Omnibus and Tax Extenders Legislation
Floor Speech
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Mr. WARNER. Mr. President, I know my friend from West Virginia and I compliment the Senator from Maine.
Before these two great former Governors came to this body, there were many times I would stand up and rail on these issues. It is great to have other folks who balanced budgets and made hard choices in their careers. I welcome the opportunity to share a couple of my thoughts.
I will not repeat all of the comments Senator Manchin made. I concur with the vast majority of them. The data is overwhelming. I know the Presiding Officer has also taken on this issue. There are some good things, so let me start with some of the good.
As someone who feared that at some point this tax extender package might exceed $800 billion or get close to $900 billion, I think it is an interesting place when folks are celebrating the fact that it is only $680 billion of unpaid-fors. In many ways, there is a lot to commend in the policy choices made by both sides. On the Democratic side, making permanent the earned-income tax credit is, frankly, a policy that was initiated by a Republican President and called the best anti-poverty program around. Expanding and making that permanent is a step in the right direction. The child tax credit is a policy raised by both sides, and making that permanent and expanding it makes an enormous amount of sense.
I know, as well, that from a business standpoint, one of the challenges businesses face in an ever more competitive world is lack of predictability. So for certain areas, such as the R&D tax credit and 179 expensing, it is appropriate and timely that we make those provisions permanent.
I know there may be differences, particularly even on my side. The bonus depreciation provisions are nice to have, but I am not sure I know any business that makes that decision on capital investment based upon bonus depreciation, and the fact that it is winding down over 5 years is a great step in the right direction.
I have some concerns about some of the international tax provisions, not because of the merits of the system but as someone who believes strongly that to keep America competitive, we need international tax reform. If we take things off the table now, the ability to bring those back to get the kind of comprehensive tax reform we need in the long haul makes those challenges more difficult.
Let me again build on Senator Manchin's comments. I want to be respectful of my colleagues' time and make this brief. As Senator Manchin said, anybody in this body that tries to say this is all the Republicans' fault or it is all the Democrats' fault doesn't know their history. There are no clean hands.
As Senator Manchin mentioned, the good news is we are actually at a relatively low rate of annual deficit. The challenge is that, because of unthoughtful behavior by those of us in this Chamber and many that preceded us, now the aggregate debt our Nation faces is $18.5 trillion, and it will go up.
I talked to a group of high school students this morning and said: The biggest challenge you are going to inherit is this massive amount of debt. If we are not careful, within a few years the Federal Government of the United States will be a social insurance party and an army and nothing else.
Yesterday Senator Cantwell spoke to this. I know the Federal Reserve appropriately started to inch up interest rates. With this aggregate debt--by the way, we just added $680 billion more to this debt over the next 10 years through these unpaid-for tax extenders--interest rates go up one percentage point. At 100 basis points, that is more than $140 billion. We can have $140, $150, $180, depending on how they collect it. But let's take the conservative, $140 billion a year of additional spending off the top before we spend on any other priority. That is more than this government spends on the Department of Homeland Security and on the Department of Education combined.
So at some point we do have to say ``no mas.'' At some point--and I hope it will be starting next year--we will step back and look at this holistically. Even though there are good policies in this extender package, the overall aggregate is a challenge.
Two last points. We worked on a transportation bill in this body. While I supported the policy goals when it was here on the stand-alone, I voted against it because the pay-fors were a hodgepodge that basically had nothing to do with transportation. It is remarkable to me as a businessman--not as a Senator, but as a business guy. You look at your balance sheet on your expenditure side and your revenue side. They are both spending. Purely from a government standpoint, you are spending on the Tax Code or you are spending programmatically. When we spend on investments like transportation, we have to pay for them. When we spend in the Tax Code, suddenly there is a free pass that these items never have to be paid for. Yet going forward, when we look at our budget next year, we will have less ability because the revenues have been decreased over a 10-year period of $680 billion. I know my colleagues will speak to these issues.
I want to make a final point. I am not sure of my colleagues' stand on this, but it is of grave concern to me. I supported the Affordable Care Act. I think there are good things in it; I think there are problems that need to be fixed. But one of the components of the Affordable Care Act that even its greatest critics point out is that it actually was paid for. Some of those pay-fors, we are paying for. They were policy choices; one in particular was the so-called Cadillac tax. The remarkable thing about the Cadillac tax was that was the one point of agreement--whether you are an economist on the left or the right-- that not only would it generate revenues for the so-called ACA, but it would also be one of the most powerful reform packages to hold the overall cost of health care down. Perhaps due to an election year rush and because the pressure is on both sides, Congress is taking its proverbial punt. Rather than fixing the Cadillac tax or rather than fixing the medical device tax, we are delaying the implementation of both of these revenue sources.
I will make a wager now with any Senator in this body that while the promise of this delay is only for 2 years, 2 years from now there will be another reason to delay additionally. In doing so, what we do is undermine the financial legs as well as some of the policy legs of the ACA, and in a State such as mine where we have not expanded Medicaid, we provide fodder to those who want to delay the expansion of Medicaid because they are afraid that the Federal Government will not honor its commitments. By delaying the implementation of these pay-fors, unfortunately, I think we strengthen their argument.
I thank both of my colleagues. They are both dear friends--the Senator from West Virginia and the Senator from Maine. We have sometimes been lonely voices in our caucuses on these issues.
With that, I want to turn this over to my friend, the Senator from Maine--who, like the Senator from West Virginia, has balanced budgets, has made tough choices--to speak on the issue of the tax extenders and the omnibus, Mr. King.
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Mr. WARNER. It decreases our revenue line going forward. It does take some of the things, particularly in international tax reform, off the table. There are arguments that some of these being made permanent may make it easier. I will give you an example. The R&D tax credit is something that most of us on both sides of the aisle support. Here is the kind of only-in-Washington math that takes place. We are making permanent the R&D tax credit and not paying for it. Yet, if next year we decided to cut back on the R&D tax credit, that would be viewed as additional revenue to the bottom line, even though the cost of it has never been built in. Again, people who maybe are watching might say: I don't understand that accounting.
Let me assure you: If you questioning that accounting, then welcome to Washington, DC, and Federal Government accounting and budget lines.
I think this will make it more challenging. There are some benefits, as I said earlier--predictability to our business community. I would echo what the Senator from Maine has said. At the end of the day, we are simply transferring the obligations from our responsibility to that of our kids and grandkids. Long term, that is not going to give them the same kind of country that we all inherited.
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