[Congressional Record (Bound Edition), Volume 157 (2011), Part 8]
[Senate]
[Pages 11847-11849]
[From the U.S. Government Publishing Office, www.gpo.gov]




                              DEBT CEILING

  Mr. KYL. Mr. President, I also thought it interesting that, regarding 
the issues we are debating that so deeply divide us, a Wall Street 
Journal op-ed today appeared, which is one of those rare times when the 
author puts into a much larger perspective, a more cosmic perspective, 
what we are talking about and puts it in moral terms--long-term moral 
terms--rather than just Democrats versus Republicans and the fight of 
the day.
  Mr. President, I ask unanimous consent that this article be printed 
in the Record after my remarks. It is written by Arthur C. Brooks and 
is called ``The Debt Ceiling and the Pursuit of Happiness.''
  The ACTING PRESIDENT pro tempore. Without objection, it is so 
ordered.
  (See exhibit 1.)
  Mr. KYL. Arthur Brooks is the head of AEI, American Enterprise 
Institute, and he has written on the subject of happiness in our 
country and how we get there. His most recent book is called ``The 
Battle: How the Fight Between Free Enterprise and Big Government Will 
Shape America's Future.''
  His theme in this article was similar to the one in the book, which 
is that we have the system we have because Americans have found that it 
is a system which most leads us to the pursuit of happiness, the 
achievement of success, and things that are important in our lives. He 
talks about the fight we are engaged in now about extending the debt 
ceiling as being a fight against 50-year trends toward statism, which 
he identifies as a state that would be very disappointing to Americans, 
where we would not have the ability to pursue our dreams or the same 
opportunity we have today to be successful if we take risks and to 
utilize the full potential of the free market system.
  He says, ``Consider a few facts,'' and this is the one thing I will 
quote from his article:

       The Bureau of Economic Analysis tells us that total 
     government spending at all levels has risen to 37 percent of 
     the gross domestic product today from 27 percent in 1960--and 
     is set to reach 50 percent by 2038. The Tax Foundation 
     reports that between 1986 and 2008, the share of Federal 
     income taxes paid by the top 5 percent of earners has risen 
     to 59 percent from 43 percent. Between 1986 and 2009, the 
     percentage of Americans who paid zero or negative Federal 
     income taxes has increased to 51 percent from 18.5 percent. 
     And

[[Page 11848]]

     all this is accompanied by an increase in our national debt 
     to 100 percent of gross domestic product today from 42 
     percent in 1980.

  All of these, obviously, portend a trend toward statism, toward the 
funding of the state through increased taxation by fewer and fewer 
people but at a greater and greater amount of money. In his view and in 
mine, it will ultimately reduce the kinds of incentives that the free 
market system provides for Americans to be able to earn and hire others 
and to assist our economy to grow and, in the process, to increase our 
standard of living.
  This is one of the reasons why Republicans have been so focused on 
reducing spending as the solution to the problem we face in Washington 
today. Our problem is not that we don't tax Americans enough; our 
problem is that we spend too much here in Washington. That is 
manifested by the statistic that now we are spending almost 25 percent 
of the GDP. We were up to 25, and we are headed back up there. Yet just 
3 short years ago, we were at the average level of spending in our 
country of about 20 percent of GDP. So spending has skyrocketed in the 
last 3 years.
  If a physician is wanting to treat a patient's condition, the 
physician diagnoses the patient for what is wrong and then treats that 
illness. What is wrong with us today is that Washington spending is out 
of control. That is the diagnosis. What is the treatment? The treatment 
is not to pile more taxes onto an already sick economy. The treatment 
is to reduce the amount of government spending.
  That is what Republicans have urged us to do. The American people, 
fortunately, are in the same place.
  I will cite three surveys that make the point. One of them is a 
Rasmussen survey, just reported July 22, of likely voters in the 
country. It asks the question: Would you fear that the debt deal would 
raise taxes too much or too little? Would you fear that the debt deal 
will cut spending too little or cut spending too much?
  The answer was interesting. Among likely voters, the answer is this: 
62 percent of voters believe the deal will raise taxes too much. Only 
26 percent think we will raise taxes too little.
  On the spending side, 56 percent are afraid it will cut spending too 
little. Only 25 percent think it will cut spending too much.
  We can see the American people are with us here. They understand our 
problem is spending, not taxes. They are worried we are not going to 
reduce spending enough and that, in fact, we are going to increase 
taxes too much. Rasmussen had already done a survey a week before of 
likely voters. It asked: Do you favor including a tax hike in the deal?
  This was interesting. Fifty-five percent of voters said no. Only 34 
percent of likely voters said yes. So the majority, by far, is saying 
don't include a tax hike in the deal. Again, they understand what the 
problem is: It is not taxes, it is spending.
  CNN had a poll a few days before that, and the question--there were 
several questions in the poll, but the one that struck my eye asked 
about raising the debt ceiling only if we also cut spending, cap it at 
certain levels, and pass a balanced budget amendment. That is the so-
called cut, cap, and balance proposal that passed the House of 
Representatives but was tabled by our Democratic colleagues here in the 
Senate last week. CNN reports that by a 2-to-1 margin the American 
people thought we should cut, cap, and balance--66 percent favored, 
only 33 percent opposed.
  It is interesting to me the American people have internalized the 
same thing as we Republicans; and probably the reason Republicans are 
expressing this is because we have been listening to our constituents 
who have been telling us this. Our concern is not that we should raise 
taxes; our concern is that we should cut spending. That is why we have 
been saying what we have been saying here.
  I find it interesting even the President himself--in an earlier 
time--shared the same sentiment. In August of 2009 he made a similar 
point. In December of last year, when the tax rates that have been in 
existence for decades were extended for another 2 years, he said: You 
don't raise taxes in a recession. He is exactly right. And, by the way, 
at the time he said that, growth in the quarter was at about 6 percent 
of GDP. Today, growth is less than 2 percent of GDP. So our economic 
situation has gotten worse since then. We are up to 9.2 percent 
unemployment. Obviously, you don't raise taxes in a recession. When you 
have a bad economic condition, the worst medicine is to raise taxes.
  Another point Republicans have been trying to make with regard to 
this difference between raising taxes or reducing spending is that 
usually a couple of things happen when Congress sets out to do this. 
You get the permanent increases in taxes, but you never get the same 
dollar for dollar or $2 or $3 for $1 that you are promised in 
reductions in spending. Moreover, when you aim at hitting the 
millionaires and billionaires--which is usually the excuse for raising 
taxes--you end up hitting a lot of other folks.
  One of the things we are concerned about is exactly what happened 
with the alternative minimum tax. We tried to make sure 128 specific 
millionaires didn't get out of paying taxes because of deductions and 
credits they could take, and so we put into effect the alternative 
minimum tax. Today, the alternative minimum tax affects 25 million 
Americans. So when you aim at the millionaires, you hit everybody else. 
In fact, that is exactly what would happen under the proposal of the 
President today.
  The President says we need to hit the millionaires and billionaires. 
Well, there are 319,000 American households that report incomes of over 
$1 million a year, but there are 3.6 million other households that 
would be affected in the same way by the President's tax increase 
because they are also in the top two income tax brackets. So when you 
raise the top two brackets, you are not just going to hit the 
millionaires and billionaires, you are also going to hit a lot of other 
Americans who don't report incomes of over $1 million a year.
  Probably the primary reason Republicans have argued we should not be 
raising taxes in this bad economic time is that it is a job killer. 
This is illustrated by many things, one of which is the President's own 
Small Business Administration. One of the taxes the President has 
proposed hiking would hit small businesses especially hard. According 
to the Office of Advocacy of the Obama Small Business Administration, 
this tax ``could ultimately force many small businesses to close.'' Why 
would you impose a tax on small businesses that could ultimately force 
many of them to close? It is the wrong medicine for a sick economy.
  In addition to the fact we always end up hitting a lot more than the 
millionaires and billionaires, and that taxes are forever but the 
savings never quite seem to materialize, the most important point here 
is that raising taxes is a job killer. Two-thirds of all the jobs 
coming out of a recession are in the small business sector. Fifty-four 
percent of all jobs in the country are created by small business.
  Republicans are going to continue to push for reductions in spending 
as the way forward here, and I hope during this next week we will be 
able to get together with our House colleagues, and Republicans and 
Democrats alike will be able to at least rally around one thing we can 
all agree on: spending has to be reduced. If later on we need to have 
discussions about tax reform, that is a debate I think all of us wish 
to have. Our Tax Code needs reforming. But let's do that not in the 
context of raising revenues but rather in the context of making it a 
Tax Code that would enable us to grow more. At the end of the day, that 
is what we should all be for. Because a growing pie means there is more 
for everyone--rich and poor alike--the families of America as well as 
the governments. I hope my colleagues will focus on what the American 
people are telling us through these surveys: Let's reduce spending, not 
increase taxes.

[[Page 11849]]



                               Exhibit 1

             [From the Wall Street Journal, July 25, 2011]

             The Debt Ceiling and the Pursuit of Happiness

                         (By Arthur C. Brooks)

       The battle over the debt ceiling is only the latest 
     skirmish in what promises to be an ongoing, exhausting war 
     over budget issues. Americans can be forgiven for seeing the 
     whole business as petty, selfish and tiresome. Conservatives 
     in particular are beginning to worry that public patience 
     will wear thin over their insistence that our nation's 
     government-spending problem must be remedied through spending 
     cuts, not by raising more revenues.
       But before they succumb to too much caution, budget 
     reformers need to remember three things. First, this is not a 
     political fight between Republicans and Democrats; it is a 
     fight against 50-year trends toward statism. Second, it is a 
     moral fight, not an economic one. Third, this is not a fight 
     that anyone can win in the 15 months from now to the 
     presidential election. It will take hard work for at least a 
     decade.
       Consider a few facts. The Bureau of Economic Analysis tells 
     us that total government spending at all levels has risen to 
     37% of gross domestic product today from 27% in 1960--and is 
     set to reach 50% by 2038. The Tax Foundation reports that 
     between 1986 and 2008, the share of federal income taxes paid 
     by the top 5% of earners has risen to 59% from 43%. Between 
     1986 and 2009, the percentage of Americans who pay zero or 
     negative federal income taxes has increased to 51% from 
     18.5%. And all this is accompanied by an increase in our 
     national debt to 100% of GDP today from 42% in 1980.
       Where will it all lead? Some despairing souls have 
     concluded there are really only two scenarios. In one, we 
     finally hit a tipping point where so few people actually pay 
     for their share of the growing government that a majority 
     become completely invested in the social welfare state, which 
     stabilizes at some very high level of taxation and government 
     social spending. (Think Sweden.)
       In the other scenario, our welfare state slowly collapses 
     under its weight, and we get some kind of permanent austerity 
     after the rest of the world finally comprehends the depth of 
     our national spending disorder and stops lending us money at 
     low interest rates. (Think Greece.)
       In other words: Heads, the statists win; tails, we all 
     lose.
       Anyone who seeks to provide serious national political 
     leadership today--those elected in 2010 or who seek national 
     office in 2012--owe Americans a plan to escape having to make 
     this choice. We need tectonic changes, not minor fiddling.
       Rep. Paul Ryan's (R., Wis.) budget plan is the kind of 
     model necessary. But structural change will only succeed if 
     it's accompanied by a moral argument--an unabashed cultural 
     defense of the free enterprise system that helps Americans 
     remember why they love their country and its exceptional 
     culture.
       America's Founders knew the importance of moral language, 
     which is why they asserted our unalienable right to the 
     pursuit of happiness, not to the possession of property. 
     Similarly, Adam Smith, the father of free-market economics, 
     had a philosophy that transcended the mere wealth of nations. 
     His greatest book was ``The Theory of Moral Sentiments,'' a 
     defense of a culture that could support true freedom and 
     provide the greatest life satisfaction.
       Yet today, it is progressives, not free marketeers, who use 
     the language of morality. President Obama was not elected 
     because of his plans about the taxation of repatriated 
     profits, or even his ambition to reform health care. He was 
     elected largely on the basis of language about hope and 
     change, and a ``fairer'' America.
       The irony is that statists have a more materialistic 
     philosophy than free-enterprise advocates. Progressive 
     solutions to cultural problems always involve the tools of 
     income redistribution, and call it ``social justice.''
       Free-enterprise advocates, on the other hand, speak 
     privately about freedom and opportunity for everybody--
     including the poor. Most support a limited safety net, but 
     also believe that succeeding on our merits, doing something 
     meaningful, and having responsibility for our own affairs are 
     what give us the best life. Sadly, in public, they always 
     seem stuck in the language of economic efficiency.
       The result is that year after year we slip further down the 
     redistributionist road, dissatisfied with the growing welfare 
     state, but with no morally satisfying arguments to make a 
     change that entails any personal sacrifice.
       Examples are all around us. It is hard to find anyone who 
     likes our nation's current health-care policies. But do you 
     seriously expect grandma to sit idly by and let Republicans 
     experiment with her Medicare coverage so her great-
     grandchildren can get better treatment for carried interest? 
     Not a chance.
       If reformers want Americans to embrace real change, every 
     policy proposal must be framed in terms of self-realization, 
     meritocratic fairness and the promise of a better future. Why 
     do we want to lower taxes for entrepreneurs? Because we 
     believe in earned success. Why do we care about economic 
     growth? To make individual opportunity possible, not simply 
     to increase wealth. Why do we need entitlement reform? 
     Because it is wrong to steal from our children.
       History shows that big moral struggles can be won, but only 
     when they are seen as decade-long fights and not just as a 
     way to prevail in the next election. Welfare reform was first 
     proposed in 1984 and regarded popularly as a nonstarter. 
     Twelve years of hard work by scholars at my own institution 
     and others helped make it a mainstream idea (signed into law 
     by a Democratic president) and perhaps the best policy for 
     helping the poor to escape poverty in our nation's history. 
     Political consultants would have abandoned welfare reform as 
     unworkably audacious and politically suicidal. Real leaders 
     understood that its moral importance transcended short-term 
     politics.
       No one deserves our political support today unless he or 
     she is willing to work for as long as it takes to win the 
     moral fight to steer our nation back toward enterprise and 
     self-governance. This fight will not be easy or politically 
     safe. But it will be a happy one: to share the values that 
     make us proud to be Americans.

  Mr. KYL. Mr. President, I suggest the absence of a quorum.
  The ACTING PRESIDENT pro tempore. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  The ACTING PRESIDENT pro tempore. The Senator from Oregon.
  Mr. MERKLEY. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The ACTING PRESIDENT pro tempore. Without objection, it is so 
ordered.

                          ____________________