really at a point of desperation trying to figure out how to pay 
the mortgage, how to keep going, and we have so many small businesses 
that are being supportive, and we want to recognize that and give them 
some support as well.
  A permanent allowance for all veterans to use qualified mortgage 
bonds to purchase their homes, again, is another way to help people be 
able to purchase homes, to be able to do what we

[[Page 3779]]

all want, which is to have a home, save through the equity of a home, 
and be able to live a good life in America.
  We also have created the ability for Active-Duty troops to withdraw 
monies from retirement plans without penalty. This is very important, 
when people unfortunately now have dipped into savings. They may have a 
home equity loan going on and they find themselves in strapped 
situations and we ought to allow them to take their savings and 
retirement plans without penalty to be able to help them pay the bills.
  We have an extension of a provision that gives retired veterans more 
time to claim a tax refund. Under certain disability benefit payments, 
the ability for families of reservists killed in the line of duty to be 
able to collect life insurance and other benefits provided by civilian 
employers and the ability for families of soldiers killed in the line 
of duty to contribute 100 percent of survivor benefits to retirement 
savings accounts or education savings accounts. This is a very 
important part of this amendment that pays tribute to those who have 
been asked to sacrifice the most, whether it be someone bravely serving 
right now in the war, someone who has come home disabled, or the family 
of someone who did not come home.
  We are debating a budget resolution right now and talking about who 
receives benefits and where we have to make hard choices. The folks who 
have made the toughest choices are the folks who are serving us, 
serving our country in war halfway around the world. I have a lot of 
folks who are in this category of getting the more than $120,000 a year 
in tax cuts this last year who have said to me: I don't need it. I earn 
over $1 million a year. I don't need this. Give this to the men and 
women who are serving us. Help pay for the war so that we are not 
paying for it on a credit card or make sure our veterans have the 
health care they need when they come home or make sure we fund a GI 
bill that Senator Webb has introduced that would provide educational 
opportunities for the men and women who have come home from this war 
that so far has lasted 5 years.
  So there are many wonderful people who love our country who are 
saying this kind of a tax system where those who make less than 
$100,000 a year get $674, but if you make $1 million a year or more you 
get $120,000 in a tax cut, just doesn't make sense. In my opinion, it 
doesn't represent the great values of America, our values and 
priorities, what we are all about in this country. We are not about 
having a system where a privileged few receive all of the benefits, 
while we are asking so many others to sacrifice and to be able to be 
required, unfortunately, on too many occasions now, to lay down their 
lives for their country.
  So I hope the Baucus amendment is passed overwhelmingly. Then I hope 
we say no to what I believe will be an additional amendment, which 
would extend this tax policy. It would extend it out. With a war unpaid 
for, with the massive debt that we have in our country, the obligations 
to our veterans and their families when they come home, we do not need 
to extend a tax policy that has given so many of our precious resources 
to a blessed few people in our country, many of whom are asking us, in 
fact, not to do that.
  So I thank our leader on the Budget Committee for all of his 
wonderful leadership, as well as the ranking member.
  I yield back the remainder of my time.
  Mr. CONRAD. Madam President, would the Senator withhold for just one 
moment for the purpose of a unanimous consent request that the ranking 
member and I previously worked out?
  Mr. GRAHAM. Yes.
  Mr. CONRAD. Madam President, I ask unanimous consent that the Baucus 
amendment be temporarily laid aside for the purpose of the Republicans 
offering the Graham amendment, and that the Baucus amendment remains as 
the regular order, regardless of the pendency of other amendments.
  The PRESIDING OFFICER. Is there objection?
  Without objection, it is so ordered.
  Mr. CONRAD. I thank the Chair, and I thank the distinguished Senator 
from South Carolina for his courtesy.
  The PRESIDING OFFICER. The Senator from South Carolina is recognized.


                           Amendment No. 4170

  Mr. GRAHAM. Madam President, I send an amendment to the desk.
  The PRESIDING OFFICER. The clerk will report.
  The assistant legislative clerk read as follows:

       The Senator from South Carolina [Mr. Graham], for himself, 
     Mr. McCain, Mr. Kyl, Mr. McConnell, and Mr. DeMint, proposes 
     an amendment numbered 4170.

  The amendment is as follows:

  (Purpose: To protect families, family farms and small businesses by 
    extending the income tax rate structure, raising the death tax 
 exemption to $5 million and reducing the maximum death tax rate to no 
 more than 35%; to keep education affordable by extending the college 
tuition deduction; and to protect senior citizens from higher taxes on 
        their retirement income, maintain U.S. financial market 
competitiveness, and promote economic growth by extending the lower tax 
                 rates on dividends and capital gains.)

       On page 3, line 11, decrease the amount by $949,000,000.
       On page 3, line 12, decrease the amount by $3,215,000,000.
       On page 3, line 13, decrease the amount by $93,791,000,000.
       On page 3, line 14, decrease the amount by 
     $127,024,000,000.
       On page 3, line 15, decrease the amount by 
     $151,137,000,000.
       On page 3, line 20, decrease the amount by $949,000,000.
       Qn page 3, line 21, decrease the amount by $3,215,000,000.
       On page 3, line 22, decrease the amount by $93,791,000,000.
       On page 3, line 23, decrease the amount by 
     $127,024,000,000.
       On page 3, line 24, decrease the amount by 
     $151,137,000,000.
       On page 4, line 5, increase the amount by $18,000,000.
       On page 4, line 6, increase the amount by $110,000,000.
       On page 4, line 7, increase the amount by $2,487,000,000.
       On page 4, line 8, increase the amount by $8,005,000,000.
       On page 4, line 9, increase the amount by $15,207,000,000.
       On page 4, line 14, increase the amount by $18,000,000.
       On page 4, line 15, increase the amount by $110,000,000.
       On page 4, line 16, increase the amount by $2,487,000,000.
       On page 4, line 17, increase the amount by $8,005,000,000.
       On page 4, line 18, increase the amount by $15,207,000,000.
       On page 4, line 23, increase the amount by $967,000,000.
       On page 4, line 24, increase the amount by $3,325,000,000.
       On page 4, line 25, increase the amount by $96,278,000,000.
       On page 5, line 1, increase the amount by $135,079,000,000.
       On page 5, line 2, increase the amount by $166,344,000,000.
       On page 5, line 8, increase the amount by $1,214,000,000.
       On page 5, line 9, increase the amount by $4,539,000,000.
       On page 5, line 10, increase the amount by 
     $100,817,000,000.
       On page 5, line 11, increase the amount by 
     $235,846,000,000.
       On page 5, line 12, increase the amount by 
     $402,190,000,000.
       On page 5, line 16, increase the amount by $1,214,000,000.
       On page 5, line 17, increase the amount by $4,539,000,000.
       On page 5, line 18, increase the amount by 
     $100,817,000,000.
       On page 5, line 19, increase the amount by 
     $235,846,000,000.
       On page 5, line 20, increase the amount by 
     $402,190,000,000.
       On page 26, line 16, increase the amount by $18,000,000
       On page 26, line 17, increase the amount by $18,000,000
       On page 26, line 20, increase the amount by $110,000,000
       On page 26, line 21, increase the amount by $110,000,000
       On page 26, line 24, increase the amount by $2,487,000,000
       On page 26, line 25, increase the amount by $2,487,000,000
       On page 27, line 3, increase the amount by $8,005,000,000
       On page 27, line 4, increase the amount by $8,005,000,000.
       On page 27, line 7, increase the amount by $15,207,000,000.
       On page 27, line 8, increase the amount by $15,207,000,000.

  Mr. GRAHAM. Madam President, consistent with the unanimous consent 
request, I will talk for 10 minutes about the outline of this 
amendment. I, too, would like to recognize the chairman of the Budget 
Committee and the

[[Page 3780]]

ranking member for dealing with what I think is a very fruitful and 
important exercise in American democracy, and that is setting the 
budget. We are going to try to create a budget to guide the Federal 
Government not just this year but in coming years.
  If I had to showcase a difference between honorable men and women in 
the Senate about our philosophies, how you think about the economy, 
showcase differences between people who are very sincere and all love 
their country, it would probably be this amendment. Senator Baucus's 
amendment--I will vote for that; it extends tax cuts to families, child 
tax credits. The details of the amendment will be discussed on the 
floor. Certainly, it is needed.
  My amendment is about those tax cuts that will be left behind if we 
pass Senator Baucus's amendment and we let current law expire. This 
probably illustrates the difference between the parties as much as any 
other event that I could offer to the American people. We live in a 
global economy, and the question for America is this: What kind of tax 
structure do we need in place to make sure capital will be formed here 
and not leave? Does your Tax Code matter when it comes to creating 
jobs? Does the amount you take from a business--a small business or a 
major corporation--matter in terms of a global economy? Does it affect 
people's decision about where to do business? What is fair?
  This idea of class warfare--that it is not fair to do this for one 
group if you are going to do something for the other group--would be a 
great debate to have. What I am trying to do is offer an amendment to 
complement Senator Baucus's, to make sure our tax structure in America 
is fair to those who work hard, who hire people, who create capital and 
jobs, to those in retired status who are depending on their investments 
earlier in life to get them through.
  Here is the question for the country: Under the current law that we 
passed several years ago, which expires in 2010, the top tax rate is 35 
percent. The question for America is: Is a 35-percent top tax rate at 
the Federal level fair? It seems to be a gracious plenty to me--35 
percent out of whatever you earn going to the Federal Government as the 
top rate. Should it be more? Should it be less? Well, 35 percent, to 
me, is more than a gracious plenty to be sending to the Federal 
Government because most people have to pay taxes at other levels of 
government.
  Now, in 2011, if we do nothing, the 35-percent rate goes to 39.6; the 
33-percent rate goes to 36; the 28-percent rate goes to 31; and the 25-
percent rate goes to 28.
  If you ask a variety of Americans--and this has been true for 10, 15, 
20 years--what is a fair amount for an American to pay to the Federal 
Government in terms of the income they earn, the No.1 answer is 
consistently 25 percent--regardless of income, region, rich, poor, 
black or white. Most Americans view 25 percent as a fair amount that 
somebody should have to pay to the Federal Government in terms of their 
income. We are now at 35 percent, and we are trying to hang on to that.
  Our Democratic friends, by opposing this amendment, would allow the 
top rate to go to 39.6. But most importantly, it would allow the 25-
percent rate for that class of taxpayers to go to 28. Who is at the 25-
percent rate? It starts with income levels of $31,850 for single and 
$63,700 for married couples. In 2011, they would, at that rate--if my 
amendment is not passed--have to pay 28 percent.
  That is a lot of money from the economy going to Washington, at a 
time when we need money at home for families and businesses. Small 
business owners are in the 35-percent rate in large numbers. Do we want 
to take every small business that is paying 35 percent of their income 
to the Federal Government and, 3 years from now, make it 39.6 percent? 
Numbers matter. To us, we are picking numbers. At home, it is the 
bottom line. I grew up in a small town in South Carolina, where my dad 
owned a liquor store, a restaurant, and a pool room. I can remember 
that we got by. Neither of my parents graduated high school. The one 
thing I can remember about small business life is you have no option 
not to get up and go to work. If you are dog sick, you still have to go 
to work because nobody will pay the bills if you don't open the door. 
We had health insurance basically for the four people in our family. My 
mother got Hodgkin's disease, and I paid those bills up through when I 
was in the Air Force. To the people out there making a living, the 
burdens of regulations matter.
  I think we should come together and say something simple: 35 percent 
is enough to take from anybody. If you don't like rich people, if you 
think there is an amount of money that is too much to make, then that 
is one way to run the Government, I guess. That is one way to create a 
society--put a ceiling on what people can do. As long as you earn your 
money honestly and fairly, the better you do, the happier I am for you. 
If I take 35 percent of what you make, I think I have probably taken 
enough. Should I take 39.6 percent because somebody makes too much? If 
you let the Government do that, I think you are letting the Government 
get out of line and out of control.
  And it is just not the people who make a lot of money whom I am 
worried about; it is people who are working for every dollar they can 
get to grow their business and pay the families' bills that I worry 
about.
  As I said, the amendment I am trying to offer to the Senate will keep 
rates at 35, 33, 28 and 25 and not go to 39.6, 36, 31, and 28. If we 
don't pass this amendment, there is going to be a major tax increase 
coming to hard-working Americans out there, at a time when we live in a 
global economy; and if we take any more from Americans, a lot of our 
businesses are going to leave us. How many people are affected by my 
amendment? Twenty-eight million people will experience a tax increase 
by 2011 if this amendment doesn't pass.
  Now, we have heard that two things are certain--death and taxes. The 
only thing I can tell you about taxes is that if you touch it, use it, 
put it in your car or eat it, in America it is taxed in some form. And 
then you die. Well, we have an estate tax law in America, and it goes 
kind of like this. The current law is you get a $2 million exemption 
for a couple at a 45-percent rate. If you have an estate over $2 
million as a couple, the Government takes 45 percent of what is left. 
You have paid taxes on everything you have earned right before you 
died. Here comes the Government, after the $2 million exemption has 
been reached, and it takes 45 percent of what is left. That is current 
law. That is supposedly too good a deal. I don't think it is that great 
a deal.
  In 2010, here is what happens if we do nothing: Instead of a $2 
million exemption for a couple, it goes back to $1 million, and you get 
a 55-percent tax rate on everything else that is left. How many small 
businesses out there, on paper, have assets over $1 million or $2 
million? How many farmers are land rich and cash poor? Is that good 
policy? One thing I can tell you for sure, being a former prosecutor, 
if we don't do something about this, there are going to be a lot of 
mysterious deaths on New Year's Eve 2010. Look at the consequences of 
dying one day versus the other. It is political malpractice for the 
Congress to put people in this bind, where estate tax rates go from 45 
to 55 and the exemption is cut in half, based on dying one day versus 
the other. That is bad public policy. We need to fix it.
  My amendment would say there would be a $5 million exemption for 
couples in this country and, after that, a top rate of 35 percent for 
the death tax. In other words, 35 percent of everything you worked for 
all your life, after a $5 million exemption, would be taken by the 
Government.
  The PRESIDING OFFICER. The Senator's time has expired.
  Mr. GRAHAM. May I have 5 more minutes?
  Mr. CONRAD. Yes.
  Mr. GRAHAM. What I am trying to do is offer an amendment that will 
preserve current law so in 3 years, in the case of the death tax, and 2 
years, we don't hit people with a tax increase, at a time when we don't 
need to be raising taxes, at a time that we live in a global economy.

[[Page 3781]]

  When it comes to the death tax, one in three small business owners is 
never able to pass their business on to the next generation because, 
when they die, the assets are evaluated in such a way that people have 
to break up the business to pay the taxes or they have to sell the 
family farm.
  That is not what we need to be doing in America. That is not fair. 
The capital gains taxes are at 15 percent under current law. In 2011, 
they go to 20 percent. There are over 9 million families and 
individuals who will claim capital gains, and if this amendment doesn't 
pass and we don't do something about this, there are going to be 9 
million families hit by a tax increase out there, at a time when our 
economy needs more money in the private sector, not in Washington.
  As to dividends, there are a lot of people in this country--24 
million families and individuals--who receive dividend income. Under 
current law, it is taxed at 15 percent. In 2011, the dividends go back 
to regular income tax rates--a dramatic increase.
  What does that mean? That means owning stock becomes less attractive. 
There will be less people buying stock and receiving dividends from 
purchasing stock. That means people who are trying to create a company 
or expand their business will have to borrow the money from a bank, 
rather than getting investors from the market, and that will create 
more debt on top of what is already a debt-laden country.
  As to small business expensing, under current law, firms may expense 
up to $250,000 of qualified assets of property they place in service in 
2008. In 2011, the expensing allowance is scheduled to revert to 
$25,000. By being able to expense, from a tax point of view, the 
purchase of assets, you are able to grow your business, and it makes it 
attractive to expand your business.
  If we don't pass my amendment, in 2011, that $250,000 allowance goes 
down to $25,000. My amendment reflects a Tax Code that is very generous 
to the Federal Government but is still burdensome on families and 
businesses. But to let it get worse, at a time when we are competing in 
a global economy, and try to pit one group of Americans against 
another, at a time when we are trying to put our best foot forward as a 
nation under a stressful business climate, is ill advised.
  If you think America is undertaxed, then vote no. If you think we 
have taken a gracious plenty from business and families, then vote yes. 
If we don't make these tax cuts permanent in 2013, we are going to 
drive people offshore and create less jobs, not more; we are going to 
tax people who are struggling to make it as it is; and it will all be 
under the idea of fairness. It is unfair to not pass my amendment.
  I think it would be incredibly shortsighted not to pass my amendment 
and make these tax cuts permanent that would allow Americans to keep 
jobs and grow jobs and pay the bills they are struggling to pay right 
now.
  I yield the floor.
  The PRESIDING OFFICER. The majority leader is recognized.
  Mr. REID. Madam President, there will be no more rollcall votes 
tonight. There has been tremendously good debate. We have had few, if 
any, quorum calls all day long. It has been a good and productive 
debate. The two managers are working through the amendments. An 
amendment has been laid down on both sides. We are making good 
progress. Hopefully, tomorrow we will make even more progress. I 
appreciate the good work of the managers of the bill.
  The PRESIDING OFFICER. The Senator from Kentucky is recognized for 10 
minutes.
  Mr. BUNNING. Madam President, I wish to speak today as a member of 
the Senate Budget Committee. I had hoped the budget that was presented 
before the committee last week was going to be fiscally responsible and 
would help to address the mounting financial problems families face 
today, problems such as the rising cost of filling up a tank of gas, 
increased expenses for health care, and declining equity in the family 
home. Instead, this budget before us assumes Congress will allow the 
largest irresponsible tax increase in the history of the United States 
to go into effect. At $1.2 trillion, it would be the largest tax 
increase in history, and taxes would go up $2,300 on 43 million 
American families, $2,200 more on 18 million senior citizens, and 
$4,100 more on small businesses. Because of this, I was not able to 
support the budget resolution in committee, and I will be forced to 
vote against it here unless some drastic changes are made.
  This tax increase will hit family budgets hard. Let me tell my 
colleagues what $2,300 means to most American families. The family 
budget--and we are talking about groceries now--$2,300 is enough to buy 
8 months of groceries. Next, we have the bills for gas and electric for 
heating; $2,300 a year is enough for 43 million American families to 
buy enough gas and electric for 1 year's heating. It is almost enough 
money for American families with two cars to buy gasoline at $3.20 a 
gallon for unleaded regular for almost an entire year. We should not, 
at this time, be placing more of a burden on the American people with a 
huge tax increase. Instead, we need to pass a budget that includes 
progrowth policies to help balance the family budget.
  This budget proposal increases spending by $210 billion in 
discretionary spending--an increase of over 9 percent of what we spent 
in fiscal year 2008. Under this budget, we will see a $2 trillion 
increase in the debt of the United States by 2013. That is more than 
$6,000 in extra debt for each and every American citizen.
  At $3.08 trillion, this budget resolution calls for $10,165 of 
spending for every man, woman, and child in America--all 300 million of 
us. But there are only about 130 million taxpayers who file an income 
tax return. Of those 130 million, only about 14 million had an average 
income liability of over $10,000 in 2005. Of these, about 11 million 
had gross incomes between $100,000 and $200,000. That leaves 3.5 
million taxpayers--no more than 2 percent--with an income above 
$200,000. These wealthy few are paying an extraordinary 50.1 percent of 
all Federal tax revenues. But even if you taxed away half of their 
income, the additional revenue would not add up to enough to balance 
the budget and pay for programs in mandatory spending this budget 
resolution assumes over the long term.
  The idea that money can be found in a mythical source of funding 
called the tax gap is unlikely as well. The chairman of the Budget 
Committee repeatedly has noted that the IRS estimate of the gross tax 
gap is close to $345 billion per year. However, the idea that anywhere 
near this amount of money can be raised by closing the tax gap is 
simply an illusion. It is nothing more than a figleaf meant to conceal 
the intent of spending beyond the means of the Federal Government.
  The truth is, we are not really serious about this, and the proof is 
that we do not have a proposed penny more in this budget for the IRS 
than the President does in his budget. It would be difficult to drive 
the long-term history level of voluntary compliance from 85 percent, 
where it is now, to nearly 100 percent in order to tap into this 
mythical source of funding because that is what it would take to raise 
$345 billion per year. But it is hard to see how it can be done without 
a vast increase in the size of the IRS.
  We also need to pass a budget that includes the necessary funding to 
help us stop our addiction to foreign oil.
  In 2005, Congress enacted a comprehensive national energy plan--the 
first step toward energy independence. Nevertheless, this year has been 
a difficult year for Americans facing much higher energy costs. The 
policies we enacted in 2005 needed to be backed up with Federal funding 
in the budget, but this budget resolution fails to address important 
alternative-fuel technologies and other oil replacements.
  One of our top priorities should be on our most abundant domestic 
fossil fuel: coal. New technologies will make burning coal both cheaper 
and more efficient. We are even developing coal-to-liquid technology 
that can create a synthetic transportation fuel from coal. American 
coal reserves will be our best tool to overcome our reliance on Middle 
Eastern oil.

[[Page 3782]]

  I have three amendments I wish to propose to this budget resolution.
  First, I wish to offer an amendment that will repeal the unfair tax 
Congress enacted in 1993. I have brought this issue before the Chamber 
before, so it should be familiar to many of my colleagues. In fact, the 
Senate adopted a very similar amendment by unanimous consent last year, 
and it passed by a recorded vote 2 years earlier.
  When the Social Security Program was created, benefits were not 
taxed. In 1983, Congress decided that half the benefits of some seniors 
should be subject to taxation and in 1993 raised that amount to 85 
percent of the Social Security benefits. Today, more than 15 million 
seniors are affected by that taxation of benefits. In 1993, the tax was 
intended to reach only wealthy seniors by the income levels which were 
set at $34,000 for a single and $44,000 per couple. This is hardly 
wealthy today.
  My amendment is fairly simple. It drops the tax back to the pre-1993 
levels, and it is paid for by an offset of $89 billion over 5 years by 
an adjustment in function 920. Over $300 billion in potential savings 
on Government programs over the next 5 years has been identified by the 
inspectors general report and the CBO options report. And it is my hope 
that the committees of jurisdiction will review wasteful Government 
spending to offset the repeal of this tax increase on America's 
seniors. It was unfair then when it was enacted, and we need to repeal 
it now. I urge my colleagues to support this amendment.
  The second amendment I plan to offer, together with Senator Ben 
Nelson of Nebraska and Senator DeMint, will make room in the budget to 
permanently extend the tax incentives for adoption that we enacted in 
2001. This is a critical kitchen-table, family-budget issue for many 
middle-income families in Kentucky and across the country who are 
contemplating the adoption of a young child or facing costs of 
adoption. By helping to ease this financial burden, we can encourage 
the development of more stable families and provide a brighter future 
for thousands of children.
  This important goal prompted us to act in 2001 when we passed these 
important adoption incentives in the form of tax credits. In 2005 
alone, 85,000 families, 77 percent with an adjusted gross income of 
under $100,000, claimed $319.5 million in adoption credits.
  The PRESIDING OFFICER (Mr. Whitehouse). The Senator's time has 
expired.
  Mr. BUNNING. Mr. President, I would like to mention the last one, and 
I will be finished. I ask for 1 additional minute.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. BUNNING. Mr. President, last year the Joint Committee on Taxation 
scored the cost of my bill, the Adoption Tax Relief Guarantee Act, at 
$4.5 billion over 10 years.
  The last amendment I wish to discuss will require the budget 
resolution to balance the Federal budget without Social Security taxes. 
For too long, we have been relying on payroll taxes to pay for general 
Government spending. As we all know, 2017 is the year in which Social 
Security obligations begin to equal payroll tax contributions, but our 
problems are likely to emerge much sooner.
  In 2011, payroll tax contributions to the Social Security trust fund 
will begin to decline. Each year, we are going to have a problem, and 
by the year 2044, we will be paying 72 percent of the assigned benefits 
right now on our Social Security unless we address the Social Security 
spending in our current general budget.
  I thank the Chair.
  The PRESIDING OFFICER. The Senator from North Dakota.
  Mr. CONRAD. Mr. President, I thank, once again, the Senator from 
Kentucky for his courtesy.
  At this point, I wish to offer a unanimous-consent request that we 
have worked on both sides that would be this: From 5:20 p.m. to 6:20 
p.m. will be the time for the Joint Economic Committee; the first 5 
minutes of that time--is that sufficient for the Senator?
  Mr. WEBB. That will be sufficient.
  Mr. CONRAD. The first 5 minutes will go to Senator Webb, then come 
back to, for the next 30 minutes, Senator Brownback, then come back to 
this side for the final 25 minutes of JEC time; then at 6:20 p.m., to 
go to Senator Dorgan from 6:20 p.m. to 6:35 p.m.; to Senator Hatch from 
6:35 p.m. to 6:50 p.m.; to Senator Conrad or his designee from 6:50 
p.m. to 7 p.m.; to Senator Coburn or Senator Gregg's designee from 7 
p.m. to 7:15 p.m.; and to Senator Brown from 7:15 p.m. to 7:30 p.m.
  The PRESIDING OFFICER. Is there objection?
  Mr. BROWNBACK. Mr. President, reserving the right to object, and I 
will not object, I know we need to move everything back 10 minutes 
because we were supposed to start at 5:20 p.m. and we are already 10 
minutes past that time. So if we move everything 10 minutes back--
  Mr. CONRAD. The Senator makes a good point; if we can adjust all 
those times to 10 minutes later.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. CONRAD. Mr. President, that means we now go to Senator Webb for 5 
minutes.
  The PRESIDING OFFICER. The Senator from Virginia.
  The PRESIDING OFFICER. The Senator from Virginia is recognized.
  Mr. WEBB. Mr. President, I appreciate the chairman allowing me to 
speak and also I appreciate the Senator from Kansas allowing me to 
speak briefly before he does.
  I want to express my support for the provisions in this budget that 
go to the veterans programs. I want to deal with that in a minute.
  First, I would like to point out to this body that this afternoon, 
ADM William Fallon, who is the commander of Central Command, resigned 
his position. We are not sure exactly how this is going to affect the 
administration's policies or Admiral Fallon's long-term willingness to 
express his views on administration policies, but I want to express my 
own regret that Admiral Fallon, who has served our country more than 40 
years, has decided to resign his post in part, apparently, because of 
his concerns about some of the administration's policies.
  I know a little something about resigning. I resigned my position 
when I was Secretary of the Navy when I was unable to support some 
dramatic reductions in the Navy shipbuilding program. Those are not 
easy decisions to make. I would also point out that this administration 
is not an administration that has tolerated dissent from our military 
leaders or, for that matter, is not an administration that has been 
very willing to seek advice from our military leaders, our senior 
military leaders, particularly when that advice is not in strict 
accordance with its own political views.
  It should be pointed out that Admiral Fallon, who is the commander of 
Central Command, which is the overarching command that also includes 
Iraq, is now the third CENTCOM commander in recent history to have had 
at least some form of concerns about policies in that region.
  Before we invaded Iraq, GEN Tony Zinni, Marine Corps general, former 
CENTCOM commander, spoke out strongly against invading Iraq, as did GEN 
Joe Hoare, former CENTCOM commander. So I think we need to see a 
greater willingness among our political process to listen to the views 
of people who have had long service and who have concerns about where 
this country is going.
  There are too many people who have been involved at the top levels in 
the Pentagon who tend to believe that Iraq is something of an island, 
that you can separate what is going on in Iraq from other issues that 
are affecting the entire region. This is a region that is in chaos, all 
the way from Lebanon to Pakistan, as we well know. We need the advice, 
the contributions of global thinkers.
  Admiral Fallon was one of them, Admiral Mullen is another, people who 
bring another sort of strategic perspective into this debate. I am 
profoundly concerned that Admiral Fallon has decided to take this 
measure, and I am hoping that we can hear from him in a more specific 
way in the future.

[[Page 3783]]

  In fact, I would point out that I recently signed two letters on 
January 17, one to Chairman Levin of the Armed Services Committee and 
another to Senator Biden of the Foreign Relations Committee, both of 
which I sit on as a member, asking specifically that they invite 
Admiral Fallon, among others, to testify in consonance with General 
Petraeus's testimony coming up this year.
  I was saying last September that it was an error, I believe, only to 
focus on what General Petraeus was saying in the stovepipe of Iraq 
rather than to hear these strategic thinkers talking about the region 
at large. So I hope we can do that in some greater detail in the near 
future.
  Again, I want to express my profound appreciation for the service 
that Admiral Fallon has given our country.
  With respect to the veterans provisions in this budget, we on this 
side have put more money into it. We have listened to the joint 
opinions of our major veterans groups. A big part of this is the GI 
bill, which I introduced my first day in office. We now have 49 
cosponsors on this bill which will give those people who have been 
serving since 9/11 the same level of benefits as those who came back in 
World War II.
  On the one hand, we hear so many people, particularly in this 
administration, talking about how these who have been serving since 9/
11 are the next ``greatest generation,'' and on the other, this 
administration itself seems to oppose giving our veterans of this time 
period the same benefits we gave those who served during World War II--
a GI bill that literally transformed notions of class and privilege in 
the United States.
  I would remind my colleagues that for every dollar in tax 
remuneration that was paid on the World War II GI bill, we received $7 
in tax benefits because of the way they were able to advance their 
careers.
  I yield the floor.
  Mr. CONRAD. Mr. President, we wish to amend the previous unanimous 
consent agreement to provide that Senator Brownback finish his 
presentation on JEC by 6:05, from 6:05 to 6:30, that it be the JEC 
Democratic time; from 6:30 to 6:45, Senator Hatch be recognized; from 
6:45 to 7:15, Senator Coburn be recognized; from 7:15 to 7:30, Senator 
Brown be recognized; and that there also be an opportunity for Senator 
Coburn to continue after Senator Brown, if he should desire; and that 
at the end of that time, both sides would yield back an additional 5 
hours each off the resolution.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The PRESIDING OFFICER. The Senator from Kansas is recognized.
  Mr. BROWNBACK. Senator Webb and I are involved in the Joint Economic 
Committee's time. Under the Budget rules, we get a certain amount of 
time to talk about the impact of the budget on the overall economy. 
That is what I intend to do.
  I think it is also important to do this because, obviously, the 
budget does not happen in a vacuum, and the size of the Federal budget 
and its impact on the economy is so profound that I think we need to 
spend quite a bit of time, a lot more than just an hour's time, about 
what impact the Federal budget has on our overall economy.
  The things we do, it is impacting the overall economy. I appreciate 
Senators Webb's comments about the military actions. We actually have 
held a Joint Economic Committee hearing on the impact of the war in 
Iraq, in Afghanistan, on our overall economy.
  While I certainly dispute some of what the economists came forward 
with, I thought it was a useful thing for us to discuss. I think we 
ought also to look at that as not in a vacuum, given potential large 
impacts if the United States pulls out of Iraq and Afghanistan and 
pulls back from engagement on the global war on terrorism. It can have 
a huge impact on our economy, in many ways unmeasurable, and in a lot 
of ways difficult to predict.
  But the impact is enormous. I think we have to look at this and say: 
We need to stay in this. We need to be able to get this done. That 
stability has a clear, positive impact on the environment. And a change 
toward a more stable environment in the Middle East and toward a 
democratic process in Iraq and Afghanistan over a lengthy period of 
time has a very positive impact on the global economy and ultimately on 
the U.S. economy. I do not think we can discount those features. While 
members of the Joint Economic Committee on the other side of the aisle 
prefer to look only at economic costs associated with wars, there are 
clearly benefits derived from National security, which they should not 
ignore.
  I wanted to talk about now the budget proposal in a couple of ways. I 
would like to speak first about the impact of tax-and-spend proposals 
that are too much of a feature in the overall budget put forward by the 
Democratic majority in the Senate. I appreciate the work by those who 
constructed the budget. I recognize the difficulty of crafting a 
budget.
  But I think there are some fundamental flaws that exist in the 
Democrat's budget that if not addressed, or if addressed in the way 
that the Democratic majority puts forward, are going to have 
fundamentally negative impacts near term and long term on the U.S. 
economy and on our opportunities and our hope for the future.
  I think as a premise that we need to look at the United States as a 
place for a growth platform. We need to look at how we can grow the 
economic activity, increase the freedom for our people and the 
population overall, provide for everybody, and in that process grow and 
provide more opportunities for people here and for us in our future and 
future generations.
  If we go the way the Democratic majority is putting forward in this 
budget, we are going to see increased taxes, we are going to see 
increased spending of a substantial nature. We are not going to deal 
with the entitlement crisis we are already in, and we are not going to 
be able to provide for opportunities in our future.
  There are fundamental choices that people need to make and I will 
articulate these and I will go through them specifically. Our economy 
is currently experiencing a significant slowdown associated with the 
subprime mortgage meltdown, difficulties in financial markets, and 
certainly a slowing in our housing markets, which includes rising 
foreclosures.
  With that backdrop, though, now would seem to be exactly the wrong 
time to be talking about tax increases. Just on a basic level, you 
would look at that and say: If you have a slowing economy, is that the 
time to raise taxes? And I think most people, if you ask them, they 
would say: No, that is the time you cut tax rates to try to stimulate 
economic growth.
  Yet this Democratic budget provides just the opposite, a very large 
tax increase, raising taxes by $1.2 trillion, the largest tax hike 
ever. That is not something you want to do when the economy is slowing. 
It goes against economic fundamentals. But it also shows the 
fundamental impact of the Federal budget on the overall economy. This 
tax increase will be wide and deep, affecting nearly 116 million 
Americans, millions of American families, including seniors who will 
owe thousands of dollars more to pay for more and more Government.
  And, yes, this budget projects to make the Federal Government even 
larger and more intrusive. Not satisfied in the Democrat's last budget 
with a $205 billion 5-year discretionary spending increase; this 2009 
Democrat budget will increase spending by $210 billion over 5 years in 
this budget. Of course, this will lead to more and more debt that will 
pile up on top of more and more spending.
  I think the second major shortcoming of the budget proposal put 
forward by the majority is the failure to confront the need for 
entitlement reform. Now this is something we have been talking about 
for some period of time. I stand ready, and I hope a lot of my 
colleagues do, to go at, on a joint, bipartisan basis, entitlement 
reform. We have talked about it a lot. I am going to show charts on 
this. But the entitlement plans are going to eat up the entire budget. 
We will go through the specifics, but it is clearly an unsustainable 
system that we are in right now.

[[Page 3784]]

  Like in most problems, the earlier you deal with it the more options 
you have to deal with it. And the earlier you deal with it the more 
likely it will be that you successfully deal with it. And the earlier 
you deal with it the less pain there will be over a period of time, 
than if you deal with it later.
  These problems with entitlement promises that are unsustainable are 
the same. If we can come together, on a bipartisan basis now, start an 
entitlement reform, A, the country would cheer that we would do it; B, 
we would have more options; C, it would be more successful; D, it would 
be less painful. That is the way we need to go at it in dealing with 
our entitlement reforms.
  But in the Democrats' fiscal year 2009 budget, we see that they are 
again wishing to ignore this pressing problem associated with 
entitlement spending. So I wanted to take a look now at some of these 
problems and put a few charts up in front of people I think they are 
familiar with, but they remind us of the magnitude and the growing 
nearness of this problem of entitlement programs.
  If you look at the red line on this first chart, you see that total 
primary spending is projected by the CBO, Congressional Budget Office, 
a nonpartisan office, to rise from its current level of 18 percent of 
GDP to more than 30 percent at the end of this chart, 2082, a long ways 
out there, but it shows you clearly where the trend line goes under the 
current entitlement programs.
  Those are not adjustments to entitlement programs, those are current 
entitlement programs. Yes, Federal spending is projected to rise to 
over 30 percent of our Nation's GDP, under our current set of 
entitlement promises.
  The second chart shows that the longer we wait to address the 
unsustainable nature of promises in our entitlement programs, which 
this Democratic budget totally ignores, the bigger will be the pain.
  Now, here you can see reductions in spending that would be necessary 
to solve our entitlement crisis. For example, if we were to address our 
fiscal problems solely by cutting Federal spending starting this year, 
we would need an across-the-board spending cut of close to 7 percent. 
If we wait until 2020, we would have to cut spending across the board 
by 9 percent. To wait until 2040, you have to do it by 15 percent.
  That is my point; that is, the sooner you start to work on these 
things the less pain you have to have in the process, and the more 
likely it is that you are going to be successful in getting this done. 
These are dramatic spending cuts. But what if we can get started now 
and on a bipartisan basis, just going on a slight level and give people 
time to prepare for adjustments that will surely have to be made?
  You still get a much larger impact if you don't fix the unsustainable 
nature of our entitlement promises now, and instead wait longer. The 
longer we ignore the unsustainable nature of entitlement promises, the 
bigger will be the pain associated with bringing the Nation back to a 
sustainable fiscal course.
  Now, this is a commonsense proposal. You would say: Of course, then, 
I should deal with that now. We are offering to do it on a bipartisan 
basis. The chairman of the Budget Committee from the majority claims 
that the task force he and Senator Gregg wish to form to study the 
entitlement programs is the only way to deal with the problems. I am a 
cosponsor. I would sponsor legislation to do this. But that in no way 
mitigates the need to get started as soon as we can to reform 
entitlements now. Why wait for a task force to form? I think we need to 
get started on this now.
  To see how severe problems associated with the entitlement program 
promises are, consider the next chart which shows CBO's projection of 
health care spending. Now, here is the big one that eats us up. We know 
this. We have got fabulous things going in the health care field that 
probably are going to drive these costs up even more than this chart 
projects.
  I want to see those things developed further as far as the technology 
and the ability. I was out at the National Institutes of Health this 
morning looking at some of the things they are working on at the 
National Institute of Mental Health, understanding the mind and how it 
works. Fantastic.
  I want us to continue to fund that. That is going to probably drive 
this line up even higher. That may be the nature of where we are. We do 
not want to stop that funding. But then you see how dramatic and 
important it is to address this piece of it, the health care piece of 
it now, and to begin to address it at this point in time.
  Net Federal spending on Medicare and Medicaid now accounts for about 
4 percent of GDP. CBO projects, given current entitlement promises and 
not these major changes I am talking about, that spending will grow to 
almost 20 percent of GDP in the projected time period here of 2082. A 
long time now, still the trend line is known and knowable and we should 
use the ability to deal with it more now than putting that off until 
later on. So spending on Medicare and Medicaid alone, according to the 
projections on this chart, will use up the entire historic norms for 
tax collection and beyond.
  But Medicare and Medicaid are not the only entitlement programs. The 
next chart shows Social Security spending as a share of GDP in the past 
and spending projections for the future. While spending for Social 
Security benefits has been between 4 and 4.5 percent of GDP for the 
past couple of decades, it is projected to rise significantly to 6 
percent over the length of this chart's projection, not near the growth 
of entitlement programs, but still showing a significant 50 percent 
rise. If you add the 20 percent of GDP accounted for by Federal 
promises for Medicare and Medicaid, 6 percent for Social Security 
benefits, you see that the Federal Government has already promised over 
25 percent of our total yearly output to entitlement spending. This 
only counts promised entitlement spending right now. As I mentioned 
previously, our historical norm for the amount of tax collection that 
our society gives and puts into the Federal Government is about 20 
percent. If you get above that, people really start to yell. So we are 
already above that in the promises made in three entitlement programs. 
And that takes into account nothing for the military, for schools, for 
other social programs, for infrastructure, for unemployment, or for any 
discretionary spending.
  The Democratic majority seems to want to focus on one route here, and 
that is tax and spend. The Democratic majority, unfortunately, has 
chosen in their budget to ignore our Nation's looming fiscal crisis 
that is sure to come from the unsustainable nature of entitlement 
programs. This fiscal year 2009 budget promises to impose the largest 
tax increase in the history of this Nation on American families and 
does this at precisely the wrong time, when the economy is struggling. 
This will be the largest tax hike ever, amounting to an additional 
$3,135 in taxes each year for every household, over $3,100 a year 
increase in household taxes at exactly the time when people are getting 
concerned about economic activity. Just when we did the stimulus, we 
raise taxes.
  I want to take up the theme of the impact on our economy of this 
budget. That is the role of the Joint Economic Committee, and that is 
why they have been given a period of time to comment on this, because 
this has such a profound impact.
  Now I want to talk about the impact of raising taxes at this point in 
time on the overall economy. I have talked about entitlement programs, 
the failure to address those, the long-term pain that is associated 
with that, and the additional pain by putting it off on a longer basis. 
Now what about the impact of raising taxes at this point in time on our 
economy and who is going to pay those increased taxes? The Democratic 
majority's budget will raise taxes on at least 116 million Americans. 
It is not just on the rich, unless there are 116 million people 
categorized as that in the United States. It will tax the hard-earned 
income and retirement benefits of millions of American families and 
seniors to pay for larger and larger government rather than reform. I 
think what people

[[Page 3785]]

want to see is, you guys are going to operate within the amount that 
you have and reform the system. Reform what you have, don't tax and 
spend. Let's leave taxes where they are or make them lower so we can 
grow the economy more and then reform the system within rather than 
just adding and adding and adding.
  The majority would have you believe that they will offer amendments 
to make the middle-class parts of the tax reductions permanent. They 
are not including any teeth in that budget amendment, and we will 
almost certainly not see legislation to accomplish that extension in 
this Congress. It is just empty promises. Democrats complain that the 
tax relief measures of 2001 and 2003 primarily benefitted the wealthy. 
Let's go through a couple of charts to look at that claim and see who 
is paying these tax increases or paying and receiving the tax relief of 
2001 and 2003 and who would pay, if what the majority is putting 
forward is enacted, the tax increases.
  As shown by the changes in the share of total Federal tax liability 
by income group on the chart, the percentage of all taxes paid by the 
top income group has increased since the tax relief measures were 
enacted, and the share of taxes paid by the bottom four income groups 
has declined. I think this tells a dramatic and different story than 
what we hear a lot of times in the rhetoric. Where you look at the 
various income categories, the lowest 20-percent income category, next 
20, next 20 up, and on up, and then we put a block here showing the top 
1 percent income category. My point of showing this is on your bottom 
four income categories, the lowest 20 percent earners under the changes 
in Federal tax liabilities 2000 to 2005, this is the 2001 and 2003 tax 
cuts, the greatest beneficiaries under those tax cuts were the lowest 
income categories. The biggest beneficiary under those tax cuts was the 
bottom 20 percent. That is as it should be. The lowest income category 
should have the biggest impact, the most positive impact. You are 
seeing that in then the next lowest 20 percent, the bottom 40 percent 
here, then the 60, and then the 80 percent of lowest incomes.
  Now you look at the top 20 percent earners, they pay an increase as a 
percentage of the Federal budget of taxes under these tax cuts in 2001 
and 2003. And your top 1 percent is up 8.2 percent in terms of what 
they pay as their share of Federal taxes.
  My point in saying this is, these tax cuts have worked as they should 
have. They have cut the overall tax rate for individuals, and 
particularly for lower income individuals. They have stimulated the 
economy, and they have shifted the tax burden to the higher end of the 
income distribution. When you say tax cuts for the rich, your really 
should be talking about tax cuts for most Americans and the percentage 
they pay. This is as it should be. This is how it was designed. So when 
people say we have done these tax cuts for the rich, we are not going 
to extend them, does this chart show tax cuts for the rich? I think it 
shows tax cuts primarily benefitting the lower 80 percent of wage 
earners and having a burden shifting to the top 20 percent of income 
earners. That is the design it should have. It has grown the economy 
overall. It has been the way we should go.
  Yes, despite the tax relief measures that many tout as tax cuts for 
the wealthy, the share of taxes paid by the top 10 percent of income 
earners rose more quickly than during previous periods, including 
periods with higher top marginal tax rates. According to the most 
recent data, the share of all Federal income taxes paid by the top 10 
percent has reached an all-time high of 73 percent. Let me say that 
again. According to the most recent data, the share of all Federal 
income taxes paid by the top 10 percent has reached an all-time high of 
73 percent. You can see the trend line of what is taking place from 
1979; the top 10 percent of income earners, 1979, the percentage of 
income taxes paid was below 50 percent. In 2000, 68 percent; now it is 
all the way up to 73 percent, as it should be.
  Democrats talk about raising taxes on the wealthy, but fail to 
mention that not extending the tax relief measures of 2001 and 2003 
will result in huge tax increases for all Americans, as this chart 
displaying average percent increases in taxes by income levels shows. I 
wanted to show you this one. Low- and middle-income families will be 
the hardest hit by the scheduled tax increases that will occur in 2011. 
These families benefitted the most from a reduction in the bottom tax 
rate, from the child tax credit and marriage penalty relief contained 
in the 2001, 2003 tax relief measures. If the tax relief measures of 
2001 and 2003 are not made permanent, families with $50,000 in income 
will see their tax bills rise by 261 percent in 2011.
  On the other hand, families with $500,000 or more in income will 
experience a 12- to 13-percent rise in their taxes. Is that what you 
want for a structure of tax increases, putting the largest hikes on the 
lowest earning families and the smallest hikes on the upper earners? I 
don't think that is the way you want to structure tax increases. I 
don't think that is the way the American public would want to see that 
structured. I don't think the American people would want to see any tax 
increases. The average household will pay an additional $1,833 under 
the Democrat's plan. Many will have their taxes rise by even more. 
Seniors, families with children will pay an additional $2,000 or more. 
Married couples will pay an additional $3,000. Small business owners 
will have their tax bills rise by more than $4,000.
  Another shortcoming in this budget is the failure to adequately 
address the growing burden that the AMT will place on many middle-
income families. Although the AMT was enacted initially to prevent 
millionaires from avoiding taxes altogether, it will soon ironically 
affect a greater percentage of middle-income married couples with 
children than millionaires. Let me show this chart, the ones it is 
going to impact.
  This says, middle-income married couples with kids will be more 
likely than millionaires to pay the AMT in 2010. Here is your married 
couples with kids, AGI of $75,000 to $100,000, 89 percent will be in 
the AMT; millionaires, 39 percent will be in the AMT. The AMT needs to 
go. I think we should go and offer an optional flat tax for the overall 
Tax Code and do away with the AMT altogether. You can see its 
disproportionate negative impact on families, not hitting its target 
and having an overall very negative impact on the economy.
  Given the time I have left, I want to talk about a proposal we are 
going to put up in this budget and it is a bill on the CARFA 
commission, the Committee on Accountability and Review of Federal 
Agencies. It is something we have talked about before and we have had 
it up as a proposal in the Congress. I have had it up as a proposal and 
I have had a number of cosponsors. On the current CARFA bill, we have 
24 cosponsors. I hope it will be a bill that my colleagues in the 
majority will look at and support. It is built on the BRAC Commission. 
I would note that the BRAC Commission provided for a process to close 
military bases. Before we had BRAC, it was impossible to close a 
military base. Any time you wanted to close one, the people in that 
district, that State would fight you. You would never get any of them 
closed. We put together this BRAC process. They came up with a list of 
bases to close, and then they presented it to Congress. Congress got 
one vote up or down, close all of them, keep all of them, deal, no 
deal. Through that system, we have now saved the Federal taxpayer over 
$65 billion from that process of closing military bases and 
consolidating them in a few areas, working toward greater efficiencies. 
It has been very successful.
  What we need to do now as a part of the Federal budget is take that 
to the rest of the Government so we can close Federal programs that are 
no longer working.
  I want to show you this report card of how successful is the Federal 
Government. This is the Federal Government report card, and this is 
done as a scoring by Federal agencies, where they score the 
effectiveness of various programs for hitting their intended target 
when they were started and for the budget they have been given. I

[[Page 3786]]

want to note that if you gave a GPA to the Federal Government on 
accomplishments that it does with the money it has been given, the 
overall grade point average that the Federal Government gets is a 1.14 
out of a 4.0 GPA. Now, that is not very good.
  What happens--everybody knows this is what takes place--we get a 
program started, it gets funded, and it is never ended. It may be 
completely successful and all is accomplished, but the program 
continues because we do not do any sort of culling process at all. Then 
we want to do something new, but wait a minute, we did not do away with 
the old.
  The BRAC process we are talking about putting on the rest of 
Government--this CARFA Commission--would put that process on the rest 
of Government and I think dramatically improve this GPA because now you 
start getting rid of programs that are no longer effective, just like 
when we had military bases that were in places that were there because 
of maybe the Spanish American War or the early wars in this country--
completely out of position, no longer necessary but sustained because 
they had supporters in the system, even though they were not being 
effective.
  Well, imagine if you take that system of protection and nonculling 
and apply it to the rest of Government. How many programs do we have 
that we have created over the 200-plus-year history of the country, and 
we have never done away with any of them? We have not even adequately 
evaluated their effectiveness. You can see why we would be able to 
improve the government's GPA score and be able to have more money to 
put in higher priority areas, such as the National Institutes of 
Health, where I would like to do a war on cancer; or the things we need 
to do for infrastructure in the country. Yet we have never been able to 
eliminate any spending.
  Here is a systems approach, under my proposal, that has worked in 
another area, that has been key, that has produced $65 billion in 
savings, that we need to take to the rest of Government.
  So one of the amendments I will be putting forward is asking for the 
establishment of this CARFA Commission--Commission on Budgetary 
Accountability and Review of Federal Agencies--that will provide a 
list--a group on an annual basis--of programs that should be eliminated 
and give Congress then one vote, up or down: agree or disagree whether 
to eliminate this whole group or to keep the whole group.
  I think that is something we need to do overall. It ought to be 
something we can come together on, on both sides of the aisle. I would 
note that in traveling across this country and talking with people, one 
of the big things the American public wants to see us do is get 
together and get something done on something that is significant to 
them.
  One of those things is that we would be much more responsible to the 
Federal taxpayers as to what we are spending their money on. If we can 
become more responsible on that and work across the aisle and they 
could see Federal programs that are being eliminated because they are 
no longer effective or they are wasteful--and then they would actually 
see that taking place--I think people would then trust us more with 
taxpayer dollars rather than not trusting us with taxpayer dollars. If 
we can show them that, they would see us doing it on a bipartisan 
basis.
  This is something for which the outcome is certainly not stacked. 
This is something that both sides could support as a process because we 
have in the past. We could finally see something starting to take place 
in eliminating waste, fraud, and abuse in the Federal Government. 
Everybody is opposed to waste, fraud, and abuse in this body--
everybody. Yet it continues because the system is built to spend, it is 
not built to save, it is not built to reduce. We have a system that is 
built to save and reduce, and it is called that BRAC system in the 
context of military bases. Then that saved money is put into higher 
priority needs. Let's take that system out to the broader body of 
government.
  This is the short period of time given to the Joint Economic 
Committee to talk about the impact of the overall budget on the U.S. 
economy. The impact of this budget that the majority is putting forward 
is profound and it is negative on the overall U.S. economy. I urge my 
colleagues to vote against it because of that.
  It fails to address any sort of entitlement reform. It increases 
taxes at exactly the wrong time. You do not need to increase taxes, I 
think, at any time because of the scale of taxes. But when you have a 
slowing economy, it is the absolute wrong time to raise taxes. The 
Democrat's budget also does not deal with reform of the AMT, the 
alternative minimum tax, which it should. It raises taxes on lower 
income individuals in this society and in our economy, not on upper 
income individuals. Again, it does have tax increase at exactly the 
wrong time. And it does not include things such as fundamental spending 
reform through a CARFA type of process we used in the military base 
BRAC system before.
  Because of these failures of big-ticket, overarching items, this is 
the wrong budget at the wrong time that will have a negative impact on 
our overall economy. It will have a profoundly negative impact on our 
overall economy. It is not the right medicine of what we need to move 
forward. For us to grow this economy at this point in time, we need 
lower taxes, not higher taxes. For us to grow this economy and provide 
for our future, we need entitlement reform now. We also need to be able 
to get at our wasteful spending in the Government. We need to adjust 
our systems to be able to do that. Those are reforms that if we did 
them now--and did them at this point in time--we could have a much 
brighter and sustained future. This budget does not provide for those. 
For those reasons, I will be opposing this budget.
  Mr. President, I yield the floor and reserve any time I have on the 
Republican side for the JEC.
  The PRESIDING OFFICER (Mr. Menendez). The Senator from Pennsylvania.
  Mr. CASEY. Mr. President, I ask unanimous consent that I be permitted 
to speak for up to 15 minutes within the time allocated for the Joint 
Economic Committee on the floor.
  The PRESIDING OFFICER. Is there objection?
  Without objection, it is so ordered.
  Mr. CASEY. Mr. President, thank you very much.
  I wish to, first of all, start my presentation today with an 
overarching commendation of the work of the Budget Committee and, in 
particular, Chairman Kent Conrad, who worked, as he always does, along 
with the members of his committee from both parties who have worked 
very hard on this budget.
  We are going to have a significant debate this week and we are doing 
that now and it will be fairly heated because we have broad 
disagreements about this budget. But I do wish to commend Chairman 
Conrad and his work over many months, as he does every year, in his 
committee.
  I wish to focus on three areas: First of all, our fiscal situation 
that we face now because of what has been happening in the last several 
years with our Federal budget; secondly, to talk about our families and 
the struggles so many families are living through right now; and then, 
finally, to summarize very briefly some of the Democratic proposals and 
how they compare to the President's budget.
  But I wish to start first with our fiscal situation. And I wish to 
thank Nathan Steinwald, who is with us, who is not only helping with 
getting the right chart up but also has done a lot of work on our staff 
to prepare us for these budget debates.
  The first chart sets forth the deficit as it has taken hold over 
time. It starts on the far left corner, with that green bar, which 
starts at the year 2001, the first year of President Bush's 
administration. That is his first year. There was $128 billion in 
surplus in his first year. I would argue that is a surplus that was 
left over from the prior administration.
  But then you go into the 6 years after that, where we have data set 
forth and

[[Page 3787]]

depicted on this chart showing the deficits since President Bush has 
been in office from 2002 to 2007--$158 billion in deficit; $378 billion 
in deficit; the largest deficit, $413 billion, in 2004; it reduced 
somewhat to $318 billion in 2005. It had been reduced and went down to 
$162 billion last year. But then here is where we begin to get into 
trouble again. The projected deficit, as it is set forth in President 
Bush's budget: $410 billion is a projection for 2008; for 2009, it is 
$407 billion.
  So we go from a surplus, when he came into office, far into deficit. 
Just when you think we are crawling out of it, because of his 
proposal--if we enacted his budget--we are going to go back into almost 
record deficit. You can see they are almost at the record level of $413 
billion. So that is a big problem. That chart alone is evidence to tell 
us we should not adopt President Bush's budget.
  So let's go to the next chart, which focuses not on deficit but on 
debt. Unfortunately, this chart tells us even more. This is bad news. I 
will try to get to good news as soon as I can, but I think it is 
important to set forth where we have been, where we are, and where we 
are going. This is the debt of the United States: $5.8 trillion--that 
is what the T means--in 2001, the first year of President Bush's 
administration. As if it were ascending steps to an unknown height, 
step after step after step going up, the debt number is increasing year 
after year after year.
  So we keep borrowing under this administration ad nauseam, borrowing 
against our children's future. It is not just about some far off debt 
that this Government has put on our children--that is bad enough; that 
is reason enough to try to bring that number down--but we are paying 
for this every year, hundreds of billions of dollars in debt service 
right now. In 2007, we had that, and in years before that--2008, 2009. 
So we are paying for it now to the tune of hundreds of billions of 
dollars.
  Here is where we will be in 2009: a debt number of $10.4 trillion. At 
some point in that year, we will achieve a debt number of $10.4 
trillion. The President, even though he will technically be out of 
office in January of 2009, bears responsibility, a large part, if not 
all the responsibility, for that number: $10.4 trillion. In essence, 
this President has become the ``10 Trillion Dollar Man,'' the ``10 
Trillion Dollar President''--not something that anyone would want as 
part of their legacy.
  It is important to note that $5.8 trillion--that was the level we 
were at when he came into office--that number was actually starting to 
go down in the last couple of years of the prior administration. So 
instead of staying on that path and having a flat line--so to speak, 
holding it under control--this President, with a lot of help from the 
Republican Congresses, by the way, sent that number through the roof.
  As you can see, the final number--the most disturbing number, if we 
stay on the path we are on and do not adopt the policies that will lead 
us to get us on the path of fiscal responsibility--in 2013, the debt 
will be $13.3 trillion. Again, we are going to pay for that every year.
  We spent last year, in terms of debt service, more money than all of 
the Medicaid Program, which is over $200 billion in and of itself, and 
all of the State Children's Health Insurance Program. And you can add 
more to that. But consider that: We spend more on debt service than we 
do on both of those programs that help poor children, Americans who are 
suffering from a disability, children of working families who have 
health care. All of that health care, all the good things that happen 
in those programs do not equal what we are paying in debt service to 
finance his debt.
  So we are in a debt mess here. It is a fiscal nightmare. I will go to 
the next chart, which shows what we owe the foreign governments.
  A portion of that almost $10 trillion in debt, of course, is foreign 
debt, debt to foreign countries. The top 10 foreign holders of our 
national debt: In first place, Japan. We owe the Japanese Government 
$581 billion. We owe China $478 billion. It goes down from there; the 
UK; the ``oil exporters,'' we owe them $138 billion. It goes down from 
there.
  That is another piece of bad news. This is not some far off debt 
number. Some of them are allies; some of them are not. Some of them we 
have some real disputes with. We owe them hundreds of billions of 
dollars.
  I will go to the next chart where we have been hearing a lot the last 
couple days about the tax cuts. Well, let's look at how much they have 
cost us and what they will cost us. The cost of extending the Bush tax 
cuts explodes outside the 5-year budget window. So when you are talking 
about here that we are debating the budget for 2009--talk about 2009, 
look at the way that number goes up starting in 2010: the 10-year cost 
of $2.9 trillion for the Bush tax cuts if we stay on this path from 
2009 to 2018. So if you want to adopt the Bush tax cut, that is what 
you have to pay for. That is what you have to pay for in that 10-year 
window. To say it is unaffordable, to say it is fiscally reckless is a 
gross understatement, but I think we can see from all of the red why 
that is the case.
  So what do we do when we debate this budget? We can talk a lot about 
the fiscal situation, but I think it is probably even more important to 
talk about what has been happening in our country with regard to our 
families.
  It seems that in the life of a family, in terms of costs, everything 
that a family hopes would be going down is going up. A family would 
hope, I guess, that health care costs would be leveling off or going 
down. They have actually gone way up. We would hope the cost of a 
college education has flatlined or is staying at a certain level or 
going down. The cost of a college education is going up. Everyone knows 
the price of gasoline is going through the roof, is going up over and 
over again, month after month. The price of oil--I don't know what it 
did today, but we were over $105 a barrel; the subprime crisis we are 
living through and the cost of housing, the value of the house in terms 
of that family's value, their economic value on paper but also the 
value to our economy. So this housing crisis, caused in large measure 
by mortgage brokers and others who were unregulated and really took 
people over a cliff, so to speak, with regard to their housing costs, 
has caused tremendous pressure, first of all, on individual families 
but, of course, on our neighborhoods. Whenever we have a property 
foreclosed upon, a neighborhood disintegrates time after time. But at 
the same time, the costs of everything in the life of that family is 
going up, whether it is housing or gasoline or education or health 
care.
  The things a family hopes would be going up are things like consumer 
confidence. That is going down. The value of one's home, one would hope 
it would be increasing, but that has been going down. All of these up 
and down problems for families are real-life crises for so many 
families across America. What they expect us to do with this budget is 
everything we can to help dig them out of the economic crisis they 
face.
  So what should we do? Well, we can do a lot. We can, first of all, be 
fiscally responsible but also have budget policies and strategies in 
place that focus on creating not just jobs, not just any jobs, but 
good-paying, family-sustaining jobs. That means in particular budget 
proposals on how we fund an agency, what we cut and what we don't, what 
we increase and what we don't, but also it means trying to set aside 
places in the budget where we can make investments over time. These 
aren't things that will happen right away, these aren't things that can 
happen quickly, but these are priorities.
  For example, education--I think our budget should reflect that we 
place a value upon and we are actually going to invest in education, 
just as a good CEO would invest in workers. First of all, this budget 
resolution invests in education strategies that create jobs and growth, 
preparing our workforce for the global economy, making college 
affordable, improving student achievement. You can see what it does 
there: education tax cuts up to $13 billion, $5.7 billion over the 
President's budget in discretionary funding for the Department of 
Education and Head Start. Thirdly, an education reserve fund for

[[Page 3788]]

school construction and higher education authorization.
  The second chart talks about the way we can grow our economy and 
create high-paying, good jobs by investing in energy. The old way of 
thinking about this was that if you had to conserve energy or be more 
efficient, that was going to cost jobs. Now we know that when we are 
not in conflict, one of the best ways to create jobs is to invest in 
green-collar jobs and in green energy.
  I will go to the last chart in terms of our infrastructure, just to 
get this in before we conclude.
  Our infrastructure, everyone knows--we knew this before, but 
certainly when we saw the bridge collapse in Minnesota--that we have to 
invest in basic infrastructure. This budget resolution sets aside room 
in the budget to do just that: to invest in our infrastructure, whether 
it is highways or mass transit, whether it is airports or what we call 
ready-to-go infrastructure projects. Sometimes, when a company wants to 
locate in a community, they don't have time for a lot of debate. They 
need to get moving very quickly. We need projects and land set aside to 
do that.
  I will conclude with one final chart because I know the chairman of 
the Joint Economic Committee, Senator Schumer, is with us, and he is 
probably coming up next, and I want to make sure he has all the time he 
needs because he has been a great leader on these budget issues.
  The final chart I will put up: We hear a lot about Democratic 
spending, spending, spending from the Republican side. The differential 
between what the President proposed--$3.04 trillion--in this 2009 
budget and what we are proposing is $3.8 trillion. That is a 1-percent 
difference. So when we hear debate and arguments back and forth that 
Democrats are spending too much--more than the President--the 
difference is 1 percent.
  I have a lot more to get into, but I am going to conclude with this 
thought: We have to invest in good-paying jobs, family-sustaining jobs, 
and we also have to get our fiscal house in order. Unfortunately, I 
think the President's budget does not do that. The Democratic budget 
will.
  Mr. President, I yield the floor.
  The PRESIDING OFFICER. The Senator from New York is recognized.
  Mr. SCHUMER. Mr. President, may I make an inquiry of the Chair? How 
much time do I have?
  The PRESIDING OFFICER. The Senator has 10 minutes.
  Mr. SCHUMER. I ask unanimous consent for an additional 5 minutes. Is 
that in order?
  The PRESIDING OFFICER. Is there objection?
  Without objection, it is so ordered.
  Mr. SCHUMER. Mr. President, first, I wish to thank my colleague from 
Pennsylvania before he leaves the floor. He is a great member of the 
committee, a great Senator, and always has his eye on the average 
family. One of the reasons he has been so effective on the Joint 
Economic Committee is he understands all the concepts, of course, but 
then he is able to take them and relate them directly to the needs of 
average families. I thank him for the good job he did this afternoon, 
which is typical of the good job he always does on the JEC and 
elsewhere. I also thank my colleague, Senator Webb, who also took some 
time to speak on these issues.
  Now I will conclude our Humphrey Hawkins budget debate.
  Today, we are looking at an economy on the verge of recession. Many 
economists would say it is already in recession. The economic hits to 
middle-class American families just keep on coming and coming.
  Before I talk about our Democratic budget package, which is far 
superior to the President's budget, I would like to use this Humphrey 
Hawkins debate time as chair of the Joint Economic Committee to talk a 
little bit about the economy.
  In the last week alone, we have learned that we are experiencing 
record home foreclosures in the prime and subprime mortgage markets 
from coast to coast. Every single State has been affected by an 
increase in foreclosures. According to an analysis by the Joint 
Economic Committee, home prices in every major market are falling. 
Families have historically low equity in their homes.
  Moody's Economy.com estimates that 8.8 million homeowners--that is 10 
percent of all homeowners--will owe more money than their homes are 
worth. Think of that: 10 percent of all homeowners--not homes in 
foreclosure, not homes in trouble, but 10 percent of all homeowners 
will owe more money than their homes are worth.
  Just this past Friday, the Labor Department reported back-to-back 
months of losses in jobs, with serious losses this past month in 
manufacturing, construction, and retail. Today, the Commerce Department 
released data showing rising trade deficits with China and oil-
producing nations such as Venezuela and Saudi Arabia. Americans are 
paying a record average $3.22 per gallon of gasoline today, and if that 
wasn't enough, oil is selling for over $110 a barrel. Let me repeat 
that. Oil is selling for over $110 per barrel. That is an alltime 
record.
  As we put forward a more sensible budget plan for our country this 
year, we have to recognize that the pressure on families has been made 
worse since President Bush took over. Over the last 7 years, Americans 
have been squeezed by skyrocketing energy, health care, and education 
costs. Energy costs have ballooned 64 percent during Bush's tenure. A 
gallon of regular-grade gasoline has increased 60 percent in real 
terms, up from $1.62 in January 2001. To put this in perspective, the 
average middle-class family is paying more just in higher gasoline 
prices than they received in the Bush tax cuts. Again, let me repeat 
that. The average American family is paying more just in higher 
gasoline prices than they received in the President's tax cut. That is 
appalling.
  There are 7.2 million more people uninsured since the President took 
office, and average health insurance for families who do have it 
increased nearly 40 percent since 2000. Inflation-adjusted tuition for 
4-year public colleges increased 36 percent, to $5,526 per year between 
1999 and 2005. In February of 2008, 4.9 million people were working 
part time for economic reasons but wanted to work full time, and the 
underemployment rate is almost 9 percent--9 percent--up 1.6 percent 
since 2000. Now there are 1.4 million fewer people with jobs since the 
President took office--1.4 million unemployed.
  The bottom line is that this administration is the owner of the worst 
jobs record since Herbert Hoover, and the last 2 months of losing 
nearly 90,000 jobs secures the President's unfortunate place in 
history, as this chart shows. Here is Herbert Hoover. Everyone did 
better than George Bush since Herbert Hoover.
  The significant job losses in manufacturing and construction have 
continued since the housing market has been in trouble and doesn't seem 
to be getting better. The job losses in the retail sector are 
particularly troubling because it indicates that consumer spending, 
which has driven this economy, has also declined measurably.
  The President's ``hear no evil, see no evil, do no evil'' policies on 
our economy simply don't work. It is only a matter of time before 
consecutive months of job losses, falling home prices, rising energy 
prices, and cutbacks in consumer spending lead us into a full-blown 
recession. It is crystal clear to everyone except the people in the 
White House that we are inevitably heading toward a recession.
  It isn't a surprise to many in Congress that we are on the brink of 
recession--or are already in one--although the administration has done 
an excellent job of hiding its head in the sand, because their strategy 
has produced burgeoning budget deficits, a serious global trade 
imbalance, and brought us to the brink of recession. That is because 
their only economic strategy for everything is to cut taxes--help their 
wealthy friends and no help for the rest of America.
  The unmistakable economic downturn began early last year as the 
subprime mortgage mess unfolded. The spillover effects into the broader 
housing market, the credit market, and

[[Page 3789]]

overall economy are tremendous and ongoing.
  According to the JEC's conservative estimates, by 2009 at least 1.3 
million foreclosures will occur as the riskiest subprime mortgages 
reset over the course of this year and next. This will lead to the 
destruction of approximately $100 billion in housing wealth, including 
an estimated $71 billion in direct losses on foreclosed properties and 
a decline in the value of neighboring properties by an additional $32 
billion.
  Overall housing prices continue to fall, as seen in the almost 10 
percent decline of the S&P/Case-Shiller national home price index since 
the first quarter of 2006.
  Last week, the Federal Reserve released data showing that American 
families hold less equity in their houses than at any time since the 
Fed began tracking this data in 1945. Under the Bush administration, 
the primary source of wealth for most Americans--the equity in their 
houses--dropped by nearly 10 percentage points, from a 57.8 percent 
equity stake when Bush took office to a current low of 47.9 percent.
  Given that housing wealth totaled about $23 trillion in 2006, the 
decline in household balance sheets is now between $1 and $2 trillion. 
Declines in house prices are likely to have significant negative 
effects on consumer spending and a host of other deleterious effects on 
the economy. But housing is the bull's-eye of this crisis. It has 
spread outward and outward and outward. Again, the administration, 
wrapped in ideological handcuffs, does nothing.
  We are also borrowing to pay for this war in Iraq. The economic cost 
for the Iraq war is truly staggering. According to professor Joe 
Stiglitz, a Nobel Laureate who testified at our Joint Economic 
Committee last month, the war could cost $3 trillion--that is with a 
T--$3 trillion. According to a report our committee did in November--we 
have been pursuing this issue of the cost of the war--the war will cost 
each American household $37,000.
  The Federal Government is increasingly reliant on the rest of the 
world to buy our public debt, and with falling dollars and skyrocketing 
debt, who knows how much longer we can count on the largesse of our 
trading partners.
  President Bush turned huge budget surpluses into huge deficits in a 
few short years, as we see here. In January 2001, the CBO projected 
surpluses would total $5.6 trillion in 2002 to 2011. In 2001, CBO's 
projection was a surplus of $573 billion in 2007. In reality, the 
deficit was $163 billion, a turnaround of $736 billion, and more than 
$100 billion for every year that the President has been in office. This 
remarkable, dramatic turnaround in the budget picture shows a reckless 
disregard by this administration for living within our means and has, 
frankly, jeopardized the economic future of families across the 
country.
  The President may have passed some big tax cuts for the people who 
need it least, the very well off. But he has not been very 
compassionate to future generations who will be paying for the 
increased debt for generations. I compliment the Senator from North 
Dakota for the amazing budget he put together. It is the best budget 
document I have ever seen since I have been in the Senate.
  The Democratic budget provides some measure of sanity and order to 
our budget priorities and, hopefully, will put our country back on more 
solid economic footing. Senator Conrad did an amazing job in crafting a 
budget resolution that gets us started on the road to recovery from 
these misguided policies.
  One of the most important things about Senator Conrad's budget is 
that by restraining spending and making the right choices on long-term 
tax cuts, it provides room for important middle tax cuts to ease the 
middle-class squeeze, such as the tax cuts provided in Senator Baucus's 
amendment. These tax cuts are not a fix for what ails our economy in 
the long term, but they will indeed help middle-class families make 
ends meet.
  Senator Baucus's amendment is broad-based tax relief targeted to the 
middle class, plain and simple. Everybody benefits, but the middle 
class gets most of the spoils. That is the way we ought to provide tax 
relief in this country--not providing more and more tax breaks to the 
top one-tenth of 1 percent, whose incomes have shot up into the 
stratosphere. Tax cuts for those who need them, not for those who would 
not notice them. That is our watchword, while the other side continues 
to believe in trickle down, but not even trickle down from the middle 
class to the poor but from those higher regions of wealth.
  If we look at the tax cuts that passed in 2001, we know which ones 
should be made permanent and which ones should not. The $1,000-per-
child tax credit, marriage penalty relief, and the 10-percent bracket 
are all sensible tax cuts that can be made permanent with the surpluses 
provided for in the Conrad budget.
  The Baucus amendment does some other sensible things as well. Across 
the country, parents are struggling to manage the crunch of work and 
family. According to a report issued by the Joint Economic Committee, 
full-time childcare costs average about $7,300 per year in the United 
States. That is almost 20 percent of the median income of families with 
young children. The Baucus amendment will permanently extend the tax 
credit for childcare expenses to provide essential benefits to working 
families.
  Senator Baucus's amendment also includes provisions to offset the 
impact of rising local property taxes. I hear about that from my 
constituents every week. The amendment will make permanent the 
important military tax benefits passed both by the House and the Senate 
last December. These benefits are particularly targeted toward service 
men and women and their families. Given the multiple rotations many of 
them have endured, these tax provisions are supported by all, and they 
are the least we can do.
  I know what the other side will say: ``Democrats are for tax 
increases.'' My friends, telling people who are making a million 
dollars a year or more that they should continue to get a tax cut is 
what is wrong, not saying they should begin to pay their fair share. I 
have news for my colleagues on the other side of the aisle. Their old 
arguments are not going to work because the middle class has seen 
promise after promise from this administration, and then they have seen 
the vast majority of the tax cuts go to the very top of the income 
scale.
  I will repeat it again: The average middle-class person has paid more 
of an increase in gasoline than their entire Bush tax cut, while this 
administration twiddles its thumbs about the energy crisis and 
continues to tell those at the top of the economic ladder that they get 
the vast majority of the benefits, even though they don't need it.
  So I hope we will support the Conrad budget. It is a good, fine, and 
well-thought-out one. I hope we will support the Baucus tax cuts, which 
are targeted at the middle class. I hope we will support a budget such 
as the one proposed on our side, which is smart and helps the middle 
class.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Utah is recognized.
  Mr. HATCH. Mr. President, I ask unanimous consent that I be given an 
additional 5 minutes.
  The PRESIDING OFFICER. Is there objection?
  Without objection, it is so ordered.
  Mr. COBURN. Mr. President, how much time does the Senator from Utah 
have?
  Mr. HATCH. Mr. President, I have 15 minutes, and I have asked for an 
additional 5.
  Mr. COBURN. According to the agreement we had, that would put us 
until 7:25 when Senator Brown would be eligible to speak; is that 
right?
  The PRESIDING OFFICER. The Senator from Oklahoma would start at 6:55 
and have until 7:25.
  Mr. COBURN. I thank the chair.
  The PRESIDING OFFICER. The Senator from Utah is recognized.
  Mr. HATCH. Mr. President, I rise to express my opposition to and 
disappointment with the fiscal year 2009 budget resolution before us 
today.
  Interestingly enough, I listened to the Senator from New York talk 
about how the rich are getting away with

[[Page 3790]]

things. Well, the upper 1 percent of all taxpayers paid 39 percent of 
all income taxes the last time I heard. The upper 5 percent paid 60 
percent of the total income tax in this country. The upper 50 percent 
pay 97 percent of all the total income tax in this country. The bottom 
50 percent generally pay almost nothing, and a good percentage of them 
get money from the Federal Government. So what is he talking about?
  I think it was Yogi Berra who once said, ``This is like deja vu all 
over again.'' I am sure he was not talking about the Federal budget 
when he uttered these oft-quoted words, but he might as well have been. 
As I look at the budget resolution before us today, and as I listen to 
the arguments on both sides of the aisle, it seems to me that we could 
be talking about last year's budget resolution. The numbers are 
somewhat larger, but the arguments are about the same.
  Now this might not be so bad if the budget resolution were a good 
one. No, you would not hear me complaining about a repeat of a budget 
that strengthened our economy, addressed our near-term problems, and 
prepared this country for the longer-term budget challenges of the 
future. Unfortunately, this is not the case. In fact, quite the 
opposite is true.
  Once we were through with that resolution last year, it didn't even 
resemble what the budget resolution was calling for. In fact, I have 
been here for 31 years, and not one day has the conservative point of 
view been dominant in the Senate. The liberal point of view, with 
almost all liberal Democrats and a few liberal Republicans, has held 
sway. That is where all the spending is coming from.
  Instead, we are, once again, talking about a budget that raises taxes 
by an unprecedented amount, which will do untold harm to our economy, 
exacerbates our near-term problems by not holding spending in check, 
and totally ignores the longer-term mandatory program challenges of the 
future.
  Much has already been said on this floor about the budget resolution 
and its failings. I could add a great deal more, but instead I choose 
to focus my remarks on three premises on which this budget is based. 
Three premises that, unfortunately, are false. And every child in 
Sunday school knows that false premises are like the house whose 
foundation is built upon sand. We all know that a house built upon 
sand, or a budget built upon false premises, cannot stand.
  The first faulty premise underlying this budget resolution is that it 
would not raise taxes on Americans. I know that my colleagues on the 
other side of the aisle have said and will continue to say that this 
budget does not raise one cent in taxes. Technically speaking, this is 
true. However, while the document before us may contain no actual tax 
increase language, it does nothing to prevent the largest tax increase 
ever, which is set to occur at the end of 2010 if the 2001 and 2003 tax 
cuts are allowed to expire as scheduled.
  The American people need to ask a simple question of this budget. 
What is it doing to make sure that my tax bill does not go up in 2010?
  They will be met with deafening silence.
  Now, those on the other side will try and explain this deficiency 
away. They will argue that allowing a tax cut to expire is not the same 
thing as raising taxes. Well, try telling that to the 116 million 
American taxpayers who will face higher taxes if these tax cuts are 
allowed to expire. Try explaining this nuance to the 43 million 
American families who, on average, will owe $2,300 more, and to the 18 
million seniors who will pay an average of $2,200 more.
  This is not small potatoes. Families that do not consider themselves 
rich, that struggle to make ends meet, and that are doing all they can 
to make the mortgage and save for college, are going to get hit with 
massive tax bills. They are going to see their paychecks shrink by 
hundreds of dollars every pay period. This is real money. Money that 
families could use to pay medical bills or pay tuition, and instead it 
is going to go to the Federal Government.
  It will not be much fun trying to explain this to the owners and 
managers of 27 million American small businesses. Try telling them that 
their higher tax bill is not really a tax increase. No, not at all. It 
is merely the reversal of a temporary lower tax rate they should have 
been grateful to have gotten for a decade, due to the generosity of 
Uncle Sam, who no longer deems it necessary to throw such favors their 
way.
  Good luck selling that one.
  I will tell you one thing--I do not want to tell the hundreds of 
thousands of Utah families, seniors, and small business owners that the 
extra dollars we were letting them keep for a few years are now needed 
for more urgent things, such as higher spending in Washington.
  So if this is not a tax increase, I do not know what is. The other 
side can call it what it wants. But if the end result is more money 
coming to Washington, and less money staying in the paycheck, the 
family budget, or the small business expansion account, this is a T-A-
X, Tax!
  We have heard the other side talk about how they are for extending 
the middle-class elements of the 2001 and 2003 tax cuts. We have even 
heard them say that the budget resolution provides for this, through 
the adoption of an amendment offered by the Senator from Montana. $323 
billion for middle-class tax relief. Does any of this sound familiar? 
It should, because the same amendment was offered, and adopted, in last 
year's budget resolution.
  I have a question about that tax relief. Where is it? What happened? 
Last year's Baucus amendment offered pretty much the same kind of tax 
relief as this year's version. But, why did we need to adopt it again? 
The answer, of course, is that nothing happened because the tax changes 
necessary to carry out the stated intent of this amendment were never 
brought up in the Finance Committee or on the floor of this Senate. 
This is a shell game.
  The reason why is that you have to look at the fine print on this 
amendment to see what is really going on. The Baucus amendment allows 
only for the consideration of so-called middle-class tax relief. It 
does not, however, provide a means to offset the lost revenue. Under 
the Democratic pay-go rules, along with the $323 billion of tax relief 
that the Baucus amendment purports to offer, there is an asterisk with 
fine print that says, provided that the revenue can be found to offset 
it. My goodness.
  So this explains why we need the Baucus amendment again. The reason 
we did not provide that middle-class tax relief is that we could not 
find the revenue to offset it. But what about what my friend and 
colleague, the distinguished chairman of the Budget Committee, says? He 
points to the tax gap and says we can get the money there. All we have 
to do is stop some of the leakage in our tax system.
  I agree with my colleague from North Dakota. I agree that we should 
be able to reduce the tax gap. It is too large and it is inexcusable 
why $200 to $300 billion or more in taxes that are due go uncollected 
each year. But you know what? Our tax system, as leaky and clumsy and 
unfair and antiquated as it is, is the envy of much of the world as far 
as the percentage due that we collect.
  Can we do better? Of course. Do we need to crack down on tax abuse 
domestically and overseas? Indeed we do. Can we raise enough money by 
closing the tax gap to offset the revenue loss of the amendment of the 
Senator from Montana? Not even close. As Senator Grassley very 
eloquently demonstrated on this floor on Monday, the real potential for 
revenue from the tax gap is very, very small in comparison to what the 
other side is claiming. If not, then where are the specific proposals 
from the other side to do it? Why haven't they been enacted, if it is 
so easy to get this revenue?
  The tax increases inherent in this budget resolution will do untold 
damage to our economy. Even if the other side can find the votes to 
increase taxes enough to overcome the pay-go problem associated with 
some of the middle-class tax relief proposed by the Senator from 
Montana, we would still be doing major harm to the economy.
  We can perhaps look to the model provided for us by the chairman of 
the

[[Page 3791]]

Ways and Means Committee in his so-called Mother Tax bill. It is so 
named because my good friend Chairman Rangel said it represents the 
Mother of All Tax Reforms. His ranking member, Congressman McCrery, 
more aptly describes it as the Mother of All Tax Hikes.
  I can tell you right now, as much as I hate to say this about my 
friend Charlie Rangel, Congressman McCrery is right. This ``mother'' 
bill includes plenty of tax offsets. It would increase the income tax 
rates across the board to where they were in 2001, with the top rate 
exceeding 40 percent at the margin. This may sound as if it would 
affect only the wealthy, but this is another false premise. In reality, 
it would affect millions and millions of small and midsized businesses, 
the great majority of which pay their taxes through the individual Tax 
Code.
  How is this going to help us solve the economic problems our Nation 
is facing? This budget is nothing but a recipe for disaster.
  The second faulty premise underlying this budget resolution is that 
the increase in spending it authorizes will solve our long-term 
economic problems. Yes, I think we have heard this before as well. Yes, 
it was last year in the fiscal year 2008 budget debate. That budget 
resolution called for $205 billion in increased spending over 5 years, 
and this number ballooned to $350 billion over 10 years. Apparently, 
this amount was not high enough, so this budget ups the amount to $210 
billion over the next 5 years, and it will have the same ballooning 
effect over the years beyond because the spending gets built into the 
baseline. That is the danger of a seemingly small amount of additional 
spending. It is insidious. It seems relatively small in the first year, 
and so it may be, but the way we do budgeting in Congress has a way of 
multiplying the seemingly small increases so they are huge in a few 
years. There is a compounding effect.
  In his opening remarks on Monday, the distinguished chairman of the 
Budget Committee talked about the need for additional investment in 
America. He spoke about priorities in education, energy, 
infrastructure, law enforcement, weatherization, health care, uninsured 
children, food, drug safety, veterans, and much more.
  I know the Senator from North Dakota is sincere, and I know he works 
hard and is very effective in presenting his side of the argument. I 
have much admiration and affection for him. I care a great deal for 
him. He has a very tough job, and he does it well.
  The Senator from North Dakota is right about the needs of this 
country--they are unlimited, just like the needs of the typical 
American family. The needs of the American people as a whole are 
unlimited. The problem in both situations is that we do not have 
unlimited resources, and neither does the family. We have to make 
choices, and we have to set priorities. It would be nice if we could 
simply take care of every problem in this Nation by spending the money 
that is needed, just as it would be great if every American family had 
enough money to solve all of its problems. But that is not reality.
  In reality, we are in serious financial trouble in this country. 
Money trouble, if you will. When a family faces reality and knows it 
has money trouble, that family will sit down at the kitchen table and 
decide where to prioritize and what has to go. That is exactly what we 
need to do at the national level.
  The Senator from North Dakota is correct about another point, and 
that is that the discretionary portion of our budget is getting 
squeezed. According to Comptroller General David Walker, the portion of 
discretionary spending in 1966 was 67 percent of the total budget. By 
1986, this portion had dropped to 44 percent. By 2006, a couple years 
ago, it was down to 38 percent.
  This shrinking percentage of discretionary spending, however, is not 
because we are spending less in terms of nominal dollars. The fact is 
we spent almost twice as much on discretionary programs in 2007 as we 
did in 2000. However, our mandatory spending is increasing so much 
faster. This growth in the entitlement programs, such as Medicare, 
Medicaid, and Social Security, is squeezing out our ability to grow the 
amount we spend on discretionary programs.
  But the answer is not to increase discretionary spending even by what 
the proponents of this budget are calling a very small amount. We are 
going in the wrong direction, and this small amount will compound into 
a large amount in a few years. And guess what. Once we spend and it 
gets built into the baseline, it is almost impossible to get it out.
  This leads me to the third faulty premise underlying this budget 
resolution, and that is it is safe to ignore our longer term problems 
with Medicare, Medicaid, and Social Security. I know if I were to 
separately ask each Member of this body if we need to do something 
about the growth of these programs, there is a good chance that every 
single Senator would agree we cannot afford to ignore them and that 
something has to be done to save our future. But as I looked over this 
budget resolution, I cannot seem to find the part that addresses the 
growth of these programs, and yet the Government Accountability Office 
tells us that between now and 2032, spending on Medicare and Medicaid 
alone will grow about 230 percent. At the same time, our GDP will grow 
about 70 percent if we are lucky.
  Let me share some truly frightening numbers with you. The Government 
Accountability Office recently computed the fiscal exposures we face as 
a nation from our unfunded obligations under Social Security and 
Medicare. In 2007 dollars, our total unfunded liability for future 
Social Security benefits, assuming the law does not change, is $6.8 
trillion--that is trillion dollars. This is a number of galactic 
proportions, so big that it is hard to comprehend. But I have to tell 
you, it pales in comparison to the amount of our unfunded liability 
associated with Medicare, which is more than $34 trillion--that is 
trillion dollars, $34 trillion. When this is combined with all other 
major fiscal exposures, the GAO estimates that our total unfunded 
liability is almost $53 trillion. That is with a T. This amount is 
nearly as high as the total household net worth of Americans, which is 
$59 trillion.
  In other words, we are nearly bankrupt as a nation. Within a few 
years, we will absolutely be bankrupt if something is not done. It is 
clear that this path is not sustainable. We all know it. Our children 
know it, and our grandchildren are going to find it out the hard way. 
They are going to blame us if we do not act to turn things around. It 
is as if we are all in a ship floating down a river. The waters are 
quite calm now, but the map shows that a very high and dangerous 
waterfall is ahead of us. We know if we do not turn the ship around, 
disaster awaits. But it is not an easy thing to do. We know we cannot 
turn it around in 1 year. It will take a lot of work and sacrifice. It 
will take pain.
  It is easy to say we should wait, that this is an election year and a 
new captain and maybe a new crew will be taking over after the 
election. But I say to my colleagues, we cannot afford to wait. In the 
midst of the calm water, we can hear the roar of the waterfall. We are 
coming to it very quickly, and if we wait too long, catastrophe will 
result. The budget before us does nothing about the cataclysm just down 
the river. It is a fatal flaw.
  I started by mentioning that the rich do pay a lot of taxes right 
now. Actually, the rich are paying more after the tax cuts than they 
were paying before. The fact is, the upper 1 percent of the rich--the 
last time I saw the figures, and it is even worse now--are paying about 
39 percent of all income taxes--the upper 1 percent of all taxpayers. 
And the top 5 percent pay about 60 percent of all taxes. And the upper 
50 percent pay almost 97 percent of all income taxes. Think about that. 
The bottom 50 percent pay little or none and many of them get largess 
from the Federal Government. So this idea that the rich need to pay 
more is a phony argument. It is time people got called on that 
argument. It is phony, it doesn't make sense, and we have to get with 
it around here. We cannot keep bringing up these phony budgets such as 
this with all the budgetary gimmicks this one has in it.

[[Page 3792]]

  I don't blame the distinguished Senator from North Dakota. He has a 
side that is fractionated. They want to spend more--that is how they 
keep themselves in power--and he has to find gimmicks and some way of 
justifying additional spending, and this budget is filled with 
additional spending, additional taxes, and a lot of budget gimmicks 
that should not be in it.
  I urge my colleagues to reject this budget resolution. Let's get 
started on one that recognizes the dangers ahead and begins to turn 
this ship around before we hit that cataclysmic waterfall.
  Mr. President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The bill clerk proceeded to call the roll.
  Mr. BROWN. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. BROWN. Mr. President, I ask unanimous consent that I be allowed 
to speak before Senator Coburn, my colleague from Oklahoma.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. BROWN. Mr. President, I rise in support of the budget resolution 
before us this evening. Governing is about choosing. This budget makes 
the right choices and at the same time maintains fiscal discipline.
  Over the past year, I have held some 85 roundtables of 20 or 25 
people each in communities across the State. I have held them in some 
55 of Ohio's counties, listening to workers and business leaders, 
listening to teachers and sheriffs, listening to people running social 
service agencies and people served by those social service agencies. In 
every town I visited, Ohioans have asked to work together with the 
Federal Government, not for a handout, not necessarily for assistance, 
but to work together with the Federal Government in attacking the 
problems of our small towns, our rural areas, our inner-ring suburbs, 
and our big cities.
  I have heard from employers who have good jobs that go begging 
because we have not trained or retrained people in the skills they 
need. I have heard from county commissioners, worried that their 
crumbling bridges may fall and that their water and sewer 
infrastructures are not sound. I have heard from doctors who think we 
can do a much better job of providing access to health care through 
their offices and their examining rooms rather than through the 
emergency room, and not just for the 47 million Americans without 
health insurance, including 9 million children, but for the millions of 
people in this country with inadequate health insurance.
  Last month we saw the priorities of the Bush administration when he 
sent his budget to Congress. The Bush budget proposed to cut funding 
for job training and technical education. Today I met with people from 
Wayne County and Butler County, from Geauga County and Cuyahoga County, 
and all over my State, to talk to people who are teachers and 
administrators, and superintendents and students, who depend on 
vocational training, technical education, and who provide training for 
so many in our State.
  The Bush budget proposed to cut the community development block 
grants by more than 20 percent. As big cities and small towns face the 
impending problems that are in the midst now of these problems with 
foreclosures, the Bush budget proposed to cut health care for seniors 
and for children, and these are the choices of the Bush administration. 
They are the choices of an administration that has gone in the wrong 
direction year after year after year. They are the choices we must 
reject.
  Our budget, by contrast, will increase Federal efforts to educate and 
train our citizens, young and old. Our budget will increase funding for 
economic development and for rebuilding our Nation's infrastructure. 
Our budget will improve the health care of families and of children. 
Our budget will help to create good-paying jobs here in America.
  This administration either doesn't care or doesn't understand what it 
is doing to the middle class and what is happening to the middle class. 
Up until last summer--in front of the Presiding Officer in the Banking 
Committee--the Secretary of the Treasury and others in the 
administration assured everyone the economy was doing fine and the 
housing crisis was contained. Senator Menendez and so many others here 
spoke up for Federal involvement in trying to help the many people in 
New Jersey and Ohio and across the country who were threatened with 
this foreclosure problem in their homes and in their neighborhoods. But 
when the problems were mostly on Ohio's main streets, the main streets 
of Zanesville and Steubenville, the main streets of Toledo and Dayton 
and Lima and Marion, the administration was indifferent. They said the 
problem would go away. But when the problems migrated from main street 
Mansfield and main street Springfield to Wall Street, suddenly the 
problems became important to the administration.
  But even then the response of the Bush budget to economic troubles 
and to the problems of foreclosure across our country speaks volumes. 
It proposes to cut taxes for the wealthiest people in the country, 
offset by cuts in Medicare. They want to pay for their tax cuts for the 
richest people in the country, but they do it by making cuts in 
Medicare. They propose to reduce benefits under the Social Security 
system while pushing a privatization program that generates big fees 
for Wall Street at the expense of seniors and disabled people in our 
country.
  While families are struggling to afford the cost of sending their 
children to college, it proposes to cut Federal support for student 
loans. One of the greatest accomplishments of this new Democratic 
majority, right off the bat, is what we were able to do to increase 
Pell grants and what we have been able to do to bring down interest 
rates for student loans, and what the Governor of my State, Governor 
Strickland, has done by freezing college loans.
  The Bush administration, it seems, as I said, either doesn't know, 
doesn't understand, or doesn't care about these middle-class kids who 
are struggling to go to college.
  My wife was the first in her family to go to college. She got loans, 
she got grants, and she graduated with a debt of only a couple thousand 
dollars. That was almost 30 years ago. Today, it is very different, 
because the Federal Government has simply shrugged its shoulders and 
said, that is the problem of these middle-class students.
  I am proud that our budget charts a much different course. Most 
importantly, we invest in America. We invest in its people and in its 
communities. And most importantly, we invest in America's future.
  The President likes to tout the length of the economic recovery, but 
he seldom mentions its breadth or its depth, and for good reason. 
During the last 7 years, median weekly earnings have actually fallen, 
after adjusting for inflation. Most Ohioans make less today than they 
made when George Bush took office, in real dollars. Job creation has 
been the worst since the Hoover administration. And if you look at 
private sector jobs or manufacturing jobs, the picture is even worse. 
As bad as job creation and job growth has been, as I said, it has been 
even worse in the private sector and even worse yet in the 
manufacturing sector.
  If there is a recovery, as the President likes to trumpet, heaven 
help us in a recession. Middle-class families are being squeezed by 
toxic mortgages and by gas prices that have doubled in the past few 
years. The President didn't know that gas prices had exceeded $3 and 
were approaching, in some places, $4 a gallon. Middle-class families 
are being squeezed by increases in the cost of food, education, and the 
cost of health care.
  Our budget will extend tax relief to these families. The Democratic 
budget will prevent the alternative minimum tax from reaching millions 
of middle-class families. Senator Baucus's amendment, which I am 
cosponsoring, will provide further relief by extending the tax credit, 
the child credit, the dependent care credit, and other provisions, 
including several important provisions to our veterans and to our 
active duty military personnel.

[[Page 3793]]

  At the same time, unlike the President's budget of the last 5 years, 
we maintain a path to a balanced budget. The Senator from New Jersey 
and I, and others, participated in the 1990s in passing a balanced 
budget under President Clinton. We moved toward a balanced budget, 
unlike what President Bush has unraveled in the last 6 years. This is 
an important difference between our budget and the President's.
  Once upon a time, our Republican colleagues were concerned about 
balancing the budget. That was then. Now, this administration has piled 
up trillions of dollars of debt that our children and grandchildren 
will be forced to repay--a sorry legacy indeed. The public debt stood 
at $6 trillion--actually less than $6 trillion--when President Bush 
took the oath of office in 2001. By the end of this fiscal year, the 
debt will have grown to $10 trillion. That is a 4,000 billion dollar 
growth, from under $6 trillion to more than $10 trillion. Even at a 
time of low interest rates, we will spend $260 billion next year to pay 
interest due on that debt.
  Many of my Republican colleagues have changed their tune because they 
do not seem so interested in balanced budgets anymore. They will say 
the cost isn't that great when measured against the size of the 
economy. But they ignore the opportunity cost. Think of that $260 
billion and what we could have done with that money. Think of how it 
could be used to expand opportunity for better health care, for 
education, for roads, for bridges, for research, for infrastructure. 
Instead, we write checks to bondholders, many of them big contributors 
to my Republican colleagues, whose addresses are more and more often 
found, in some cases, in China and in the OPEC states and in the 
offshore banking centers.
  The hundreds of billions in Federal debt financed by foreigners is 
swamped by the even larger size of the trade deficit, which has roughly 
doubled under the Bush administration, to more than $700 billion last 
year. Every day in this country, every single day of the year, we buy 
almost $2 billion in goods, importing more into this country than we 
export--almost $2 billion every single day. That translates into lost 
jobs, it translates into stagnating wages, it translates into 
communities that are, in many cases, devastated. Places particularly 
hard hit are smaller towns and industrial centers that have been hard 
hit by plant closings.
  Our manufacturing sector has in too many cases been hollowed out. 
Companies that have been in business for centuries, surviving 
challenges from the Great War to the Great Depression, have been unable 
to weather this administration. The response: The Bush budget 
eliminates funding for one of the Government's most effective programs 
to help small business, the Manufacturing Extension Program, which 
assists American manufacturers to adapt to changing technology.
  We can do better, and the Democratic budget does do better. Over the 
weeks ahead, in working with our colleagues in the House, we will write 
a budget that pays attention to the voices of the middle class and 
responds to the needs of the middle class. We will write a budget that 
increases funding for education and for health care, one that gears tax 
policy to the needs of struggling families and small businesses, and 
one that builds a foundation rather than undercutting that foundation 
for our future and doesn't take a mortgage out on it.
  As an Eagle Scout many years ago, I was taught you should leave a 
campground better than you found it. I think that is not a bad 
description for our role as Senators too. Let us make the choices that 
will leave the country's fiscal situation better than it is today. 
Let's help the middle class, let's help working families and end the 
red ink. Let's invest in our future.
  Mr. President, I yield the floor, and I suggest the absence of a 
quorum.
  The bill clerk proceeded to call the roll.
  Mr. BROWN. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.

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