[Congressional Record (Bound Edition), Volume 157 (2011), Part 9]
[Senate]
[Pages 11993-11995]
[From the U.S. Government Publishing Office, www.gpo.gov]




                      DEBT LIMIT AND TAX INCREASES

  Mr. HATCH. Mr. President, last night we heard from President Obama in 
a prime-time address from the East Room of the White House. The topic 
was raising the Federal debt limit. According to Treasury Secretary 
Geithner, the Federal Government may breach the statutory debt limit as 
early as August 2, 2011. That is 1 week from today.
  Remarkably, the President, in yet another prime-time address, again 
hectored the American people about the need for politically charged tax 
hikes as a cure-all for our deficit and debt problems.
  We have to hand it to the President; he is a true believer. For the 
President, there seems to be no problem in Washington that can't be 
fixed with tax increases. Even his own party has moved beyond him on 
this. To be certain, Democrats have not become the party of tax relief. 
For example, the plan offered by the majority leader does not address 
the 10-year tax increase of $3.5 trillion that is said to kick in on 
January 1, 2013. But last night on CNN, one reporter got it about 
right. This is how she put it: ``Nobody is talking about tax increases 
except Barack Obama.''
  For weeks the President and his surrogates on and off Capitol Hill 
have been talking about tax increases as the solution to our debt 
crisis, but the President was on his own last night. It was a speech 
very much divorced from the reality of our situation.
  Republicans are insistent that the solution to a spending crisis is 
not giving

[[Page 11994]]

government more money to spend, and here is the dirty secret: Many 
members of the President's own party are not keen on tax increases 
either. They know the President's politically driven tax increases, in 
the context of trillions in deficits and debt, will do little to 
restore the Nation's fiscal footing. They know more significant tax 
increases will hit the middle class and small business job creators 
very hard. But even as his troops have left him, President Obama 
soldiers on, leading the fight for higher taxes and spreading the 
wealth around.
  The President talked last night about the need for a balanced 
approach. Here is what he means by that: To balance the budget his way, 
we will have to raise taxes by roughly $2 trillion. So what does he 
think of the plan of the Senate's distinguished majority leader? After 
all, the majority leader has put forth a plan that does not contain tax 
increases--or at least that is the claim. Presumably, the President 
would, therefore, oppose the majority leader's plan as unbalanced. But 
that would assume the President is not playing politics with this 
debate. That would assume he is more concerned with solving our 
Nation's debt crisis than appealing to his base, getting his approval 
ratings up, and positioning himself for reelection.
  Somehow, in spite of his absolute insistence on the need for tax 
increases and a balanced solution to the debt limit debate, the 
President supports the majority leader's proposal.
  The President likes to present himself as the only reasonable man in 
Washington. But as he proved again with his latest politically driven 
inconsistency, he is as partisan as they come. To the disappointment of 
his campaign advisers, it is clear the American people are demanding a 
leader who will be straight with them rather than focus on election 
year positioning.
  If the President and his party came clean with the American people, 
this is what they would acknowledge: Nondefense discretionary spending 
is at historic highs. The Nation's biggest spending programs are 
completely out of control and set for bankruptcy. Over the next 10 
years, the President's budget would drive this country into debt by an 
additional $13 trillion. Most importantly, they would acknowledge that 
the Nation's problem is principally too much spending, not too little 
taxes.
  I don't envy my friends on the other side of the aisle. They are in a 
tough place. On the one hand, the liberal base refuses any structural 
reforms to the spending programs that are driving the country's debt to 
the brink. On the other hand, absent these structural reforms the 
middle class and job creators will have to be hit with historic tax 
increases. Obviously, they cannot be open about this second point or 
they risk the ire of American voters.
  Those who represent San Francisco and the upper west side might be 
able to go home and sell these tax increases, but for Democrats 
responsible to entire States, not just small liberal enclaves, such tax 
increases are a much tougher pitch.
  So what is a Democrat to do? Democrats can't propose meaningful 
spending reductions, but they can't support job-killing tax increases. 
So this is what they will do. They choose to ignore the real problem. 
They offer no plan. They refuse to present a budget--they actually 
refused to present a budget for more than 800 days. They dodge and 
weave. One minute the President is for real reforms to Medicare. The 
next minute he is accusing Republicans of trying to destroy Medicare 
for recommending reforms, and they hope their friends in the media 
ignore the failure to offer a real solution.
  As we can see from this chart, the problem is spending, and we need a 
solution commensurate with that problem. As we can see, spending is the 
red line; taxes happen to be the blue line. Spending as a percentage of 
GDP is much higher than the historical average. The average level of 
spending has been around 18 percent since World War II. Since President 
Obama took office in 2008, spending has surged to over--actually 25 
percent at one point of our economy--way above the 18 to 20 percent 
norm. Tax receipts have dipped, but they are expected to come back. CBO 
estimates, however, that spending is currently set to stay at around 24 
percent.
  As we can see, spending is the red line that goes off the charts 
during 2009, 2010, and on into 2020. Taxes have always been right where 
they are. They went pretty high, came down, and now they are back up. 
As we can see from the chart, President Obama's 2012 budget does not 
help one bit in reducing this level of spending. The President's budget 
is not balanced by any means.
  Again, the problem for the President is this: Even while he was 
explaining to Joe the Plumber the moral and civic imperative of 
spreading the wealth around, he was promising not to raise taxes on 
individuals making less than $200,000 or families making less than 
$250,000. But if he is going to balance the budget by attempting to pay 
for current levels of discretionary spending that Lyndon Johnson only 
dreamed of and spending programs that are permanently in the red, he is 
going to have to hit the middle class hard. He is going to have to 
break his promise--not exactly a political win.
  Even as he talked about moving the Democratic Party to the left and 
abandoning the comparative moderation of the Clinton administration, he 
remembers well the fate of Walter Mondale. When accepting his party's 
nomination for President in San Francisco in 1984, Walter Mondale 
promised Americans that he was going to raise their taxes. President 
Reagan went on to win in a 49-State landslide. President Obama is not 
going to suffer the same fate as Walter Mondale, so he avoids 
discussion of the tax increases on the middle class that he really 
believes in. Instead, in this debate he is focused on a number of 
politically opportunistic red herrings that will have minimal impact on 
the Nation's debt crisis.
  The purpose of these red herrings is to distract Americans from the 
real driver of our deficits and debt and the real choices Democrats 
have to, but are refusing to, make. Let's just look at a few of these 
examples.
  The President has been talking incessantly about the need to tax 
corporate jets. Well, if we were to raise the appreciable rate on 
corporate jets from 5 years to 7 years as the Democrats propose, it 
would yield, at least according to the economists, $3.1 billion--that 
is with a ``b''--over 10 years.
  Just to be clear, as we are discussing these paltry numbers--numbers 
which the President would have us believe are key to restoring the 
markets' confidence in the American economy and our ability to manage 
our debt--the United States will run a budget deficit this year of $1.5 
trillion. Our national debt is $14.3 trillion. The President's budget 
assumes an additional $13 trillion in debt on top of that, and the 
President is talking about the tax treatment of corporate jets which, 
if he got his way, would raise $3.1 billion over 10 years.
  This is about as effective as one of my fellow Utahans standing in 
his driveway in Little Cottonwood Canyon during a blizzard and flicking 
a snowflake off his shoulder and claiming he was finished shoveling for 
the day.
  To hear the President talk, one would think this proposal is 
absolutely critical to balancing our budget. To put it in perspective, 
over the next 10 years of debt this Nation is set to take on it would 
equate to roughly 20 hours and 23 minutes of debt reduction.
  Let's not forget about the essential matter of cutting back the 
mortgage interest deduction for yachts used as second homes. Again, the 
President acts as if this is one of a handful of policies that will 
restore America's prosperity. But if Congress enacted this change, we 
would cover the 10 years of debt from the Obama budget for all of 15 
hours and 47 minutes.
  Of course, the Democratic talking points would not be complete 
without an attack on the oil companies. The President has talked about 
making American oil companies pay their fair share by reducing or 
eliminating domestic energy incentives. This proposal would raise $21 
billion in revenue. That would cover a whopping 5 days, 18

[[Page 11995]]

hours, and 47 minutes of debt that the President is prepared to take on 
over the next 10 years.
  Then there are the rich. Tax the rich. Make them pay their fair 
share. This class warfare might be appropriate in Europe and countries 
with a feudal history, but in the United States, a nation conceived in 
liberty and the proposition that all men are created equal, families 
and entrepreneurs just don't buy it--and for good reason. Taxing the 
rich hits job creators and undermines economic growth. But as deficit 
reduction policy, it falls short as well.
  In the name of bipartisanship, I am going to use data from the Tax 
Policy Center, or TPC, to demonstrate my point. According to TPC models 
and estimates for 2011, American households earning more than $1 
million account for 12 percent of the Nation's pretax income and pay 19 
percent of Federal taxes and carry an average tax rate of 29 percent. 
Even more critical from my perspective, these taxpayers also account 
for 38 percent of all flow-through income. Flow-through income is 
predominantly earnings from ownership of small businesses.
  So raising rates on the rich will hit squarely on those who create 
and expand the small businesses that need to be the engine for our 
economic recovery. But let's be clear about something. Higher taxes on 
these wealthy individuals will not only have adverse economic 
consequences, it will not even provide the deficit and debt reduction 
suggested by the left.
  Even if all of the income of those earning more than $1 million a 
year were confiscated with a 100-percent rate--with the unlikely 
assumption of no taxpayer behavioral response--for the year of 
confiscation, these higher taxes would yield about $893 billion. My 
gosh, our deficit this year is $1.5 trillion--just in 1 year. The most 
we would get is $893 billion, and that is if we are lucky.
  This is a one-shot opportunity. If we confiscated this wealth, those 
individuals would no longer work, save, create more wealth, and 
generate more tax revenue. And confiscating all the income from those 
earning over $1 million does not even fix 1 year--not even 1 year--of 
the 10 years of projected Obama debt. It would cover 244 days, 16 
hours, and 34 minutes.
  All the demagoguery on jets and yachts and oil companies yields about 
1 week of deficit reduction from the President's 10-year debt.
  Even throwing in a one-time confiscation of all the income for 
taxpayers above $1 million, we can only add 244 days. Add it all up, 
and what the President is proposing amounts to less than one-tenth of 
deficit reduction from the debt President Obama will add over the next 
10 years.
  Last night, the President tossed some more class warfare into the 
mix. He mentioned taxing hedge fund managers. Here is how he put it:

       How can we ask a student to pay more for college before we 
     ask hedge fund managers to stop paying taxes at a lower rate 
     than their secretaries?

  The proposal he is talking about would tax carried interest as 
ordinary income. The Joint Tax Committee has provided an estimate on 
this, and over 10 years this change in the Tax Code would generate 
another $21.4 billion. That is about as much as the oil company tax 
Obama is proposing of $21.1 billion. This would cover approximately 5 
days and 21 hours of the President's 10-year debt.
  This morning, someone on television was bemoaning the fact that 
Democrats are not going to the mat for tax increases the way the 
President has. He suggested the congressional Democrats do not have the 
courage to support tax increases.
  With all due respect, the person lacking in courage is the current 
occupant of the Oval Office. The President had an opportunity this 
summer. Was he going to lead on the debt crisis or would it be more of 
the same--red herrings piled on top of straw men in an effort to 
distract the American people from his own complicity in this debt 
crisis.
  Yet the President chose not to own up to the American people. The 
quarterback punted. He offered no solutions. Concerns about reelection 
were of greater priority than the imminent downgrading of the Nation's 
credit rating--a downgrade that will work as a tax increase on 
homeowners, students, and the Treasury itself, which is responsible for 
servicing the $14.3 trillion in existing debt.
  Unable to propose tax increases on the middle class and unable to 
reform entitlements due to liberal dead-enders, he chose to offer 
platitudes and class warfare that might play well with some 
constituencies but do nothing to address the fundamental problem this 
Nation faces.
  This country cannot avoid the choices that are coming. We have to get 
our spending under control. That is why I supported cut, cap, and 
balance. That is why I think S.J. Res. 10--the balanced budget 
amendment I introduced along with my colleague and friend from Utah, 
Senator Lee, and all 47 Senate Republicans--is absolutely essential. It 
would fix this problem once and for all.
  But the President opposes it. He talks a lot about empowering people. 
Well, the Founders of this country empowered the American people to 
make changes to the Constitution. The Constitution provides for that. 
Why not give them the opportunity to pass this amendment? Remember, if 
the Democrats do not like it, all they have to do is get 13 States to 
disagree. We have to get 38 States to ratify. Why not let the people 
decide this? Why are they so afraid to let the people decide this?
  Let me offer an answer. Because Democrats are terrified the American 
people would ratify it and their big spending practices would go the 
way of dinosaurs. The American people are sick and tired of spending. 
Mothers and fathers understand that the Federal Government is going to 
bankrupt their children and leave them an America that is less free and 
less prosperous.
  The American people are frustrated. They might not have the data at 
their fingertips, but they understand what I just laid out quite well. 
We are not going to solve our problems by raising taxes. Increasingly, 
the President is an island in his call for more tax increases. 
Republicans do not support him. Independents do not support him. Now 
even Democrats do not support him.
  It is time to move on. We need to rein in our debt, and we need to 
act boldly in doing so. So far, the President has failed to lead on 
this issue, choosing instead politically convenient talking points. But 
I would remind my dear friend in the White House, it is never too late 
to mend this problem.
  I suggest the absence of a quorum.
  The PRESIDING OFFICER (Mr. Franken). The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. LEAHY. 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. LEAHY. Mr. President, what is the parliamentary situation?
  The PRESIDING OFFICER. The Senate is in a period of morning business 
in which Senators may speak for 10 minutes.

                          ____________________