[Congressional Record (Bound Edition), Volume 157 (2011), Part 9]
[Senate]
[Pages 12432-12437]
[From the U.S. Government Publishing Office, www.gpo.gov]




                            THE DEBT CEILING

  Mr. HATCH. Mr. President, according to President Obama and Treasury 
Secretary Geithner, the Federal government will default on its 
obligations in 5 days, on August 2, 2011.
  It is clear that some Democrats, including President Obama, want to 
use this fiscal crisis to raise taxes.
  Under the guise of closing loopholes, the administration wants to set 
the stage for tax increases to finance historic levels of government 
spending.
  When this President came into office, he saw himself as the second 
coming of Franklin Roosevelt. He was going to finish the work that LBJ 
was unable to complete. And a fawning media was happy to encourage his 
grandiose vision for national economic reordering.
  I get a big kick out of this ``Time'' magazine article entitled ``The 
New New Deal.''
  Using the financial crisis of 2008 and 2009, he was going to 
transform the United States into a European-style social democracy.
  Businesses, and the individuals who start them, would no longer be 
free entities with property rights. They would be arms of the state 
that exist for the purpose of funding ever expanding welfare programs.
  Taxation would no longer be a necessary evil, with citizens and 
businesses recognizing a legal duty to pay what was owed, but 
understanding that they were ceding their property rights to the 
government to provide for certain public goods.
  Instead, businesses and taxpaying citizens would be obligated to 
share their wealth with the state.
  Because the progressives running the administration do not believe in 
natural rights to liberty and property because they think everything a 
family or business makes is in fact due only to the largesse of the 
state paying taxes is no longer something that must be done, but 
something that people should want to do.
  They owe it to the government to pay taxes, since that money is not 
really theirs anyway. In this new progressive political community that 
the President hopes to create, taxation becomes shared sacrifice, and 
taxpayers become gleeful participants in ``spreading the wealth 
around,'' as the President once put it.
  But the President and his party have hit a brick wall. The spending 
part was easy. The taxing part is hard.
  For all of the talk about how Republicans are divided on the issue of 
raising the debt ceiling, you only have to scratch the surface to see 
the deep divisions among Democrats.
  The reason that the President has offered up no plan to reduce 
spending, and the reason Democrats have not passed a budget in over 800 
days, is because they are badly divided.
  They all want the massive levels of new spending that the President 
pushed through in his stimulus and ObamaCare. But not all want to pay 
for it.
  They all want to maintain existing levels of entitlement spending. 
But not all want to raise the taxes necessary to pay for it.
  They know that some of their constituents like all this spending, but 
they know that the vast majority of Americans reject the President's 
funding of his leviathan state through higher taxes.
  So they do nothing.
  The President has no plan.
  I want to repeat that again.
  The President has no plan.
  Maybe if we shout it from the rooftops, the media will start to take 
notice.
  The President has no plan. And Senate Democrats don't either; 
certainly not one that addresses our current fiscal crisis.
  The critical issue we face is more than imminent default on our 
obligations. That is unlikely to happen. It certainly should not 
happen. In my opinion, it will only happen if the President wants it to 
happen. On Wednesday, I asked the Financial Stability Oversight 
Council, which is chaired by Secretary Geithner, to provide me and the 
rest of this institution with an assessment of the cash position of the 
United States. As Congress considers options for raising the debt 
ceiling, it needs to know precisely how Treasury plans to pay its 
bills, and when it is going to fall short of cash to do so.
  I asked that the Secretary respond to this reasonable request by 
yesterday afternoon. The Secretary chose not to respond. I want to be 
clear that this unresponsiveness by his Treasury Secretary is 
unacceptable. President Obama needs to understand that this failure to 
provide the Senate with critical information is not tolerable and will 
not be forgotten.
  Still, I am confident that the Nation will get through this immediate 
crisis, and there will be no default. But that is only part of the 
problem. The real issue remains. The United States cannot support the 
level of spending President Obama has given us and that Democrats from 
the New Deal onward have bequeathed to the Nation in the form of ever 
expanding entitlement spending programs.
  That is the real issue. And the majority leader's proposal does not 
address this, any more than the President's White House bromides about 
a balanced solution address it.
  The real threat to this Nation is not the threat of a downgrade due 
to default.
  The real long-term threat is a downgrade of the Nation's credit 
rating because President Obama has written checks that this country 
can't cash.
  The real threat is that interest rates will go up for businesses, 
families, students, homeowners and anyone who has to borrow money. The 
economic ramifications of a downgrade threaten to bowl over our fragile 
economy. Job creation remains weak. Annualized growth in real 
inflation-adjusted GDP was only 1.3 percent in the second quarter. This 
follows on the heels of .4 percent growth in the first quarter.
  Along with many others, I have said that if we do not get our 
spending under control, we are on a glide path to Greece and other 
Eurozone countries whose credit ratings are destroyed and whose bonds 
have junk status. Those countries would not have solved their problems 
by allowing the government to borrow more. Their only way out was to 
reduce the size of their welfare states.

[[Page 12433]]

  Yet this is what the President, and the Treasury Secretary, and 
congressional Democrats are suggesting as a solution. They would have 
you believe that everything will be set right if only we give the 
President the legal authority to borrow an additional $2.7 trillion.
  Americans are not buying this snake oil. I know that Utahns are not 
buying it. They understand that our nation's fiscal problem is 
spending. Giving the President more power to borrow more money is not 
going to fix that problem. Reducing spending is going to fix that 
problem.
  The numbers could not be more clear.
  As we can see, here are the Federal taxes and spending as a 
percentage of GDP. The red line is the spending line. We can see it is 
out of control in the 2012 Obama budget. The blue line is the average 
of what it has been in the past. We can see it is tremendously below 
where the President's budget is taking us.
  Federal spending, as a share of our economy is trending at a pace 15 
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 relief of 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 that the deficit and debt must be addressed through 
tax increases.
  This is either deliberately misleading or sadly delusional.
  Maybe we have found the truly shovel-ready policies of my friends on 
the other side, and they smell like a freshly fertilized farmer's 
field. Or maybe my friends on the other side simply refuse to come to 
grips with reality. But sticking their heads in the sand is not an 
option here. The markets, and the American people, understand the 
nature of our crisis.
  Non-defense discretionary spending is at historic levels. And our 
entitlement programs are headed for bankruptcy. This fiscal year we 
have a projected budget deficit of $1.5 trillion.
  We have a debt of over $14.3 trillion.
  President Obama's budget assumes $13 trillion in new debts. This 
spending needs to be brought to heel. But the proposal of the majority 
leader does not get the job done.
  It allows for the largest debt ceiling increase in history.
  This makes sense. President Obama has given us the largest deficits 
in our history, and his borrowing needs are historic as well.
  To pay for his political science experiment to turn the United States 
into Sweden, he earlier required a $1.9 trillion debt limit increase. 
That was the largest in the Nation's history.
  But now he is coming back for another $2.7 trillion.
  Conservatives understand that this is not sustainable. It is one 
thing to raise the debt limit. It is another thing to do so without 
reforms that would keep us from getting into a fiscal crisis of this 
magnitude again. That is why I, and many others in Congress, pledged to 
vote against a debt ceiling increase prior to the institution of 
immediate spending cuts and spending caps, and sending a strong 
balanced budget amendment with taxpayer protections to the States for 
ratification.
  To be clear, that commitment to cut, cap, balance passed the House 
with bipartisan support. The Senate could have taken up that bill last 
week, but Democrats chose to table it rather than debate it. And the 
President chose to tell us what he did not support rather than what he 
does support.
  Any increase in the debt limit needs to be accompanied by serious 
spending reductions, but the bill of the majority leader does not get 
us there. All it does is provide President Obama with an opportunity to 
borrow more money to pay for more spending.
  The President would get a $2.7 trillion debt limit increase but less 
than $1 trillion in cuts.
  And most of those cuts are gimmicks. They assume savings from war 
spending that the President has not requested and that is unlikely to 
materialize.
  It does not include a balanced budget amendment. And most importantly 
from my perspective, it assumes a massive tax increase in 2013 by 
allowing the 2001 and 2003 tax relief to expire, allowing the AMT to 
hit middle-class taxpayers, and allowing for increases in estate taxes 
that are a small business and job killer.
  You won't see that though in the talking points. They bury the 
breadth of that tax hit in their baseline assumptions.
  But we know that President Obama and his liberal allies are planning 
massive tax increases on the middle class. While their rhetoric 
suggests that we can fix out debt crisis just by raising taxes on the 
rich and closing loopholes, the reality is that they are setting the 
stage to roll back tax expenditures.
  And cutting back tax expenditures will be a tax increase on middle 
income itemizers.
  When Democrats talk about tax expenditures, 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.
  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. It 
is not in changing the treatment of carried interest for private equity 
companies. It is not in repealing the deduction for mortgage interest 
related to yachts used as second homes.
  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 really mean for taxpayers and 
families.
  I have spoken about tax expenditures a number of times in the last 
few weeks, but given the failure of the President and his congressional 
allies to take on our spending crisis, I want to reemphasize the 
essential point--if Democrats are allowed to balance the budget their 
way, it will result in new tax burdens for the middle class.
  Tax expenditures are not ``spending through the tax code.'' They are 
an opportunity for you to keep more of your own money.
  And they are not, by and large, special interest benefits that 
disproportionately benefit wealthy taxpayers. The Democrats' rhetoric 
on expenditures does not jibe with the reality of our Tax Code. The 
data are clear. Tax expenditures tend to skew towards taxpayers below 
the President's definition of the rich.
  Let's work through some examples of what concrete proposals to 
cutback tax expenditures would yield in revenue and what they will mean 
to middle income Americans.
  I am going to take a look at the budget outline presented by our 
friend and colleague, the distinguished chairman of the Senate Budget 
Committee. The Senate Democratic Caucus outline was discussed among the 
larger Democratic Caucus. Republican members, including long-standing 
Budget Committee members, were briefed by reading the details of the 
outline in the Washington Post. The Senate Democratic budget called for 
$2.38 trillion in tax increases when measured against the current 
policy baseline. The current policy baseline represents the level of 
taxation Americans are currently paying.
  According to materials released by Senate Budget Committee Democrats, 
they are looking at three categories of tax increases.
  The first category would raise marginal rates on single taxpayers 
with $500,000 and over in income and married couples with $1,000,000 
and over in income. For those taxpayers, including many small business 
owners, the marginal rates would rise by 17 percent. According to the 
Tax Policy Center, the TPC, a think tank often cited by our friends on 
the other side--certainly not a conservative think tank--at least 38 
percent of flowthrough income, much of it small business income, would 
be subject to the marginal rate hike.
  The marginal rate on capital gains and dividend income would rise by 
33 percent. Keep in mind the IRS Statistics of Income group reports 
that 65

[[Page 12434]]

percent of capital gains income would be hit by this tax hike. Add in 
the tax increases from ObamaCare, and in less than 18 months the 
marginal rates on capital gains and dividends will rise by 59 percent. 
Is that a positive signal for investors to move capital into projects? 
That tax hike represents $380 billion of tax increases in the 
Democratic budget.
  Now, look at this chart, the Senate Democratic budget tax increases. 
The total tax increases needed are $2.380 trillion. They suggest, No. 
1, raise the marginal rates on singles over $500,000 and married 
couples over $1,000,000. That would be $380 billion. No. 2, closing 
corporate loopholes and curtailing offshore tax evasion is $262 
billion. After that, the remaining tax increases needed from tax 
expenditures would be $1.738 trillion.
  So, again, we would take the total tax increases needed--$2.380 
trillion--reduce that by the $380 billion gained from raising the 
marginal rates on singles earning over $500,000 and married couples 
over $1,000,000 and closing corporate loopholes and curtailing offshore 
tax evasion with $262 billion, and the remaining tax increases needed 
from the tax expenditures alone would be $1.738 trillion.
  The second category of tax increases in the Democratic budget is a 
set of concepts we have heard about for years in Senate floor speeches. 
President Obama frequently refers to them as well. We also see these 
concepts mentioned in the vast left-of-center DNC think tank 
establishment and by liberal pundits. They fall into two groups of 
proposals: The first group is closing corporate loopholes, and the 
second group is curtailing offshore tax avoidance or evasion.
  Again, as you can see, they want to increase taxes by $2.380 trillion 
by raising the marginal rates on singles earning over $500,000 and 
married couples earning over $1,000,000, which is $380 billion. Then 
they want to close corporate loopholes and curtail offshore tax 
evasion, and they think they can save $262 billion on that. That still 
leaves $1.738 trillion.
  The Finance Committee Republican staff compiled all known, specified, 
and scored proposals in these two groups. Staff calculated the 
proposals as summing $642 billion over 10 years. The numbers are Joint 
Committee on Taxation scores.
  Mr. President, I ask unanimous consent to have printed in the Record 
a summary of the staff calculations.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

 
------------------------------------------------------------------------
                                                     Treasury estimates
                                   JCT Estimates        (in billions)
------------------------------------------------------------------------
Other revenue changes and                    $ 262                 $ 336
 loophole closers..............
Eliminate fossil-fuel                         40.7                  46.2
 preferences...................
Increase unemployment taxes....               47.4                  61.0
Simplify the tax code..........             (10.7)                   0.4
Reduce the tax gap and make                 (10.1)                   1.4
 reforms.......................
Modify estate and gift tax.....                3.1               $ 19.50
    Sum........................              $ 332                 $ 464
                                ----------------------------------------
        Total tax expenditures             $ 2,380                $2,380
         from Conrad budget....
    Substract estimates from                   380                19.50%
     raising marginal rates....
    Subtract other revenue                     262  ....................
     changes and loophole
     closers...................
                                ----------------------------------------
        Amount needed from tax             $ 1,738  ....................
         expenditures..........
------------------------------------------------------------------------

  Mr. HATCH. To President Obama's credit, he put his money where his 
rhetoric is. Most of the loophole closures and offshore measures were 
contained in his budget.
  If we subtract the two categories of tax increases, there remains 
$1.73 trillion in tax increases the Senate Democratic budget must find 
by cutting back tax expenditures.
  Here we go again. This is a very important chart. I will remind 
everyone of something I mentioned in my first discussion of tax 
expenditures. The Joint Committee on Taxation warns us that tax 
expenditure figures are not the same as revenue estimates for policy 
changes.
  In March 2011, the CBO released a set of budget options for deficit 
reduction. On the revenue options, CBO and Joint Committee on Taxation 
estimated the proposals. There are a number of them that deal with 
cutbacks on tax expenditures.
  If we start with the Senate Democratic budget's target of $1.73 
trillion, we can see an illustration of some policy options that tax 
writers would have to consider. I have a chart that lists the revenue 
raised from some of these options.
  Let's look at this chart. It may be difficult to read on a television 
monitor, so I will go through these. These are tax expenditure policy 
options from the Congressional Budget Office to raise revenue. In other 
words, we have a tax to take away these tax expenditures.
  No. 1 would be eliminate the deduction for State and local taxes. I 
don't think many people are going to want that to happen.
  No. 2, they will tax Social Security benefits similar to the defined-
benefit distributions. That is $438 billion right there in increased 
taxes.
  No. 3 is tax investment income from life insurance and annuities. 
That is $260 billion.
  No. 4, curtail the deductions for charitable giving. Can you believe 
that? That is $219 billion.
  No. 5, gradually eliminate the mortgage interest deduction. Take that 
away from people who buy homes?
  That is $215 billion.
  No. 6, eliminate the child tax credit. That is $117 billion.
  No. 7, raise tax rates on capital gains. That is $49 billion.
  No. 8, eliminate education tax benefits, which is $48 billion.
  No. 9, reduce 401(k) contribution limits, which is $46 billion.
  And No. 10, tax carried interest as ordinary income, which is $21 
billion.
  Well, the first one should cause some concern to my friends on the 
other side. It would eliminate the State and local income and sales tax 
deduction. The so-called blue States generally have very high local and 
State tax burdens. Eliminating that deduction would mean the 
constituents of my friends representing those States will find 
themselves with an effective tax increase of up to 35 percent. That is 
what they are doing to themselves. Eliminating this deduction would 
yield revenue of $862 billion over 10 years.
  The second one would reduce the aftertax value of Social Security 
benefits received by seniors. This CBO option would tax Social Security 
benefits like we do employer-provided defined benefit retirement plans. 
Funny how much fur has flown over Social Security reform. Yet this 
cutback on Social Security benefits has flown under the radar. It 
appears not all tax expenditures are about corporate jets and yachts. 
That proposal would raise $438 billion over 10 years. I mean, come on, 
hit Social Security for something like that?
  Well, let's look at the third tax expenditure cutback option. That 
would tax the inside buildup in life insurance. Here is an example. 
Under current law, if a father and mother buy a $100,000 life insurance 
policy and make the surviving spouse or children beneficiaries, death 
will trigger a tax-free benefit of $100,000. Under this option, this 
tax expenditure--if they get rid of that--the difference between the 
face amount of the policy and premium payments would be taxable. 
According to the CBO option book, that new tax would

[[Page 12435]]

raise $260 billion over 10 years. Who wants to do that?
  The fourth on the list is a tax benefit near and dear to many of my 
fellow Utah families. It is the itemized deduction for charitable 
donations. Under this option, only those deductions that exceed 2 
percent of adjusted gross income would be deductible. For many Utahns 
who tithe--and I am one of them--10 percent of our gross income, this 
would mean an automatic cut of 20 percent of our deduction. This would 
affect not just Utahns but charitable givers all over the country. This 
proposal would reduce the tax benefit of charitable giving by $219 
billion over 10 years.
  Now, the fifth one is well-known to tens of millions of our 
constituents. It is the home mortgage interest deduction. If a taxpayer 
saves up a down payment and borrows for a home, they can take the 
interest paid on the mortgage as an itemized deduction. This proposal 
would gradually eliminate the home mortgage interest deduction. In 10 
years, the deduction would be gone. This proposal would raise $215 
billion over 10 years.
  The sixth tax expenditure cutback option involves the current $1,000-
per-child tax credit. That credit drops to $500 per child in 18 months 
if the 2001-2003 tax relief plans are not extended. It is, by 
definition, limited to low- and middle-income taxpaying families. CBO 
tells us if we were to eliminate it, there would be $117 billion raised 
over 10 years.
  The seventh tax expenditure cutback would partially eliminate the tax 
expenditure for the lower rate on capital gains and dividends. It 
would, in effect, eliminate 25 percent of that tax expenditure and 
significantly drive up capital gains and dividends rates. As I 
indicated earlier, the top marginal rate on capital gains and dividends 
is set to rise by 59 percent in less than 18 months if the President 
and my friends on the other side get their way. This option--though 
described as a cutback on a tax expenditure--would drive that rate up 
higher.
  The marginal rate on two-thirds of capital gains income would be 
driven up 72 percent. It would raise $49 billion, though, over 10 
years, for our tax-seeking friends.
  The eighth tax expenditure cutback option would sharply curtail tax 
benefits for families who send their kids to college. It would 
eliminate the Hope Scholarship and lifetime learning credits and phase 
out the student loan interest deduction. For that half of the 
population that pays the freight in society, the 49 percent who pay 
income tax, our friends on the other side are telling them their load 
is just going to get much heavier. That would be their message to 
middle-income American families who want to send their kids to college. 
This option would raise $48 billion over 10 years.
  The ninth tax expenditure cutback option would reduce limits on 
contributions to retirement plans. About 50 percent of American workers 
participate in retirement plans. They save for their own retirement. 
They do not look to rely only on Social Security. There is bipartisan 
consensus that for America to remain prosperous, families and 
individuals must save more during their working lives. Yet this option 
would go in the other direction. It would mean less in retirement 
savings. CBO says it would raise $46 billion over 10 years if we take 
that one away.
  Now, the tenth tax expenditure cutback option is one we have heard 
much about from my friends on the other side. It would tax partnership 
interests--known as carried interest--like ordinary income rather than 
capital gain. Interestingly enough, with a solidly Democratic Senate 
last year, this revenue raiser did not pass. There is a lot of 
speculation about that. I will not join it, but it is curious that when 
constituencies that favor Democrats decisively raised legitimate 
concerns about the possible negative effects on private equity and 
enterprise value, this proposal didn't quite make it past the finish 
line. That proposal would raise $21 billion over 10 years.
  If you assume no interactive effects, the list of options I walked 
through adds up to $2.27 trillion in tax hikes. That is a lot more than 
called for by the Senate Democratic budget outline. Recall that outline 
produced by Senate Democrats boiled down to $1.73 trillion in cutbacks 
on tax expenditures. But look at how broad these tax hikes are. They 
hit big chunks of the 49 percent of American households who pay income 
taxes.
  Take a look at the chart again. This is a chart that confirms what 
many of us have suspected. Although they might not come clean about it, 
when you look at the code and you look at our deficits, there is only 
one place for Democrats to go if they are going to close the deficit 
their way, with no meaningful spending reductions. They are going to 
have to hit tax expenditures, and specifically those that benefit 
middle-class itemizers.
  They hit residents of blue States. They hit seniors. They hit 
everyone who owns a life insurance policy. They hit everyone who takes 
an itemized deduction for giving to their church, local food kitchen, 
or other charities. They hit everyone with a mortgage, everyone who 
receives a child tax credit, and anyone with capital gains. They hit 
middle-income families and students who benefit from education tax 
benefits. They hit those who save for retirement. They hit those folks 
who start up businesses and take a future profits interest in the form 
of a capital gain. But to hear the President talk, you would think we 
could get there by taxing corporate jets and yachts.
  I am accustomed to the media carrying the water of liberal 
politicians, but there has been a real dereliction of duty in allowing 
President Obama to get away with this. Even at this late date, he is 
still getting away with it. He has no plan. Tell me. He has no plan. 
Show it to me. He talks about his plan, but we have yet to see it in 
writing. In fact, there is no plan.
  The press ridiculed Richard Nixon for his secret plan to end the war 
in Vietnam. But here we are in a catastrophic crisis, and President 
Obama gets a pass when it comes to his secret plan to balance the 
budget.
  To suggest that a debt crisis triggered by $14.3 trillion in debt can 
be fixed by taxing the luxuries of evil rich people is so childish and 
lacking in seriousness that the President should have been called out 
on it immediately. But he wasn't. He was allowed to get away with it.
  President Obama's balanced approach--he talks about a balanced 
approach all the time--one that includes meaningful reductions to his 
historic levels of spending, is a plan for economic stagnation and 
national ruin, and it is a plan to bankrupt seniors.
  He wants shared sacrifice. From whom? We were shown that the middle 
class is going to get hit the hardest. I want shared prosperity by 
cutting back on spending and getting the Federal Government out of most 
of our lives in ways that are intrusive and costly, to being able to 
get jobs and raise jobs and do what has to be done in this country.
  It is a plan to bankrupt our seniors. The President knows this, as do 
his colleagues in Congress. He knows his supposed plan does nothing to 
fix the long-term trajectory of his deficit spending. So the question 
folks need to ask is, what is he hiding? How does the left plan on 
closing the gap and balancing the budget their way? The answer is the 
elimination or reduction of tax expenditures. And that means middle-
class tax increases. To hear my friends on the other side, you would 
think the only folks hit by Democratic tax increases will be corporate 
jet owners, yachtsmen, and millionaires. But when you peek behind the 
rhetorical curtain, you find that does not pan out. Most of the tax 
base is in the middle and upper middle income families who make up that 
49 percent of Americans who are the only ones who shoulder the burden 
of the income tax.
  We know that the recent numbers are the bottom 51 percent of all 
households do not pay income taxes. No, it is the 49 percent of 
Americans who shoulder the burden of the income tax; that is where the 
money is. As I have shown with the CBO and Joint Committee on Taxation 
options, that is where you have to go. Without a counterbalancing rate 
cut, this version of tax reform

[[Page 12436]]

means fewer resources for home ownership, retirement savings, and 
charitable giving.
  But don't say I did not warn you. Those who want to treat tax 
expenditures as some abstract budgetary honey pot risk having the folks 
who make the honey, the taxpaying bees, to rightfully sting you. As one 
who hails from the Beehive State, I can tell you, you will feel the 
sting.
  Mr. President, I yield the floor.
  The PRESIDING OFFICER (Mr. Merkley). The Senator from Rhode Island.
  Mr. WHITEHOUSE. Mr. President, I am here this afternoon to discuss 
our work toward addressing the national debt and staving off a 
collision with our debt ceiling or a default on our financial 
obligations.
  First, I wish to commend Majority Leader Reid for putting forward a 
proposal which would make a very serious $2.4 trillion downpayment on 
deficit reduction and, most importantly, end the impasse over the debt 
ceiling. I encourage my Republican colleagues to support it or offer 
some reasonable changes that would allow them to support it.
  But let me also address some developments on the other side of the 
Capitol, where an extremist group of House Republicans is continuing 
their ``my way or the highway,'' what President Lincoln called ``rule 
or ruin,'' approach to these negotiations.
  Amazingly, news reports indicate that Pell grants--Pell grants--may 
be put on the chopping block in Speaker Boehner's latest effort to 
appease the most extreme members of his party. This is getting 
ridiculous. Rhode Island's great Senator Claiborne Pell first proposed 
the grants that now bear his name. He envisioned a grant that would 
enable low-income students to attend our country's wonderful colleges 
and universities so they too could share in the American dream. Why do 
these far-right extremists in the House want to snuff that out?
  In 1976, the first year Pell grants were fully funded, a full Pell 
grant paid 72 percent of the cost of attendance at a typical 4-year 
public college. Today, a full Pell grant covers 34 percent of those 
costs, and even that they are willing to attack. This vital assistance 
from Pell grants can often mean the difference between being able to 
attend college or not. With many families in Rhode Island and across 
America still struggling in this struggling economy, we should be 
looking for ways to strengthen Pell grants, not weaken them. America 
needs more college graduates, not fewer.
  During my time in the Senate, we have taken steps to improve the Pell 
grant program. After 4 years of level funding under President Bush, we 
began to increase the maximum grant from $4,050 in academic year 2006-
2007 to $5,050 for this coming academic year. We also increased the 
minimum family income that automatically qualifies a student for the 
maximum Pell grant, a change which better reflects today's economic 
realities.
  Despite the clear need for continued investment in our future through 
Pell grants, a need that has long had bipartisan support and backing, a 
group of House Republicans this year began an outright assault on Pell 
grant funding. These grants are needed more than ever, as the economic 
downturn has led more people to seek higher education in an effort to 
find a job. But not to this band of extremists. The House Republican 
budget would have slashed Pell grants, reducing the average award by 
$1,775, and cutting off more than 1.3 million Americans, including 
nearly 5,800 students in Rhode Island.
  I understand the need to find savings in the Federal budget and to 
make difficult choices, and Leader Reid's proposal offers up $2.4 
trillion worth. But we could also make bad choices in going about this, 
and of all the bad choices we could make, cutting Pell grants is among 
the worst. America needs a highly trained workforce, and Pell grants 
help make the promise of a college education a reality.
  After America spoke out and the Senate defeated the extreme House 
Republican budget, I hoped the assault on the Pell grant was behind us, 
at least for a while. Yesterday, however, The Hill, a newspaper here in 
Washington, reported that some Republican House Members are opposing 
Speaker Boehner's debt ceiling increase bill over funding if it 
provides for Pell grants. In this article, someone called Pell grants 
welfare. Some welfare, helping kids afford college and pursue their 
dreams. Today there is talk that cuts to Pell grants are being 
discussed as the pound of flesh required by the most far-right Members 
of the Speaker's caucus as the price of supporting his bill. Remember 
that these House Republicans continue to protect every tax giveaway to 
special interests, every one, while they want to cut off access to 
college for regular kids.
  The simple fact is Pell grants help lower income people achieve 
dreams of college and improve those young people's prospects for 
careers and employment. It is good for them and it is good for America. 
The Pell grant program doesn't give a free ride, but it does give a 
boost and is a wise investment in the future of our country, a future 
where the fates of nations will depend on the education of their 
people.
  Earlier this week, student and education advocacy organizations, 
including the Education Trust, Campus Progress, the National Council of 
LaRaza, and the United States Student Association, joined together to 
``Save Pell.'' I applaud their advocacy and commitment in fighting for 
Pell grants, and I am proud to join their effort. I strongly urge the 
far-right extremists who are pulling their party and the House of 
Representatives and this country over the cliff to end their reckless 
attack on the American middle class, take the victory you have been 
offered, and stop the damage.
  Ronald Reagan in 8 years I believe raised the debt ceiling 18 times. 
The Tea Party has been here 6 months and has put the country on the 
brink of default days away. Instead, I ask my colleagues to work with 
Democrats on a bipartisan solution that does not attack the fundamental 
underpinnings of a successful middle class, such as Medicare, Social 
Security, Pell grants. Avert the looming debt ceiling collision and 
reduce our deficits.
  I yield the floor.
  I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. REID. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  Mr. THUNE. I object.
  The PRESIDING OFFICER (Mr. Bennet). Objection is heard.
  The clerk will continue with the call of the roll.
  The legislative clerk continued with the call of the roll, and the 
following Senators entered the Chamber and answered to their names:

                             [Quorum No. 4]

     Begich
     Bennet
     Blumenthal
     Brown (OH)
     Cantwell
     Cardin
     Casey
     Conrad
     Coons
     Durbin
     Johanns
     Lautenberg
     McConnell
     Merkley
     Murray
     Pryor
     Reid (NV)
     Sanders
     Schumer
     Thune
     Whitehouse
  The PRESIDING OFFICER. A quorum is not present.
  Mr. REID. Thank you, Mr. President. I move to instruct the Sergeant 
at Arms to request the attendance of absent Senators, and 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 legislative clerk called the roll.
  Mr. KYL. The following Senator is necessarily absent: the Senator 
from Mississippi (Mr. Wicker).
  The PRESIDING OFFICER. Are there any other Senators in the Chamber 
desiring to vote?
  The result was announced--yeas 76, nays 23, as follows:

                      [Rollcall Vote No. 119 Leg.]

                                YEAS--76

     Akaka
     Baucus
     Begich
     Bennet
     Bingaman
     Blumenthal
     Blunt
     Boozman
     Boxer
     Brown (MA)
     Brown (OH)
     Burr
     Cantwell
     Cardin
     Carper
     Casey
     Chambliss
     Coats

[[Page 12437]]


     Cochran
     Collins
     Conrad
     Coons
     Corker
     Durbin
     Feinstein
     Franken
     Gillibrand
     Hagan
     Harkin
     Hatch
     Hutchison
     Inouye
     Isakson
     Johanns
     Johnson (SD)
     Kerry
     Kirk
     Klobuchar
     Kohl
     Kyl
     Landrieu
     Lautenberg
     Leahy
     Levin
     Lieberman
     Lugar
     Manchin
     McCaskill
     Menendez
     Merkley
     Mikulski
     Moran
     Murkowski
     Murray
     Nelson (NE)
     Nelson (FL)
     Portman
     Pryor
     Reed
     Reid
     Rockefeller
     Rubio
     Sanders
     Schumer
     Shaheen
     Shelby
     Snowe
     Stabenow
     Tester
     Thune
     Udall (CO)
     Udall (NM)
     Warner
     Webb
     Whitehouse
     Wyden

                                NAYS--23

     Alexander
     Ayotte
     Barrasso
     Coburn
     Cornyn
     Crapo
     DeMint
     Enzi
     Graham
     Grassley
     Heller
     Hoeven
     Inhofe
     Johnson (WI)
     Lee
     McCain
     McConnell
     Paul
     Risch
     Roberts
     Sessions
     Toomey
     Vitter

                             NOT VOTING--1

       
     Wicker
       
  The motion was agreed to.
  The PRESIDING OFFICER. A quorum is present.
  The majority leader is recognized.
  Mr. REID. Mr. President, may we have order.
  The PRESIDING OFFICER. The Senate will be in order.
  Mr. REID. I thank the Chair.

                          ____________________