TAX RELIEF ACT OF 2005 -- (Senate - November 17, 2005)
BREAK IN TRANSCRIPT
Mr. OBAMA. Mr. President, in the immediate aftermath of Hurricane Katrina, there was an enormous urgency, not only in Congress but all
across the Nation, to respond to the needs of the people of the gulf coast region. Although the sense of urgency appears to have subsided, unfortunately, somewhat in Congress, that sense of urgency remains all too real for the hundreds of thousands of Americans who are still dealing with the loss of jobs, the loss of family, and the loss of homes that too many Hurricane Katrina survivors have suffered.
I am pleased the bill we are debating today includes tax relief for those affected by Hurricanes Katrina, Rita, and Wilma. I am fully supportive of those provisions. I also believe that before we go home for Thanksgiving to enjoy our homes and our families, we need to take some meaningful action to help those who might not have as much to be thankful for.
Nearly 2 months after Hurricane Katrina devastated the people of the gulf coast, we are seeing that our Government is still leaving too many Americans behind. Let me give some examples. This week, FEMA is telling 150,000 evacuees who are currently in hotels that they have to be out of their hotels in 15 days. Imagine, someone has lost their home, and they have 15 days to get out of the shelter they are currently in.
Yesterday, we heard a story on NPR that shelter residents in Iberville, LA, will soon be transitioned to a tent city when the shelter closes. That's right--a tent city.
Thousands in Mississippi are currently living in two-person tents, without running water or adequate heat, because FEMA has not provided the mobile homes they promised.
There are concerns that contractors participating in the gulf coast reconstruction are exploiting immigrant labor. There are stories from Mississippi and Louisiana of immigrant laborers being lured to the gulf by promises of good pay, only to be stiffed their salaries and charged for their temporary housing.
In addition to these stories--we are hearing enormous complaints--and I am getting them in Illinois, despite the fact that I do not represent the region--that local companies are being shut out of the reconstruction bidding process.
According to the Washington Post, companies outside the States most affected by Katrina have received more than 90 percent of the Federal contracts for recovery and reconstruction. Ninety percent of the contracts have gone to companies that do not maintain a place of business in the affected States. This is unacceptable.
The American taxpayers and this Congress provided $62 billion for the reconstruction effort precisely so that the people of the gulf coast region, including some of the most vulnerable citizens of our society, would be left behind no more. Yet right now we have no idea where that money is being spent, how that money is being spent, why it is not being spent on fixing the problems I mentioned and why FEMA is still sitting on nearly $40 billion that has not been spent at all.
Now think about that. The managers of this bill have been struggling with the fiscal constraints we are trying to deal with and we have $40 billion that is not spent and we do not know where the other $20 billion has gone. There is absolutely no accountability to this process at all, no accountability to the taxpayers and no accountability to the people who need this help the most.
I am a freshman in the minority party. I am accustomed sometimes to not knowing what is going on around here, but this is, unfortunately, one of those situations in which I do not get a sense that neither the majority party nor the administration has a clear idea of how our money is being spent.
The Hurricane Katrina contracting process has been rife with problems from the very beginning. Rather than use the reconstruction process to help companies and workers in the regions most affected, we are seeing many of the prime contracts going to the largest contractors in the country. These are the same contractors that received reconstruction contracts in Iraq and with only a few exceptions they are not the folks whose businesses were harmed by the ravages of the storm.
Small businesses are not being given a fair shake to bid on these projects, and it is unclear how many contracts have been provided to small businesses. Meanwhile, minority contractors have been left almost entirely out of the contracting process. The Congressional Black Caucus has proposed good legislation to address some of these problems and I hope the Senate will consider it, if it passes the House.
But let me be clear--this is not simply partisan complaining or political point scoring. At a hearing held on November 3, 2005, the inspector general of the Homeland Security Department, a Bush appointee, said about the reconstruction process: Obligations are being made at a rate of $275 million a day in an unstable environment and in an expedited manner. When you mix it all together, it is a potentially perfect recipe for fraud, waste, and abuse.
The GAO's preliminary observations indicate that the Army Corps of Engineers' $39 million purchase of portable classrooms may have resulted in the Army Corps paying more than necessary. The GAO will continue to monitor the reconstruction contracts.
I am certain that we are going to keep on seeing these stories surfacing almost daily about how taxpayer money is being wasted, while the people who are supposed to be helped are not getting what they need.
One of the most egregious examples of this potential waste, fraud, and abuse is in the Government's refusal to rebid $400 million worth of no-bid contracts that they already promised they would rebid. Immediately following Hurricane Katrina, FEMA awarded four $100 million no-bid contracts for reconstruction efforts. Acting FEMA Under Secretary Paulison made the following statement to the Senate Homeland Security and Governmental Affairs Committee on October 6, 2005: I have been a public servant for a long time, and I have never been a fan of no-bid contracts. Sometimes you have to do them because of the expediency of getting things done. I can assure you, we are going to look at all of these contracts very carefully. All of those no-bid contracts, we are going to go back and rebid.
That is what Under Secretary Paulison said before the Senate Homeland Security and Governmental Affairs Committee a month ago.
These contracts have not been rebid. In fact, FEMA officials testified on November 11, just a month after the statement by Under Secretary Paulison, that they would not rebid the contracts until February. Here is the only problem: By February, the contracts will have been completed.
Today, I am offering a sense-of-the-Senate amendment calling on FEMA to immediately rebid these contracts in a competitive fashion before nearly $400 million of taxpayer dollars are spent in an inefficient and potentially abusive manner.
I know this amendment only gets at one element of a multilayer problem, but I firmly believe this body must take a stand to ensure that these Federal agencies that have been entrusted with such a monumental job and so many taxpayer dollars stick to their promises.
I am pleased my colleague from Oklahoma, Senator Coburn, has joined me in offering this amendment.
Senator Coburn and I have also offered a bill that establishes a chief financial officer to oversee the use of Hurricane Katrina recovery funds so that we do not have further problems of this sort. That bill was voted out of the Senate Homeland Security and Governmental Affairs Committee and is awaiting a vote. Unfortunately, that bill so far has not seen the light of this floor, so I am forced to offer this amendment today to provide some accountability and transparency into this contracting process.
I hope my colleagues will support this amendment. I appreciate the time and the attention of Chairman Grassley and Ranking Member Baucus.
Before I yield the floor, I ask unanimous consent to call up a pending amendment that has no number yet, submitted by myself and Senator Kerry, filed earlier today by Senator Kerry, which provides relief from the marriage penalty and from the military service penalty faced by many low-income taxpayers who receive the low-income tax credit.
BREAK IN TRANSCRIPT
Mr. OBAMA. Mr. President, I rise today to speak in favor of the amendment offered by Senator Feingold. I am pleased to be a cosponsor of the amendment.
In recent years, the philosophy in Washington has been that you can spend without consequence or sacrifice. That we can fight a war in Iraq and a war on terror, protect our homeland, provide our citizens with Medicare and Social Security, and maintain our domestic priorities, all while cutting taxes for the wealthy and funding every local project there is.
If you are wondering how Congress pays for all this, it doesn't. Instead, billions of dollars are borrowed from other countries and put on a credit card for our children to pay off. Yet, when it comes time to pay these bills, no one can seem to agree on any tax cuts to defer or any programs to cut.
Every family knows that it is one thing to use a credit card; it is another thing to keep spending money you don't have. You have to pay as you go, which is a rule most Americans live by.
Washington once did too, until the White House and my colleagues on the other side of the aisle abandoned it to push through the President's tax breaks.
This attempt to pass $60 billion in tax breaks despite record breaking deficits is just the latest example of the fiscal irresponsibility in this city.
The amendment offered by Senator Feingold is about restoring responsible budgeting. Previously, PAYGO rules applied equally to increases in mandatory spending and tax cuts.
Unfortunately, the rules were changed, and now the requirements of budget discipline apply to only half of the budget--the spending part.
The problem is, that there is no such thing as half a budget. Budget discipline requires enforcing control over both sides of the ledger.
The original PAYGO rules were abandoned to provide for a series of unfunded tax breaks. In order to pay for these tax breaks, the Government had to borrow money from countries like Japan and China.
And we borrowed from the Social Security Trust Fund. In the process, our national debt shot up to $8 trillion, and it is still rising. Last year, for example, our national commitments exceeded our national resources by more than $550 billion.
Americans deserve better financial leadership.
Washington could learn a lot from the American people about fiscal responsibility. The people I talk to in Illinois are not fooled by what's going on. They know what is happening with higher deficits and reduced levels of Government service.
They understand that, in this life, you get what you pay for and if you don't pay for it today, it will cost you more tomorrow.
The people I have met with know that if you need to spend more money on something, you also need to make more money, and if your income falls, your spending must fall, too. This is the essence of the PAYGO rules we are trying to reinstate today. Changes in spending must be offset by changes in revenue, and vice versa.
The people I talk to understand that when you have massive costs coming down the road, you need to prepare for them. There is no excuse for ignoring the financial consequences of foreseeable expenses--whether it is the rising costs of health care, the retirement of the baby boom generation, or the growing inequality of wealth in our society.
So when you are already deep in debt--as the Federal Government is now--and you are facing a mountain of debt in the future, it is just not the right time to be giving out $60 billion in tax cuts, even if many of these cuts have merit.
And if you are intent on giving out these tax cuts, let's find a way to pay for them.
And that is why it is so important that we reinstate PAYGO in a way that meaningfully enforces the budget discipline that both sides of the aisle need in order to honestly tackle our short-term and long-term fiscal challenges.
It is time for some adult supervision to return to the budgeting process. PAYGO provides a necessary tool at a necessary time.
I urge my colleagues to support this amendment.
BREAK IN TRANSCRIPT
Mr. OBAMA. Mr. President, amendment No. 2605 deals with Hurricane Katrina contracting. This sense-of-the-Senate amendment I offer with Senators Coburn, Lautenberg, Ensign, and Johnson is a simple effort to enforce some accountability and transparency into the contracting process.
FEMA needs to reopen its no-bid contracts. FEMA representatives testified before Senate committees they would do so. They have now backed away from that. That is unacceptable.
I hope my colleagues will support this amendment.
BREAK IN TRANSCRIPT
Mr. OBAMA. Mr. President, I rise to speak in favor of the amendment I am offering with Senator Kerry to make two simple yet critical improvements to the earned income credit and to reduce the Federal deficit. Our amendment provides relief from the marriage penalty and from the military service penalty faced by many low-income taxpayers.
The EITC is one of the most effective programs to lift working Americans out of poverty. It rewards work, reduces tax burdens, and supplement wages that help a family to be self-sufficient.
It is an idea that Republicans and Democrats can agree on because it works. Study after study has demonstrated that the EITC increases employment among single mothers and reduces reliance on cash welfare assistance. The EITC lifts millions of children and families out of poverty each year. Census data show that in 2003, the poverty rate among children would have been nearly 25 percent higher without the EITC.
Established by the Ford administration in 1975 and celebrated by Ronald Reagan, George H.W. Bush, and Bill Clinton, this is a program that has long enjoyed bipartisan support. President Reagan characterized the EITC as one of the best ``pro-family'' and ``anti-poverty'' programs.
Unfortunately, as currently structured, the EITC has a marriage penalty. Working parents receive less tax relief if they marry than if they stay single. If we want to reduce poverty and improve the life chances of poor children, the last thing we should do is penalize marriage. Children with married parents generally have much lower rates of poverty and better educational outcomes. Fixing the marriage penalty is a matter of common sense.
It is also something that this body agreed on in the 2001 tax bill. Unfortunately, unlike the marriage penalty relief for middle-income taxpayers, which was accelerated in 2003, full relief for the low-income marriage penalty was delayed until 2008.
Our amendment provides full marriage penalty relief in 2006 rather than requiring married taxpayers to endure further delay.
Of all the tax breaks that Congress considers important, this should be among the first deserving action. It is relatively inexpensive. It will have the strongest economic stimulus effect. It will improve the fairness of the Tax Code. The second fix proposed by this amendment is to ensure that the families of our men and women in combat are not deprived of their tax benefits. In the midst of war, are we really going to tell our troops that their combat pay doesn't count as earned income for purposes of calculating tax credits?
That is hard to image. Our amendment extends the tax protection for combat pay through 2007. Our troops not only earn their combat pay, but they have also earned our respect. They deserve our commitment of support.
The combined cost of these important fixes is about 2 percent of the cost of the tax reconciliation package and provides relief to our most needy taxpayers. Nevertheless, it is important that even this tax cut be deficit neutral. Congress has to make choices and set priorities and cannot get away with new spending or tax cuts that are not paid for. American families expect this country to pay for its priorities.
To pay for relief from the marriage penalty and relief from the military service penalty, this amendment closes a tax loophole related to foreign entities by changing sale-in and lease-out provisions. This sensible change raises more than the cost of the important EITC fixes.
Unlike the tax package as a whole, this amendment does not worsen the deficit, and it does not shift the burden from those in our society fortunate to have the most to those who have the least.
Our amendment is fair. It is fiscally responsible. It is an example of the sort of tax policy adjustments that we ought to be focused on in reconciliation.
I urge my colleagues to support fiscally responsible relief of the marriage penalty and military service penalty for low-income families, and I ask you to support this amendment.