[Congressional Record (Bound Edition), Volume 158 (2012), Part 11]
[Senate]
[Pages 15802-15808]
[From the U.S. Government Publishing Office, www.gpo.gov]




                              FISCAL CLIFF

  Mr. McCONNELL. Mr. President, throughout the week, I have raised 
questions about the President's level of seriousness and engagement 
when it comes to resolving the short- and long-term fiscal challenges 
we face. I have done this because, as I have said repeatedly, the 
President is the key to success in all of these discussions. So I am 
hoping that when Secretary Geithner comes up to the Capitol today, he 
brings a specific plan from the President that the two parties could 
agree to for the good of the country. I hope to hear the 
administration's specific plans for protecting jobs and promoting 
economic growth for middle-class Americans, while reducing the debt by 
strengthening entitlements, reducing Washington's spending, and 
preventing a tax hike on every American taxpayer.
  Up until now, the White House has preferred talking points and an 
appeal to the hard left to a serious discussion about how we fix the 
economy, reduce the Federal debt, and return the country to a path of 
growth and prosperity for all. They are stuck on the same old tired 
slogans, and it is really completely counterproductive. So this morning 
I would like to address one of these recurring talking points in a 
little more detail in the hope that the White House puts it aside and 
starts talking in a way that suggests they are actually serious over 
there about finding a solution. I am referring to the oft-repeated 
assertion by the White House and reporters alike that those of us who 
insist on not raising income tax rates on anybody are doing so to 
``protect the rich.'' I assure you, that has absolutely nothing to do 
with it. Check the polling data. The super-rich vote for the Democrats. 
We are not insisting on keeping tax rates where they are to protect 
some tiny sliver of the electorate; we are insisting on keeping tax 
rates where they are first and foremost to protect jobs and because we 
do not think government needs the money in the first place.
  The problem, as I have said, is not that Washington taxes too little, 
but it is that it spends too much. But if more revenue is the price 
Democrats want to exact for supporting other necessary reforms, then we 
should at least agree that we do it in a way that does not cost jobs 
and disincentivize work, as we all know raising rates would do.
  A lot of people around here seem to have forgotten that we are still 
in the middle of a jobs crisis. I can tell you that lots of folks are 
hurting in my State of Kentucky. National unemployment is still just a 
hair below 8 percent, and millions of Americans are still looking for 
work.
  So if it is an iron law of economics that you get less of what you 
tax, why on Earth would we want to raise taxes on work? Rates matter 
because they affect behavior. The higher the tax rate, the higher the 
disincentive to work. This isn't just Republican orthodoxy, it is basic 
economics. As the nonpartisan Congressional Budget Office recently put 
it, ``Increasing revenues by raising marginal tax rates on labor would 
reduce people's incentive to work and therefore reduce the amount of 
labor supplied to the economy.''
  That is the CBO, not the Republican National Committee. They go on to 
say over at CBO, it would, by itself, ``decrease output in the medium 
and long term.''
  In the middle of a jobs crisis, that is the last thing we ought to be 
doing. Shouldn't we at least agree on that? The negative effect raising 
rates has on labor is so widely acknowledged that the Joint Committee 
on Taxation actually has models that incorporate the effects of doing 
it. They also know that higher rates increase the incentive to shelter 
income from taxation. When rates are higher, the people paying

[[Page 15803]]

them try even harder to keep the government from taking what they earn.
  In short, raising rates means less labor, less investment, and more 
incentive for the wealthy to waste money in an attempt to shelter what 
they have earned. We can quibble about the magnitude of these effects, 
but everyone agrees they exist.
  The problem is particularly acute for those thinking about taking a 
second job in a household, which in many cases unfairly targets married 
women looking to supplement the family income or someone considering a 
promotion or starting a new venture.
  Instead of raising rates, Republicans have proposed capping 
deductions through tax reform instead. If the only way to get Democrats 
to agree to progrowth tax reform and meaningful entitlement reform is 
through more revenue, a smarter way to do it is by capping deductions. 
Capping deductions, or tax expenditures as some people call them, is a 
far less painful, more economically sound, way of closing deficits. The 
Congressional Budget Office agrees. As the Congressional Budget Office 
recently put it:

       Increasing revenues . . . by broadening the tax base would 
     probably have a smaller negative effect, or even a positive 
     effect, on the amount of labor supplied.

  The White House likes to say you can't come up with a realistic plan 
to reduce the deficit without raising tax rates. It is not true. Not 
only are there plenty of ways to do it, there are ways to do it that 
minimize the disincentive to work, and they can be found right in the 
President's own budget. In the President's own budget he proposes three 
different ideas that, combined, dwarf the $442 billion revenue his own 
Treasury estimates he could grab from increasing two rates. All of them 
cap the amount that higher income Americans can deduct from their 
income taxes, and all of them do it in a way that is far less damaging 
than raising those tax rates while protecting middle-class taxpayers.

  Look, I don't like any of these ideas. They all hurt somebody. The 
government spent way too much money as it is. Frankly, I don't think 
the Democrats are any more interested in using new revenue to lower the 
deficit now than they have ever been. But don't tell me you have to 
raise rates to do it. It is not true. The longer Democrats keep saying 
it, the longer it is going to take to come up with an agreement.
  The only reason Democrats are insisting on raising rates is because 
raising rates on the so-called rich is the holy grail of liberalism--
the holy grail of liberalism. Their aim isn't job creation; they are 
interested in wealth destruction--not job creation but wealth 
destruction.
  The President needs to realize that he wasn't elected President of 
the hard left wing of the Democratic Party. He was elected President of 
the United States. He is the steward of the Nation's finances. He has a 
responsibility to everyone to work out an agreement, and that means he 
has to come up with something that can get through a Republican House 
of Representatives.
  We are waiting on the President. We can still get there, but he is 
going to have to lead. He can start by putting the campaign talking 
points on the shelf. I know that whacking the rich works politically. 
It worked pretty well for him in his campaign; I get it. But the 
election is over, and it is time to lead.


                         Tribute to Tom Jurich

  Mr. President, yesterday was an extremely happy day for my alma 
mater, the University of Louisville, and I want to talk today about an 
extraordinary individual who has achieved an incredible success at my 
university over the last 15 years. It has been my privilege during my 
career to get to know a number of people in all walks of life who have 
been highly successful. However, I am hard pressed to think of a more 
conspicuous example of success than what Tom Jurich has accomplished 
for the University of Louisville in athletics in the last 15 years. 
Membership in the ACC, announced yesterday, is the culmination of his 
extraordinary leadership.
  Tom Jurich has for 15 years served as the athletic director for the 
University of Louisville, and yesterday it was announced that UofL, as 
I indicated, will be joining the Atlantic Coast Conference. The ACC 
will be a great home for UofL and the school's commitments to 
academics, groundbreaking research, and top-ranked athletic teams.
  Under Tom Jurich's leadership, student athletes at UofL have been 
making and breaking records and stirring excitement deep in the hearts 
of Cardinal fans all across Kentucky and all over the world. Since 
joining the Big East Conference in 2006, Cardinal teams have won 50 
championships, with 10 of those in the 2011-2012 season alone, 10 
championships just this year.
  Our men's basketball team ranks No. 2 in the Nation in total 
attendance records. Our women's basketball team ranks No. 2 in the 
Nation for average attendance per game. I think it is safe to say 
Cardinal fans love their basketball.
  Tom Jurich masterminded the hiring of legendary men's basketball 
coach Rick Patino, who has led the Cardinals to three Big East titles 
and two Final Fours, including one last season. Now ranked in the top 
five nationally, this year's Cardinal team is well poised to make 
another run for the Final Four.
  Tom was also responsible for hiring head football coach Charlie 
Strong, a legend in the making, who has revitalized the Louisville 
football program by leading the Cardinals to two bowl games and a share 
of the Big East championship in his short tenure there. Now in Coach 
Strong's third year, the Cardinals are 9-2 and have been ranked in the 
top 10 nationally this year and have a chance to win the Big East title 
in a nationally televised game against Rutgers tonight.
  Under Tom Jurich's tenure, Cardinal teams have brought home 
championships in sports as diverse as baseball, field hockey, men's 
soccer, women's soccer, volleyball, men's cross country, men's golf, 
women's golf, softball, men's swimming and diving, women's swimming and 
diving, men's tennis, women's indoor track, and men's and women's 
outdoor track and field, an extraordinary list of accomplishments.
  Tom Jurich has grown the school's physical facilities to be, in my 
view, the best in the country. Under his leadership the men's and 
women's basketball teams began playing in a new state-of-the-art KFC 
Yum! Center in downtown Louisville in 2010. It is an arena equal to any 
college basketball facility, college or professional, in our country.
  Under Tom Jurich, an expansion of Papa John's Cardinal Stadium was 
completed in 2010, giving UofL football fans one of the best stadiums 
in the country in which to watch a game, seating 55,000. Tom Jurich 
also oversaw the construction of an extensive sports park that includes 
new softball and field hockey stadiums, a soccer field surrounded by a 
track, fitness trail, and playground.
  Tom has increased participation for women's athletics, upgrading 
funding and support staff for existing women's programs and adding four 
new women's sports: softball, golf, rowing, and lacrosse. He 
transitioned field hockey and women's soccer and baseball to fully 
funded programs. For his accomplishment, he received the Citizens for 
Sports Equity 2000 Sports Leadership Award.
  For his success as an athletic director, Tom was honored as the 
Louisvillian of the Year in 2005 by the Louisville Urban League, and he 
was nationally recognized in 2007 as Street & Smith's Sports Business 
Journal and Sports Business Daily Athletic Director of the Year. The 
university also recognized his enormous contribution to the institution 
by appointing him vice president for athletics in 2003.
  Yesterday, the totality of Tom Jurich's accomplishments was 
recognized when the ACC voted unanimously to accept the University of 
Louisville as its newest member. This is an exciting time for Cardinal 
sports fans. We relish the opportunity to play in the strongest league 
in the Nation and show that Cardinals are able to compete and beat 
anybody.
  To my good friends from the fine States such as North Carolina, 
Virginia, New York, Pennsylvania, Florida, Indiana, Georgia, 
Massachusetts, and South Carolina, I say ``look out.''

[[Page 15804]]

  I have been pleased to get to know Tom well over the years, as well 
as his wife Terrilynn and their wonderful family. I don't think I have 
ever met anybody who has done a better job building an enterprise than 
he has, given what he had when he came to the university in 1997, and 
then look at it today. He has built an athletic department that boasts 
a budget in the top 20 in the country, championship football and 
basketball teams, record-setting men's and women's basketball 
attendance at our new downtown arena, and enormous success for all the 
other school sports that may not get as much attention but are just as 
vital to the students and the community in Louisville. He has done all 
this while increasing academic success for student athletes with a 
record 21 of 23 Cardinal athletic teams producing a 3.0 or higher 
grade-point average in the most recently completed semester.
  It is a truly extraordinary accomplishment. I am proud of my friend 
Tom Jurich and what he has done. I want to extend to him my heartiest 
congratulations from the Senate floor.
  Go Cards.
  I yield the floor.
  The ACTING PRESIDENT pro tempore. The Senator from Texas is 
recognized.


                              Fiscal Cliff

  Mrs. HUTCHISON. Mr. President, I rise today to talk about the need to 
address entitlement reform as part of the impending fiscal cliff.
  I am not just going to talk about the macro issue, I am going to talk 
about specifics on a way that we can at least do one entitlement 
reform, Social Security, and make a difference for the long-term future 
of Social Security and the millions of Americans who depend on it and 
have earned it.
  It is so important that it be part of the discussion today. So much 
of our short-term consequences and needs for the fiscal cliff have 
dominated the discussion. Well, that is okay; we are 1 month away, 
after all, from dire circumstances. However, we cannot avoid talking 
about the long term because that is what we have been doing that has 
caused us to reach a fiscal cliff. We need to look at entitlements. 
According to Medicare trustees, for instance, Medicare paid $35 billion 
more to beneficiaries than it took in last year in payroll taxes, and 
its trust funds will be depleted 12 years from now if we don't act to 
save Medicare in a responsible way.
  The other issue that is not being talked about very much at all is 
Social Security. In 2010 and 2011, Social Security expenditures, the 
benefits paid to retirees and the disabled, exceeded payroll tax 
revenue for the first time since 1983. So as a practical matter, we 
know the Federal Government is borrowing to pay the Social Security 
needs of today.
  Last year, 2011, the Social Security trustees reported that with 
benefits paid continuing to exceed payroll, the trust funds would be 
depleted in 2036, after which the program would have a net unfunded 
obligation through the end of Social Security's 75-year valuation 
window, and that net unfunded obligation would be $6.5 trillion. After 
reading the trustees' report last year, I drafted the Defend and Save 
Social Security Act to preserve and strengthen Social Security for 75 
years. The longer we delay, the longer and more painful the fix will 
be.
  I keep hearing Members of Congress, and even the President, saying 
Social Security is off the table; we are not going to talk about it 
when we are talking about the fiscal cliff. That is an astonishing 
statement for the President and Members of Congress to say, that we are 
not going to talk about 56 percent of the spending in this country, 
that it is off the table, because that is what mandatory spending is--
56 percent of our spending in this country on an annual basis. Of that, 
let's take out Medicare, Medicaid, and Social Security, which is 44 
percent of the total spending of our country.
  According to the Social Security trustees--1 year after the 2011 
report--the Social Security trust fund reserves, because we waited 1 
year to do anything about it, will now be depleted in 2033. That is 3 
years earlier than was estimated just 1 year ago. And the unfunded 
obligation for the 75-year window has now grown to $8.6 trillion.
  So we can see what happens with just 1 year of delay to the security 
of Social Security and the capability to keep it going. In 21 years, if 
we don't do something there will be severe cuts or severe increases in 
taxes that will be automatic. Without any act of Congress, they will be 
automatic. Talk about a fiscal cliff now, think about the cliff Members 
of Congress will face then because we didn't do our job in addressing 
this issue when the solutions were there in a relatively clear glide 
path that would be relatively unnoticed in most households.
  Let me lay out what will happen: There will be a 25-percent automatic 
cut to the retirement payments and the disability payments that are 
going out now in Social Security. That would be an average of $308 per 
month.
  The Social Security trustees put it straight out there. They have two 
ideas to shore up Social Security right now: One is to immediately and 
permanently increase the combined payroll tax on employees and 
employers from 12.4 percent to 15.01 percent. That would be a one-fifth 
increase in the payroll taxes that are, in the norm, being paid today.
  The other alternative they suggested is to cut core benefits right 
now by $200 per month. They said that would do it--$200 per month in 
cuts to Social Security checks.
  I don't think anyone in America believes that is feasible or even 
desirable--either of those options. So what can we do? We can act now. 
We can reform Social Security without cutting core benefits and without 
increasing taxes on people who are working today.
  I introduced a new version of my Defend and Save Social Security Act 
after the 2012 report came out from the trustees, and it covers the 75 
year window and the shortfall of $8.6 trillion which is estimated, and 
it doesn't raise taxes on the people working today.
  Here is what it does: It increases the age of retirement very 
gradually. When I introduced my bill just last year, it wouldn't have 
affected anyone who was 58 years old or older. But in just that 1 year, 
because the deficits in Social Security payments going out have 
occurred, today it is 59 years of age. No one 59 years of age or older 
would be affected. For everyone else it would be a very slow increase 
of 3 months per year. For instance, the normal retirement age would 
reach 67--going from 66--by 2019, 68 by 2023, 69 by 2027, and 70 by 
2031. The early retirement age would be increased to 63 by 2019 and 64 
by 2023.
  The second point: The COLA--the cost-of-living adjustment--would be 
reduced slightly when inflation is 1 percent or more. Inflation has 
averaged about 2.5 percent, so there would be a COLA, but it would be 
about $12 less if inflation is kicking in above 1 percent.
  There would be no core benefit cut at all, just a slightly smaller 
COLA increase if inflation goes up, and then we would have a secure 
system. It would be a system that would last 75 years. We would not 
have the $8.6 trillion added to our deficit and no core benefits would 
be cut.
  Mr. President, I ask unanimous consent for 2 more minutes.
  The ACTING PRESIDENT pro tempore. Without objection, it is so 
ordered.
  Mrs. HUTCHISON. Mr. President, let me just say that is not the only 
thing we could do. We could change the cost of living to the chained 
consumer price index. That would be OK. It wouldn't get us as much of a 
deficit reduction over 75 years--a chained CPI--but it would get us at 
least into a better position if we increased the age rate.
  I just want to give a note of history. When President Reagan was 
facing the same issue, and the Senate was one-party dominated and the 
House the other, he got together with House Speaker Tip O'Neill, and 
they formed a commission which started the increase in age that we have 
today because people were living longer and they were working longer. 
We can do the same thing President Reagan and Tip O'Neill did, because 
our government is a similar configuration, by coming together and 
acknowledging that people are living longer and are working longer.

[[Page 15805]]

  We can make accommodations for people who are in particularly 
physically strenuous jobs. I think all of us understand people in those 
jobs may not be able to work as long. We can do those things and fix 
this issue in a responsible way. Let's do it now. One more year is 
going to make it that much worse. We have added $2.1 trillion to the 
deficit in just 1 year. We can do this.
  Mr. President, I thank the Senator from Arizona for giving me the 
extra 2 minutes to say let's do it now. In fact, the Senator from 
Arizona has been a cosponsor of my bill to fix Social Security. We 
cannot address the fiscal cliff without talking about entitlements and 
mandatory spending, which is 56 percent of our spending. Anybody can do 
the math on that.
  I yield the floor.
  The ACTING PRESIDENT pro tempore. The Senator from Arizona.
  Mr. KYL. Mr. President, first, let me thank my colleague from Texas 
for her leadership on this and so many other issues that we have worked 
on over the years. One of my regrets in leaving the Senate is that I 
will not be able to work with her, and she has said the same thing 
about me. We will be off doing something else, but we are not going to 
give up on some of the fights we have been engaged in during these 
years.
  I want to just begin where my colleague left off, about the meaning 
of this fiscal cliff and what is being proposed as alternatives to 
going over the fiscal cliff. I was interested this week that the 
President has embarked on what one newspaper referred to as ``the 
fiscal cliff campaign trail.'' We have seen the pictures. He is out 
speaking as if the campaign were still going on, and the centerpiece of 
his pitch--and I heard him say it on TV again last night--is that the 
House of Representatives should pass a bill that was passed in the 
Senate related to 2001 and 2003 income taxes.
  The President is a constitutional scholar, and he served in the 
Senate. He knows that can't be done. It is unconstitutional. The 
Constitution requires that all revenue measures must be initiated in 
the House of Representatives. That is one reason the bill got through 
the Senate, because everybody knew it couldn't pass. It was simply a 
statement by our Democratic colleagues. It wasn't serious legislation. 
But if we look at the legislation itself, we begin to see why 
Republicans are so opposed to what the President is proposing--because 
of the job-killing policies contained in that bill the President would 
ask the House of Representatives to pass.
  What are we talking about specifically? I don't like to get into this 
kind of detail very often, but somebody has to at some point just 
discuss the actual facts of what this bill would do. It would raise the 
marginal income tax rates from 33 percent to 35 percent in the fourth 
bracket, and in the fifth bracket from 36 percent to 39.6 percent--
almost 40 percent.
  Well, what is the problem with that? Let's start with the fact that 
53 percent of all income from so-called flowthrough businesses is 
subject to these higher tax rates. That is because most small 
businesses are not corporations. They are called flowthrough entities--
subchapter S corporations, limited partnerships, and those kinds of 
entities that pay their income taxes as if they were individuals. So 
they are governed by the top two marginal rates.
  Well, they are governed by all the marginal rates of the income-tax 
code. So when we raise those rates, we are raising taxes on much of 
small business income. In fact, almost 1 million small business 
owners--940,000 to be exact--would be hit by the higher taxes caused by 
the President's proposal. That is an average, by the way, of well over 
18,000 per State of the Union.
  What else would it do? It goes directly to business taxes, such as 
capital gains taxes. It raises that from 15 to 20 percent, which is why 
we are seeing a lot of activity right now taking advantage of the lower 
rate, and we are going to find virtually none of that after this rate 
is increased to 20 percent. It is one of the reasons we will go back 
into recession, as the Congressional Budget Office has pointed out.
  It also raises taxes on qualified dividends from 15 percent, where it 
is today. The problem of raising taxes on qualified dividends is, as 
the Wall Street Journal has reported over and over again, that 
companies that are paying dividends are dumping them all right now so 
they will all be paid out before the end of the year.
  If you are a retired teacher or a retired fireman or have a pension 
and you are counting on your investments to pay dividends in the 
future, forget it. Once the dividends rate goes back up, corporations 
are not going to plow their earnings back into dividends to the 
shareholders as they do today. But these don't even tell the whole 
story because, of course, once you are taxed as a corporation--and this 
pertains just to the corporations, not the flowthrough entities I 
mentioned--you are doubled-taxed if you also pay a dividend or you have 
a capital gain. You have to pay not only your corporate income tax but 
the tax on the gain, or the individual pays the tax on the dividends 
that are paid out by the corporation.
  So we already have the fourth highest integrated capital gains and 
dividends rates in the industrialized world at over 50 percent. Why 
would we want to make ourselves even less competitive by raising these 
taxes? We would fall even further behind our international competitors 
with the second highest capital gains rate, 56.7 percent.
  Talk about a blow to the economy--which is the way the President put 
it 2 years ago when he decided not to raise all of these rates. Of 
course, we all agreed with him on that. It would be an even bigger blow 
to the economy to do so today. Our growth rate today is less than it 
was 2 years ago when the President himself said these very policies he 
is advocating would be a blow to the economy.
  The last thing I would mention, everybody knows about the death tax. 
We have forgotten about what would happen with the death tax. The death 
tax rate would go to 55 percent, up from 35 percent today. A lot of 
people think 35 percent is way too much and would like to see it 
eliminated. I would. But think about this. You would only have $1 
million of the farm or the business or the estate exempted from the 
tax. After that, over half--55 percent--of everything you have worked 
for all your years would have to go to Uncle Sam, leaving your heirs 
frequently with the requirement of selling off all or part of the 
business or the farm, whatever it is, in order to pay for the estate 
tax.
  It would increase the number of estates hit by the death tax from 
3,600 this year to over 55,000 next year. There would be 24 times more 
farm estates that would be hit, 13 times more small businesses, 15 
times more taxable estates.
  This is not good for our economy, and it is not good for our 
families. The estate tax raises about 1 percent of all the tax revenue. 
To hurt the small businesses again by raising this death tax rate is 
just unconscionable.
  People need to stop and think. This is not just about hitting the 
rich; this is about hitting small business folks, the very people we 
anticipate will create the jobs coming out of the economy.
  Let's turn to job creation issue for just a second. Ernst & Young, 
the respected accounting firm, released a study recently that estimated 
the long-run effects of a plan very similar to the Senate bill that the 
President is advocating--the top two rates increasing, combined with 
the ObamaCare tax rates taking effect, all of this together, that study 
found that 710,000 jobs would be lost just as a result of this, 710,000 
jobs.
  The President likes to brag every now and then that we have an 
increase of 100,000 or 115,000 jobs in a month. Here is 710,000 jobs 
they say would be lost just from the increase in these tax rates. Our 
gross domestic product would decline by $200 billion, and wages would 
fall by 1.8 percent.
  I know these statistics make our eyes glaze over sometimes, but these 
are the facts; these are the results. And poorer families and a weak 
economy and a lot of joblessness are the result.

[[Page 15806]]

  To put these numbers into perspective, 42 business organizations 
representing tens of millions of American employees--including those in 
wholesaling, air conditioning, retail, franchising industries, and 
others--recently sent a letter to the congressional leadership urging 
Congress not to raise income taxes during negotiations over the fiscal 
cliff and instead to pursue comprehensive progrowth tax reform.
  I ask unanimous consent to have this letter printed in the Record at 
the end of my remarks.
  The ACTING PRESIDENT pro tempore. Without objection, it is so 
ordered.
  (See exhibit 1.)
  Mr. KYL. I will conclude by quoting one sentence from it.

       We call on Congress to avoid raising marginal tax rates on 
     employers, either as part of negotiations over the fiscal 
     cliff, or as part of a larger effort to reform the tax code. 
     Instead, Congress should seek to enact comprehensive tax 
     reform that simplifies the tax code and encourages economic 
     growth for both passthrough businesses and corporations.

  As I said, the passthrough entities are those small businesses, and 
the corporations are those that pay under the corporate tax rate. So I 
think the data, as well as the voices from employers around the 
country, make it clear that the Senate bill, combined with the tax 
increases from ObamaCare, would have a devastating effect on economic 
growth and our ability to create jobs.
  What should we do instead, just to summarize? I think the better 
approach is the one the Republicans have been proposing. We actually 
have a plan, as opposed to the administration's plan--the only part of 
which I can discern is to pass the Senate bill, which raises tax rates. 
Our plan is to avoid the tax rate increases that would otherwise 
automatically occur on January 1 and commit to tax and entitlement 
reform that raises revenue through economic growth, eliminates wasteful 
credits and deductions and loopholes, and cuts spending in the future.
  Recall that, in 1986, President Reagan signed into law a historic tax 
reform bill that lowered corporate and individual tax rates and 
eliminated a lot of loopholes. It wasn't a perfect bill, but the 1986 
reform package can serve as a guide for revenue-neutral tax reform 
moving forward. Cutting our corporate tax rate--which had a combined 
rate of 39.2 percent as the highest in the industrialized world--would 
dramatically boost American competitiveness and improve our standard of 
living.
  Many studies have found that lowering our corporate rate will 
increase growth, including one which found that cutting the corporate 
tax rate by 10 percentage points can increase the annual growth rate by 
around 1.1 percent. Since we are only a little over 1.1 percent as it 
is, cutting it by that much would have a dramatic impact.
  Comprehensive tax reform also means lowering tax rates on 
individuals, including the 95 percent of passthrough entities that file 
as individuals.
  The Reagan tax reform also provided relief for businesses that are 
not structured as C corporations. During Ronald Reagan's 8 years, 20 
million new jobs were created. More specifically, after tax reform 
became law, inflation and unemployment fell.
  The ACTING PRESIDENT pro tempore. The Senator's time has expired.
  Mr. KYL. Mr. President, I ask unanimous consent to proceed an 
additional 1 minute.
  The ACTING PRESIDENT pro tempore. Without objection, it is so 
ordered.
  Mr. KYL. If we are interested in growth, Congress must avoid raising 
tax rates in the lameduck session and instead pursue tax reform, which 
sends a signal to the world that we are open for business.
  Short of going off the fiscal cliff entirely, passing the Senate tax 
increase instead of pursuing these progrowth and fiscal reform ideas is 
the worst idea on the table. Raising the top two marginal rates would 
reverse longstanding tax policy and hit nearly 1 million business 
owners in the process, and it would eliminate over 700,000 jobs.
  So if the President is genuinely interested in economic growth and 
higher tax revenues that come from it, he should drop his demands for 
the Senate bill and listen to the growing bipartisan consensus that 
higher taxes hurt growth and lower taxes help create jobs and 
prosperity.

                               Exhibit 1

                                                November 27, 2012.
     Hon. Harry Reid,
     Majority Leader, U.S. Senate, Capitol Building, Washington, 
         DC.
     Hon. Mitch McConnell,
     Minority Leader, U.S. Senate, Capitol Building, Washington, 
         DC.
     Hon. John Boehner,
     Speaker of the House, U.S. House of Representatives, Capitol, 
         Washington, DC.
     Hon. Nancy Pelosi,
     Minority Leader, U.S. House of Representatives, Capitol, 
         Washington, DC.
       Dear Congressional Leadership: As organizations 
     representing millions of pass-through businesses employing 
     tens of millions of workers, we strongly urge Congress to 
     pursue comprehensive tax reform that lowers rates on all 
     forms of business income while enacting significant 
     entitlement reforms that put the federal budget on a 
     sustainable fiscal path.
       Congress faces two fiscal challenges in the near future. 
     First, it will need to take action on the ``fiscal cliff'' of 
     expiring tax provisions and automatic spending cuts. Second, 
     it will need to raise the debt ceiling.
       In taking on these challenges, we call on Congress to avoid 
     raising marginal tax rates on employers, either as part of 
     negotiations over the fiscal cliff, or as part of larger 
     effort to reform the tax code. Instead, Congress should seek 
     to enact comprehensive tax reform that simplifies the tax 
     code and encourages economic growth for both pass-through 
     businesses and corporations.
       Raising rates on individuals and employers will harm hiring 
     and investment now and into the future. According to the 
     Congressional Budget Office, allowing top tax rates to rise 
     to their pre-2001 levels and beyond will result in 200,000 
     fewer jobs early next year. Ernst & Young has estimated that 
     the impact of these higher tax rates will be to reduce long-
     term employment levels by more than 700,000, while also 
     lowering overall investment and suppressing wage levels.
       The prospect of higher marginal tax rates is already having 
     an adverse impact on the economy. According to the National 
     Federation of Independent Businesses, two-thirds of business 
     owners cite the uncertainty over future fiscal policy as 
     making it more difficult for them to grow their businesses 
     and increase employment. At the same time, the rate of 
     business creation is at its lowest level in two decades.
       Although some have asked Congress to enact corporate-only 
     reform in the coming year, there is no economic or political 
     justification for reform that lowers marginal tax rates on 
     corporations while raising either marginal or effective tax 
     rates on the 95 percent of businesses structured as pass-
     through entities who employ more than half of the U.S. 
     workforce.
       Finally, we are eager to see Congress enact permanent, 
     comprehensive tax reform, but this alone will not solve the 
     long-term fiscal imbalance. The Trustees to Social Security 
     and Medicare have made clear that, absent reform, these 
     programs are unsustainable. While Congress should commit to 
     tackling comprehensive tax reform, it is also imperative that 
     Congress agree to develop a long-term plan to address 
     America's entitlement programs as well.
       Simply put, we need to reform our tax code and we need to 
     reform our entitlements.
           Sincerely,
         Air Conditioning Contractors of America, American Council 
           of Engineering Companies, American Farm Bureau 
           Federation', American Foundry Society, 
           American Supply Association, American Trucking 
           Association, AMT--The Association For Manufacturing 
           Technology, Associated Builders and Contractors, 
           Associated Equipment Distributors, Associated General 
           Contractors of America, Automotive Aftermarket Industry 
           Association, Financial Executives International, Food 
           Marketing Institute, Heating, Air-conditioning & 
           Refrigeration Distributors International, Independent 
           Insurance Agents & Brokers of America, International 
           Foodservice Distributors Association, International 
           Franchise Association, Metals Service Center Institute, 
           National Apartment Association, National Association of 
           Convenience Stores, National Association of Wholesaler-
           Distributors.
         National Automobile Dealers Association, National Beer 
           Wholesalers Association, National Electrical 
           Contractors Association, National Federation of 
           Independent Business, National Grocers Association, 
           National Lumber and Building Material Dealers 
           Association, National Marine Manufacturers Association, 
           National Multi Housing Council, National Restaurant 
           Association,

[[Page 15807]]

           National Retail Federation, National Roofing 
           Contractors Association, National Small Business 
           Association, National Utility Contractors Association, 
           Printing Industries of America, Professional Beauty 
           Association, S Corporation Association, Service Station 
           Dealers of America & Allied Trades, Tire Industry 
           Association, Truck Renting and Leasing Association, 
           United States Chamber of Commerce, Wine & Spirits 
           Wholesalers of America.

  The ACTING PRESIDENT pro tempore. The Senator from Alabama.
  Mr. SESSIONS. Mr. President, I appreciate Senator Kyl's comments, and 
I share them. We are going to miss the most knowledgeable fiscal tax 
expert in the Senate, and his long career includes time on the Finance 
Committee. I thank Senator Kyl.
  I want to express some reservations about the negotiations that have 
been going on, as I understand it from reading the paper, involving the 
fiscal cliff.
  Over the last 2 years, Congress and the President have held an 
endless series of negotiations. There have been Gangs of 6 and 8, a 
supercommittee of 12, talks at the Blair House and the White House. But 
the only thing these secret talks have produced is a government that 
skips from one crisis to the next. Everything has been tried but open 
production of a 10-year plan from this Senate that is required by law, 
that would allow us to openly debate and discuss concretely the 
financial challenges we face today.
  All of this secrecy allows the President to position himself as being 
in favor of a balanced plan--which is what he says: I favor a balanced 
plan--while the only comprehensive proposal, to my knowledge, he has 
actually laid out was in January or February of this year when he laid 
out his budget. Of course, it was voted down unanimously. In both the 
House and the Senate not a single person voted for it. But he did lay 
out a financial plan for the country. He put it on paper.
  Basically, it increases taxes to fuel more spending. That is what the 
plan did. It increased taxes $1.8 trillion and increased spending $1.4 
trillion over the agreement we just reached under the Budget Control 
Act in August, a year ago.
  So we reached agreement on 10 years of spending limits in August, a 
year ago. Then January, 6 months later, he proposes a budget that would 
increase taxes $1.8 trillion and spending that would increase another 
$1.4 trillion over that BCA baseline: tax and spend. Not taxes to 
reduce deficits but taxes to fund new spending. That is why the budget 
puts us on track to have $25 trillion in total debt at the end of 10 
years--another almost $10 trillion in debt added to the current debt 
level.
  Insofar as I can see, that tax-and-spend policy remains his goal 
today. The White House isn't planning to raise taxes to reduce the 
deficit. It raises taxes, under their plan, to expand government. That 
is not acceptable. I don't believe Congress will accept such a deal if 
that is what is going on in these secret negotiations.
  President Obama campaigned on tax increases just on the wealthy, just 
on raising their rates, just only $800 billion in tax increases. But 
now the White House is demanding $1.6 trillion in tax increases. Don't 
the American people have a right to see where those taxes fall, who 
they will impact, and how much they are?
  Shouldn't the President lay out his plan? He is the President of the 
United States and the only person who represents everybody in the 
country. Will that remain a secret? Will it just be revealed to us on 
the eve of Christmas or the eve of the new calendar year? We will be 
asked to vote for or to ratify like lemmings, I suppose.
  The White House has repeatedly asserted they believe in $2.50 in 
spending cuts for every $1 in tax hikes, which does not reflect 
sufficient spending cuts. But if the White House now wants $1.6 
trillion in new taxes, where are the $4 trillion in spending cuts? Have 
those been laid out? Do we know what they would be? And this is over 10 
years. These spending cuts would be very achievable if we put our minds 
to it.
  The ACTING PRESIDENT pro tempore. The Republican time has expired.
  Mr. SESSIONS. Mr. President, I ask unanimous consent that I be 
allowed to have the full 10 minutes.
  The ACTING PRESIDENT pro tempore. Is there objection?
  Without objection, it is so ordered.
  Mr. SESSIONS. I thank my colleagues for their courtesy.
  In fact, the President has given speeches calling for more spending. 
On Tuesday, he gave a speech in which he said he wants to use the tax 
hikes to ``invest in training, education, science, and research.''
  When you are in a deep hole and you are borrowing almost 40 cents of 
every dollar you spend, shouldn't you constrain yourself and not start 
new programs? Or if you start a new, needed program, shouldn't you 
reduce some less valuable program to pay for it instead of just taxing 
to create more programs?
  Not once in the speech did he discuss entitlements. That is the 
largest item in our government, entitlements. Not once did the 
President of the United States discuss with the American people the 
problem that Social Security, Medicare, and Medicaid are on an 
unsustainable path and are at great risk. Shouldn't the President 
honestly talk to the American people about that?
  He didn't discuss our $16 trillion debt and how the Debt Commission 
he appointed indicates that we are on an unsustainable path, heading to 
a fiscal crisis. He did not discuss the economic catastrophe that could 
occur if we don't get off this unsustainable path.
  The President should lead on these things. I don't think this is a 
partisan complaint. I am saying the President of the United States 
should be discussing with the American people the great danger of our 
time: the debt.
  The President will go out to the press and use the buzz words that 
say he has a balanced plan or a responsible path to deficit reduction. 
But where are the spending reductions? What is the plan?
  It seems to me the plan is to talk in general, to meet in secret day 
after day, week after week, the deadlines getting closer, the fiscal 
cliff getting closer. Then, under threat of panic, force through some 
deal that maintains the status quo: more taxes, more spending, more 
debt. And it will be presented to the Senate in a way that, if it is 
not adopted immediately, the country will be in great fiscal danger. 
This process needs to be taken out of the shadows. We need public 
debate, and then people would know the facts that are now being hidden 
from us, hidden from Members of Congress. We don't know what is going 
on. The latest article in Politico today said the deal--the so-called 
deal has been negotiated by the Speaker of the House and the President. 
Not even Harry Reid is in the meetings, apparently--certainly not the 
Members of the Senate or the Members of the House of Representatives.
  If we had a public debate, people would discover that according to 
the CBO, mandatory spending is going to increase nearly 90 percent over 
the next 10 years. To get the country under control requires some real 
tough focus, but it does not mean we are going to have to cut spending 
dramatically, just reduce the growth of spending. Expenses on welfare 
are particularly interesting. Mandatory spending, that is, the 
entitlement programs of all kinds, is set to automatically increase 90 
percent over the next decade. That is over half of our budget. We 
already spend $2.3 trillion on mandatory costs today in our budget--
this year we will spend 2.3 trillion--but we will spend $4.12 trillion 
in the 10th year from now. Those are the projected growth patterns we 
are on. This is a huge increase, and we do not have the money.
  People would also learn from public debate that welfare costs are now 
the single largest item in the budget, exceeding Medicare--larger than 
Medicare, larger than Social Security, larger than the defense budget. 
We spend enough on these poverty programs to send every household 
beneath the poverty line in America a check for $60,000, each family. 
That is how much we are spending. The President's plan apparently would 
not deal with that at all. Indeed, the Budget Control Act of 15 months 
ago that was passed explicitly failed to address some of the biggest 
items in that budget.

[[Page 15808]]

  I do not see how we can support a plan that does not at least begin 
to reform these programs and improve their operation. Is this going on 
in the secret talks? Are they talking about it or, like the Budget 
Control Act, is this off- limits, not to be discussed? Will welfare 
reform be a part of the framework of the settlement that will be 
dropped on the Senate? We do not know.
  Meanwhile, the President demands more taxes and refuses to do 
anything about waste, really. I have not seen any strong management 
leadership from this White House that gives me confidence that we 
should send more money. There are lavish conferences, duplicative 
programs, billions in refundable tax credits being mailed every year to 
illegal aliens or children not even in the United States--billions from 
their own department, the reports tell us. No one is managing this 
government effectively. Why should the American people send one more 
dime in taxes to Washington when we will not reform and manage the 
money we are already getting from them? The American people should not 
send more money to this dysfunctional government. They should insist 
that we fix what is going on here first.
  The ACTING PRESIDENT pro tempore. The time of the Senator has 
expired.
  Mr. SESSIONS. Mr. President, I appreciate the opportunity to share 
these remarks. I ask for 1 additional minute to wrap up.
  The ACTING PRESIDENT pro tempore. Without objection, it is so 
ordered.
  Mr. SESSIONS. I thank my colleagues.
  I would say I am concerned about the nature of these secret talks, 
the fact that the Senate is really not participating. From the reports, 
it is only the Speaker and the President of the United States 
discussing it, and that appears to be--from what I picked up--to be 
true. Apparently, the majority leader is not intimately involved, the 
chairman of the Budget Committee is not involved, and the chairman of 
the Finance Committee is not involved. These are Democratic leaders in 
the Senate, certainly not Republican leaders in the Senate.
  The Senate is a great institution. We ought to be engaged, and the 
engagement of the Senate allows the American people to know what is 
happening. They are entitled to that. I really believe we can do 
better. We must do better.
  I yield the floor.
  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.
  Mr. UDALL of Colorado. 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.

                          ____________________