[Congressional Record (Bound Edition), Volume 157 (2011), Part 4]
[Senate]
[Pages 4796-4798]
[From the U.S. Government Publishing Office, www.gpo.gov]




                           DEBT AND DEFICITS

  Mr. WHITEHOUSE. Madam President, Abraham Lincoln began his famous 
``house divided'' speech with simple, homespun advice that we should 
first ``know where we are and whither we are tending,'' before we 
``judge what to do and how to do it.'' We are embarked on a journey of 
great consequence regarding what to do about our Nation's budget and 
how to do it. This is a vital conversation. We simply must reduce our 
annual Federal deficits and our Nation's debt. But it would seem wise 
at this important time to take President Lincoln's advice and examine 
where we are and whither we are tending as we go about making these 
decisions.
  I will touch on a few factual landmarks that may help orient us to 
where we are and help us learn whither we are tending. The first and 
most obvious is that we just weathered the worst economic crisis since 
the Great Depression. Few of us who were here then--I know the 
Presiding Officer was--will ever forget the animal fear and desperate 
urgency displayed by Treasury Secretary Paulsen and Federal Reserve 
Chairman Bernanke as they, having looked into that abyss, came to this 
building, to the LBJ room, and pleaded for our help to save the world 
economy. We are now past the worst depths of the financial and economic 
crises.
  As this chart shows, the economic recovery measured in jobs is 
proceeding, though all too tentatively and all too slowly. In Rhode 
Island, we are still at 12 percent unemployment in the Providence 
metropolitan area and over 11 percent statewide. To Lincoln's question 
where are we, well, gradually trending in the right direction. But no 
one can yet rule out a double dip back into deeper recession.
  Into this gradual and tepid recovery, the Republicans want to inject 
H.R. 1. What can we know about that? Mark Zandi, an economic adviser to 
Senator McCain's 2008 Presidential campaign, says this legislation, the 
House bill, will cause 700,000 job losses. That wipes out about half of 
the recovery, if that number is correct. Goldman Sachs, the Wall Street 
investment bank, says that bill, H.R. 1, could lower GDP growth by two 
full percentage points in the remaining two quarters of the fiscal 
year. Goldman Sachs is no fool where economic numbers are concerned. It 
would be a perilous choice to dismiss their warning. Our present rate 
of economic growth is only about 3 percent. So reducing that by a full 
2 percent over a year could wipe out more than half of our economic 
recovery. Of course, economic growth correlates to Federal revenues so 
the cuts' damage to economic growth would in turn create revenue loss, 
so there would be less deficit reduction. That is one landmark of where 
we are. We are in a too-slow economic recovery from what was nearly a 
second great depression, and we face a bill from the House that 
threatens that too-slow recovery.
  Another mark of where we are and whither we are tending relates to 
the balance between regular Americans and corporate America's 
respective contributions to our Nation's revenue. In 1935, regular 
Americans and corporate America evenly split the responsibility to fund 
our country's obligations. Then in each of these indicated years, it 
broke through the following ratios: humans twice as much as 
corporations in 1948; three times as much in 1971; four times as much 
in 1981; and recently the ratio broke through 6 to 1, individual 
Americans contributing more than six times the revenue that corporate 
America contributes. When people say how overtaxed corporate America 
is, it is worth looking at the facts of where we actually are and 
whither for decades we have been tending--ever diminished corporate 
contributions to our Nation's revenues.
  Look next at how we collect revenues. Look at the landmarks of our 
dysfunctional Tax Code. Start with what it takes to comply with our 
beast of a code. The National Taxpayer Advocate, an independent office 
within the IRS, has calculated that Americans spend 6.1 billion hours 
of time engaged in tax compliance each year. Think of what could be 
invented, what could be built with 6 billion hours of human work. 
Instead, it is all consumed, every year, in the economic dead weight 
loss of tax compliance. In terms of where we are, that is an important 
fact, and it is an abysmal place to be.
  Let me take my colleagues to another place. Here is a picture from 
our Budget Committee Chairman Kent Conrad taken in the Cayman Islands. 
This nondescript building doesn't look like much. It certainly doesn't 
look like a beehive of economic activity. But over 18,000 corporations 
claim this building as their place of business. It gives a whole new 
meaning to the phrase ``small business'' when we think of 18,000 
corporations claiming that building as their place of business. As 
Chairman Conrad has pointed out, the only business going on here is 
funny business, monkey business with the Tax Code, tax gimmickry. This 
is estimated to cost us as much as $100 billion every year. For every 
one of those dollars lost to the tax cheaters, honest tax-paying 
Americans and honest tax-paying American corporations have to pay an 
extra dollar or more to make up the difference.
  Here is another building with a tax story to tell about where we are 
as we look at our budget debate. This is the Helmsley building New York 
City. This building is big enough to be its own zip code so that the 
IRS reports of tax information by zip code can tell us a lot about this 
building. Here is what this building tells us from actual tax filings. 
The well off and very successful occupants of that building paid a 
lower tax rate than the average New York City janitor paid. It seems 
extraordinary, but it is not a fluke. The average tax rate of the New 
York City janitor is 24.9 percent of their income. Of a New York City 
security guard, is 23.8 percent of their income. And of the occupants 
of that wonderful building, 14.7 percent of their considerably larger 
incomes. That seems as though it must be extraordinary, but it is not a 
fluke.
  The IRS reports that the tax rate actually paid by the highest income 
400 Americans--the story is the same--the highest earning 400 
Americans, in the IRS's most recent calculation, each earned an average 
of $34 million-plus a year, over a third of a billion each and every 
year, 400 of them. I truly applaud their success. It is a magnificent 
thing. But here is the rub. They actually paid on average only a 16.7 
percent total Federal tax rate. I asked my staff to calculate the wage 
level where a regular single worker starts paying 16.7 percent in total 
Federal taxes. It is at a salary of $28,650. A representative job at 
that income level in my home State, in the Providence labor market, is 
that of a hospital orderly which the Bureau of Labor Statistics 
calculates pays $29,100 a year. At that point, they are paying the same 
as the 400 biggest taxpayers who each earned over a third of a billion 
dollars, 16.7 percent. So it is not just the fortunate and successful 
residents of the Helmsley building who pay a lesser share of their 
income to support their country than does the janitor, it is also the 
top 400 income earners, those averaging over a third of a billion in 
income, who contribute a

[[Page 4797]]

lesser share of their income than the hospital orderly pushing his cart 
down the halls of Rhode Island Hospital at night.
  Where are we? Well, it seems to me we are upside down as far as this 
is concerned. I believe no less an economic titan than Warren Buffett, 
the fabled ``oracle of Omaha,'' agrees with me that this needs to be 
corrected.
  The corporate Tax Code makes little more sense. Decades of lobbyists 
have carved it into a Swiss cheese of tax loopholes, of earmarks for 
the rich and powerful. The result? We have a nominal corporate tax rate 
of 35 percent. But here is what the New York Times reported last week. 
General Electric, one of the Nation's largest corporations, made 
profits of over $14 billion last year and paid no U.S. taxes. In fact, 
it actually received a $3.2 billion refund from the taxpayers. Maybe 
that was a 1-year anomaly. But a previous analysis by the New York 
Times of 5 years' worth of corporate tax returns found that Prudential 
Financial only paid 7.6 percent; Yahoo, 7 percent; Southwest Airlines, 
6.3 percent; Boeing, 4.5 percent; and what looks to be our tax 
avoidance champion, on $11.3 billion of income, the Carnival Cruise 
Corporation paid 1.1 percent in Federal taxes. One recent paper 
actually calculated their cash effective tax rate at 0.7 percent on 
$11.3 billion in income. Carnival lines is not just taking us for a 
cruise, they are taking us for a ride.
  But wait, there is more. Don't forget that we make the American 
taxpayer subsidize big oil to the tune of $3 billion a year, and big 
oil has made a trillion dollars in profits this decade. Indeed, on an 
effective tax rate basis, the petroleum-gas industry pays the lowest 
rate of any industry.
  These are all noteworthy landmarks and each should inform us about 
where we are and whither we are tending as we face our budget. But the 
big landmark, the Mt. Everest of landmarks casting its vast shadow over 
the entire budget discussion, is health care.
  I agree with Congressman Paul Ryan. He said:

       If you want to be honest with the fiscal problem and the 
     debt, it really is a health care problem.

  He is dead right. And the landmark feature of this landmark problem 
is this. The health care cost problem is a health care system problem. 
Our national health care costs are exploding. The health care system is 
driving the costs of Medicare. The health care system is driving the 
costs of Medicaid.
  The health care system is driving the costs of private insurance. The 
health care system is driving the costs of the military's TRICARE 
system. No one is exempt. The health care system is what is driving the 
cost problem in public and private programs alike. So we have to 
address the health care system problem if we are going to get our 
health care costs under control.
  How do we solve this? We actually have a pretty good toolbox that has 
five major tools in it.
  One, quality improvement. Quality improvement saves the cost of 
errors, misdiagnosis, disjointed care, and so forth. For example, 
hospital-acquired infections alone cost about $2.5 billion every year, 
and they are virtually entirely avoidable. They should never be events.
  Two, prevention programs. Prevention programs can avoid the cost of 
getting sick in the first place. More than 90 percent of cervical 
cancer is curable if the disease is detected early through pap smears.
  Three, paying doctors for better outcomes rather than for more and 
more tests and procedures can save money while improving the outcomes.
  Four, a robust health information infrastructure has been estimated 
to save $81 billion a year by the RAND Corporation, and that number may 
very well be low as the system builds itself out.
  Finally, five, the administrative costs of our health care system are 
grotesque. The insurance industry has developed a massive bureaucracy 
to delay and deny payments to doctors and hospitals. The doctors and 
hospitals have had to fight back, so they have had to hire their own 
billing departments and consultants.
  In the little Cranston community health center, which I visited a few 
months ago, half of the staff are dedicated to trying to get paid, and 
they have to spend another $200,000 a year on consultants. All of 
that--the entire war over payment between insurers and hospitals and 
doctors--adds no health care value--zero. We have heard that on the 
private insurance side, anywhere from 15 to 30 percent of the health 
insurance dollar gets burned up in administrative costs. We know we can 
do better because the costs of administering Medicare are closer to 2 
percent of program expenditures. Add this all up, and the numbers here 
are enormous.
  The President's Council of Economic Advisers has stated that 5 
percent of GDP can be taken out of our health care system without 
hurting the health care we receive. That is about $700 billion a year. 
The New England Healthcare Institute says it is $850 billion a year. 
The well-regarded Lewin Group has estimated the probable savings at $1 
trillion a year, a figure echoed by former Bush Treasury Secretary 
O'Neill.
  Not only are the numbers enormous, but the results are a win-win. 
Consider the five strategies: higher quality care with fewer errors and 
infections; prevented illnesses, so you do not get sick in the first 
place; secure, complete health records that are there when you need 
them, electronically, so your doctors, your lab, your pharmacy, your 
hospital, your specialists all know what everybody else is doing; 
payment to doctors and hospitals based on keeping you well and getting 
you well rather than on giving more procedures and things to you; and 
finally, not so much infuriating insurance company bureaucracy, 
hassling both patients and doctors. Those are not bad outcomes even 
without the savings.
  So what do we draw from this if we keep all these landmarks in mind, 
landmarks of where we actually are in this budget debate? Well, our 
colleagues on the other side, particularly our House Republican 
colleagues, say they are determined to reduce our annual deficit and 
our national debt, that it is their top priority. But in evaluating 
that claim, look at H.R. 1, which spends all its cost-cutting fury on 
only 12 percent of the budget--the nonsecurity discretionary spending--
and zero percent on the revenue side.
  If they are really serious about deficit and debt reduction, why risk 
destroying 700,000 jobs when job destruction only adds to the deficit 
and to our debt through lost economic activity and revenue?
  If they are really serious about deficit and debt reduction, why is 
not one corporate tax loophole on the chopping block--not one? Why is 
the Tax Code off limits in this discussion, as it burns up 6 billion of 
our precious hours every year and makes that hospital orderly, pushing 
that cart down the linoleum hallway at midnight, pay a higher rate than 
those fortunate and able Americans who made more than $1/3 billion each 
in a single year?
  If they are really serious about this, if deficits and debt are 
really the most important thing we face, why is there no discussion of 
corporate America's ever-diminishing contribution as a share of our 
national revenue?
  If our friends are really serious, why is there no plan for even one 
of the 18,000 corporations in that phony-baloney headquarters in the 
Cayman Islands to pay its proper taxes?
  Finally, if they are really serious, why is there so much pure 
political nonsense about ObamaCare and socialized medicine instead of a 
mature discussion about using and improving the tools in the health 
care bill to address our grave national health care system problem?
  Further, why is it necessary to throw Planned Parenthood and Head 
Start and every single idealistic young kid in City Year and Teach for 
America under the bus? Not one kid in an American school doing Teach 
for America can be spared, and yet we must keep our full deployment of 
57,000 troops in Germany? Is it necessary to single out the 
Environmental Protection Agency for the gutting that polluters long 
have lusted for? Why go after Social Security, which has never 
contributed a nickel to America's debt or deficit?

[[Page 4798]]

  It just seems to me that until one, just one, corporate tax loophole 
is on the table; until one, just one, subsidy to big oil is on the 
table, one, just one, subsidy to big agribusiness; until we are even 
beginning to talk about billionaires contributing Federal revenue in 
the same share of their income as that hospital orderly; until our 
friends are not so casual about threatening 700,000 jobs and perhaps 
$20 billion in related tax revenue; until the cuts and all those riders 
in H.R. 1 make it something other than a Republican Trojan horse of 
political favors and ideology, then count me a skeptic about their real 
priorities.
  I have always found that you get a better read looking at what people 
actually do rather than just believing whatever they say. If you look 
at what H.R. 1 actually does, it is the same old Republican agenda--
attacking programs that help the poor, attacking women's right to 
choose, attacking national voluntary service, helping polluters get 
around public health measures, reducing the share of revenues paid by 
corporations and very high income individuals. It is the same old song. 
And most important, if you go that road, it is just not adequate to 
meet the serious problems at hand. We need to look throughout the 
budget and across all of our opportunities to bring down our Nation's 
deficits and to bring down our Nation's debt.
  I look forward in the months ahead to a serious, fair, and sensible 
discussion, a mature discussion of how to reduce our deficits and our 
debt.
  I thank the Chair, and I yield the floor.
  I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. HARKIN. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER (Mr. Coons.) Without objection, it is so 
ordered.

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