[Congressional Record (Bound Edition), Volume 157 (2011), Part 8]
[Senate]
[Pages 10721-10738]
[From the U.S. Government Publishing Office, www.gpo.gov]




  SHARED SACRIFICE IN RESOLVING THE BUDGET DEFICIT--MOTION TO PROCEED

  The ACTING PRESIDENT pro tempore. Under the previous order, the 
Senate will resume consideration of the motion to proceed to S. 1323, 
which the clerk will report.
  The legislative clerk read as follows:

       Motion to proceed to the consideration of S. 1323, a bill 
     to express the sense of the Senate on shared sacrifice in 
     resolving the budget deficit.

  The ACTING PRESIDENT pro tempore. Under the previous order, the time 
until 5:30 p.m. will be equally divided and controlled between the two 
leaders or their designees.
  Who yields time?
  The Senator from North Dakota.


                                SCHEDULE

  Mr. CONRAD. Mr. President, the Senate has resumed the motion to 
proceed to S. 1323, a bill to express the sense of the Senate on shared 
sacrifice in resolving the budget deficit. The time until 5:30 will be 
equally divided between the two leaders or their designees. At 5:30, 
there will be a rollcall vote on the motion to proceed to S. 1323.


                Measure Placed on the Calendar--S. 1340

  Mr. CONRAD. Mr. President, I understand S. 1340 is at the desk and 
due for a second reading.
  The ACTING PRESIDENT pro tempore. The clerk will read the bill by 
title for the second time.
  The legislative clerk read as follows:

       A bill (S. 1340) to cut, cap, and balance the Federal 
     budget.

  Mr. CONRAD. Mr. President, I object to any further proceedings with 
respect to the bill.
  The ACTING PRESIDENT pro tempore. Objection is heard. The bill will 
be placed on the calendar under the provisions of rule XIV.
  Mr. CONRAD. I thank the Chair.
  Mr. President, we are in the midst of a defining debate on the budget 
of the United States. All of us understand we have a debt threat 
looming over this country that is as significant as anything we have 
faced in many years. Democratic members of the Senate Budget Committee 
have worked for weeks to devise a blueprint we think has merit and that 
deserves to be a part of the debate. Today, I am here to outline the 
key elements of that budget blueprint.
  First of all, I think it is critically important we all understand we 
are as a Nation borrowing 40 cents of every $1 we spend. That is not a 
sustainable circumstance. Admiral Mullen, the Chairman of the Joint 
Chiefs of Staff, has indicated that our national debt is our biggest 
national security threat. This is the top military man in our country 
saying the debt threat is the most serious national security threat.
  Why does he say that? Here are the facts: The debt of the United 
States--the gross debt--all the debt we owe is now approaching 100 
percent of our gross domestic product, which is the highest level it 
has been since after World War II. This chart shows a threshold of 90 
percent and a gross debt of 90 percent. Why did we draw that line on 
this chart? Because the best evidence we have tells us when we cross 
the 90-percent threshold on the gross debt of any nation, we are in the 
danger zone, we are in the red zone.
  The distinguished economists Carmen Reinhart and Kenneth Rogoff wrote 
a book called ``Growth in a Time of Debt.'' Here is their conclusion:

       We examined the experience of 44 countries spanning up to 
     two centuries of data on central government debt, inflation 
     and growth. Our main finding is that across both advanced 
     countries and emerging markets, high debt to GDP levels (90 
     percent and above) are associated with notably lower growth 
     outcomes.

  This is a key fact all our colleagues need to know. When our gross 
debt goes over 90 percent of our gross domestic product, our future 
economic prospects are diminished. That means fewer jobs created, less 
economic opportunity--a nation that is at risk. That is where we are.
  Look at what the Congressional Budget Office says is where we are 
headed. On the current trajectory, we are headed for a debt that will 
go to 200 percent of the gross domestic product of the country. This is 
not the gross debt; this is the publicly held debt, which is smaller 
than the gross debt. So this chart now looks at the publicly held debt 
and says it is headed for 200 percent of GDP. We cannot stay on this 
course. It is critically important we change direction.
  For every 1 percentage point increase in interest we pay, $1.3 
trillion is added to the debt. For those who say don't worry about the 
debt limit, let's remind them what will occur if the United States 
refuses to pay the bills it has already incurred, which is the interest 
rates will go up. Those who have loaned us money, if we renege on our 
commitments to pay them, will then insist on higher interest rates--all 
borrowers will insist on higher interest rates--and for every 1-percent 
increase in the interest rate, we will pay $1.3 trillion more on our 
debt. So those who think that somehow, by not extending

[[Page 10722]]

the debt limit, we are going to help on the debt--no. The opposite is 
true. The debt will increase and increase dramatically.
  Here are the hard facts with respect to the relationship between 
spending and revenue over the last 60 years in this country. The red 
line is the spending line. The green line is the revenue line. What 
this shows very clearly is that spending is the highest it has been as 
a share of GDP in 60 years. Yes, we have a spending problem. But it is 
not exclusively a spending problem, as some assert on this floor, 
because revenue as a share of GDP is the lowest it has been in 60 
years. To deny that essential fact is to deny the significant elements 
of a compromise that are required to solve this problem.
  Spending is the highest it has been in 60 years as a share of our 
national income. Revenue is the lowest it has been in 60 years as a 
share of our national income. Both have to be addressed if we are going 
to solve this problem.
  For those who say: Well, it is not a revenue problem, oh, yes, it is.
  This is an article that appeared Sunday, May 1, in the Washington 
Post: ``On the way to a surplus, a $12 trillion U.S. detour.''
  Remember, in 2001, we were told we were on the way to paying off the 
debt of the United States. This article by Lori Montgomery in the 
Washington Post on May 1 indicated the fundamental reasons that instead 
of paying off the debt, we have a debt that is mushrooming. This one 
paragraph says it all:

       The biggest culprit, by far, has been an erosion of tax 
     revenue triggered largely by two recessions and multiple 
     rounds of tax cuts. Together, the economy and the tax bills 
     enacted under former President George W. Bush, and to a 
     lesser extent by President Obama, wiped out $6.3 trillion in 
     anticipated revenue. That's nearly half of the $12.7 trillion 
     swing from projected surpluses to real debt. Federal tax 
     collections now stand at their lowest level as a percentage 
     of the economy in 60 years.

  That is the point I just made.
  So when Democrats on the Senate Budget Committee approached this 
problem, we looked at it in historical perspective. How did we get into 
this problem? Half of it is on the revenue side. So we chose to deal 
with a solution that deals on both sides of the ledger. Yes, we need to 
cut spending; absolutely, that must be done. But we also cut so-called 
tax expenditures that are just spending by another name--loopholes, 
exclusions, deductions, tax preferences, abusive tax shelters, and tax 
havens that are hemorrhaging revenue that rightfully belongs in the 
Treasury--people avoiding what they legitimately owe to the United 
States by engaging in abusive tax shelters and tax havens that is 
costing us substantial revenue. We will get into the specifics of that.
  The House Republicans chose a different path. They only want to focus 
on half the problem. They only want to focus on the spending side of 
the equation. They don't want to touch the revenue side of the 
equation. I believe that denies reality. That runs away from the hard 
reality of how we got into this situation. Again, we got here by, yes, 
spending that is higher than it has been in 60 years as a share of 
national income but also revenue that is lower than it has been at any 
time in 60 years. If we are truthful with ourselves, we are going to 
have to deal with both sides of this equation.
  The plan Senate Democrats on the Budget Committee have agreed on 
looks at a budget framework that includes roughly the same amount of 
deficit reduction as the House Republican plan. In fact, we have 
somewhat more deficit reduction than did they. They have a plan that 
was $3.9 trillion of deficit reduction. Our plan is $4 trillion. The 
actual difference is about $50 billion, but because of rounding, it 
turns out they are at $3.9 trillion, we are at $4 trillion. The actual 
difference is about $50 billion more in deficit reduction in the plan 
worked by Senate Democrats on the Budget Committee.
  So this is what happens to deficits as a share of GDP under the 
framework we are offering. As you can see, this year the deficit is 9.3 
percent of gross domestic product. We bring it down very steadily until 
we get down to 1.3 percent in the 10th year--a lower deficit in dollar 
terms, a lower deficit as a share of GDP than the House Republican 
plan. Let me repeat that. The Senate Democrats on the Budget 
Committee--our plan reduces the deficit by the 10th year by more than 
the Republicans in total, and in the 10th year we have a lower deficit 
in dollar terms and a lower deficit as a share of GDP.
  As shown on this chart, this is what happens to the debt itself. The 
gross debt, as you can see, peaks out at 100 percent in 2011, and then 
we bring it down gradually but steadily to about 98 percent by 2021. 
The key is, instead of having the debt line going up, up, and away, 
burying this country under a mountain of debt, we stabilize the debt 
and begin to bring it down--something that every serious economist has 
said is absolutely essential.
  In terms of spending, I indicated that current spending is the 
highest it has been as a share of GDP in 60 years. Our plan takes that 
down from 24 percent of GDP to 23 percent and then freezes it at 22 
percent of GDP for the rest of this decade.
  Now, some will say: There go the Democrats again. They are spending 
too much money. I would say to them: If we could get the spending down 
to the levels that were obtained during the Reagan administration, 
would that be acceptable? Because that is exactly what we do. Under the 
plan of Senate Budget Committee Democrats, we get spending to the exact 
same level that pertained during the administration of Ronald Reagan. 
During Ronald Reagan's 8 years, spending averaged 22.1 percent of GDP. 
That is precisely what our spending equals in the budget framework I 
have outlined here today. We include every part of the Federal budget, 
including the defense budget. Just as the fiscal commission did, just 
as every other bipartisan deficit reduction plan has included, we 
looked to defense spending for savings because no part of the budget 
can be off the table in terms of a deficit reduction plan.
  I would say separately, Social Security we deal with separately 
because Social Security need not be, should not be part of a deficit 
reduction plan. Savings on Social Security ought to be for the purpose 
of extending the solvency of Social Security. But in terms of those 
parts of spending that are considered on budget, defense has to be 
included in any savings. Why do I say that? Well, look what has 
happened since 1997. Spending on defense and war has gone from $254 
billion a year to $688 billion a year. It is a key reason spending has 
exploded.
  Before the fiscal commission, some of the best defense analysts in 
the country came before us and told us that 51 percent of all Federal 
employees are at the Department of Defense--51 percent of all Federal 
employees are at the Department of Defense--and that does not count the 
contractors.
  I asked these analysts: Well, how many contractors are there?
  Their response was: Senator, we can't tell you.
  I said: Is that a matter of security? Is that a matter of clearances?
  They said: No, Senator. We don't know.
  I said: Well, what is the range? About how many contractors are there 
working at the Department of Defense?
  The answer was: Senator, 1 million to 9 million. Between 1 million 
and 9 million. We can't tell you which is right.
  We have a serious problem of contractors working for the Department 
of Defense and the Department of Defense cannot even tell you how many 
contractors they have working for them. We have a problem.
  The previous Secretary of Defense, Secretary Gates, said this:

       . . . the budget of the Pentagon almost doubled during the 
     last decade.

  And he is right about that. Our chart shows that.

       But our capabilities didn't particularly expand. A lot of 
     that money went into infrastructure and overhead and, 
     frankly, I think a culture that had an open checkbook.

  ``A lot of that money went into infrastructure and overhead''--
overhead--``and, frankly . . . a culture that had an open checkbook.'' 
We cannot afford an open checkbook anywhere. We have to go after waste, 
fraud, and abuse in every department. We have to go after 
infrastructure spending that really

[[Page 10723]]

does not contribute to improving our defense. We have to go after 
overhead, overhead costs that have really run amok.
  Chairman Ryan of the House said this about defense:

       There are a lot of savings you can get in defense. There's 
     a lot of waste over there, for sure.

  Yet, when they came with their plan, they continued the path of 
increasing defense spending year over year without any discipline. This 
is the plan they outlined--from $529 billion a year headed for $667 
billion a year, and that does not count the war funding.
  In our plan, we have done what the fiscal commission called for. We 
have achieved the same savings out of security as the fiscal commission 
did--$886 billion out of the security category. Now, that includes 
defense. Obviously, defense is most of security, but in the 
``security'' category also falls homeland security, and also included 
is veteran spending. Veteran spending, by the way, is one place we do 
not cut a nickel. The veterans deserve to have the promise we have made 
to them kept, and under our budget, every dollar that has been promised 
to veterans will go to them. That does not mean we cannot save money 
out of the security side. The fiscal commission--which, by the way, is 
the only bipartisan plan that has come from anywhere: five Democrats, 
five Republicans, one Independent--endorsed a plan with $886 billion of 
savings over 10 years out of the security category. The budget by 
Senate Budget Committee Democrats adopts that finding.
  The budget that Senate Budget Committee Democrats are advancing also 
has governmentwide savings. We freeze the pay of Members of Congress 
for 3 years. We freeze the legislative branch and White House budgets 
for 3 years. We freeze civilian pay for 2 years. That has already been 
adopted, but we include that in our budget. We reduce the Federal 
vehicle fleet by 20 percent because, frankly, in our investigations we 
find in this area there has been an explosion of vehicles in the 
Federal fleet, and I think all of us have seen it with our own eyes. 
This is something that has to be taken on. We reduce travel costs of 
Federal agencies by 20 percent. We reduce Federal printing costs by $1 
billion by 2015. We reduce the number of contractors, which we have 
previously described.
  The House Republican plan on revenue is really almost impossible to 
believe. In a circumstance in which we have record debt, in a 
circumstance in which the revenue of this country is the lowest it has 
been in 60 years, what is part of their answer? Cut taxes some more, 
and cut them for the very wealthiest among us, cut them another $1 
trillion for those who are the most fortunate among us. I am not making 
this up. This is the House Republican plan: Take a circumstance in 
which we have record debt, the lowest revenue we have had in 60 years, 
and cut taxes for the very wealthiest among us by another $1 trillion 
by extending the top rate cuts, by a $5 million estate tax exemption. 
They actually cut revenues $4.2 trillion below the CBO baseline. Let me 
repeat that. They actually cut revenue in their plan $4.2 trillion 
below the Congressional Budget Office baseline. That is inexplicable.
  Maybe we can start to understand it when we look at what a former 
Reagan economic adviser said about the House Republican plan. Mr. 
Bartlett said this:

       Distributionally, the Ryan plan----

  The House Republican plan----

     is a monstrosity. The rich would receive huge tax cuts while 
     the social safety net would be shredded to pay for them. Even 
     as an opening bid to begin budget negotiations with the 
     Democrats, the Ryan plan cannot be taken seriously. It is 
     less of a wish list than a fairy tale utterly disconnected 
     from the real world, backed up by make-believe numbers and 
     unreasonable assumptions. Ryan's plan isn't even an act of 
     courage; it's just pandering to the Tea Party. A real act of 
     courage would have been for him to admit, as all serious 
     budget analysts know, that revenues will have to rise well 
     above 19 percent of [gross domestic product] to stabilize the 
     debt.

  Revenue today is 14.8 percent of GDP--again, the lowest it has been 
in 60 years. If we look at the last five times the budget has been 
balanced in the last 50 years, here is what we see: Revenues had to be 
close to 20 percent of GDP. They were 19.7 percent in 1969, 19.9 
percent in 1998, 19.8 percent in 1999, 20.6 percent in the year 2000, 
and 19.5 percent in 2001. That is the last five times the budget has 
been balanced. Each of those times, revenue was close to 20 percent of 
GDP. Now it is 14.8 percent of GDP. Anyone who seriously argues that 
you can solve this problem just on the spending side of the equation is 
not being serious.
  The budget framework we offer today has revenues at 19.5 percent of 
GDP--almost equivalent to what it was during the Clinton years, when we 
had balanced budgets and, in fact, stopped using Social Security money 
to pay other bills. During the Clinton years, revenue averaged 19.4 
percent of GDP. Under our plan, it averages 19.5 percent. So revenue is 
clearly not out of line compared to the other times we balanced the 
budget and, in fact, during the Clinton years when we had the longest 
economic expansion in this Nation's history.
  For our colleagues who say, oh, you can't touch revenue or you will 
kill the economy, you will kill job creation--really? How about the 
historic record? The historic record shows very clearly that during the 
Clinton years, when you had revenue at the same level as we have in 
this plan, you had the longest economic expansion in this Nation's 
history--39 quarters; 32 of those quarters during the Clinton years--
the longest uninterrupted period of economic growth in this Nation's 
history, and you had revenue at the same level we are talking about in 
this plan. Facts are stubborn things. A previous President said that. 
He was right. The fact is, we had the longest period of uninterrupted 
growth in our economy during a period in which revenue was at the level 
we are proposing in this budget. That is a fact.
  Mr. President, the proposals in the budget framework also seek to 
bring us transparency. We have tax reform that simplifies the Tax Code, 
scales back tax loopholes, protects the middle class, improves 
progressivity and fairness of the code, promotes economic growth and 
U.S. competitiveness--because we lower the corporate rate from 35 
percent to 29 percent to make America more competitive, and we pay for 
it by closing corporate loopholes. We also address the tax gap, 
offshore tax havens, and abusive tax shelters, and ensure that 
corporations pay their fair share.
  The specifics of our revenue proposal are as follows: The tax cuts--
the so-called Bush-era tax cuts--are extended for singles earning up to 
$500,000 a year and for couples earning up to $1 million a year. So 99 
percent of the American people will see no rate increase--none; 99 
percent of the American people will see no rate increase. One percent 
will, and it will be those who are sufficiently fortunate to be earning 
over $1 million a year--the top 1 percent in this country. We ask them 
to go back to rates of the Clinton era, when the top rate was 39.6 
percent, capital gains were 20 percent. Those are the rates that 
pertain--when we had the longest economic expansion in our Nation's 
history.
  For those who say it is a job killer, they have to explain how that 
can be since history shows something quite different from their claim.
  We also provide for alternative minimum tax relief. That costs $1.5 
trillion. That is not a tax increase. We are lowering taxes that would 
be imposed by the alternative minimum tax, which is increasingly 
gobbling up middle-class taxpayers. We are preventing that from 
happening. It costs $1.5 trillion to fix. So we are replacing that 
revenue with other revenue. I don't consider that a tax increase. That 
is merely substituting revenue for revenue that we are subtracting to 
prevent middle-class people from being caught up in the alternative 
minimum tax.
  We also reform the estate tax, going back to the 2009 levels which 
are $3.5 million a person and $7 million a couple. That means well over 
99.5 percent of estates would be completely exempt. That is a fair 
plan.
  We also assume net $2 trillion of additional funds from closing tax 
loopholes, cutting tax subsidies, promoting tax fairness. That is over 
10 years.

[[Page 10724]]

  We assume tax preferences for individuals are reduced 9 to 17 
percent, depending on the amount of offshore tax havens and abusive tax 
shelters that are closed.
  We assume, as I indicated earlier, that the corporate rate is lowered 
to 29 percent, offset by reducing corporate tax expenditures and 
closing corporate tax loopholes--specific policies to be determined by 
the Finance Committee, as they always are.
  Mr. President, when I indicate there is a range for reducing tax 
expenditures from 9 to 17 percent, depending on how much savings we get 
out of offshore tax havens, here is the math. Over the next 10 years, 
the tax preferences--or expenditures, as they are sometimes called--
will cost the Treasury $14 trillion. Let me repeat that. The loopholes, 
the exclusions, the preferences in the Tax Code will cost the Treasury 
$14 trillion over the next 10 years.
  On top of that, offshore tax havens and abusive tax shelters will 
cost the Treasury another $1.4 trillion. That is according to estimates 
based on data from the Permanent Subcommittee on Investigations. So if 
we recover nothing from tax havens, to reach our revenue numbers we 
would have to reduce tax expenditures 17 percent. On the other hand, if 
we recover 80 percent of tax haven losses and tax shelter losses, the 
reduction in tax expenditures would only have to be 9 percent--17 
percent reduction in tax expenditures if we get no savings from tax 
havens and tax shelters, and a 9-percent reduction in tax expenditures 
if we recover 80 percent of the losses from tax havens and tax 
shelters.
  Probably, the realistic expectation ought to be somewhere in between 
those extremes.
  If the CBO scored the proposal by Senate Budget Committee Democrats, 
they would not say there is any tax increase here at all. Let me repeat 
that. If the Congressional Budget Office scored this proposal by Senate 
Budget Committee Democrats, they would say there is a $765 billion tax 
cut over 10 years. How can that be? How can I be saying there is $2 
trillion of additional revenue over 10 years, and the Congressional 
Budget Office would say--if they evaluated this plan by Budget 
Committee Democrats--they would say it is a $765 billion tax cut? The 
reason is simple.
  In our plan we extend all of the middle-class tax cuts. In addition, 
we actually broaden the middle-class tax cuts so that nobody is 
affected by a rate increase unless they are a couple earning over $1 
million a year. We also provide the alternative minimum tax relief to 
prevent millions of middle-class people from being affected by that 
law.
  As I indicated earlier, that costs $1.5 trillion over the next 10 
years to shield middle-class taxpayers from that.
  Third, we provide estate tax reform at the 2009 levels so that well 
over 99 percent of estates are completely shielded or exempt.
  Again, when our Republican colleagues say--and some of them do--you 
can't have a higher tax rate, even on those earning over $1 million, it 
will kill the economy--really? How about looking at the facts. How 
about looking at the historic record. How about being informed by what 
has actually happened before because when we look at history, we find 
quite a different answer than our friends on the other side are 
providing.
  What we find is that the last time the top rate for those earning $1 
million was 39.6 percent, we experienced the longest period of 
uninterrupted economic growth in U.S. history. That is a fact. We had 
39 quarters of economic growth from 1991 to 2000. For 32 of those 
quarters, Bill Clinton was President, and we had a top rate of 39.6 
percent on those couples earning over $1 million a year.
  Our friends on the other side say: You will kill jobs. Do you know 
what is fascinating? I remember this debate back when we passed deficit 
reduction under President Clinton. Our friends on the other side said 
the same thing then. I remember, I was seated here listening to the 
then-Republican leader claim that if we passed the Clinton plan to get 
the deficit down and balance the budget, we would crater the economy. 
Those were the exact words our friends on the other side used at that 
time--that if we raised rates on the wealthiest among us, it would 
crater the economy.
  What happened? Not only did we not crater the economy, we had the 
longest period of economic expansion in our Nation's history, and 24 
million jobs were created--the best record ever. That is the fact. That 
is what really happened--not some fairy tale about what happens if we 
get the country back on track, if we move toward balancing the budget, 
toward getting the debt down, because that is in fact what happened 
during the Clinton years.
  Yes, we had the highest rate of 39.6 percent on those earning over $1 
million. But it didn't crater the economy--no. The economy grew. We had 
the longest economic expansion in this Nation's history, and 24 million 
jobs were created during that period, the best record ever.
  Let's look again at history. The last five times economic growth was 
above 4 percent in this country, the top tax rate was 39.6 percent on 
those earning over $1 million. Facts. Facts are stubborn things. In 
1994, the top rate was 39.6 percent and the growth rate was 4.1 
percent. In 1997, the top rate was 39.6 percent and economic growth was 
4.5 percent. In 1998, we had 4.4 percent economic growth. In 1999, it 
was 4.8 percent. In 2000, we had 4.1 percent economic growth--the 
strongest economic growth, going back decades, in every year. The top 
rate on people earning over $1 million was 39.6 percent, which is 
precisely what we are proposing in this plan.
  Mr. President, I think it is undisputed by serious economists, of 
whatever philosophical stripe, that these tax expenditures have to be 
reined in. We are spending $1.1 trillion a year on tax expenditures. 
Some of the most conservative economists in the country have said that 
is just spending by a different name. Here is Martin Feldstein, 
professor of economics at Harvard, Chairman of the Council of Economic 
Advisers under President Reagan. He has written a column called ``The 
Tax Expenditure Solution for Our National Debt.'' He said this:

       Cutting tax expenditures is really the best way to reduce 
     government spending. . . .

  It is called revenue, but it is really spending.

       Eliminating tax expenditures does not increase marginal tax 
     rates or reduce the reward for saving, investment or risk-
     taking. It would also increase overall economic efficiency by 
     removing incentives that distort private spending decisions. 
     And eliminating or consolidating the large number of 
     overlapping tax-based subsidies would also greatly simplify 
     tax filing. In short, cutting tax expenditures is not at all 
     like other ways of raising revenue.

  This is from the head of the economic advisers under President 
Reagan, saying we ought to cut tax expenditures. That is exactly what 
the Senate Democratic budget plan does. We cut tax expenditures 9 to 17 
percent, depending on how much we are able to save from closing off 
these offshore tax havens and the abusive tax shelters.
  If we get no savings from tax havens and tax shelters, then we would 
have to reduce tax expenditures 17 percent. If we are able to reduce 
tax havens and the other loopholes, offshore loopholes--the abusive tax 
shelters--by 80 percent, then we would be able to reduce tax 
expenditures by 9 percent.
  Just like Martin Feldstein who said we ought to have after tax 
expenditures, also Alan Greenspan, former Chairman of the Federal 
Reserve, said this:

       I think that Republicans are out to identify a very 
     significant amount of so-called tax expenditures, which in 
     fact are misclassified. They are expenditures, they are 
     outlays, and many are subsidies, and subsidies are not the 
     type of thing that you want for an efficient market system. 
     There are a lot of them.

  Mr. President, that is what we are proposing. Let's go after these 
subsidies, these preferences, these exclusions. While we are at it, 
let's go after offshore tax havens, abusive tax shelters. Let's shut 
them down.
  If there is any doubt about where this money is going, here it is: 
26.5 percent of tax expenditures go to the top 1 percent in this 
country; 26.5 percent of all

[[Page 10725]]

tax expenditures go to the top 1 percent. So when we are saying we may 
have to reduce tax expenditures 17 percent, we could do it all just 
with the top 1 percent. That is where the benefit is going.
  Let me show you in another way. The top 1 percent, in dollar terms--
the value, on average, of tax expenditures for those who are in the top 
1 percent in this country, earning an average of $1.1 million a year, 
they get, on average, a benefit every year from tax expenditures of 
over $205,000. For those who are in the middle quintile, those earning 
$39,000 a year, their average benefit is $3,000. You can see that the 
top 1 percent have a benefit from tax expenditures that is 66 times 
what people in the middle get. It is not unfair to go to those who have 
had the greatest benefit from the national economy over the last two 
decades and say to them: We need you to help a little bit more to get 
out of this debt rut we are in. And you know what, that is not unfair 
because they have had the greatest benefit over the last 15 years.
  Here is something that I think shows it conclusively. This is the 
effective tax rate for the 400 wealthiest taxpayers in America. In 
1992, it was about 27 percent. In 1995, the tax rate for the wealthiest 
400 was 30 percent--29.9, to be exact. Look what has happened since 
1995. The effective tax rate for the wealthiest 400 taxpayers in 
America has gone down to 16.6 percent. They have had their tax rates 
cut almost in half. Has anybody else had their taxes cut in half? I 
don't think so. The people who have had their taxes cut in half are the 
wealthiest among us. So it is not unreasonable to go back to them and 
say: Hey, wait a minute. We have to go back to what the tax rates were 
here--not back to an effective rate of 30 percent but a top rate that 
we had in the Clinton years when we had the largest economic and 
longest economic expansion in our Nation's history. That seems 
reasonable.
  We also know it is not just on the individual side but on the 
corporate side as well. This is a little five-story building in the 
Cayman Islands. Now, 18,857 companies say they are doing business out 
of this little building. Anybody believe that? Anybody believe 18,857 
companies are doing business out of this little 5-story building down 
in the Cayman Islands? I would say that is the most efficient building 
in the world. Imagine, a little 5-story building, and 18,857 companies 
say they are doing business out of there. They have maybe 100 employees 
in that building. Those are the most efficient people in the entire 
world. Unbelievable what they are doing.
  You know what, they are not doing business; they are doing monkey 
business because what they are doing is cheating all the rest of us who 
pay what we owe. Why are they down in the Cayman Islands, those 18,857 
companies, calling that little building home? Because there are no 
taxes down in the Cayman Islands, and they are showing their profits in 
subsidiaries they say are operating out of that little building so they 
can avoid paying the taxes the vast majority of us pay right here in 
the United States. That is outrageous. That is unfair. Our Republican 
friends say: Oh, you can't touch that; it is a tax increase if you do. 
Really? That is a tax increase? I don't think so.
  Offshore tax haven abuse is proliferating. If anybody doubts it, go 
Google offshore tax havens and see what happens. See what happens if 
you Google offshore tax havens. The experts here on the Permanent 
Subcommittee on Investigations have said this:

       Experts have estimated that the total loss to the Treasury 
     from offshore tax evasion alone approaches $100 billion per 
     year, including $40 billion to $70 billion from individuals 
     and another $30 billion from corporations engaging in 
     offshore tax evasion. Abusive tax shelters add tens of 
     billions of dollars more.

  The Democrats on the Budget Committee said: We have had it. We are 
going after those people. We are going to insist they pay their fair 
share just as the vast majority of Americans already do. So we are 
saying: We are coming after you. If you have a tax haven down in the 
Cayman Islands, we are coming after you. If you have an abusive tax 
shelter, we are coming after you because it is not fair to all the rest 
of us who are paying what we owe.
  There are critical priorities that shouldn't be cut. One is 
education. Education is the foundation for future economic strength.

       An educated population is a key source of economic growth. 
     . . . Broad access to education was, by and large, a major 
     factor in the United States' economic dominance in the 20th 
     Century and in the creation of a broad middle class. Indeed, 
     the American Dream of upward mobility both within and across 
     generations has been tied to access to education.

  This is a quote from Harvard economists Claudia Goldin and Lawrence 
Katz in ``The Future of Inequality: The Other Reason Education Matters 
So Much.''
  When we see what our friends on the other side are doing, they are 
cutting education 15 percent. We don't believe that is the right 
priority for the country. Yes, overall spending has to be cut. We do 
cut spending--almost $2 trillion in the Democratic blueprint, almost $2 
trillion--but not education.
  Another key priority is energy. We all know what has happened to gas 
prices. They have soared from $1.81 in December of 2008 to over $3.50 a 
gallon by July 4. I just paid $3.77. We all know what is happening to 
gas prices. Many of us believe a key priority is to reduce our 
dependence on foreign energy. House Republicans have a different idea. 
They cut the programs to reduce our dependence on foreign energy by 57 
percent. We reject that proposal. We don't think it is in the national 
interest.
  Infrastructure--roads, bridges, airports, rail. Here is what the U.S. 
Chamber of Commerce has said about infrastructure spending:

       If we don't change course over the next five years, the 
     economy could forgo as much as $336 billion in lost economic 
     growth as transportation networks continue to deteriorate. I 
     am well aware of the fiscal constraints facing this Congress 
     and the nation. But we must avoid cutting off our nose to 
     spite our face. Without proper investment and attention to 
     our infrastructure, the United States' economic stability, 
     potential for job growth, global competitiveness, and quality 
     of life are all at risk.

  That is a quote from Thomas Donohue, the president and CEO of the 
U.S. Chamber of Commerce.
  Republicans in the House weren't listening because they propose 
cutting transportation funding in their budget by 30 percent. We reject 
that cut as well. It does not make sense to cut education, to cut 
infrastructure. It does not make sense. It will only weaken our 
position.
  On health care, the House Republican plan ends Medicare as we know 
it. It replaces it with a voucher system, block grants Medicaid, and 
shifts costs on seniors, children, the disabled, and individual States. 
It ends the countercyclical nature of Medicaid, and it defunds health 
care reform, increasing the number of uninsured by at least 34 million 
people in this country. The House Republicans have said their plan 
saves Medicare. I don't think so. I think it kills Medicare. Why do I 
say that? Because under traditional Medicare now, the beneficiary pays 
25 percent. Someone who is eligible for Medicare pays 25 percent of the 
bill. Under the House Republican plan, they would pay 68 percent of the 
bill. That just stands things on their head. Instead of people having 
Medicare as a social safety net when they get to their senior years, 
they would have it pulled out from under them.
  We have rejected the House GOP approach and would remind our 
colleagues that we have had large health care savings that were already 
enacted last year in health care reform. The Congressional Budget 
Office says that will save in the second 10 years $1.3 trillion. So, 
yes, everything has to be on the table, but we just took a big run at 
getting our health care costs back in line--$1.3 trillion in deficit 
savings, according to CBO.
  In conclusion, the overview of the budget framework we are offering 
our colleagues for their consideration provides $4 trillion in deficit 
reduction over 10 years. It is actually $5 trillion if measured on the 
same basis as the fiscal commission. We have adopted

[[Page 10726]]

what we think is a more plausible baseline in light of things that have 
happened over this year. It stabilizes the debt by 2014 and cuts the 
deficit to 2\1/2\ percent of GDP by 2015 and 1.3 percent by 2021. We 
have tax reform that simplifies the code. This closes loopholes and 
goes after offshore tax havens and abusive tax shelters and restores 
fairness. We reject the House GOP plan to end Medicare as we know it. 
We protect education, energy, and infrastructure investments. And we 
have a balanced deficit and debt reduction plan, cutting spending by 
about $2 trillion and providing additional revenue by about $2 
trillion.
  Let me conclude as I began by saying that our revenue plan would be 
scored by the Congressional Budget Office as being a $765 billion tax 
cut because we are replacing revenue lost by extending other tax cuts. 
We are extending all the middle-class tax cuts and expanding middle-
class tax cuts up to those earning $1 million a year. And we are fixing 
the alternative minimum tax. That costs $1.5 trillion over 10 years. I 
don't consider that a tax increase at all because you are reducing 
revenue that would otherwise come into the Treasury under the 
alternative minimum tax--which I think almost all of us think is 
unfair--and replacing it with revenue by reducing tax expenditures. 
Even the most conservative economists in the country say that needs to 
be done.
  That is the blueprint the Senate Budget Committee Democrats are 
laying before our colleagues. We are under no illusions. We know this 
is a year in which the normal process is not being followed. We 
understand there are leadership negotiations at the highest level, so 
we understand this is not going to be dealt with in the normal course 
of doing business. We understand there is leadership negotiation, but 
we believe there are some ideas in this package that deserve 
consideration as those negotiations go forward.
  Mr. President, I thank my colleagues for their courtesy and their 
patience, and I look forward to this continuing debate as we take on 
the debt threat that looms over our Nation.
  I thank the Chair, and I yield the floor.
  The ACTING PRESIDENT pro tempore. The Senator from Georgia.


                         Passage of Dodd-Frank

  Mr. ISAKSON. Mr. President, I commend the Budget Committee chairman 
on his contribution to this debate and his contribution to our country. 
I enjoy listening to his remarks and appreciate many of the ideas he 
has offered today.
  I rise to talk about an anniversary today--no, it is not my 
anniversary or his but the anniversary of Dodd-Frank, which passed a 
year ago today.
  This morning at a press conference, Barney Frank, then-chairman of 
the House Banking Committee and the Frank portion of the Dodd-Frank 
legislation, gave a speech before the National Press Club. In it he 
made some comments that are very important, and I wanted to share my 
agreement and support for some of the things Chairman Frank said.
  I did not vote for Dodd-Frank when it passed 1 year ago, but I did, 
along with Senator Hagan and Senator Landrieu, offer an amendment which 
was adopted by the Senate and ultimately agreed to by the House in the 
conference committee. It was an amendment known as QRM, qualifying 
residential mortgage, an amendment to carve out an exemption from risk 
retention for a well-underwritten mortgage loan.
  The Dodd-Frank bill, as many in this room will remember, originally 
called for a total 5-percent risk retention on every residential 
mortgage made, which would have eliminated many people from making any 
residential mortgages at all. Ranking Member Frank today in his 
comments said: Well, we had a 100-risk retention prior to 1994.
  He is right. That is when savings and loans made loans, and that is 
when the Federal Government insured the others, and savings and loans 
had preferential interest rate treatment so they could make 
preferential payments to people to save in their institution versus the 
bank. But the Federal Government took away the one-quarter percent 
differential that savings and loans had and the banks became 
competitive with savings and loans for short-term and long-term 
deposits of savings and all the savings money flowed to the banks that 
offered other products. So savings and loans went out of business. When 
they did, there was no residential mortgage money, at least no 
conventional money, available in America.
  So what happened? The securitized market began. Freddie and Fannie 
began to play a significant role in providing conventional residential 
mortgage money. Until the collapse, which began in 2006 and culminated 
in 2009 and we still are suffering from today--until that collapse, 
securitization was a very reasonable and safe way of raising capital 
for mortgages.
  What happened in the mortgage collapse was not a failure of equity or 
skin in the game by the borrower; it was the collapse of underwriting. 
Mortgage lenders got into loosey-goosey underwriting--subprime credit. 
They made loans to people who were higher risk in order to price it at 
a higher rate, and they blurred qualifying requirements to where, all 
of a sudden, if you walked in and fogged up a mirror with your breath, 
you could probably get a mortgage loan and they could probably 
securitize it.
  Dodd-Frank was designed to see to it that didn't happen again, and I 
commend them for it. But as government often does, sometimes it goes 
too far when the pendulum swings back the other way.
  Thus is the dilemma we are in today, as the rule being proposed by 
the FDIC, the Federal Reserve, Comptroller of the Currency on the QRM 
rule is going to require, in addition to quality underwriting, a 
minimum 20-percent downpayment.
  For years in this country we have had 90 percent and 95 percent 
conventional financing or, in terms of FHA, 3.5 percent downpayment and 
VA none at all. There have been various varieties of downpayments that 
have been allowed based on the loan and its insurance. But with this 
rule of requiring risk retention on any loan with a downpayment of less 
than 20 percent, except for an FHA or VA loan, it is going to literally 
destroy what is left of the residential housing market because it will 
extract what is probably 40 to 45, maybe 50 percent, of the current 
market today.
  Senator Landrieu, Senator Hagan, and myself in QRM proposed that 
people have a qualifying ratio of debt to income that is sufficient to 
amortize the debt, a third-party verification they have a job, a credit 
score that indicates they are willing to pay their payments, an 
appraisal that indicates the house is worth what they are paying for, 
and a downpayment with mortgage insurance required if the downpayment 
was less than 20 percent.
  Today, I wish to quote Ranking Member Frank. When talking about risk 
retention, he said: I am troubled because there is an assault now on 
risk retention--Barney Frank--adding that even though he believes the 
20 percent requirement in the QRM rule being circulated is too high. 
When asked further what would be a good downpayment, he said at least 4 
or 5, something above FHA.
  I wish to commend the ranking member because he is precisely right. 
Although he in his original intent with Dodd-Frank did not want to 
bifurcate residential qualifying mortgages by some having risk 
retention and some not, he recognized the importance of doing some of 
that bifurcation and having some exception to risk retention. They 
would have realized that anyway, if you recognize they exempted Freddie 
Mac, Fannie Mae, and FHA from the requirements of Dodd-Frank and left 
them solely on the conventional market.
  So I wish to thank Congressman Frank today for his comments as they 
related to QRM and his identifying the downpayment requirement 
currently being circulated is entirely too high. It is entirely too 
high, and it is very important that we get the final rule, which will 
be published on August 1, to have a reasonable downpayment of 5 percent 
or more, rather than 20 percent

[[Page 10727]]

or more. Five percent or more will ensure there is skin in the game; 
and with the other qualifying and underwriting provisions in QRM, it 
will ensure that quality residential mortgages are being made.
  I am not one to offer advice often to the President. He is the 
President. He can do as he wishes. But today in Politico there is an 
article about the President is now returning to revisit the residential 
housing market because he understands employment is not coming back 
until housing comes back; he understands the American dream is, for 
some people, now the American nightmare; and he understands what has 
been done so far has not been working.
  I wish to suggest to the President that if he thinks what is 
happening now is a nightmare, you just wait until this QRM rule that is 
being circulated now actually goes into effect. Without it being 
changed and a continued requirement of a 20-percent downpayment, you 
will have a further lack of demand in the housing market, which already 
is almost at least anemic, if not feeble, because most Americans who 
want to buy a home can afford 5 percent or maybe 10 percent down, but 
they can't afford 20, and that is middle America. If you pull them out 
of what is already an anemic housing market, you would have no housing 
market at all.
  So as this Dodd-Frank rule is being circulated in the next 2\1/2\ to 
3 weeks before it is finalized, I hope we can all keep up the drumbeat 
for the regulators to be reasonable in their approach--understand risk 
retention is important but also understand home ownership is important 
and understand we had a collapse that was not downpayment related. We 
had a collapse that was underwriting related.
  So if you have strong underwriting and minimal skin in the game of at 
least 5 percent, you have a qualified residential mortgage that does 
not have to have risk retention; therefore, you will have enough 
capital raised in the mortgage markets to fund a housing demand which 
hopefully is going to continue to grow.
  In the absence of securitization, in the absence of an exemption of 
risk retention for a qualified residential mortgage, there will be no 
housing market in the United States of America.
  FHA is already under so much stress and duress, it is awful and it is 
frightful. The Veterans' Administration is a privileged loan for those 
who have served and made the ultimate sacrifice for our country, and 
they deserve it. Freddie and Fannie are exempted because we have them 
in conservatorship. But they are not going to be a source of money for 
long. Something will have to replace them, a new entity, probably 
something with securitization. But if the QRM rule being circulated now 
does, in fact, go into place as it is written, with a minimum 20-
percent downpayment, it will be the last nail in the coffin of the 
American housing market. The unintended consequence of reaching too far 
to react to the terrible crisis which we had will put the death knell 
of the housing market squarely on the shoulders of this Congress, this 
administration, and these regulators who are currently carrying out 
those rules.
  I wish to commend Ranking Member Frank on his comments today, his 
recognition that the QRM rule being circulated asks too much, 
recognizing that a 5-percent or greater downpayment is a reasonable 
approach and recognizing that underwriting is the important key to see 
to it that we have a housing market.
  I commend the gentleman from Massachusetts. I thank him for adding 
that comment today to the National Press Club. I hope the regulators, 
the FDIC, the Federal Reserve, the Comptroller of the Currency, and the 
Treasury heard it too. If they didn't hear it and they remain silent 
and continue with 20 percent, they will be doing exactly the opposite 
of what the President of the United States stated he wants to do; that 
is, bring the housing market back in America.
  I yield back.
  The ACTING PRESIDENT pro tempore. The Senator from Alaska is 
recognized.
  Mr. BEGICH. Mr. President, before I talk about the budget, I wish to 
commend the Senator from Georgia.
  As someone who has been in the real estate business for many years, 
such as the Senator from Georgia, he is absolutely right. If homeowners 
are stuck with a 20-percent minimum, the odds are it will crush the 
housing market. I can tell you this personally because I am helping my 
mother do the paperwork now for her home. If she was required to put 20 
percent down, she would not be buying that home today. We hope to close 
on the home in the next 45 days. We are fortunate she is able to do 
that, but 20 percent would take her right out of the market, unable to 
buy the home she wants to retire in.
  So I say to the Senator from Georgia, I hope more people hear it in 
the administration, because if they don't hear that, as we know with 
the housing market, it is a critical component of our ability to pull 
ourselves out of the recession. I thank the Senator for making those 
comments and noting that.
  I know Senator Conrad was down here earlier, the chair of the Budget 
Committee, to talk about the budget framework. I first wish to say 
thanks to Chairman Conrad. Here is someone who has been on the Budget 
Committee for 25 years, since 1986, and has been chairman for many of 
those years, an unbelievable capacity and understanding of the budget 
and what needs to be done. He understands it. He clearly recognizes we 
have to have a balanced approach.
  For months, yourself, Mr. President, and myself, sitting on the 
Budget Committee, along with the chairman on the Democratic side, have 
been working to try to figure out how do we craft a balanced approach. 
How do we ensure that at the end of the day, we recognize we have to 
have a budget that continues to help grow our economy, creates fairness 
in the system, and makes sure we take the responsibility of creating a 
more accountable and financially responsible budget, not only for this 
year but for the years out, and dealing with a comprehensive approach 
to dealing with the deficit?
  This is not an easy task, to say the least. I can say, standing here, 
and I know, Mr. President, as a member of the Budget Committee also, 
none of those meetings were easy in the discussion, if I could say 
that--robust debates, robust controversy in some of the issues we 
talked about but also a lot of ideas. But what is in front of us?
  No one can match the chairman's approach of how to address an issue 
such as this as he lays out slide after slide the impacts, from the 
macro to the micro, of this budget and what it will mean. But it is 
clear the budget proposal he has laid out, the framework, as he calls 
it, by the Democratic majority of the Budget Committee is $4 trillion 
in cuts for deficit reduction and is achieved in a very fair and 
balanced way, without putting the burden on the backs of seniors, 
working families, and small business. This is a balanced approach. The 
deficit-cutting mechanisms are drawn half from savings and half from 
revenues. Revenues mean closing loopholes.
  His photo there, which as we sit here and present to the President 
our positions is hard for people in the balconies to see, but it is of 
an amazing five-story building. It is not a very attractive building, 
just a small five-story building in a tax haven that grants thousands 
and thousands of businesses a shelter from their fair share of paying 
their taxes.
  The idea of this revenue component of the proposal we put forth is 
closing loopholes, closing down tax avoidance schemes that rely on 
abusive tax shelters, and, yes, cutting tax subsidies, ending the 
practice of giving the wealthiest of the wealthy tax subsidies they 
simply do not need. It is about promoting fairness.
  As we dealt with this budget, a $4 trillion reduction--a number that 
the bipartisan commission hit as their target, one we hear out there 
now in the press a lot but one we felt was a reasonable approach. It is 
more than the House budget that was proposed. The House budget included 
savings only on the spending side and actually worsened the outlook on 
the revenue side

[[Page 10728]]

 that we simply do not believe is good enough.
  The budget is about fairness, about ensuring that we have a system 
that is balanced but also investing in the right areas so we have long-
term and continued growth. We do not give more tax breaks to 
corporations and the rich and then put the burden on the backs of 
seniors, poor kids, working families, disabled. It is unacceptable to 
put the burden on our most vulnerable population. The budget is truly a 
moral document. It defines where we are going to go, what we are going 
to do, and how we are going to look in the next 10 years or 20 years as 
a country.
  When I was mayor of Anchorage in 2003, when I got elected, I had a 
budget around $215 million, with about a $33 million hole in it--pretty 
significant in the sense of proportions. We had to deal with spending 
and reducing it. We had to create a fairness in the revenue, but we 
also had to invest. But we also knew the document and the work we were 
doing in the budget would define where our community went, not just in 
the year we were doing it but in the next several years down the road.
  I was very pleased. When I got elected to the Senate, it was, I 
think, Business Week and others that rated the city that I was mayor 
of, Anchorage, as probably the most likely city in the country to 
recover from the recession the fastest. As a matter of fact, Forbes has 
listed it, not only last year but this year, I think, No. 3 this year 
as the city of job growth because there was a foundation laid. We had 
to make some tough decisions, and I remember as mayor they were no fun. 
I remember the role of the Presiding Officer in the community he 
represented. There are tough decisions we have to make, but you have to 
make them.
  I can still remember one headline that as we were trying to figure 
out what do with our library system that wasn't run as well as it could 
be, I still remember this headline to this day: ``Begich Lays Off 21 
Librarians,'' which is not a very good headline, to say the least.
  But what did we do? We reexamined it, reinvested, increased our 
partnerships with the private sector today, and the library system is 
more robust than ever before, with new branch libraries serving more 
kids than ever before, better facilities, new equipment, new 
technology. It is more robust than it has been in decades because we 
had to make some tough decisions for the long term.
  That is where we are today, especially after the disappointing news 
we had this last week with regard to the job market, when the 
economists thought we were going to have 120,000 new jobs and we ended 
up with just 18,000, unemployment rising to 9.2 percent.
  As I said, this plan protects critical investment that will help us 
build the future of our economy here. It invests, as mentioned by the 
chairman of the Budget Committee, Chairman Conrad, in education, 
energy--which is, of course, for my State critical--and infrastructure, 
core infrastructure.
  I use my experience as a mayor. In my short term as mayor of 
Anchorage, we built more roads than all the mayors combined in the 
previous 20 years. We built more vertical construction--fire stations, 
convention center, museums, and other facilities that helped water, 
sewer, power, new generation of gas turbines--all that because when you 
build that infrastructure, the private sector will attach to it, will 
be attracted to it and will build off of that.
  This budget that is being presented by the majority on the Budget 
Committee keeps our investments in education, energy, infrastructure, 
which in turn will ensure that we continue to move back into the realm 
of being more competitive on the worldwide market.
  We have all heard the budget proposal lays out some ideas on tax 
reform--not just a little bit here and a little bit there, but fairly 
significant. When we talk about our corporate rate in this budget 
proposal by the majority in the Budget Committee, it brings it down to 
about 29 percent. It is not where I would like it, but it is better 
than where it is today. It gets us more competitive on the world 
market.
  A group of us also have introduced legislation in advance of this 
budget proposal, the Wyden-Coats-Begich Bipartisan Tax Fairness and 
Simplification Act. The legislation provides real tax reform for our 
very outdated system. It plays off of exactly what the majority laid 
out, a budget proposal that talks about tax reform to create certainty 
for our business community for long-term investments, and we take it 
one more step. Not only do we look at the corporate component, we look 
at the individuals.
  Can you imagine, as an individual right now we deal with six 
different rate structures. If we can reduce it to three, which our bill 
does, and you could do your tax return on one page--can you imagine the 
amount of time, effort, and money individuals will save? We take the 
budget proposal that the committee I sit on and the Presiding Officer 
sits on one step further. Not only do we focus on stability and 
certainty for the business community, which is critical for long-term 
investments they need to make to ensure all those trillions they have 
literally locked up in their cash accounts because they are not sure 
where we are headed as a country, we create the certainty, but we also 
ensure the individual has a compressed rate, a more fair system, and 
simplified, which we think is important.
  Tax reform is an integral part of the conversation on deficit 
reduction. I am pleased Senator Conrad's proposal also provides some of 
the same tax reform principles I mentioned. As I mentioned, it not only 
deals with the rate structure but, as he detailed, very aggressively 
closing shelters and loopholes, and not just for one industry over 
another industry, which has been some of the debate, it is for fairness 
of all. We look at it all because we want everyone to be treated 
fairly.
  Let me talk about a couple of more pieces in the majority's budget 
from the Budget Committee. Chairman Conrad went through it in great 
detail but I want to emphasize this point. The AMT, the middle-class 
tax cuts--what does this mean? What does this mean for the average 
person here?
  Right now, 4.3 million taxpayers are affected by the AMT, which is a 
small tax provision that many years ago was set in place to get the 
richest of the richest. But it was never indexed, never inflation 
adjusted, so it has grown. There are 4.3 million taxpayers we have 
affected today. If we do not fix this tax problem, it will increase to 
31 million people who will have additional taxes to pay.
  What are we doing? We are putting on the AMT patch to fix this 
problem so 30-plus million people will not have this additional tax 
burden. We think it is right. We think it is the right approach. It 
goes to the people who need it the most.
  In addition, this framework that was laid out today, for singles 
earning $500,000 and couples earning $1 million or more, they will not 
receive the same tax relief as everyone below them will receive. The 
tax relief will be focused on families who earn $1 million or less. Why 
is that important? Because not only are they families, but almost 98 
percent of all small business earn $1 million or less pretax. So we 
protect the backbone of my State. I can tell you as a small 
businessperson, the Presiding Officer knows that as someone who worked 
in a small business and it grew to a larger business, it is the 
backbone. It is what makes the difference in hiring people. Every day 
when people see their revenue stream start to increase, small 
businesses start hiring people. They need those employees.
  But this proposal is not only for the individual, and then also the 
larger corporation bringing in that corporate rate, but it protects 
almost all the small businesses in this country--and, of course, being 
very biased--and in my State.
  What does that mean? That means when you calculate it all in real 
dollars, and you heard the numbers, when you think about the tax 
reductions, the tax savings for middle-class Americans and small 
business, it is well over $1 trillion between the AMT and preserving 
the tax relief for families earning under $1 million. It is 
significant.

[[Page 10729]]

That is money that small businesses will reinvest into their 
businesses, employing other small businesses to do the work. It is 
families who will have more disposable income to put into the economy 
which means more purchases from businesses which means more hiring and 
this has a constant ripple effect.
  When you talk to business owners, and I have--I spent a lot of time 
with them as a small businessperson and a Senator now, meeting with 
business folks on a regular basis--over and over again they tell me put 
the money in the hands of the consumer. Then the consumers will spend 
that money and improve the economy because, as they spend money, we 
will hire more employees and buy more product. It goes on and on.
  There is a difference between what we are trying to do in the sense 
of the value, who receives the benefit of a comprehensive budget 
proposal, a budget proposal that the majority in the Budget Committee 
has worked on for the last 2 or 3 months, at least, and before that 
trying to figure out the right approach. It is a balanced approach. It 
focuses, as I said, on dealing with budget reductions, accountability, 
ensuring that where there is waste we go after it aggressively. Where 
people are taking advantage of the system at the cost of the everyday 
person, we go after that. But we don't forget that we have to invest in 
the core issues of education, energy, and infrastructure, so we 
continue to grow this economy.
  We must have a balanced approach in this process. I know on the other 
side they will argue over and over, first let's do spending and then we 
will deal with other things. You have to do it all together. I am 
telling you this as a person who ran a city for almost six years, ran 
businesses for many years: you cannot do it on one piece of the 
equation. It is a three-pronged attack. Some of the folks I know around 
here after years of service have gotten a little amnesia as to how it 
will occur. We can blame individuals, blame certain Presidents, certain 
majorities, but we are where we are and we have to deal with this.
  It is not going to be fun. It will be uncomfortable. It will make us 
have to dig deep into what is right for the long-term health of this 
country and what we need to do to ensure America becomes what it used 
to be--a stronger country economically than it is today where we are in 
the lead when comes to innovation and we are in the lead when it comes 
to developing new technologies to lead this world in its economic 
growth.
  We cannot do it in this process of I am only going to do one thing 
and one thing only. That does not work. It has to be a broad, sweeping 
approach.
  We are not going to forget in this process that we are not going to 
throw people overboard who have helped build this country. When you 
think of our seniors, the generation that built our country to where it 
is, ensuring that people such as myself, the Presiding Officer, and 
others have an incredible opportunity, thinking about where they need 
to be, this budget plan keeps Social Security off the table.
  We recognize there are issues and we have to deal with it in its 
sustainability and we recognize that, but it is not a driver. It has 
not contributed 1 penny to this deficit. We need to treat Social 
Security in a way that ensures sustainability in the long term and 
there are simple solutions to that that I know we can get to.
  We also ensure that Medicare is taken care of, that benefits are not 
reduced. Also, as the chairman said so eloquently earlier, we have to 
ensure that our veterans are protected, those who serve now in Iraq and 
Afghanistan and all around the world, and served before. We owe a great 
deal to veterans. In some cases before I got here I know there was a 
lot of debate in the Veterans' Committee on which I sit. We have been 
working to be very sure they get the benefits they deserve. We need to 
make sure we fund them. When we send them to war and they become 
veterans after their service, we have an obligation, an obligation that 
should not be sliced and diced because we want to make political 
statements on the budget cutting process. They need to be protected.
  As I said, this budget does good things. It is a fair approach. It 
may not be perfect in all senses. I can tell you there are things I 
don't like in it that are going to impact groups that are concerned 
about how we approach this, but we are all in this together. We need to 
make the approach the right way. But those who are so hardened now who 
say it is only going to be about spending cuts--which, let me make it 
very clear, I think the Budget Committee, the majority on the Budget 
Committee, is not afraid of dealing with the budget cuts. We have done 
that--$2 trillion of budget cuts. We have to get used to it when we are 
here in the Senate, not Bs or Ms, they are Ts, $2 trillion of budget 
cuts. We also balance it getting rid of loopholes and tax shelters in a 
fair and balanced way so everyone pays their fair share, but we also 
make sure we invest in the future.
  If we are shortsighted around this place, we will pay for it next 
year and the year after that and the year after that. This is truly I 
think the right approach that goes after ensuring the middle class are 
not the people carrying the burden as they have been doing for the last 
several years--especially in the last 2 years, clearly--and that 
everyone participates. But we also make sure investment is done the 
right way.
  The chairman laid out in great detail all that is in the framework. 
We think it is an important piece to lay down, that Democrats have been 
working on. We have been working every hour, every day. Even when we 
are back in our home States, trying to talk to constituents, we are 
talking about the budget. The Presiding Officer tells me stories. Every 
night he heads home and he meets with constituents to try to find out 
what the right approach is here. We bring all that information right 
here in this body. We did it in the majority in the Budget Committee. I 
know I put up a Web site request asking Alaskans what it is they want 
to cut. What do they want to save or have as revenues? Like good 
Alaskans, they were not bashful. They were very adamant about what they 
wanted and what they did not want and where we should cut and where we 
should not cut. I have taken all that in, and I have used that as part 
of my debate and discussion with the majority of the Budget Committee 
to figure out what the right approach is. I think this is the right 
approach. I think some might call it a big deal. In the Senate, this is 
the big deal. We are in the big place. This is where big deals happen. 
This is where it all has to happen. It is where we drive the economy in 
the sense of our certainty and our policies. If we cannot have a strong 
deficit reduction budget, we are not going to create the certainty the 
business community needs to invest, which will, in turn, employ more 
people and create a better economy for us here and obviously will have 
an impact around the world.
  I want to say thank you for an opportunity to say a few words, again, 
commending the chairman, who was here earlier, for all of his work. It 
is a tough call. I will end on this comment, the story I told you about 
the librarians and the headline I had to have. That was in my first 6 
months in office when I was mayor. Mr. President, 2\1/2\ years later, I 
won reelection with one of the largest margins in the city's history. 
So I would say this to anybody who is trying to figure out if they are 
going to win their primary, win their general election: Put that all 
aside. That is what I did when I was mayor. I had to make some tough 
calls. Did I know if I would win reelection? No. I didn't know. I knew 
I did the right thing because it was the city I lived in. It was the 
State I grew up in. It was important for us to make the right decision, 
which at the end of the day is usually the right political decision. 
That is what this body has to do. It is not fun because people face 
primaries. They face general elections. Some will win, some will lose. 
But if we are true public servants, truly it doesn't matter if we are 
sitting in this room or outside there; we are always public servants. 
We have to do what is right in this critical time for this country and 
in

[[Page 10730]]

the global perspective. If we don't do the right deficit plan, it will 
ripple through this country and it will ripple through this world in 
the wrong direction.
  Thank you for the opportunity. Thank you for the chance to say a few 
words, but also I implore my colleagues on the other side to think 
about today's opportunities for the generations in the future and not 
about today's elections. And I mean on both sides of the aisle. It is 
about the moment of what people do for this country.
  I yield the floor.
  Mr. HATCH. Mr. President, I ask unanimous consent that I be permitted 
to speak until I finish my remarks.
  The ACTING PRESIDENT pro tempore. The Senator from Utah.
  Mr. HATCH. Mr. President, in recent days I have spoken several times 
on the matter of tax expenditures. I am going to address this subject 
again today. It is a timely topic. Everyone is talking about our out-
of-control deficits and debt. There are divergent opinions on how best 
to deal with our Nation's increasingly perilous fiscal situation, but 
there is one thing everyone seems to agree on: Both the deficit and the 
debt are unsustainable. If we keep going down this fiscal path, the 
United States will face a crisis similar to that in Greece and sooner 
rather than later. The numbers could not be clearer. Federal spending 
as a share of our economy is trending at a pace 15 percent to 20 
percent greater than its historical average of 20.6 percent of GDP. If 
we leave in place this year's level of taxation, including the marginal 
rate of relief between the 2001 and 2003 tax cuts, and patch the 
alternative minimum tax, or AMT, the Federal tax take will equal or 
exceed its historic share of the economy.
  Liberals suggest the deficit and debt can only be resolved with a 
significant tax increase. This is either deliberately misleading or 
sadly delusional. They are either selling snake oil to the American 
people or they refuse to come to grips with reality. Sticking their 
heads in the sand is not an option. As you can see, here are Federal 
taxes and spending as a percentage of GDP. The red line happens to be 
the spending line. And as you can see, we are way up here in the Obama 
2012 budget. The blue line happens to be the average between 1960 and 
2009. As you can see, it is way down here. Our spending is out of 
control. The markets and the American people understand the nature of 
our crisis. Nondefense discretionary spending is at historic levels and 
our entitlement programs are headed for bankruptcy.
  When former Speaker of the House Nancy Pelosi responded to the utter 
failure of President Obama and congressional Democrats to come up with 
a Medicare reform plan, she responded, ``We have a plan. It's called 
Medicare.'' That attitude is the recipe for bankrupting the Nation, a 
bankruptcy that will take our seniors down with it. The left might 
prefer to ignore reality, but here is the undeniable truth: Our Nation 
faces a spending crisis that tax increases cannot fix. I wish the media 
would get this. They are so enamored with the idea of a grand bargain 
on deficit reduction, a little spending reduction here, a little tax 
increase there, that they miss the fundamental point. The problem is 
spending, as you can easily see by this red line. It is way out of 
whack, and going back to the dry well of raising taxes on the rich is 
not going to work.
  The fact that Democrats in the Senate have not put forward a budget 
in over 800 days is neglecting one of the core constitutional 
responsibilities, and it is all the evidence we need that they are 
afraid of the bill coming due on all of their spending. They understand 
their hard left base will not accept structural changes to our biggest 
spending programs under any circumstances. But they also understand 
that the American people will not stomach for a minute the tax 
increases that will be necessary in the absence of such reforms. This 
is a difficult position to be in, so rather than deal with the facts, 
they traffic in obfuscation. This morning I heard the ranking 
Democratic member on the House Budget Committee following the 
President's lead and suggesting that removing some tax breaks for 
energy companies would fix our deficit crisis. Getting rid of those tax 
breaks would raise $21 billion over the next 10 years. Yet this fiscal 
year alone, in 2011, we will have a projected budget deficit of $1.5 
trillion to $1.6 trillion. So where is the rest of our money going to 
come from?
  Last week I came under fire for stating what I thought to be a 
relatively noncontroversial fact. Here is what I said:

       In 2009, 51 percent of Americans had zero or negative 
     income tax liability.

  Here is what that means. In 2009 only 49 percent--a minority of all 
households in this country--49 percent of tax units shouldered 100 
percent of the Nation's tax burden. And 51 percent of the tax units--a 
majority of all tax units in this country--either owed nothing to the 
IRS or, better yet, got money back from the IRS in excess of their tax 
liability. Mr. President, 23 million of them got refundable tax 
credits, much more than they pay in employment taxes, which are Social 
Security. By the way, as they pay into Social Security, they only pay a 
third of what they will ultimately draw out according to the actuaries, 
but they are not paying income taxes. This should be no less 
controversial than saying the Sun rises in the east. This is not 
conjecture. It is a demonstrable fact, yet apparently touched a nerve. 
Because last week after raising this issue on the Senate floor, MSNBC 
and the liberal blogosphere, presumably armed with the talking points 
from the Senate Democratic war room, went ballistic, suggesting that I 
wanted to balance the budget by raising taxes on the poor. I am not 
surprised, but this completely misses my point, and the point is this: 
No matter what these Democrats tell you, the wealthy and middle class 
are already shouldering around 100 percent of the Nation's tax burden 
and 51 percent pay absolutely nothing in income taxes. Furthermore, 
because of this perverse distribution of Federal income taxes, there is 
no way to fix our deficit hole and pay down the debt by increasing 
taxes on the so-called rich.
  Here is the bottom line. All of the ``let's talk about taxes on the 
rich'' and closing loopholes and going after corporate tax breaks is 
meant to divert attention from the sad fact that the President's out-
of-control spending puts Democrats in a position of having to raise 
taxes big time on the middle class since they are going to balance the 
budget without structural reforms to our largest spending programs. Tax 
increases on the wealthy will not get our Nation to fiscal balance. 
Even if we let the Bush tax breaks expire from the top income bracket, 
the total amount raised over 10 years would be $615 billion. That is 
over 10 years. Yet our deficit this year alone is $1.5 trillion to $1.6 
trillion. This is why the issue of tax expenditures is critical. So 
everybody knows, I made it clear, I thought, in my last remarks that I 
don't want to tax the truly poor, those who would help themselves if 
they could. I do not want to tax them. But you can't tell me that 51 
percent of all households are the truly poor. I don't want to tax them 
either, to be honest with you, but it is apparent we are going to have 
to find a better way of broadening the base of the tax system. 
Democrats talk about tax expenditures as though they were the holy 
grail of deficit reduction. Just close these loopholes and happy days 
are here again. The public is being misled in this type of debate, but 
don't take my word for it. Today the Associated Press had a story with 
the following lines:

       SPIN METER: Obama, Dems skirt issue on tax hikes.

  This is what the body of the article has to say:

       Proposals under consideration include raising taxes on 
     small business owners and potentially low- and middle-income 
     families.

  You won't hear about that from President Obama. Instead, the 
President focuses on the very rich and speaks euphemistically. Here are 
a few of the phrases the President has used of late of what amounts to 
raising taxes for some:

       What we need to do is to have a balanced approach where 
     everything is on the table.

  He goes on to say:

       We need to take on spending in the tax code. The tax cuts I 
     am proposing we get rid

[[Page 10731]]

     of are tax breaks for millionaires and billionaires, tax 
     breaks for oil companies, hedge fund managers and corporate 
     jet owners. You can't reduce the deficit to the levels it 
     needs to be reduced without having some revenue in the mix.

  All those are quotes by the President. They are doing their best to 
hide their intentions, but the writing is on the wall. Democrats are 
angling for historic tax increases on the middle class, and the way 
they want to accomplish this is by reducing or eliminating tax 
expenditures. Cutting back tax expenditures is a convenient way for 
Democrats to tax middle-class tax-paying families without having to say 
they are raising their tax rates. As I noted last week, this is what we 
were talking about when Democrats discussed tax expenditures. They are 
talking about your pension. They are talking about your Medicare. They 
are talking about your ability to purchase a home or save for 
retirement or give to your church or put away money for your children's 
education. This is exactly what we are talking about. That is where the 
money is. It is not in bonus depreciation for corporate jets, and it is 
not in tax benefits for energy companies.
  When Democrats talk about tax expenditures and tax loopholes as a way 
to bring down the deficit and debt, they are putting a bull's-eye on 
the backs of middle-class American families. We heard a lot this 
morning about Republicans walking away from the President's grand 
bargain on deficit reduction. Well, I know that the people of Utah 
applaud Speaker Boehner for not signing on to this bogus deal. This 
morning the President's allies in the media were asking why Republicans 
walked away from this deal. With the President willing to put 
entitlement spending on the table, why aren't Republicans willing to 
put taxes on the table? It is worth noting that the President and his 
Democratic allies steadfastly refuse any structural changes to 
entitlement spending.
  Second, for Democrats, putting taxes on the table and tax 
expenditures means tax increases on the middle class, and that is a 
nonstarter. This issue of tax expenditures is confusing and demands 
greater clarity. As ranking member of the Finance Committee, it is my 
responsibility to correct the record on what the curtailment or 
elimination of tax expenditures would mean for taxpayers and families.
  If you listen to my friends on the other side of the aisle, you would 
think tax expenditures are ``spending through the Tax Code.'' You would 
think they are mostly loopholes in the tax law designed by and for 
special interests such as ethanol blenders. Another mantra you will 
hear too often uncritically reviewed by many in the media is that tax 
expenditures disproportionately benefit wealthy taxpayers.
  A few days ago I talked about what tax expenditures are and what tax 
expenditures are not. They are not spending. You can find the text of 
that speech from July 6 on the Finance Committee Web site. They are 
not, in the main, loopholes for special interests. The other day, I 
talked about the major features of family financial planning that would 
be upended if tax expenditures were curtailed. I referred to employee 
pension plans such as 401(k) accounts. I also mentioned charitable 
gifts and home ownership. If my friends on the other side are 
successful in cutting back tax expenditures, American families, 
workers, and investors can expect the cost of all of these activities 
to rise. If the cost rises, as a nation, we will be poorer because we 
will have less retirement savings, fewer charitable contributions and 
more expensive homeowners. You can find the text of that speech last 
Thursday on the committee Web site as well.
  Today I am going to consider the oft-repeated line that tax 
expenditures disproportionally benefit the wealthy taxpayers.
  For purposes of this discussion only, I will adopt the President's 
definition of rich; that is, singles with adjusted gross incomes over 
$200,000 per year and married couples with incomes over $250,000 per 
year. I wish to be clear that I do not lump all of these folks in with 
Bill Gates, Jr., LeBron James, Warren Buffett, or Gilligan's Island 
resident millionaire Thurston Howell, III. Here is good old Thurston 
who was the millionaire on Gilligan's Island. I am using the 
President's definition of rich because most of my friends on the other 
side use it. They also claim tax expenditures reside disproportionately 
with rich taxpayers.
  The Democrats' rhetoric on expenditures does not jibe with the 
reality of our Tax Code. The data is clear. Tax expenditures tend to 
skew toward taxpayers below the President's definition of the rich. If 
my friends on the other side examine the data, they will find their 
assertion about who benefits from tax expenditures does not square with 
the facts. They will find their assertion that tax expenditures 
disproportionately benefit the wealthy falls flat on its face.
  In much of the coverage of tax expenditures, it has been taken as an 
article of faith that they disproportionately benefit wealthy 
taxpayers. Similar assertions have come from the White House and 
congressional Democrats. The one exception is my friend, the ranking 
Democrat on the Ways and Means Committee, Sander Levin. Congressman 
Levin has cautioned against treating tax expenditures as rich persons' 
tax benefits. His position is well founded. The source for this 
assertion, that tax expenditures are tax benefits for the rich, is a 
Tax Notes article dated May 3, 2011.
  I ask unanimous consent to have it printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

               [From the Tax Policy Center, May 5, 2011]

                  Who Benefits From Tax Expenditures?

                         (By Roberton Williams)

       The federal income tax is replete with tax expenditures, 
     provisions that grant special benefits to selected taxpayers 
     or for selected activities. Exclusions and deductions reduce 
     taxable income, preferential rates cut the tax on specific 
     types of income, and tax credits are subtracted directly from 
     tax liability.
       The various kinds of tax expenditures reduce taxpayers' 
     individual income tax liability differently throughout the 
     income distribution (see graph). More than 90 percent of the 
     tax savings from preferential tax rates on long-term capital 
     gains and qualified dividends go to taxpayers in the top 
     quintile (or fifth) of the income distribution, and nearly 
     half the benefits go to people in the top one-tenth of 1 
     percent. The top quintile gets about three-fourths of the 
     savings from itemized deductions and more than 60 percent of 
     the benefits of exclusions of selected sources of income such 
     as employer health insurance contributions. High-income 
     households receive relatively larger benefits from special 
     rates, deductions, and exclusions, because they have 
     relatively more income from certain tax-favored sources 
     (capital gains, dividends, tax-exempt interest) and because 
     under our graduated income tax, exclusions and deductions are 
     worth more to taxpayers in higher rate brackets.
       In sharp contrast, most of the value of tax credits goes to 
     households in the bottom four quintiles. Nearly 80 percent of 
     nonrefundable credits and more than 95 percent of refundable 
     credits benefit those households. Many credits phase out for 
     high-income taxpayers, limiting their value, but they are a 
     major reason why nearly half of all tax units pay no federal 
     income tax. Nearly one-third of all refundable credits go to 
     the poorest one-fifth of all households and often result in 
     net payments from the government.
       Overall, tax expenditures give more benefits to high-income 
     households relative to income but are roughly proportional to 
     tax liabilities. The top quintile collects 55 percent of all 
     income, pays 67 percent of all taxes, and gets nearly 65 
     percent of the value of tax expenditures. Middle-income 
     households earn slightly more than 40 percent of all income, 
     pay one-third of taxes, and get one-third of tax benefits. 
     The poorest quintile of households receives slightly less 
     than 4 percent of both income and benefits from tax 
     expenditures but pays only 0.5 percent of federal taxes, 
     largely because refundable credits offset almost all their 
     tax liabilities.

  Mr. HATCH. The article is written by Roberton Williams of the Tax 
Policy Center or TPC. TPC is a tax policy think tank that is the 
product of two center-left think tanks. The article presents 
conclusions from a TPC distribution analysis of tax expenditures.
  The analysis concludes that about two-thirds of tax expenditures 
benefit the top quintile of households in the study. Viewers on C-SPAN 
may wonder what a quintile is. It refers to one-fifth of the given 
population. The TPC analysis is, therefore, measuring the top one-fifth 
of the population.
  According to that study, where does that top one-fifth of the 
population

[[Page 10732]]

begin? It begins at $123,000 of household income. It should be noted 
that household income is a bit broader than the adjusted gross income 
which is the basis of the President's definition. According to TPC, 
that top quintile earns 55 percent of income and shoulders a huge 
amount of the Federal tax burden. They say it is 67 percent.
  Now, perhaps not too surprisingly, TPC finds that tax expenditures 
for the top quintile approximate that top one-fifth's share of the tax 
burden. With the exception of the refundable credit tax expenditures, a 
taxpayer has to pay income tax to benefit from the tax deduction credit 
or exclusion.
  Those asserting that tax expenditures are mainly wealthy taxpayer 
benefits are principally relying on TPC's distribution analysis. If 
confronted with the TPC data, it seems to me they have four choices. 
Their first choice would be to revise downward the income basis of 
their definition of ``rich.'' They could say we really did not mean 
families at $250,000 of income; we meant families of $123,000 of 
income. That would be similar to the adjustment made for ObamaCare. 
Joint tax distribution tables for ObamaCare showed that for every 
family below $200,000 who received an exchange credit, four families 
paid higher taxes. For every middle-class family who receives a premium 
subsidy, five pay higher taxes. That is just a fact. I guess I said 
five. It really would be four who would pay higher taxes.
  A second choice would be to revise the proportion of tax expenditures 
so that the tax expenditure dollar amount reflects the benefits 
attributable to taxpayers defined by the President as rich. The 
President's rich taxpayer definition is the top 3 to 5 percent of 
taxpayers. It means the group of taxpayers who are roughly 25 to 33 
percent of the size of the group in the TPC analysis.
  Put another way, the TPC population of rich taxpayers is three to 
four times the size of the group the President and my friends on the 
other side define as rich. If a consistent definition of the rich were 
used, the dollar amounts of tax expenditures in play would be 
considerably lower. Since the goal of the group pushing the cutback of 
tax expenditures is to relieve spending constituencies of the pressure 
of curtailing spending, my guess is they will not choose to reduce the 
tax expenditure kitty.
  Their third choice would be to simply curtail or eliminate tax 
expenditures for higher income taxpayers. This, of course, could 
largely eliminate the preferential rates for capital gains and 
dividends.
  Let's take another look at this chart because it shows a big share of 
the capital gains tax expenditure goes to the top one-fifth. It looks 
as though about 95 percent of tax expenditures accrues in the top one-
fifth. We see that about 50 percent of it accrues to the top one-tenth 
of 1 percent. Do we think it would make sense in the current economic 
climate to double or triple the tax hit on investment?
  At one point, at least, the President's answer was no. In August 2009 
the President was asked by a resident of Indiana:

       [e]xplain how raising taxes on anyone during a deep 
     recession is going to help with the economy.

  Here was the President's response:

       Normally, you don't raise taxes in a recession, which is 
     why we haven't and why we've instead cut taxes. . . . You 
     don't raise taxes in a recession. We haven't raised taxes in 
     a recession.

  So what is their fourth choice? Their fourth choice would be coming 
clean with the American people. Under this option they would admit that 
tax expenditures disproportionately go to families who are not rich 
under the President's own definition. They would acknowledge that 
cutting back tax expenditures as part of a deficit-reduction exercise 
would hit the middle class and betray the President's promise not to 
raise taxes on middle-class families.
  As we can see, the proponents of these tax increases are in political 
quicksand, and there is additional evidence that they are sinking as 
they struggle against the facts. I would ask my friends on the other 
side to take a look at the Joint Tax distribution tables on many of the 
major tax expenditure categories. Joint Tax publishes these tables 
every year. They are available on the Joint Tax Web site.
  I have a chart that summarizes the percentages of tax expenditures 
that go to taxpayers under $200,000. I will have to bring that with me 
the next time. That is the break point that Joint Tax uses--the 
percentage of tax expenditures that go to taxpayers under $200,000. It 
closely squares with the definition of ``rich'' used by the President 
and his liberal allies.
  Anybody above $200,000 is rich under my Democratic friends' 
definition. Anybody under $200,000 is not rich. You can find this data 
in the tax expenditures pamphlet published annually by the nonpartisan 
Joint Tax staff.
  Now I wish to talk about the tax expenditures that Joint Tax 
distributes by income. I have listed them in order, from the largest in 
dollar volume down to the lowest in dollar volume. The first one is 
well known to tens of millions of our constituents. It is the mortgage 
interest deduction.
  If a taxpayer saves up a downpayment and borrows for a home, they can 
take the interest paid on the mortgage as an itemized deduction. That 
means 30 percent of the benefit of the mortgage interest tax 
expenditure goes to taxpayers over $200,000. Taxpayers with incomes 
below $200,000 receive 70 percent of the benefit of the mortgage 
interest deduction.
  Now, how do we measure whether the mortgage interest deduction 
disproportionately benefits taxpayers over $200,000? There is a line in 
bold letters that reads: ``Compare Total Federal Tax Burden.'' That is 
the baseline of how much tax is shouldered by the group of taxpayers 
above and below $200,000. We have a very progressive tax system. 
Taxpayers earning more than $200,000 shoulder 64 percent of the tax 
burden. Taxpayers earning less than $200,000 shoulder 36 percent of the 
tax burden.
  Taxpayers earning less than $200,000 receive 70 percent of the 
mortgage interest deduction while shouldering 36 percent of the tax 
burden. Who benefits from these tax expenditures? We are going to get 
into that. That means by a ratio of almost 2 to 1, taxpayers under 
$200,000 benefit from the mortgage interest deduction; and since 
$200,000 basically fits the definition of ``rich'' used by my friends 
on the other side of the aisle, we can see that other taxpayers who are 
nonrich, or the middle-income group, disproportionately benefit from 
the mortgage interest rate deduction.
  Now, let me talk about another tax expenditure. I am referring to the 
earned-income credit, or EIC. It is a refundable credit. That means 
taxpayers receive it whether they pay income tax or not. That is why 
the credit is basically scored as spending by the Congressional Budget 
Office--the CBO--and Joint Tax.
  There is a bit of irony about this tax expenditure because it is 
refundable. It is more popular with my friends on the other side than 
other tax expenditures. That is because those other tax expenditures go 
to taxpayers who actually pay income tax. The refundable credit is 
popular with my friends on the other side because it is a robust 
income-reducing mechanism.
  President Obama, in his famous exchange with Joe the Plumber, 
captured the economic theory supporting this policy when he said we 
need to ``spread the wealth around.''
  Here is the irony. My friends on the other side derisively describe 
all tax expenditures as ``spending through the Tax Code.'' Yet the tax 
expenditures they most support are the refundable ones, such as the 
earned-income credit. It should come as little surprise that the left's 
favorite tax expenditure is the one that is scored as spending by 
congressional spending scorekeepers.
  Because the earned-income credit tax expenditure is refundable, we 
shouldn't be surprised to find that so-called rich taxpayers do not 
benefit from it. The chart confirms this point.
  The third tax expenditure is right here: the current $1,000-per-child 
tax credit. It is, by definition, limited to lower and middle-income 
taxpayers.

[[Page 10733]]

We should not be surprised to find that none of it goes to higher 
income taxpayers, and the chart confirms this point: zero to taxpayers 
over $200,000; 100 percent to taxpayers under $200,000.
  Let's take a look at State and local taxes. It is the fourth one on 
here. The chart shows that 50 percent of this broad-based deduction 
goes to middle-income families.
  No. 5 on this list is a tax benefit near and dear to many of my 
fellow Utah families. It is the itemized deduction for charitable 
contributions or donations. Of all the tax expenditures listed on this 
chart--this big chart right here--this one, charitable itemized 
deductions--distributes in the highest proportion to taxpayers above 
$200,000 in income. The chart says 55 percent, right here; 45 percent 
for those under $200,000. Keep in mind, overall, taxpayers with income 
over $200,000 bear 64 percent of the tax burden.
  Now, this means proportionately, the charitable deduction benefits 
taxpayers under the $200,000 level more than taxpayers above the 
$200,000 level.
  Now let's take a look at No. 6 on this chart. It is the tax-free 
portion of Social Security benefits, right there. Anyone advocating a 
cutback on tax expenditures is advocating a cutback on the aftertax 
Social Security benefits for a big chunk of the senior population. 
Guess what. We are not talking about wealthy seniors. According to this 
chart, 2 percent of that favorable tax treatment of Social Security 
goes to seniors with incomes over $200,000. My guess is that few of the 
seniors benefitting from this policy own yachts or regularly fly 
corporate jets.
  No. 7 is the itemized deduction for real property taxes. Right now, 
their constituents take the edge off that heavy local tax hit with the 
itemized deduction. If many of my friends on the other side have their 
way and hack away or eliminate tax expenditures without also cutting 
their constituents' Federal tax rate, guess what happens. In the case 
of local property taxes, the net effect will be to raise the property 
tax rate by as much as 35 percent.
  Some of my friends may suggest that only those with villas are taking 
the property tax deduction. This chart says otherwise. It says 80 
percent of the real property tax benefits go to taxpayers under 
$200,000.
  How about No. 9 on the list? No. 9 on the list is the itemized 
deduction for medical expenses. ObamaCare cut back on that one. But if 
my friends on the other side reduce or eliminate side tax expenditures 
to avoid dealing with out-of-control government spending, this 
deduction will be cut back even more. The chart shows on these medical 
itemized deductions that 89 percent of this tax benefit goes to 
taxpayers earning less than $200,000.
  No. 10 is the dependent childcare credit. This is a modest tax credit 
that working moms and dads can tap. Like the child tax credit, it 
mainly is used by middle-income families. The chart confirms it. It 
indicates that 96 percent of the benefits of this credit go to families 
earning less than $200,000.
  The final item on the list is the student loan interest deduction, as 
shown right here on this chart. This tax benefit is income limited. Not 
surprisingly, all of the benefit goes to taxpayers earnings learning 
less than $200,000--100 percent of the benefit. I do not think a lot of 
the recent college graduates using this deduction are in the market for 
a yacht. But if you listen to my friends on the other side, you would 
think because this benefit is labeled a tax expenditure, those who 
benefit from it have a schooner docked in the local harbor.
  I am not saying that only middle-income families benefit from tax 
expenditures. Wealthy taxpayers benefit from the lower capital gains 
and dividends rates.
  Let me refer to this chart of the 10 largest tax expenditures for the 
period 2010 to 2014. But the lion's share of tax expenditures goes to 
that part of the middle class that is already shouldering much of the 
Nation's tax burden. Most of the tax expenditures are either income 
limited or of limited value to wealthy taxpayers. Likewise, low-income 
families do not pay income taxes. They receive tax expenditures that 
are designed for the nontaxpaying population.
  So who is left? The answer is the taxpayers who are not rich by the 
President's own definition. The answer is middle-class families.
  On our side, the reaction to all these choices would be simple. Many 
on our side, including Ways and Means Committee Chairman Camp, have put 
it this way. Keep your hands off tax increases, including cutbacks in 
tax expenditures, for deficit reduction. Reserve those tax expenditures 
for tax reform. In that way, taxpayers receive a benefit--lower rates 
in exchange for a broader base. That broader base would include reform 
of tax expenditures, if Chairman Camp and I have our way. Any other 
approach is just another tax increase. And they on the other side will 
spend every dime of it.
  The President this morning gave another press conference. He asked 
what the holdup was in arriving at a deficit reduction compromise. The 
answer seems pretty obvious. Contrary to the President's vague 
assertions, the leftwing base he is depending on for his reelection 
refuses any meaningful structural reforms to the spending programs that 
are currently bankrupting our country. That means the only serious 
deficit reduction option available to Democrats is massive tax 
increases on the middle class. Democrats will not acknowledge the 
inevitable tax increases their agenda assumes, and Republicans will not 
give the President any cover in his drive to ``spread the wealth 
around.'' That is what is holding up this process.
  So let me offer a suggestion. Instead of berating Republicans for not 
signing on to historic and economy-crushing tax increases, when 
unemployment is at 9.2 percent, maybe the President should take his own 
party to the woodshed. Maybe he should ask the liberals in his party 
who refuse any meaningful structural reforms to entitlements to get 
serious. Maybe he could go on television and explain to the American 
people that we have over $60 trillion in liabilities and that tax 
increases are not going to bring that into balance.
  Instead, the President and his party sit around and spread the myth 
that simply getting rid of tax expenditures and loopholes--and they 
certainly are not loopholes, the ones I have been talking about--will 
fix our deficits and debt. We have two reasons to worry about that 
wrongheaded approach. One, to the extent deficit reduction energies are 
diverted to cutting back tax expenditures, pressure is taken off the 
root cause of the deficit and debt problem. That is, pressure that 
should be brought to bear on out-of-control spending programs is 
released. Two, the productive sectors of the economy--workers, small 
business owners, and investors--are burdened with yet more Federal 
taxes.
  For many reasons, cutbacks in tax expenditures are a deficit 
reduction dog that will not hunt.
  If you look at all individual tax expenditures, you can see these are 
the 10 highest tax expenditures by percentage.
  Let me go back to the preceding chart. If you look at all these tax 
expenditures, for the mortgage interest itemized deduction, 70 percent 
are people earning under $200,000; for the earned income tax credit, 
100 percent; for the child tax credit, 100 percent; for the State and 
local taxes, other than real property, 50 percent; for charitable 
itemized deductions, 45 percent--yes, the rich had 55 percent by their 
definition--for Social Security benefits, 98 percent; for the real 
property tax itemized deduction, 80 percent; for the education credit, 
100 percent; for medical itemized deductions, 89 percent; for the 
dependent childcare credit, 96 percent; for student loan interest, 100 
percent.
  Look, my point is, we have to come up with a better Tax Code. I am 
dedicated to changing this awful Tax Code we have that is too 
complicated, too large, too expensive, does not do the job, and is a 
bunch of muttering around and puttering around by Members of Congress, 
and simplifying that Code so everybody knows which end is up.
  On tax expenditures, I am going to be happy to look at tax 
expenditures, but they should be reserved until we do

[[Page 10734]]

real tax reform. If you have to give up some of these expenditures, 
then there better be appropriate reductions to account for that, and we 
have to do it by flattening out that tax system that we all know is 
completely out of control and completely difficult to comply with. As a 
matter of fact, I do not know of anybody on the Senate Finance 
Committee who fills out their own tax forms. I do not think most of us 
could do it because if you had 10 different tax preparers on a 
semicomplicated tax return, you would probably have 10 different 
approaches to it. That shows the pathetic system that is wrecking our 
country.
  To make it clear, when the President took over, the bottom 40 percent 
of all households did not pay income taxes. Yes, they paid payroll 
taxes, but 23 million of them got refundable tax credits, much more 
than they paid in payroll taxes. Keep in mind, I do not believe we 
should tax the truly poor. But now that is up to 51 percent in a little 
over 2 years under this administration of people who do not pay any 
income taxes. Are they all truly poor? I do not know. All I know is, it 
does not sound right that the majority of people, the majority of tax 
units in this country, do not pay income taxes, and the minority has to 
carry the whole burden.
  If they are truly poor, I understand and I would be the last one to 
tax them, and I think I have a 35-year record here of being fair to the 
poor and fair to families and, above all, fair to children. My name is 
on an awful lot of important bills around here, and I have led the 
fight on a lot of bills that help people in distress. So you can 
imagine how aggrieved I felt when one of our great television stations 
was distorting one sentence--it seemed to me one sentence--out of a 30-
minute set of remarks on the floor that made it very clear that I do 
not want to tax the truly poor. But surely we have to have everybody 
participate. I actually think everybody ought to participate, even if 
it is only $1. We ought to all have some skin in the game. We ought to 
all help save this country, and we cannot do it without the middle 
class. And the middle class is not just the top 49 percent of all wage 
earners.
  This is an important issue, and it is one we have to resolve, and we 
have to resolve it fairly, we have to resolve it in a way that is 
meaningful and in a way that will help save our country too. I think I 
have more than made the case that you cannot pile it all on the so-
called 3 to 5 percent, the so-called rich, which includes 800,000 small 
businesses, where 70 percent of all jobs are created. And everybody 
knows that is true. Every time you tax them and take moneys away from 
them like that, when they are paying pretty hefty taxes as it is, they 
hire less, they do less, they quit their businesses, some move 
offshore, some move their businesses to other countries, and some just 
plain give up.
  We cannot let that happen. We have to have a fair tax situation. We 
have to have Democrats and Republicans work on it together. We have to 
quit playing this card that basically pits one group of people against 
another.
  All I can say is this. I am concerned. I am pointing out difficulties 
in our Tax Code. I am pointing out difficulties in some of the 
arguments the President is making. And I have to say that anybody who 
reads my remarks fairly will know these points I am making are real 
points. These charts are important. As you can see, taxpayers earning 
under $200,000 will be bereft without these benefits unless we can 
revamp the whole Tax Code in a way that you do not have to have tax 
expenditures. Tax expenditures are certainly not spending--at least 
these ones we are talking about right here and now.
  So if you compare the total Federal tax burden, those earning over 
$200,000 pay 64 percent; those earning under $200,000 pay 36 percent. 
All of that is important for us to understand.
  Mr. President, I yield the floor.
  The PRESIDING OFFICER (Mr. Merkley). The Senator from Wyoming.
  Mr. ENZI. Mr. President, I rise today to talk about some missed 
opportunities. Last week, I talked a little bit about how I thought the 
President had missed the opportunity with his deficit commission, he 
had missed the opportunity with his State of the Union speech, and he 
had missed the opportunity with his budget.
  Well, almost 2 weeks ago, President Obama scolded Congress for not 
making enough progress on debt ceiling and budget negotiations. He said 
we needed to stay in Washington last week and get things done. I took 
him at his word. I thought the administration and the majority were 
serious about staying in Washington to push forward and get some 
results. We were all in Washington last week, but we did not get 
anything done. The debt and the deficit and the lack of a budget are 
not the only issues facing America. When are we going to have real 
issues processed through committees that provide real solutions?
  Despite reports suggesting that Democrats have reached an agreement 
on a budget deal among themselves, the majority did not present us with 
that budget. Despite the President's comments that Congress needed to 
be in session to reach an agreement, he refused to meet with our 
caucus. We have gone more than 800 days without passing any sort of 
budget in the Senate. When we stayed in Washington last week to work on 
a budget deal, Democrats refused to bring up that budget for a vote.
  Last week, we had an opportunity to make headway on the debt ceiling 
issue. I spoke on the floor last Wednesday and implored my colleagues 
on both sides of the aisle to join me in rolling up our sleeves and 
figuring out a way to solve the fiscal mess this country is in. I laid 
down the facts and figures--frightening numbers that should have 
galvanized us all into action. Instead, we are still pushing for a 
comprehensive solution to the problem or none at all. This isn't ``deal 
or no deal'' time.
  Now, here we are, and what was supposed to have been an important 
workweek has come and gone. What do we have to show for it? We had one 
vote canceled on the Libya resolution, a substitute vote on whether the 
Sergeant at Arms should compel attendance, which was a nonbudget-
related matter, and we had one legislative vote on Senator Reid's 
resolution about tax increases. This resolution is a sense of the 
Senate, which is not something that could become law. At this juncture 
more than ever, we don't need publicity pieces.
  What we could have done was moved forward with the balanced budget 
amendment that all 47 Republicans have cosponsored or we could have 
voted on my legislation to reduce spending by 1 percent each year until 
we achieve a balanced budget or we could have voted on legislation 
other Republicans have offered that would cap spending or we could have 
voted on legislation offered by Republicans to ensure we pay our 
creditors in the event we cannot reach an agreement on the debt 
ceiling. Unfortunately, we didn't do any of that. Instead, we spent a 
week holding one legislative vote on a sense of the Senate about 
raising taxes that even if passed would not have the force of law.
  Republicans have proposed a variety of ideas that will help us get 
out of this fiscal mess we are in. Some are baby steps; some are giant 
steps. Every bill doesn't have to be comprehensive.
  Members of the majority have said Republicans were using every tactic 
to delay. What was last week? A vote on a sense of the Senate? The 
House passed a budget in April. The Senate Republicans proposed two 
additional budget measures. The only plan presented by the majority--
President Obama's budget for fiscal year 2012--was unanimously opposed, 
0 to 97. Not even a single Democrat voted for the President's budget. 
It sounds like a different course is needed.
  I thought we were here to take care of business. Is one legislative 
vote on an opinion piece considered taking care of business? Not in my 
mind. I am willing to bet the American people don't think so either. 
This is exactly the kind of behavior that is frustrating the people in 
Wyoming and all across the country. They have asked us to come do a 
job. They have put their faith in us to take care of business and put 
this

[[Page 10735]]

country back on solid fiscal footing. The American people want us to 
thoughtfully and seriously work to address the debt ceiling and reduce 
spending. Taking one legislative vote in a week doesn't pass the smell 
test for getting the job done. The work product we gave the American 
people last week is appalling.
  We are staring the most predictable crisis in American history in the 
face, and, with only one legislative vote last week, we essentially 
said it is not dire enough for us to get something done; it is not 
important enough to stop playing political games and stop running the 
clock. I am hopeful that this week will be different. I am hopeful that 
we will actually make progress on budget negotiations.
  I am encouraged that the President has finally taken it upon himself 
to engage leaders on the matter. His direct engagement should have been 
happening for months, and his refusal to get directly involved has put 
us in the situation we are in today, with 3 weeks until the Treasury 
Department is left without options for the debt ceiling. We have lost 
time. We have lost opportunities. We have lost the focus started by the 
deficit commission. Every day that passes that we don't get anything 
done is one more option lost and more money spent on borrowed time and 
borrowed money.
  Businesses all across the country can't afford to waste a day, much 
less a week, without productivity, and if they did, I guarantee they 
would pay a heavy price. If that unproductive behavior continued, they 
would have to close their doors. People going to work every day cannot 
afford to sit around and not do their jobs. If Americans and businesses 
in this country have to work hard and stay productive to provide for 
their families and keep their businesses running, so should we. The 
standards should not be any different in the Senate.
  As for a solution that relies on increased taxes, when Congress fails 
by spending too much, the easy answer is always to raise taxes. There 
are many Republican proposals for raising revenue without raising 
taxes. But we cannot get in a situation where, when we fail, we charge 
the people more. It usually results in less revenue anyway.
  The motion we are voting on tonight is a sham. When it passes, we 
have permission to add amendments to the sense-of-the-Senate 
resolution--maybe. In other words, we can amend the opinion of the 
Senate that cannot become law. How long will we amend and debate an 
opinion?
  I am disappointed we didn't get anything done last week. I hope we 
all learned a lesson from the week we just lost. The issues facing the 
country today are too important and too dire for us to waste time the 
way we did. I know right now committees are not having real markups, so 
there is nothing in the drawer to vote on. Even the few times a bill 
has been brought up, the majority didn't want to vote on amendments and 
shut the process down. That isn't getting us anywhere. We need to 
change course. The time for action is now, and I hope we can use last 
week's failure to get things done as an incentive to roll up our 
sleeves and get to work.
  I yield the floor and suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The bill clerk proceeded to call the roll.
  Mr. KYL. 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. KYL. Mr. President, I ask unanimous consent to speak for up to 5 
minutes as in morning business.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The Senator from Arizona is recognized.
  (The remarks of Mr. Kyl pertaining to the introduction of S. 1344 are 
located in today's Record under ``Statements on Introduced Bills and 
Joint Resolutions.'')
  Mr. KYL. Mr. President, I ask unanimous consent that the time during 
the quorum call be equally divided, and I suggest the absence of a 
quorum.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. WYDEN. 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. WYDEN. Mr. President, last week, the House Speaker--Speaker 
Boehner--and President Obama and his administration were both calling 
for comprehensive tax reform as part of a large budget deal. Obviously, 
today, that seems to have lost some momentum, and I wanted to start 
this afternoon by saying tax reform is too important to abandon after 
48 hours' worth of discussion.
  To his credit, Chairman Conrad recognizes that, and certainly that is 
what I heard this weekend when, similar to the distinguished Presiding 
Officer, I was home and had the chance to travel across eastern Oregon, 
stopping in small towns. I think there is a keen awareness that it is 
not possible to cut our way out of this economic challenge; that we 
also have to grow. We have to grow. We have to make growth-oriented 
changes in tax law.
  That is what the Conrad budget clearly offers a wide berth to do. In 
fact, I am of the view that progrowth tax reform, for example, is one 
of the few ways to generate revenue that both Democrats and Republicans 
will support. When you put people to work--and we have millions and 
millions of our fellow citizens out of work today--those are folks who 
can, in the private sector, start paying taxes again. That is what 
happened after the last major tax reform bill in 1986. In those 2 
years--the 2 years after major tax reform--6.3 million new jobs were 
created in the private sector. We have an opportunity to do that again, 
and the Conrad budget offers a wide berth in which to do it.
  So you generate revenue--revenue that both Democrats and Republicans 
can support--and create jobs in the private sector the way Democrats 
and Republicans have said they want to do. Certainly, it is pretty 
clear, as of today, there isn't anything as promising in the economic 
toolshed for long-term growth as tax reform. The fact is, a lot of 
other alternatives have been tried. Certainly, the Federal Reserve has 
done its share. We have the Recovery Act. There have been a variety of 
steps that have been taken.
  My colleague from Oregon, in my view, has done yeomen's work on the 
effort to make sure homeowners--which is an enormous economic problem--
have additional time to work through the very challenging situations 
millions are facing in the housing market. So we have thrown a lot of 
economic tools at this huge challenge, but we obviously have a lot more 
to do. I don't see any more promising path--no more promising path--
than tax reform for the long-term economic growth this country needs. 
The Conrad budget offers a wide berth in order to tap that opportunity.
  The fact is, we understand what needs to be done in terms of tax 
reform. The fundamental language--the principles of that kind of 
reform--are laid out in the Conrad budget. We ought to go in there, 
clean out a score of these special interest tax loopholes, use that 
money to hold down rates for everybody, and keep progressivity. Those 
are the three key principles.
  A number of my colleagues have spoken. I know my friend from Arizona, 
with whom I serve on the Finance Committee, Senator Kyl, in a very fine 
op-ed piece he wrote in the Wall Street Journal not too long ago, 
talked about tax reform built around exactly those principles--cleaning 
out the loopholes, holding down the rates, and, to his credit, Senator 
Kyl specifically talked about the need to ensure progressivity in the 
Tax Code.
  Senator Coats and I have introduced legislation that picks up on 
those key principles of the 1986 tax reform legislation. In fact, we 
modernize the code in line with that kind of thinking--certainly 
important to do because there have been thousands and thousands of tax 
changes made since 1986. So it is

[[Page 10736]]

certainly time to go in there and trim out all those unnecessary 
special interest tax breaks, and we can do it in a way that will create 
jobs.
  For example, right now, in the Federal Tax Code, there are actually 
incentives to export jobs out of the United States. Say that to 
yourself--export jobs out of the United States. What we want to do is 
export goods out of the United States. In rural Oregon this weekend, 
the farmers were telling me about how they want to get their 
agricultural products into Asia and other markets around the world. So 
we can grow things here, make things here, add value to them here and 
ship them somewhere. That is what we would like to be exporting. 
Instead, under the tax law, there is actually an incentive to export 
jobs.
  When you set up shop overseas and you are doing business overseas, 
you get to defer your American taxes. So what Senator Coats and I seek 
to do--and this is something I think is even more important today than 
it was a quarter century ago because of the global economic challenge--
is to take that incentive that now goes for exporting jobs out of the 
United States and we would use those very same dollars to dramatically 
slash rates for companies that offer what I call red, white, and blue 
jobs--jobs in this country. The Conrad budget offers a very substantial 
berth for taking that kind of approach in tax reform, where he 
specifically calls for lowering tax rates for American businesses. I 
particularly wish to see that done because of the message I heard this 
last weekend, where folks specifically, without my even mentioning tax 
reform, talked about the need to keep jobs here at home.
  We are going to, over the next few days, see, of course, the 
negotiations with the President and the Congressional leadership go 
forward. Chairman Conrad and other members of the Budget Committee will 
be out discussing these issues as well. But I just hope, No. 1, the 
cause of tax reform is seen as far too important to give up on after 
only a 48-hour flurry of interest and everybody then saying: Well, I 
guess we will have to do it another time. The time to make sure it is 
done is now.
  Senator Coats and I said earlier this month that what we ought to 
do--recognizing that you can't write a complete tax reform bill between 
now and August 2--is to get a commitment, lock in a strategy, to do 
comprehensive tax reform in the fall and early next year. That alone 
would send, in my view, a positive and bipartisan message to the 
financial markets of this country that there are going to be some 
changes. So what we need is a roadmap for economic growth.
  There are other features of the Conrad budget I think make a lot of 
sense. I am particularly pleased about the opportunities for investment 
in infrastructure--roads and bridges. Certainly, that would provide an 
opportunity for something that has worked in the past--the Build 
America Bonds program, which has been so successful in our State. I 
think Senator Kerry's ideas for an infrastructure bank are excellent 
ones. I support those as well. The best thing about that approach is we 
know we have to find a way in our consumer-driven society to start 
stimulating demand--demand for goods and services.
  There are few economic multipliers in our country for the short term, 
such as transportation. So the Conrad budget that puts a premium on 
those kinds of approaches in the short term makes a lot of sense for me 
as we look to the longer term, which I would define as the opportunity 
to set this country on a progrowth economic strategy, with tax reform 
in the forefront in a way that helps our economy to be both fairer and 
more efficient. We will also see a lot of other benefits.
  It was brought up to me over the weekend at home, in eastern Oregon, 
matters we have talked about before, such as the alternative minimum 
tax. Talk about something that just defies common sense: the idea that 
the alternative minimum tax would force middle-class people, people 
making $60,000, $70,000, $80,000 a year, to fill out their taxes twice 
using two separate systems just defies any semblance of sanity.
  So referring, again, to what happened this weekend, are we really 
going to tell American taxpayers getting clobbered by the alternative 
minimum tax that after 2 days' worth of discussion about tax reform we 
are just going to walk away and pursue some other topic? That doesn't 
make any sense to me. Certainly, Chairman Conrad's budget, which does, 
as I have indicated, provide a broad berth for tax reform, makes it 
clear that he shares our view.
  So, finally, if we have in front of us, as we will with progrowth tax 
reform, the opportunity to create jobs in the private sector, generate 
revenue in a way that Democrats and Republicans can agree on, make 
ourselves more competitive in tough global markets, and do it in a way 
that brings the political parties together, I think it is clear that 
has the fundamentals of what can take this country's economy in a 
better and healthier direction.
  I want it understood that in spite of what happened this weekend, in 
spite of the sense that maybe tax reform is going to be put off yet 
again, I am not going to give up for a minute. We are going to have 
another hearing that is going to be very important this week--Chairman 
Baucus, Chairman Camp, the Finance Committee, the Ways and Means 
Committee getting together to talk about tax reform. So we know what 
needs to be done. Now it is a question of having the political will to 
go forward.
  I simply want to say to the President, and I think I can say to the 
Senate today--Senator Coats and I--despite the idea that this is too 
hard to do, that it can't be done now, let's put it off for another 
time, we are going to come back to this floor and say again and again: 
It has been done. We need to do it now when there are so few other 
tools in the economic toolshed. It would be wrong to walk away after 
this brief flurry of interest in something that is so fundamental to 
the economic well-being of millions of our people.
  I yield the floor and note the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. PORTMAN. Mr. President, I ask unanimous consent the order for the 
quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. PORTMAN. Mr. President, I rise to discuss an amendment to the 
underlying bill. This amendment is designed to give American employers 
some relief from the regulatory burdens that continue to hold back our 
economy and hinder job creation. This amendment is actually identical 
to the bill I introduced in April, S. 817, which has been endorsed by 
both the Chamber of Commerce and the National Federation of Independent 
Businesses. It is the same amendment I also introduced on the small 
business bill, the Economic Development Administration bills, and also 
part of the larger regulatory relief bill I introduced in June, which 
currently has 22 cosponsors.
  Last week, as we know, we heard more troubling economic news. This 
time it was the June jobs report, which unfortunately showed the 
unemployment rate had actually risen to 9.2 percent and hiring slowed 
to just 18,000 new jobs.
  These are, of course, very disappointing numbers, but much more 
important are the families who are affected by it, families in my home 
State of Ohio and across the Nation who are struggling to find a job 
and to get the paycheck they need to make ends meet. The real 
discussion in Washington, this month in particular, has been focused on 
the fiscal reforms we need to get our fiscal house in order, to get the 
economy back on track. But there are other things we can do as well and 
one, of course, is to reduce the regulatory burden, particularly on 
small businesses. I hear from them all the time. I am sure my 
colleagues do as well.
  This burden is increasing. One recent study commissioned by the Small 
Business Administration put that burden at $1.75 trillion annually. By 
the way, that is more than the IRS collects in

[[Page 10737]]

income taxes. I have been encouraged by what the current administration 
has been saying about improving our regulatory system, but I continue 
to be deeply concerned about the new regulatory costs this 
administration is imposing on the private sector as we meet here today.
  We have seen a sharp uptick over the past 2 years in what are called 
major or economically significant rules. These are regulations that 
have an economic effect of $100 million or more. According to OMB and 
GAO data, the current administration has been regulating at an average 
pace of 84 of these major rules per year--which, by the way, is a 50-
percent increase over the average regulatory output during the Clinton 
administration, which had 56 major rules per year. These figures 
include both the executive branch agencies and the so-called 
independent agencies. Today, I was pleased to see that President Obama 
issued a new executive order that specifically addressed independent 
agencies. These are the regulatory bodies that are not within the 
executive agencies but are considered independent. They would include 
the Commodity Futures Trading Commission, the Securities and Exchange 
Commission, and the newly created Financial Protection Bureau, which 
has been subject to a lot of debate on the floor. These are all 
independent agencies which are designed by law to be insulated from 
Presidential control. This new order the President issued today and the 
accompanying Presidential memorandum endorsed two goals. First, it asks 
independent agencies to participate in ongoing regulatory look-backs. 
That means looking back retrospectively at rules that are already on 
the books to see if they make sense. Every administration since 
President Ronald Reagan has done this, undertaken some kind of look-
back, and it is important this work continue. Second, and more 
importantly in my view, it calls on independent agencies to evaluate 
the costs and the benefits of new regulations, as executive agencies 
are already required to do under executive orders, including an 
executive order by President Clinton and an executive order by 
President Obama in January. I am encouraged by the words of this new 
executive order and Presidential memorandum on independent agencies. It 
endorses a very commonsense principle; that independent agencies, no 
less than executive agencies, should evaluate the costs of new 
regulations before imposing a new burden on the economy. It is common 
sense. It is also consistent with these amendments I have been offering 
on legislation this year and the independent agency part of the 
regulatory relief bill that was introduced in June.
  The problem is the President's order today is entirely nonbinding 
because independent agencies don't answer to the President, so it has 
no force of law. The amendment I will offer would effectively write the 
President's new request into law. The President has now agreed with 
this principle. We need to expand this cost-benefit analysis to 
independent agencies, but we need legislation to do it because these 
independent agencies are not answerable to the President.
  Specifically, this amendment would extend the Unfunded Mandates 
Reform Act of 1995, which was a bipartisan piece of legislation, where 
I was the Republican cosponsor in the House. It expands the two 
independent agencies. Major rules issued by what is sometimes called 
the headless fourth branch of government are today exempt not only from 
the Unfunded Mandate Reform Act but also from the cost-benefit review 
overseen by the Office of Information and Regulatory Affairs, OIARA, at 
the Office of Management and Budget.
  This amendment would change that, effectively making the President's 
order he issued today binding on these independent agencies. They would 
be required, under the Unfunded Mandates Reform Act, to evaluate 
regulatory costs, benefits, and less costly alternatives before issuing 
any rule that would impose a cost of $100 million or more on the 
private sector or on State, local, and tribal governments. Based on the 
GAO data, it appears there are nearly 200 independent agency 
regulations that have been issued between 1996 and 2011 that would be 
considered major; in other words, have over a $100 million impact on 
the economy. They were excluded from review under this cost-benefit 
analysis we have been talking about. In 2009 and 2010 alone, the last 
couple years, independent agencies issued 56 economically significant 
regulations, representing billions of dollars in regulatory costs 
exempt from the standard cost-benefit analysis rules. But this affects 
our economy in a big way. It affects jobs and our ability to get this 
economy back on track.
  Closing this independent agency loophole is a reform those of us on 
both sides of the aisle should join the President in supporting. This 
is the right vehicle to be able to achieve that. No major regulation, 
whatever its source, should be imposed on American employers or on 
State or local governments without a serious consideration of what the 
costs are, what the benefits are, and whether there is available a less 
burdensome alternative to achieve the same objective. This amendment 
moves us closer toward that goal. It is a commonsense amendment, again, 
taking the President's executive order and memorandum of today and 
actually putting it into force through the force of law.
  I yield the floor, and I note the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. WHITEHOUSE. 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. WHITEHOUSE. I ask unanimous consent to speak for up to 10 
minutes.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (The remarks of Mr. Whitehouse pertaining to the submission of S. 
Res. 230 are located in today's Record under ``Submission of Concurrent 
and Senate Resolutions.'')
  Mr. WHITEHOUSE. Mr. President, on the pending motion, I ask for the 
yeas and nays.
  The PRESIDING OFFICER. Is there a sufficient second? There appears to 
be a sufficient second.
  The question is on agreeing to the motion.
  The clerk will call the roll.
  The assistant legislative clerk called the roll.
  Mr. DURBIN. I announce that the Senator from Ohio (Mr. Brown) is 
necessarily absent.
  Mr. KYL. The following Senators are necessarily absent: the Senator 
from Alaska (Ms. Murkowski), the Senator from Florida (Mr. Rubio), and 
the Senator from Louisiana (Mr. Vitter).
  The PRESIDING OFFICER (Mr. Manchin). Are there any other Senators in 
the Chamber desiring to vote?
  The yeas and nays resulted--yeas 69, nays 27, as follows:

                      [Rollcall Vote No. 107 Leg.]

                                YEAS--69

     Akaka
     Alexander
     Baucus
     Begich
     Bennet
     Bingaman
     Blumenthal
     Boxer
     Brown (MA)
     Burr
     Cantwell
     Cardin
     Carper
     Casey
     Coats
     Collins
     Conrad
     Coons
     Corker
     Cornyn
     Durbin
     Feinstein
     Franken
     Gillibrand
     Graham
     Hagan
     Harkin
     Hoeven
     Hutchison
     Inouye
     Johanns
     Johnson (SD)
     Kerry
     Kirk
     Klobuchar
     Kohl
     Kyl
     Landrieu
     Lautenberg
     Leahy
     Levin
     Lieberman
     Manchin
     McCain
     McCaskill
     McConnell
     Menendez
     Merkley
     Mikulski
     Murray
     Nelson (FL)
     Pryor
     Reed
     Reid
     Rockefeller
     Sanders
     Schumer
     Sessions
     Shaheen
     Snowe
     Stabenow
     Tester
     Thune
     Udall (CO)
     Udall (NM)
     Warner
     Webb
     Whitehouse
     Wyden

                                NAYS--27

     Ayotte
     Barrasso
     Blunt
     Boozman
     Chambliss
     Coburn
     Cochran
     Crapo
     DeMint
     Enzi
     Grassley
     Hatch
     Heller
     Inhofe
     Isakson
     Johnson (WI)
     Lee
     Lugar
     Moran
     Nelson (NE)
     Paul
     Portman
     Risch
     Roberts
     Shelby
     Toomey
     Wicker

                             NOT VOTING--4

     Brown (OH)
     Murkowski
     Rubio
     Vitter
  The motion was agreed to.
  Mr. REID. Mr. President, the Senate has just adopted a motion to 
proceed to

[[Page 10738]]

a bill, S. 1323, to express the sense of the Senate on shared sacrifice 
in resolving the budget deficit we have been so concerned about.
  It is my understanding the minority has amendments they wish to have 
considered. I am happy to work with the Republican leader to figure out 
a way for this to happen. In the meantime, however, we need to push 
forward. We all need to do that. I am going to fill the tree and file 
cloture on this bill. I am happy to continue to talk with the 
Republican leader and anybody else who is interested in having specific 
amendments to this legislation we are now on.
  I will not allow this legislation to be bogged down by an endless 
list of unrelated amendments. It is too important for the Senate to 
reaffirm its commitment to ensuring all Americans--including 
millionaires and billionaires and profitable corporations--contribute 
to the collective effort to reduce this deficit. This is a commonsense 
statement that we believe in simple fairness. Middle-class families and 
seniors have already been asked to sacrifice too much.
  Democrats have gone on record saying that the wealthiest of the 
wealthy should be asked to contribute to this effort and make similar 
sacrifices. We hope our Republican colleagues will finally join us in 
this effort.
  Over the past several weeks, I have had good conversations with the 
Republican leader and the chairman and ranking member of the 
Appropriations Committee about trying to work through appropriations 
bills under the regular order.
  As a result of these conversations, in an effort to move forward, I 
am going to file cloture on a motion to proceed to the Military 
Construction-VA Appropriations bill tonight. I hope we can show the 
country that the Senate can work through an important appropriations 
bill without getting bogged down.
  Remember, there are different rules on these matters. You can't deal 
with legislative matters on appropriations bills. I hope we can have 
some amendments on our sense-of-the-Senate resolution dealing with 
having the wealthiest of the wealthy contribute to the problems we have 
with the deficit in this country, and following that I hope we can move 
to Military Construction-VA. Our servicemen and veterans who have 
served our country so well need this.


                           Amendment No. 529

  Mr. REID. Mr. President, I have an amendment at the desk.
  The PRESIDING OFFICER. The clerk will report.
  The assistant legislative clerk read as follows:

       The Senator from Nevada [Mr. Reid] proposes an amendment 
     numbered 529.

       At the end, add the following new section:

     SEC. 2. EFFECTIVE DATE.

       The provisions of this Act shall become effective 3 days 
     after enactment.

  Mr. REID. Mr. President, on this amendment I ask for the yeas and 
nays.
  The PRESIDING OFFICER. Is there a sufficient second?
  There is a sufficient second.
  The yeas and nays were ordered.


                 Amendment No. 530 to Amendment No. 529

  Mr. REID. Mr. President, I have a second-degree amendment at the 
desk.
  The PRESIDING OFFICER. The clerk will report.
  The assistant legislative clerk read as follows:

       The Senator from Nevada [Mr. Reid] proposes an amendment 
     numbered 530 to amendment No. 529.

       In the amendment, strike ``3'', insert ``2''.

                Motion to Commit With Amendment No. 531

  Mr. REID. Mr. President, I have a motion to commit the bill with 
instructions, which is also at the desk.
  The PRESIDING OFFICER. The clerk will report.
  The assistant legislative clerk read as follows:

       The Senator from Nevada [Mr. Reid] moves to commit the bill 
     (S. 1323) to the Committee on Finance, with instructions to 
     report back forthwith with an amendment numbered 531.

  The amendment is as follows:

       On page 2, line 10, after ``deficit'' strike all that 
     follows and insert the following:
       ``(1) should require that those earning $1,000,000 or more 
     per year make a more meaningful contribution to the deficit 
     reduction effort; and
       (2) should not end Medicare as we know it.''

  Mr. REID. Mr. President, I ask for the yeas and nays on that 
amendment.
  The PRESIDING OFFICER. Is there a sufficient second?
  There is a sufficient second.
  The yeas and nays were ordered.


                           Amendment No. 532

  Mr. REID. Mr. President, I have an amendment to the instructions at 
the desk.
  The PRESIDING OFFICER. The clerk will report.
  The assistant legislative clerk read as follows:

       The Senator from Nevada [Mr. Reid] proposes an amendment 
     numbered 532 to the instructions of the motion to commit.

       After ``Medicare'', strike all that follows and insert 
     ``and Medicaid as we know it.''.

  Mr. REID. I ask for the yeas and nays on this amendment.
  The PRESIDING OFFICER. Is there a sufficient second?
  There is a sufficient second.
  The yeas and nays were ordered.


                 Amendment No. 533 to Amendment No. 532

  Mr. REID. I have a second-degree amendment at the desk.
  The PRESIDING OFFICER. The clerk will report.
  The assistant legislative clerk read as follows:

       The Senator from Nevada [Mr. Reid] proposes an amendment 
     numbered 533 to amendment No. 532.

       Strike ``we'' and insert ``all Americans''

                             Cloture Motion

  Mr. REID. Mr. President, I have a cloture motion at the desk.
  The PRESIDING OFFICER. The cloture motion having been presented under 
rule XXII, the clerk will report the cloture motion.
  The assistant legislative clerk read as follows:

                             Cloture Motion

       We, the undersigned Senators, in accordance with the 
     provisions of rule XXII of the Standing Rules of the Senate, 
     hereby move to bring to a close debate on S. 1323, a bill to 
     express the sense of the Senate on shared sacrifice in 
     resolving the budget deficit.
         Harry Reid, Richard J. Durbin, Patty Murray, Daniel K. 
           Inouye, Christopher A. Coons, Sheldon Whitehouse, 
           Barbara Boxer, Robert P. Casey, Jr., Bernard Sanders, 
           Frank R. Lautenberg, Sherrod Brown, Jack Reed, Dianne 
           Feinstein, Jeff Merkley, Benjamin L. Cardin, Carl 
           Levin, Charles E. Schumer.

                          ____________________