[Congressional Record (Bound Edition), Volume 156 (2010), Part 10]
[Senate]
[Pages 13801-13803]
[From the U.S. Government Publishing Office, www.gpo.gov]




                               TAX RELIEF

  Mr. CORNYN. Madam President, in 160 days, the American people will 
experience the single largest tax increase in American history unless 
Congress acts. Unless Congress acts, the highest individual tax bracket 
will rise from 35 percent to just under 40 percent. People in the 
lowest tax bracket will see a 50-percent increase from 10 percent to 15 
percent. The marriage penalty will go up. The child tax credit will be 
cut in half. Taxes on capital gains and dividends will go up as well. 
Every single taxpayer in the country will see their taxes go up.
  Last week in the Senate Finance Committee we heard testimony from 
several experts about what these huge tax increases would mean in terms 
of the economy and to small businesses. Douglas Holtz-Eakin, former 
head of the Congressional Budget Office, reminded us that about $1 
trillion in business income will be reported on individual tax returns 
and about half of that will be subject to the two higher marginal 
individual tax rates. There has been a debate--and I guess it will go 
on--about the relationship between the bipartisan 2001 and 2003 tax 
relief bills and the deficit. Some on the other side of the aisle like 
to argue that our $1 trillion deficits today are the result of tax 
relief we offered 10 years ago. They also like to argue that they bear 
no responsibility for the deficits they ``inherited.'' We are hearing a 
lot about that these days, very little taking responsibility for what 
has happened today but, rather, preferring to point the finger of blame 
at others in the past.
  I have a chart which, if Members will bear with me, tells an 
important story. This chart measures the deficit as a percentage of our 
gross domestic product which is the entire economy. The solid lines, 
the red solid line and the solid green line, represent the historical 
record from the OMB. The dotted line represents CBO projections of the 
President's 2011 budget. The red line and a portion of the light green 
line also represent the record before the Obama administration took 
office, and the solid, dark green line represents the record since 
President Obama became President.
  What does this chart tell us? It tells a very interesting and 
important story. It is true that deficits went up under the last 
administration and topped out at 3.5 percent of GDP. Of course, we have 
to remember the dot.com bubble, the recession that occurred about the 
time the last administration took office and, of course, the horrific 
events of 9/11. But then, just as the 2001 and 2003 tax relief 
provisions started to kick in, a strange thing happened to

[[Page 13802]]

the deficit. It went down to $318 billion in fiscal year 2005. It went 
down again to $248 billion in fiscal year 2006. And it went down to 
$161 billion in fiscal year 2007. That is when our deficit went all the 
way down to 1.2 percent of gross domestic product, from 3.5 percent to 
just 1.2 percent of GDP.
  People may have different interpretations for why this happened. I 
believe--and I think most economists and objective observers conclude--
the reason the deficit went down as a percentage of gross domestic 
product was because the tax relief we passed in 2001 and 2003, which 
will expire in 160 days unless we act, helped grow the economy and got 
about 8 million people on the payroll between 2003 and 2007.
  Not an incidental; it generated a lot more revenue for the Federal 
Government. As a matter of fact, it hit historic levels. That is the 
real record on the deficit. For my colleagues who claim they inherited 
a bad fiscal situation, this is what they inherited: a deficit which 
had reached one of the historic lows of 1.2 percent.
  The green line here actually shows what has happened since our 
colleagues on the other side took control of this Chamber and the House 
of Representatives. The deficit shot up from 1.2 percent to 3.2 percent 
of GDP in fiscal year 2008. That was the last year President Bush was 
in office. Then went to 8.3 percent in fiscal year 2009.
  Am I blaming my colleagues for this? I am saying there is more than 
enough blame to go around. But it is also not fair to suggest that 
previous administrations or one political party contributed to this 
increasingly dire fiscal crisis.
  The reason the deficit rose after 2007 is because of the financial 
crisis that occurred, the meltdown, particularly in September of 2008. 
We know the recession we have been going through and, of course, the 
emergency measures that Congress passed on a bipartisan basis to try to 
prevent a systemic economic collapse in America--and other countries 
around the world participated in as well--these emergency measures were 
supported by then-Senator Obama, then-Senator Biden, and by dozens of 
colleagues on the other side of the aisle, as well as colleagues on 
this side of the aisle. We thought we were acting in a major crisis, 
and we were. My point is, the deficits we have today were not inherited 
deficits but, rather, because of legislation they helped enact.
  Beginning January 20, 2009 this Congress and the President delivered 
much higher spending. Colleagues will recall the much ballyhooed 
stimulus package, $862 billion of borrowed money, which was supposed to 
keep unemployment below 8 percent. Obviously, that failed in its stated 
goal since unemployment has been almost up to double digits, now 9.5 
percent. In places such as Nevada, it is 14.2 percent. In Michigan and 
other States, it is much higher. Obviously, the stimulus did not 
succeed in its stated goal. One thing it did succeed in doing is piling 
on additional debt on future generations unless we deal with it in a 
responsible way.
  What happened as a result of the unprecedented spending we have seen 
since the Obama administration came into office? We see now that the 
fiscal year 2009 deficit as a percentage of the gross domestic product 
rose from an initial 8.3 percent to 9.9 percent, from 1.2 percent in 
fiscal year 2007 all the way to 9.9 percent.
  The second important thing to notice about this green line is that it 
will never get back to the level under a Republican Congress. The 
highest deficit level under a Republican Congress was 3.5 percent in 
2004. Under President Obama's budget, we will never get back to that 
level, even though it includes several, what most people would conclude 
are optimistic assumptions about future employment and economic growth. 
Even under those rosy scenarios, it will never get below 4.1 percent of 
gross domestic product. Once it gets there, the deficit continues to 
rise indefinitely.
  Some of my colleagues have said they want to make this election in 
November about a choice. That is fine with me. To me, the choice on 
fiscal discipline comes down to this: Do we want deficits that are 
getting lower such as the red line we see here, dropping from 3.5 
percent down to 1.2 percent, or do we want deficits to get higher, such 
as the dark green line we see here, all the way up to 9.9 percent? The 
truth is the dark green line is not just an inferior choice, it is an 
unsustainable choice.
  Last month our national debt topped $13 trillion, up $2.3 trillion 
since President Obama took office. The CBO reported that our public 
debt will reach 62 percent of gross domestic product by the end of this 
year and will be 90 percent of our economy in only 9 years. We are on a 
budget path that will add $9 trillion in additional debt over the next 
decade.
  While some of my colleagues want to let the tax relief we passed 
starting 10 years ago expire on January 1, we simply cannot tax our way 
to fiscal solvency. Again, according to the Congressional Budget 
Office, if spending is off the table--in other words, if we wanted to 
eliminate the deficit just as a result of tax increases--we would need 
to raise taxes by 25 percent to create a sustainable fiscal path for 
the next 25 years. Can Members imagine what a 25-percent increase in 
taxes would mean to hard-working American families, small businesses, 
what that would do to job creation, what that would do to the 9.5 
percent unemployment rate we see today? It would make it worse, not 
better.
  Tax increases alone don't solve the problem of trillions of dollars 
in unfunded liabilities in our entitlement programs either. They don't 
deal with the fact that Medicare is $38 trillion short of its promised 
benefits and now is expected to go insolvent by 2016. Social Security 
will pay out more in benefits than it receives in payroll taxes this 
year.
  Yet the CBO has also estimated that individual income tax rates would 
have to rise by 70 percent to balance the budget while financing the 
projected spending growth in Medicare and Medicaid. That is assuming no 
other tax increases or spending reductions in the budget. That is based 
on our budget outlook for 2007, which has obviously deteriorated since 
that time. That is based on a pretty optimistic estimate on how fast 
spending will grow in these two programs, just 1 percent higher than 
the gross domestic product growth, even though these programs have 
averaged growth of about 2.5 percent more than gross domestic product 
over the last 40 years.
  I do have some good news about our fiscal situation. The American 
people get it. That is why they believe spending and debt are two of 
the most important issues they want the Federal Government to address. 
The American people also understand intuitively the importance of 
keeping taxes low and what this huge tax increase that would occur, the 
largest in American history unless Congress acts, would do to the 
fragile economy and to high unemployment and to slow job creation.
  According to a CBS News poll last week, when asked whether government 
spending or tax cuts would be better in terms of getting the economy 
moving, Americans preferred tax cuts by 53 percent to 37 percent. That 
is a 16-point deferential. Independents actually favored tax relief by 
20 points.
  My conclusion is, we need to listen to the wisdom of the American 
people. We need to stop lecturing them. We need to make permanent the 
tax provisions we passed in 2001 and 2003, not to advantage individuals 
but to continue economic growth, to continue our ability to reduce the 
deficit, because people are working and paying taxes and our economy is 
growing.
  The most important message we can send to the small businesses and 
the job creators in America, when unemployment is at 9.5 percent 
nationally, is we are not going to increase their financial burdens in 
addition to the health care bill that was passed and other onerous 
burdens which have actually constrained job creation and create more 
uncertainty. We are going to actually encourage job creation by keeping 
taxes within reasonable limits while at the same time exercising some 
financial restraint by cutting spending and dealing with this 
burgeoning debt and burden on the American people.

[[Page 13803]]

  I yield the floor.
  The PRESIDING OFFICER. The Senator from Louisiana.
  Ms. LANDRIEU. Thank you, Madam President.

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