[Congressional Record (Bound Edition), Volume 158 (2012), Part 8]
[Senate]
[Pages 10848-10851]
[From the U.S. Government Publishing Office, www.gpo.gov]




       SMALL BUSINESS JOBS AND TAX RELIEF ACT--MOTION TO PROCEED

  Mr. REID. Mr. President, I move to proceed to Calendar No. 341, S. 
2237.
  The ACTING PRESIDENT pro tempore. The clerk will report the bill by 
title.
  The legislative clerk read as follows:

       Motion to proceed to S. 2237, a bill to provide a temporary 
     income tax credit for increased payroll and extend bonus 
     depreciation for an additional year, and for other purposes.


                                Schedule

  Mr. REID. Mr. President, there will be no rollcall votes today. The 
first vote of the week will be tomorrow at noon on the confirmation of 
the Fowlkes nomination.


                 Measure Placed on Calendar--H.R. 4018

  Mr. REID. Mr. President, I understand that H.R. 4018 is at the desk 
and due for a second reading.
  The ACTING PRESIDENT pro tempore. The leader is correct. The clerk 
will report the bill by title for a second time.
  The legislative clerk read as follows:

       A bill (H.R. 4018) to improve the Public Safety Officers' 
     Benefits Program.

  Mr. REID. Mr. President, I object to any further proceedings on this 
legislation at this time.
  The ACTING PRESIDENT pro tempore. Objection having been heard, the 
measure will be placed on the calendar.


                            Focusing on Jobs

  Mr. REID. Mr. President, last month we got a lot done. It was 
incredibly productive. Congress and President Obama worked together to 
prevent interest rates from doubling for more than 7 million college 
students, and we also worked to put 2.8 million Americans back to work 
or create new jobs and to rebuild our crumbling roads, bridges, and 
other parts of our transportation system. The Senate passed an FDA 
bill, which was so necessary to focus on why we have, among other 
things, shortages of lifesaving drugs. We also passed something that 
will allow the construction industry to go forward, which is flood 
insurance for the entire country. We passed a farm bill that will 
strengthen the agriculture industry and support some 16 million jobs.
  We were able to accomplish this much last month because Republicans 
and Democrats worked together and compromised. Rather than wasting time 
participating in political theater, we actually legislated.
  I hoped to continue that productive process in this work period, 
characterized by cooperation between lawmakers on both sides of the 
Capitol and in both Chambers. Unfortunately, we already know that our 
colleagues in the House are going to waste much of this short work 
period refighting very old battles.
  Republicans had indicated they would support the ruling of the 
Supreme Court. They, in fact, said the Supreme Court is going to decide 
this matter regarding affordable health care. Well, they have now 
changed their tune. Mitt Romney has said he would nominate Supreme 
Court Justices just like Justice Roberts. I wonder if he is saying that 
to his rightwing base today.
  But now that the Court has upheld this landmark health care reform 
with the majority decision, written by Justice Roberts, Republicans 
refuse to admit that the matter is settled. This week the House will 
vote--and this is almost hard to comprehend--for the 31st time to 
repeal health care reform. They have already voted 30 times, but 
Speaker Boehner said: Let's do it again--31 times, taking many hours 
and many days that should have been spent on creating jobs. 
Congressional Republicans have spent months trying to repeal a law that 
has already saved lives and made people more safe as they look at 
health care in this country.
  While House Republicans hold a political showboat, the Senate will 
take a different approach. We are going to continue to try to be 
constructive and focus on jobs. While Republicans are stuck in the 
past, we will be addressing the most pressing issues facing this 
Nation: creating jobs and securing the economy.
  Last week's job report underscored the fact that Congress must do 
more to strengthen the recovery. So the Senate will immediately 
consider a package of commonsense tax cuts that will lower the cost of 
doing business for small businesses and pave the way for small 
businesses to succeed.
  Our legislation will cut taxes for small firms that invest in new 
workers and equipment. The Small Business Jobs and Tax Relief Act will 
provide a 10-percent income tax credit for companies that add up to $5 
million to their payroll, creating hundreds of thousands of new jobs. 
Businesses are eligible for a tax break if they hire new workers or if 
they raise the wages of hard-working employees already on their 
payroll. And because the credit is capped at $500,000, it is targeted 
to benefit small businesses most.
  The legislation will also allow companies to write off the entire 
cost of purchases, such as new equipment, and

[[Page 10849]]

they will be able to do it in the year the purchases are made instead 
of writing them off over long periods of time.
  More than 2 million companies could get a boost to their bottom 
lines, creating hundreds of thousands more jobs.
  Proposals such as these have garnered Republican support in the past, 
and I hope they will receive bipartisan support again tomorrow.
  After our weekly caucus meetings tomorrow, the Senate will vote to 
end a Republican filibuster and begin to debate these tax cuts. 
Democrats can't undertake the work of strengthening the economy alone. 
We will need Republican support, which is why we have proposed 
consensus tax cuts that should pass the Senate overwhelmingly.
  It was good to see that so many reasonable Republicans were willing 
to work with us last month to save college students money, rebuild the 
Nation's infrastructure, and help protect American farmers. Tomorrow, 
Republicans will have an opportunity to prove they are willing to 
continue working with us to create jobs.


                       Reservation of Leader Time

  The ACTING PRESIDENT pro tempore. Under the previous order, the 
leadership time is reserved.
  Mr. REID. I thank the Chair.


                           Order of Business

  The ACTING PRESIDENT pro tempore. Under the previous order, Senators 
are permitted to speak for up to 10 minutes each.
  Mr. REID. Mr. President, I suggest the absence of a quorum.
  The ACTING PRESIDENT pro tempore. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. KYL. 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.
  Mr. KYL. Mr. President, I ask unanimous consent that I may address 
the Senate as in morning business for 20 minutes.
  The ACTING PRESIDENT pro tempore. Without objection, it is so 
ordered.


                                Fairness

  Mr. KYL. Mr. President, ``fairness'' has become one of the watch 
words in this year's political debates, both at home and abroad. The 
term echoes throughout Europe, where German Chancellor Angela Merkel is 
under pressure to come up with billions in bailouts for troubled 
eurozone countries. Her insistence on reasonable reforms is considered 
unfair by many in those countries, even though Germans have sacrificed 
to live within their means, for example, by forgoing wage increases to 
avoid the problems of their neighbors.
  In the United States, President Obama and his supporters have used 
fairness as a justification for various redistributionist policies, 
including a massive tax hike, a government takeover of health care, 
complex financial regulations, and new government spending programs.
  The President and his supporters believe the Federal Government 
should pursue policies that will result in economic equality. But 
forced equality is inherently unfair. It necessarily relies on the 
wrong incentives that penalize success. More fundamentally, it is based 
on a shallow, materialistic definition of ``fairness.''
  Aristotle wrote: ``The worst form of inequality is to try to make 
unequal things equal.''
  Contrary to the goal President Obama pursues, the key determinant of 
lasting happiness and success is not whether you have as much money as 
your neighbor, regardless of the differences between you. Rather, it is 
what American Enterprise Institute president Arthur Brooks calls earned 
success and meritocratic fairness.
  Much research shows people are happiest when they have the 
opportunity to succeed and earn their rewards. Sometimes we take risks 
and succeed. Sometimes we fail. Sometimes we defer gratification by 
saving our money. Maybe our neighbor does not. Some of us are better at 
making money than others. Some deliberately earn less to enjoy other 
pursuits in life. Decisions about families result in very different 
economic circumstances.
  When the government tries to equalize everyone or take all the 
trouble out of life by taking care of our every need, it makes earned 
success and meritocratic fairness that much harder to achieve. When 
government aims to smooth over every rough patch, it eliminates the 
experiences that make us resourceful and resilient--the experiences 
that teach us how to work harder or smarter for our rewards.
  Those of us who believe in earned success and meritocratic fairness 
believe the best way to promote these concepts is through the free 
enterprise system, a system in which opportunity is sacred and 
excellence is rewarded. We reject the notion that it is fair to impose 
interventionist and redistributionist policies to guarantee material 
equality. As Brooks notes: ``For the overwhelming majority of 
Americans, fairness means rewarding merit, not spreading the wealth 
around.''
  In his new book, ``The Road to Freedom,'' Brooks asks some 
fundamental questions related to the future of earned success, the 
pursuit of happiness, and meritocratic fairness:
  First, ``Will we see a growing bureaucracy or more 
entrepreneurship?''
  Second, ``Will we be a culture of redistribution or a culture of 
aspiration?''
  Third, ``Will we be a nation of takers or a nation of makers?''
  These are serious questions that will be answered in the long run--
not in 1 day or 1 year or in one session of Congress. But for now, I 
would like to focus on the short term. How do recent government 
policies help answer these questions about what is fair?
  How does government spending, and the staggering debt that comes with 
it, affect bureaucracy and entrepreneurship? How does a 
redistributionist tax policy affect the aspirations of job creators and 
innovators? And how does our burdensome regulatory regime affect the 
so-called ``makers'' in American society?
  Let's take these Brooks' questions one at a time. First, will we see 
a growing bureaucracy or more entrepreneurship? We all know 
entrepreneurship requires opportunity and private investment. But a 
burdensome Federal Government reduces opportunity and it crowds out 
private investment. Let's take a look at the growth of government under 
President Obama. Since his inauguration in January of 2009, the Federal 
debt has increased by more than $5 trillion, and it is rapidly 
approaching $16 trillion in total.
  Meanwhile, the Federal budget deficit has exceeded $1 trillion 4 
years in a row. The highest deficit before President Obama was less 
than half that amount. How did our deficit and debt skyrocket so 
quickly? Well, for starters, President Obama's economic policies have 
resulted in slower GDP growth, which means less tax revenue flowing to 
the Treasury and more Americans requiring government assistance. So 
government income is down.
  Second, the President has dramatically increased government spending. 
Prior to the 2008 fiscal crisis, the 40-year average for Federal 
outlays was less than 21 percent of our gross domestic product. But 
under President Obama, spending soared over 25 percent of the GDP in 
2009. It has remained above 24 percent since then. This new spending 
has grown the Federal bureaucracy and it has increased the regulatory 
burden on families and businesses.
  For example, the President's 2,700-page health spending law created 
or codified at least 159 new boards, bureaucracies, and programs, along 
with thousands of new pages of government regulations and more than 20 
new taxes. A recent Bloomberg News report notes that the President's 
health care law imposes $813 billion in taxes on middle-income families 
and job creators, according to the Congressional Budget Office. In 
total, it has imposed $24 billion in new regulatory costs on the 
private sector and States, as well as almost $59 billion in annual 
paperwork hours on the economy.
  The 2010 Dodd-Frank law is a similar story. It is still creating 
countless new

[[Page 10850]]

rules and its direct compliance costs have already exceeded $7 billion. 
Indeed, according to the Financial Services Roundtable, Dodd-Frank will 
force more than 26,000 employees to comply with the law.
  Other Obama initiatives have failed to pass the Congress, but 
likewise would have expanded the bureaucracy and funneled resources 
from the private sector to the government. These initiatives include 
cap and trade, the deceptively named Employee Free Choice Act, and the 
more recent Paycheck Fairness Act. We need to get back to basics.
  As Congressman Ryan has said, we need to make it easier for people to 
employ their ``right to rise.'' That means leaving more money in the 
private sector and reducing the size of the Washington bureaucracy. We 
can start by stopping tax hikes and bills such as ObamaCare that suck 
needed resources out of the economy and give unaccountable regulators 
immense power.
  Let's consider Brooks' second question. Will we be a culture of 
redistribution or a culture of aspiration? Public policy has a direct 
impact on economic aspiration and economic mobility. America has 
traditionally been an aspirational society with high levels of 
mobility. Although President Obama has made class warfare a central 
campaign tactic, we do not have a class system here in America. We do 
not have an American aristocracy or noble bloodlines. Because of our 
meritocratic system, people in America can and do jump from one income 
level to another throughout their lifetimes, from the one place to 
another. But with unemployment stuck above 8 percent now for 41 
consecutive months, and the Obama administration's preference for 
redistributionist policies, there is real concern that America's 
culture of aspiration may gradually be replaced by a culture of 
redistribution.
  Look at the tax issue. President Obama wants to increase the top 
marginal income tax rates in order to expand the entitlement state and 
promote what he calls greater ``fairness'' in society. But what about 
the economic consequences of taking more money from successful people 
as the economy continues to struggle? The Joint Committee on Taxation 
has told us that allowing the top two marginal income tax rates to rise 
from 33 and 35 percent to 36 and 39.6 percent, respectively, will hit 
53 percent of net positive income and just under 1 million business 
owners overall.
  Raising marginal tax rates is no way to encourage aspiration or job 
creation. It certainly imposes a wet blanket on the kind of risk taking 
that has helped build America. It is merely redistribution under the 
guise of social justice. The President's approach to investment is also 
hostile to aspiration and risk taking. He has endorsed raising the top 
capital gains rate from 15 to 23.8 percent, and he also wants to raise 
the top rate on dividends from 15 to 43.4 percent.
  The so-called ``Buffet tax'' is yet another method of hiking taxes on 
investment. All of these taxes on investment reduce the value of the 
asset by reducing the aftertax return. Our private economy runs on 
business investment, which is highly sensitive to tax rates, especially 
on capital gains and dividends.
  Some of those who prefer higher taxes have argued that if taxes do 
not go up, those in the top brackets will invest and save more, but 
that will not do much for job creation and economic growth. Well, that 
is factually incorrect. Saving does not mean throwing your money under 
a mattress or burying it in your backyard. Anyone who saves money 
either puts it into the bank, where it is lent to someone, often a 
business, so they can hire more people, purchase equipment or invest in 
stocks and bonds, or the money is directly invested in a stock or a 
bond, which provides capital for the same purpose.
  In other words, savings actually puts the money saved to work 
providing capital for someone to do something with it. And that creates 
economic growth. If that increment of income is instead taken from 
those who earned it and spent by the government, the effect on the 
economy will almost always be a net negative. If we want to encourage 
aspiration, innovation, and the job creation that comes with those, is 
it a good idea to raise the capital gains rate by almost 59 percent and 
nearly triple taxes on dividends, even though these profits have 
already been taxed once at the corporate level? The President and some 
Congressional Democrats think so, but I strongly disagree.
  Here is Brooks' third question: Will we be a Nation of takers or a 
Nation of makers? Many have lamented the decline of the manufacturing 
base in America. Although the United States is still the largest 
manufacturing economy in the world, there is no doubt that policies 
from Washington have made it more difficult for manufacturers--and 
those are the economy's foremost makers--to compete in global markets. 
The list of these policies is long. Let me explain a few.
  First, the corporate tax rate. At over 39 percent, our combined 
corporate tax rate is now the highest in the industrialized world. 
Other countries are cutting their corporate tax rates to encourage 
economic growth, but we are doing nothing on the tax front to follow 
their lead and attract more investment to the United States. Is it any 
wonder jobs are moving overseas? If not, whose fault is it, the company 
trying to return a profit to its investors or the government which 
makes it impossible to compete with foreign corporations?
  Look at energy. Manufacturers rely on cheap sources of energy to 
produce products cheaply. Yet President Obama has stood in the way of 
domestic production of energy such as the Keystone XL Pipeline and 
worked tirelessly to punitively raise taxes on the oil and gas 
industries. New regulations on coal-fired powerplants, emissions of 
greenhouse gases, and industrial boilers will also hurt our economy.
  Simply put, domestic makers are being hurt by the President's anti-
energy and proregulatory agenda. Is this fair? Why should Americans pay 
more than the real economic cost of available American energy? And is 
it fair that a few corporations make billions because the government 
mandates that we buy ethanol from them, just to cite one example?
  Now let's turn to labor. Manufacturers are also being burdened by 
union-dictated rules including from the National Labor Relations Board 
such as the ``ambush elections rule'' and new rules on the 
establishment of ``micro unions'' within the workplace.
  With anticompetitive tax, energy, and labor policy, it will be 
increasingly difficult for our country to compete as a Nation of 
makers. These are precisely the kinds of policies that encourage 
employers to move jobs overseas, which hurts American workers and the 
greater economy. And this is required in the name of fairness?
  We are also trending toward being a Nation of ``taking.'' The 
government is the biggest taker. But a majority of Americans now take 
more than they contribute. In tax year 2009, 51 percent of Americans 
paid zero Federal income taxes, according to the Joint Committee on 
Taxation--over half of Americans. And these citizens take much more 
than their follow citizens in government benefits.
  Look at food stamps, for example. As my friend Senator Sessions has 
pointed out, ``food stamp spending has quadrupled since 2001. It has 
doubled just since 2008. A program that began as a benefit for 1 in 50 
Americans is now received by 1 in 7.'' Spending on food stamp welfare 
has increased 100 percent since President Obama took office. Some 80 
percent of all spending in the recently passed farm bill will go toward 
food stamps.
  In total, there are 69 means-tested Federal welfare programs costing 
taxpayers $940 billion every year, including both Federal programs and 
State contributions to those programs. The number of Americans living 
off the wealth of ``makers'' keeps growing and growing. There are 
nearly twice as many government workers today as there are in the 
manufacturing sector, meaning that there are more government workers 
than people making products and paying their salaries. Is that fair?
  As economist Stephen Moore noted, ``This is an almost exact reversal 
of the

[[Page 10851]]

situation in 1960 when there were 15 million workers in manufacturing, 
and 8.7 million collecting a paycheck from the government.''
  The growth of taxpayer-funded dependency is directly connected with 
the growth in the economy. The more we make as a Nation, the more 
wealth we generate and the less people who rely on welfare to survive. 
To get there we need aggressive progrowth policies in place to 
encourage free enterprise and discourage a Nation of taking. It is 
neither fair to the makers nor those who must rely on the government 
for the President to impose policies that reduce economic growth, 
reduce job creation, reduce savings and investment, and reduce 
opportunity and freedom.
  In conclusion, free enterprise and meritocratic policies are 
consistent with our founding principles. As Thomas Jefferson declared 
in his first inaugural address, ``A wise and frugal government . . . 
shall not take from the mouth of labor the bread it has earned.''
  Will America remain the country our Founders envisioned or will we 
become a country where fairness means equal outcomes for all dictated 
by the government? Will we make it easier or harder for people to earn 
their success? And will the American people be happier if allowed to 
pursue their dreams, sometimes failing, sometimes succeeding, or if the 
government tries to force equal economic outcomes? Which is more moral, 
which is more fair, which is more American?
  The PRESIDING OFFICER (Mr. Manchin). The Senator from Georgia.


                           Passthrough Income

  Mr. ISAKSON. Mr. President, if the distinguished whip will remain on 
the floor for a second, as I was passing through listening to his 
speech, I wanted to add some meat on the bones of this business of 
passthrough income and the 940,000 American small businesses that will 
be affected dramatically by the President's announcement today.
  For 22 years, I ran a subchapter S corporation. A subchapter S 
corporation passes through its revenues to its investors who pay it at 
the ordinary income tax rate of an individual. Now, $250,000 is not an 
inordinate amount of a number for somebody to have passed through to 
them in the ownership of a subchapter S corporation.
  I passed the money through and paid them back based on the investment 
they made in the company I ran. When you raise the tax on the 
individual rate, then for a subchapter S corporation and limited 
liability corporation, for a limited partnership, you have two 
decisions to make as the runner of that operation: Do you reduce your 
retained earning investment in your company to maintain the return to 
your investors at the same level or do you continue to wind your 
company down because you cannot distribute at the rate you used to 
distribute?
  It is very important to understand that whichever decision you make 
has a direct negative impact on future hiring in that company. The 
Congressional Research Service estimates 940,000 businesses will be 
affected. But listen to this number. As the leader has said, 53 percent 
of all passthrough income becomes subjected to the higher tax rate--53 
percent, over half. That is American small business. So I want to 
commend the leader, because he has hit the heart of the story. This is 
a tax on what we need the most; that is, reinvestment of earnings to 
hire more people to build more businesses in America. This has the 
exact opposite effect on the middle class that the President described.
  The second thing I will point out is that today America suffers 
economically from the uncertainty of what is going to happen 
postelection. With this proposal, the President has now made a 
recommendation that would extend that uncertainty for another year. The 
last thing American business needs is to have that uncertainty about 
when the next shoe is going to drop in terms of taxation on the middle 
class--or any class.
  I commend the assistant leader for coming to the floor and telling 
the story about American business. We are not here to try to shelter 
the rich. We are here to empower business, to have more employees in 
the United States, and to empower our economy. Again, I commend the 
whip on his remarks on the Senate floor.
  I yield the floor and suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. REID. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.

                          ____________________