[Congressional Record (Bound Edition), Volume 158 (2012), Part 2]
[Senate]
[Pages 1699-1703]
[From the U.S. Government Publishing Office, www.gpo.gov]




                               THE BUDGET

  Mr. PORTMAN. As the Presiding Officer knows, this week the President 
sent his budget to Congress. This happens every year. The budget is a 
document that determines what the spending will be and what the 
revenues will be not just for the next fiscal year but for a 10-year 
period. So it is a document about what the direction of our

[[Page 1700]]

country ought to be. It is a vision for the country, if you will.
  It is being sent to the Congress at a time when we face extraordinary 
fiscal challenges. We have a record debt of over $15 trillion. We have 
deficits that have been over $1 trillion a year for the last several 
years, and it looks as though this year, once again, it will be well 
over $1 trillion.
  In comparison to previous years, we have a debt that is now as large 
as our entire economy, which is larger than at any time since World War 
II. In fact, as a country, we are spending more money at the Federal 
level than we ever have before--as a percent of GDP, more than we ever 
have since World War II. So these are times when we have a true fiscal 
crisis at our doorstep and we need to handle it.
  We are borrowing over 35 cents of every $1 we spend at the Federal 
level. In that context, I have to say I am very disappointed in the 
budget proposal that was sent to us because it is simply not up to the 
challenges we face. It taxes too much, it borrows too much, and it 
spends too much. Unfortunately, it adds another $11 trillion to the 
national debt over this 10-year period--again, a debt that already tops 
100 percent of our country's economy. It does nothing to change the 
fact that Social Security and Medicare are in trouble--very important 
programs, of course, but by not addressing them in this budget document 
it means what everybody knows, which is that unless we do something 
that will head toward solvency, this will continue to be the case.
  Remarkably, I thought, the President proposes another $350 billion in 
a so-called stimulus bill within this budget and pays for it either in 
red ink, with more borrowing, or by raising taxes. It actually raises 
taxes by nearly $2 trillion over this 10-year period. This is despite 
the fact the Congressional Budget Office has told us that by raising 
taxes, we are going to hurt the economy. In fact, it would result in 
higher unemployment next year than this year.
  We all know the long-term driver of these deficits is entitlement 
spending. These important programs, Social Security, Medicare, and 
Medicaid, along with interest on the debt, are called the mandatory 
spending part of the budget. That is now a bigger and bigger part of 
the budget and the fastest growing part of the budget. It is 64 percent 
of the budget this year.
  Under what the President has proposed, for the next 10 years, that 
mandatory spending--which means it is not subject to annual 
appropriations by Congress; again, important programs but not on a 
sustainable path--this mandatory spending will grow from 64 percent of 
the budget--where it is today, which has grown and grown over the 
years--to 78 percent of the budget in 10 years, under the budget 
proposal the President has put forward.
  Republicans, Democrats, Independents alike, we know this is not 
sustainable. It is not sustainable and, unfortunately, it is going to 
hurt these programs in a way that is going to make it very difficult 
for our seniors and others who rely on them.
  Overall, the President's promise of deficit reduction also does not 
look like it works. The budget claims $5.3 trillion in deficit 
reduction over the next decade. However, if we look at it, that $5.3 
trillion does not come from spending cuts. Looking at a budget table, 
table 3--and I ask folks at home to take a look at this--99.9 percent 
of that $5.3 trillion in so-called deficit reduction does not come from 
spending cuts, it comes from tax increases--almost $2 trillion--a 
savings that is considered to be a gimmick of saying we are not going 
to spend as much in Iraq and Afghanistan. Everybody knows we are not 
going to spend as much there. Yet they take credit for that. Already 
enacted spending caps--remember, the discretionary spending caps were 
put in place, the so-called sequestration or across-the-board cuts, 
they take credit for those which have already been enacted and then, 
finally, the net interest savings from all those policies, which is 
about $800 billion, they say.
  So again, almost all that so-called deficit reduction over the next 
decade comes not from spending cuts but, in fact, from either gimmicks, 
tax increases or things Congress has already done. That leaves very 
little--about $4 billion out of the $5.3 trillion--that is truly 
spending reductions.
  By the way, on top of that, in the so-called baseline that the 
President bases his numbers off of--in other words, we have to 
determine what would the spending otherwise be--in that baseline, there 
is another $479 billion in new spending on Pell grants, the Medicare 
doc fix, and so on.
  So the spending savings completely vanish when we put all that 
together. That is not the kind of budget we need right now.
  Last year, the President submitted a budget that I thought was a good 
political document, also, but did not address our budget problems, and 
we took it to the floor of this Senate for a vote. In the Senate, last 
year, the President's budget was voted on by Republicans and Democrats, 
and it lost by a vote of 97 to 0.
  I do not know how this budget would do if it came to the floor, but I 
am not sure it would fare much better because, frankly, when we look at 
this objectively, it is hard to say it addresses the very real problems 
we face. These are problems that relate to our spending and relate to 
the fact that we have these big deficits and debt, but also it relates 
to what is going on at kitchen tables all over America, which is people 
are having a harder time finding work, keeping jobs, making ends meet.
  The economy is tough in my own State of Ohio. We not only have high 
unemployment, but we have record numbers of weeks where people have 
been on unemployment--approximately 40 weeks now. We have a lot of 
people who have given up looking for work altogether. Unless we get 
this budget deficit and debt under control and add more predictability 
and certainty to our economy and to what is going to happen with these 
huge deficits and debt that seem to be taking us toward what is 
happening in Greece, Italy or Spain--unless we do that, we are not 
going to be able to turn this economy around and give people the kind 
of confidence they are looking for to be able to make investments and 
move our country forward.
  There are some other folks who are with me in the Chamber today. I 
would like to ask them if they would not mind talking about their 
budget perspective, what they see in this budget, the concerns they 
might have, and the ideas we have to try to improve our fiscal 
situation, therefore, our economy.
  I see the ranking member of the Budget Committee is here.
  I say to Senator Sessions, I know he wants to speak briefly on this 
issue.
  Mr. SESSIONS. Mr. President, I thank Senator Portman for his comments 
and for his leadership on the Budget Committee. We have three fabulous 
new members on the Budget Committee in Senator Toomey, Senator Portman, 
and Senator Ron Johnson, who are with us and will share their 
perspectives as new members on the Budget Committee.
  At a time of fiscal crisis, as Senator Portman has described, it is 
very important the leadership of America speak honestly to the American 
people about the challenges we face and how we plan to go about fixing 
them. That is right. That is fair. That is just. It is wrong, it is 
unfair, and unjust to spin plans, to misrepresent the impact of 
policies in a way that confuses the American people and our colleagues 
in Washington about what is going on.
  So our colleagues who are here understand the numbers. They are going 
to make some very good points. I will just say, as a member of the 
committee and the ranking Republican, I am disappointed the budget does 
virtually nothing to change the debt trajectory we are on from the 
agreement we had last year and, in the course of it it raises taxes 
considerably and raises spending considerably, although the Budget 
Director was so reluctant yesterday to acknowledge it raises spending. 
But it does raise spending in any fair and objective analysis of the 
situation we are in today with the current trajectory in the Budget 
Control Act we agreed to last year.

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  So we are at a crisis, and we need to have leadership that looks the 
American people in the eye and tells them of the crisis we are facing, 
the difficult challenges, and lays out a plan on how we can fix it. We 
can fix it. If we put ourselves on a sound path, we will have more 
growth and prosperity than a lot of people predict.
  I thank Senator Portman for the opportunity to share these few 
moments and for the contribution he and our other colleagues are making 
to this important national debate.
  Mr. PORTMAN. Mr. President, I thank the Senator for his leadership on 
the Budget Committee.
  I see we have also been joined by one of our new Members, a freshman 
Member, who comes from the business side of things. He ran a 
manufacturing company, so he has an interesting perspective on Federal 
budgeting. I love to ask folks who are in business: Could you see doing 
business where you were borrowing 35 cents of every $1 you spent? The 
answer is: I wouldn't stay in business very long.
  With that, I would like to hear from Senator Johnson of Wisconsin.
  Mr. JOHNSON of Wisconsin. Mr. President, I thank Senator Portman. 
Again, I so value his experience. Being the head of OMB himself, he 
understands these numbers.
  What I have been trying to do over the last couple days is, I have 
been trying to figure out where is this $4 trillion worth of deficit 
reduction.
  I have a chart on the debt in the Chamber. I have shown this chart in 
the past. I like this--I do not like it, but I like this depiction of 
the debt. It goes back to 1987, when our Federal debt was $2.3 
trillion. It took us 200 years to incur that much debt, and we just 
entered an agreement--I did not vote for it, but we entered an 
agreement to increase the debt ceiling by $2.1 trillion, and we will 
blow through that in about 2 years.
  But if we take a look at the debt President Obama in his latest 
budget is projecting 10 years into the future, it is $25.9 trillion. In 
last year's budget, it was about $26.3 trillion. Again, I am trying to 
do the math. If we reduce the deficit by $4 trillion, one would think 
that final debt figure would also be reduced, and it simply is not.
  I realize the President is talking about a balanced approach. But you 
know as well as I do we have a spending problem, and that is what the 
next chart is trying to portray.
  If we take a look at 10-year spending, in the 1990s, our Federal 
Government spent $16 trillion in total. In the last decade, we spent 
$28 trillion. In President Obama's budget for last year, he was 
projecting spending over 10 years of $46 trillion. In his new budget--
just 1 year further into the future--he is projecting $47 trillion over 
10 years.
  Again, I do not see where there is $4 trillion worth of deficit 
reduction. I am an accountant. I am going to continue to look through 
the budget. I am afraid I am not going to truly come up with it.
  I think what is very disappointing about President Obama's budget is 
that he simply is not grappling with what we all realize. I think 
everybody in Washington realizes what is driving our debts and deficit 
long term is Social Security and Medicare spending.
  Just a quick little chart in terms of where we are in terms of Social 
Security. In 2010, we went cash negative, which means the amount of the 
payroll is not covering the benefits--by $51 billion in 2010, $46 
billion last year. By the year 2035, we will accumulate $6 trillion in 
deficit spending in Social Security alone, and the President's budget 
is silent on Social Security. The President's budget is silent on 
Medicare.
  He has had 4 years. Why doesn't he propose something? The only thing 
he is proposing is a tax on millionaires. He is asking Congress to hop 
on board and let's pass corporate tax reform. Why doesn't he propose 
it? There is actually a growing consensus about progrowth tax reform.
  I want to agree with this President on something to enact something. 
But he needs to lead, and he is not leading on these issues.
  I want to finish my little part by talking about those millionaires 
on whom President Obama wants to raise taxes.
  I have been doing an awful lot of telephone townhall meetings. Last 
week, we had a very interesting call. After a couple of my constituents 
from Wisconsin asked me why I would not support a millionaires' tax, we 
had a call from an elderly woman, and I could tell she was afraid. She 
was scared. She said: Senator Johnson, I am so concerned about what is 
going to happen to our taxes. My husband and I have been building a 
business all our lives. All our assets are wrapped up in that business, 
and now my husband has been sick for 2 years. He has not been able to 
work in the business. I have been trying to make a go of it, and now we 
are going to have to sell the business. In maybe 1 year, when we sell 
this business, I might report one million dollars' worth of income, and 
I am so concerned: Am I going to be paying that 15-percent tax on my 
retirement fund, which is my business, or am I going to be paying a 30-
percent tax?
  The fact is, that is whom this President wants to punish--people such 
as that woman in Wisconsin who has her entire retirement wrapped up in 
her business, and she is going to sell it. That is on whom President 
Obama wants to double the tax.
  Again, I think that puts a face on the type of people President Obama 
wants to punish. I think that is a tragedy. I would like to see the 
President lead on the debt and deficit issue far better than he has.
  Mr. PORTMAN. Mr. President, I thank Senator Johnson for his 
perspective, and it is very helpful.
  We are now going to hear from another colleague who also is a new 
Member of the Senate but has a lot of experience in what makes the 
economy work and has been promoting progrowth tax reform and progrowth 
regulatory relief and other things to actually move the economy to 
generate more revenue in the right way, which is through growth, Pat 
Toomey from Pennsylvania.
  Mr. TOOMEY. Mr. President, I thank Senator Portman for organizing 
this colloquy and Senator Johnson for his contribution.
  Let me start by making this point: It seems to me the two top 
priorities the budget--and most of what we do--ought to have are, No. 
1, policies that will help encourage strong economic growth, a recovery 
that we need and the job creation that would come with it--that is No. 
1--and No. 2, putting our Federal Government on a sustainable path 
because we are not on a sustainable fiscal path now, and if we do not 
get on a sustainable path soon, we are inviting a crisis. We are 
inviting a disaster.
  It is my view that the President's budget fails badly on both fronts. 
On the economic front, there are a number of areas. First and foremost 
is a budget that proposes a growing budget deficit. The President who 
promised us in his first term he would cut the deficit in half, in 
fact, is proposing in fiscal year 2012--this year--a deficit that is 
bigger than last year and almost as big as the alltime record high--
nowhere near cutting these deficits in half. Huge deficits themselves 
have a chilling effect on economic growth because they discourage 
investment.
  Everybody knows when we are racking up massive amounts of debt, 
unprecedented amounts of debt--as we are doing right now--there is a 
huge threat that the result will be either dramatic inflation or much 
higher taxes or both. Given that threat, businesses and entrepreneurs, 
understandably, are reluctant to take a risk, to make an investment, to 
grow a business, to hire workers. So that is point No. 1.
  Point No. 2 that I would like to make is a little bit more technical 
and very specific; that is, the President's idea that we ought to tax 
dividend income, which is to say investment in business, at ordinary 
income rates instead of at the current 15-percent rate. I just want to 
illustrate why I think that is a particularly bad idea and why it will 
hurt our economy and weaken our ability to create jobs.
  This little chart demonstrates what this means is, what the President 
is proposing is effectively a 63-percent tax on investment in a 
business. The reason I say that is as follows: If you

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can imagine, let's say you have saved some money and you want to invest 
in a business so that business can grow and hire workers. How will 
these taxes be paid?
  Right now, we have just about the highest corporate income tax rate 
in the world. So if you make an investment in a business and that 
business makes a profit, the first thing that company has to do is pay 
$35 of every $100 it makes. Let's assume the company makes $100. At the 
35-percent top income tax rate that the company pays, $35 is taken, 
goes to the government. So the aftertax income for that business is 
$65. That is what the owners of the business get, right? Not quite.
  If the dividend is then paid to the owners of the business, the 
President wants that to be taxed now at the ordinary income tax rate. 
By the way, he wants that rate to go from the current rate of 35 
percent up to 43.4 percent. A top marginal income tax rate of 39.6 
percent, plus the 3.8 percent from the health care bill that was 
passed, brings the top marginal income tax rate to 43 percent.
  I know this gets a little bit confusing, but at the end of the day, 
it is not that complicated. The $65 that is remaining after the 
corporation pays its income tax--if that gets paid to the investor--
that now, under the President's plan, would be subject to a 43-percent 
further tax.
  That is another $28 that gets taken from that initial $100 of income, 
leaving the investor with $37 out of the $100 this business makes. So 
the President's plan is, if you want to invest in a business to help 
grow this economy and create jobs, the business--your activity--will be 
subject to having almost two-thirds of the income taken and you are 
left with about one-third.
  What is the net effect? It is a huge disincentive to invest, to grow 
a business, to take a risk. Most of the rest of the world does not have 
tax rates this high, does not have a corporate tax rate this high, and 
therefore it is a further incentive for capital to move elsewhere.
  I think we ought to pursue policies that encourage maximum economic 
growth, not policies that absolutely discourage savings and investment 
and the growth that comes with it.
  If Senator Portman tells me I have a couple of other minutes, I will 
make one more point; that is, to switch to the sustainable fiscal 
profile which we are not on now.
  The President, to his credit, has put his finger on precisely what is 
the long-term problem we face. He has described it as the mandatory 
health care spending, the entitlement programs, as a general matter. He 
is exactly right. When we look at his budget, it is very revealing.
  If we take just the following categories--Medicare, Social Security, 
Medicaid, and interest on our debt, just those items--and look at what 
the President has proposed for those items over the next 10 years, it 
is an average annual increase of almost 8 percent--7.8 percent to be 
precise. But he is only proposing that the economy is going to be able 
to grow by about 5 percent.
  Frankly, that is optimistic. So what happens if we have huge 
government programs growing faster than the economy each and every year 
for as far as the eye can see? That is the definition of unsustainable 
because these programs consume ever more of the budget and ever more of 
the economy until something has to collapse.
  This is why I am so disappointed the President has not so much as 
suggested an idea for how we might reform the long-term, totally 
unsustainable path they are on. Most of us--Republicans in this body 
and in the other body--believe we need to make some changes for future 
retirees. We are not talking about changing the rules for people who 
are currently retired or about to retire but people my age and younger 
and my kids. When are we going to acknowledge that we have to fix this 
so these programs can survive for the next generation?
  If we refuse, if we continue to go on this path, we are going to face 
the kind of financial crisis they are facing in Europe. We have a 
limited window of opportunity to solve this. It is not too late for us 
to avoid the fate of our friends on the other side of the Atlantic. But 
I would suggest we do not have time to lose.
  I think the President has missed the big opportunity to provide some 
leadership. I hope we will make up for that in this body.
  With that, I would be happy to yield back to my colleague from Ohio.
  Mr. PORTMAN. Mr. President, I thank Senator Toomey. I appreciate his 
focusing on the progrowth elements because, as I said at the outset, a 
budget is an opportunity to set the Nation on a 10-year course, both on 
the spending side--how much should the government spend--but also on 
the revenue side. That means we are getting into how to grow the 
economy because the right tax reform will generate more growth. That 
growth will generate more revenue in the right way.
  Unfortunately, if we look at the proposal the President has made, it 
does nothing to help improve our economic growth. In fact, when the 
dividend tax was moved down to 15 percent, it was done so because, as 
Senator Toomey has rightfully pointed out, it is a double tax. In other 
words, it has already been taxed once at the company level. So when we 
get a dividend paid, we should not have to pay a high tax on it again.
  In fact, because of that double taxation, as he has indicated, there 
will be a tax--total tax of over 60 percent. By the way, in the 
President's budget, the dividend tax was increased from 15 percent to 
39.6 percent for some taxpayers. Then, as Senator Toomey has said, we 
can add the surcharge that comes from the health care bill and get it 
up into the forties for the individual.
  Most people did not expect that. It is an example where this budget 
actually went further in terms of trying to, again, tax people more and 
therefore have less growth than anyone expected. Most people thought it 
would go from 15 percent to 20 percent or 25 percent, but not all of 
the way to--almost tripling the tax on dividends.
  So it is an example where, in this budget, there was an opportunity 
to lay out a pro-growth path that included tax reform. Instead, we are 
building on our current antiquated, inefficient tax system and just 
lopping more taxes on top, including taxes on capital gains and on 
dividends that will make it more difficult for us to have the kind of 
investment we need to get this economy moving again.
  The President, when he ran for election in 2008, pledged to reform 
entitlements. Senator Toomey talked about the fact that he has 
continued to talk about that, the need for it. I certainly agree with 
that, as do, by the way, most of my colleagues in the Senate, Democrat 
and Republican alike.
  The budget, of course, does nothing to help. In fact, it increases 
the cost significantly on entitlements, as Senator Toomey has said, an 
8-percent increase on average for these important programs. But that 
puts them on an unsustainable footing when the economy will not be 
growing nearly that fast.
  Instead of doing something to reform these programs, making them work 
better, the President is just continuing to pile on more entitlements. 
But in 2008 the President also said he was going to cut the deficit in 
half. At that time the deficit that first year of his administration 
was $1.4 trillion. He proposed to cut it in half over the 4-year term. 
So now we are in 2012, the final of his 4 years--fiscal year--and their 
estimate for the deficit this year--from the Office of Management and 
Budget, from the Congressional Budget Office--is that we will be over 
$1.3 trillion.
  So it does not sound like he has cut the deficit in half. Some will 
say, well, it is less as a percent of our economy. That is true. Our 
economy has grown some. But it is still not close to cutting it in 
half. A lot of things happen during a Presidential term. But I would 
hope that the President, in putting forward a budget, would have put 
forward a serious effort to reduce the deficit significantly, to get 
this economy back on track and prepare for, again, this unsustainable 
growth in entitlements by truly reforming the programs to make them 
work better and to make them sustainable over time.

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  We still have the opportunity to do that in the Senate. It is an 
election year, but we still have 8 or 9 months until the election. We 
should get busy working together as Republicans and Democrats, not 
follow the President's budget because, unfortunately, it does not 
provide the guidance we need. But we need to follow what all of us know 
in our hearts has to be done, which is grow the economy through pro-
growth, sensible approaches such as tax reform, regulatory relief, and 
using more of our own natural resources in this country. We can help 
grow the economy on the one hand and, therefore, create revenue.
  Then, second, we ought to do everything we can to reform these 
programs to make them sustainable, to reduce annually appropriated 
spending in ways that are responsible--not just to our kids and 
grandkids, as important as that is, but to today's economy to ensure 
that we can, indeed, have a strong recovery that all of us hope for and 
begin to bring people back to the workforce, create jobs, get this 
economy moving again, and give people that dignity and self-respect 
that comes from work.
  I am glad to have had the opportunity to talk about this budget.
  I yield the floor and suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant editor of the Daily Digest proceeded to call the roll.
  Mr. CORKER. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.

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