Waiving Points of Order Against Conference Report on H.R. 4297, Tax Increase Prevention and Reconciliation Act of 2005
WAIVING POINTS OF ORDER AGAINST CONFERENCE REPORT ON H.R. 4297, TAX INCREASE PREVENTION AND RECONCILIATION ACT OF 2005 -- (House of Representatives - May 10, 2006)
Mr. DREIER. Mr. Speaker, I have to say that my friend in his opening remarks said that he did not question our motives, and I appreciate the fact he did not question our motives. He basically said he thought we were insane. He questioned our sanity. I understand that means slightly insane, but the fact is my friends on the other side of the aisle, Mr. Speaker, appear to be fearless in the face of the facts because the facts clearly are that no matter how you try to obfuscate it we are enjoying tremendous economic growth because of the tax cuts.
I am a proud Republican. I am a proud Republican, and by virtue of being a Republican I was born to cut taxes. I am proud of the fact that I was born to cut taxes because I believe that not only should people be able to keep more of their own hard-earned money, but I believe that cutting taxes is what generates the kind of economic growth that will allow us to deal with the extraordinarily pressing problems that my friend from Fort Lauderdale mentioned.
It is clear we want to do everything we can to help the underclass, the poor, those struggling to get onto the first rung of the economic ladder. There is no doubt about that. I do not believe we do anything at all to help those who are struggling by trying to penalize the job creators.
The founder of my party, Abraham Lincoln, said it best, although I guess he didn't actually say it, but he is always credited with saying that you can't pull up the wage earner by pulling down the wage payer.
So the standard old argument of class warfare, us versus them, is a tired, worn and failed argument. I believe we need to do everything we can to again look at the facts. The facts are that the first quarter of this year saw a 4.8 percent gross domestic product growth. Virtually unprecedented, very strong, bold, dynamic growth. We are going to see the Federal Reserve have a 250 basis point increase in interest rates. Why? Because they are making sure we do not go into inflation. I am not a proponent of seeing the 16th consecutive increase in rates, but the fact is we do have a growing economy.
As we look at those who are struggling to get onto the first rung of the economic ladder, it is very important to note that they are individuals who frankly are enjoying a higher standard of living than has been the case in the past.
Last night in the Rules Committee, Mr. Hastings and I engaged in a discussion on homeownership and the savings rate. We know it is regularly discussed that Americans are not huge savers. We do not have as high a savings rate as some other countries do, but when you look at the level of homeownership in this country, the highest level of minority homeownership that this Nation has ever seen, in excess of 50 percent of those in the minority community own their homes. On a nationwide basis, it is nearly 70 percent of the American people own their own homes. That is forced savings. As people pay down their mortgages, they are seeing their asset, their savings increased. Obviously as we see the increase in value of property, we are also seeing those savings increased. So that is taking place today.
And to the argument, Mr. Speaker, of this lack of revenues to the Treasury, as I said to my friend just a few minutes ago, during the month of April we actually saw a budget surplus. We saw a budget surplus for the month of April that has come about because of the economic growth that was put into place through these tax cuts.
Now we want to encourage investment. We hear Republicans and Democrats alike talk about the need to encourage investment. Frankly, one of the reasons that this measure is so critically important is that we look at the problem of uncertainty out there.
The reduction of the rate on capital gains and dividends to 15 percent is, if we do nothing, set to expire in 2008. What does that mean? It means there will be a tax increase that clearly will slow the economy if we do nothing. So what is it that we have found by making sure that we keep that rate low and extending it for at least 2 years? I and a majority of this House would like to make it permanent. Unfortunately, because of rules in the other body, we have not been able to make it permanent. But we need to make it permanent and at least extend it for these 2 years. Why? So the job creators out there can plan and save for the future, so they can make long-term investments that will create more jobs and opportunities for the American worker.
Mr. Speaker, if you look at what has happened, again we have seen an increase in the flow of revenues to the Treasury because of what it is that we have done here.
My friend raised concern about middle income Americans. That is one of the reasons that we addressed the so-called alternative minimum tax. The alternative minimum tax, because it was not indexed, is a tax that has not just hit the rich, but has hit middle income wage earners. That is exactly why we will be providing relief to millions and millions of middle income workers in this country with the AMT provisions included in this bill.
I think it is also important for us to note that there are some real specifics we can point to that we have seen by virtue of these tax cuts that were put into place.
In the early part of this decade, time and time again we heard our friends on the other side of the aisle say if you cut taxes the economy is going to go right into the tank and we will see the deficit go sky high when in fact the opposite has been the case in both instances. Between 2002 and 2004 we were able to see a 79 percent increase.
Mr. HASTINGS of Florida. Mr. Speaker, will the gentleman yield?
Mr. DREIER. I yield to the gentleman from Florida.
Mr. HASTINGS of Florida. When you speak of the middle class, what is the income of the middle class?
Mr. DREIER. The income of the middle class, that is people earning $40,000 to $70,000 a year.
Mr. HASTINGS of Florida. If the chairman will continue to yield, in the calculations under the AMT as he proposes they will get between $9 and $14. That person in the middle class, how in the world is that helping them?
Mr. DREIER. Mr. Speaker, I thank the gentleman for his question. It is very clear that we are providing relief to middle income wage earners who would get no relief at all under the AMT provisions that our colleagues were very supportive of putting into effect in the past.
We are providing relief because we are seeing their standard of living increase. Obviously we have a lot of problems. Gasoline prices, we want to do everything we can to help us attain self-sufficiency by increasing refinery capacity, dealing with boutique fuels and other problems that are out there. But we have seen the standard of living for the American people improve dramatically because of these tax cuts.
As I was saying, we have seen a 79 percent increase in the flow of revenues to the Federal Treasury between 2002 and 2004 because of reducing that top rate on capital gains to 15 percent. Similarly, from the dividend tax relief we have seen a 35 percent increase.
Again, I would harken back to the arguments that were made in the early part of this decade when President Bush came forward and this Republican supported the notion of reducing taxes to increase economic growth, and the argument that was made was it would ruin us.
We know we have tremendous costs out there. We have costs like dealing with the war, and thank God we are seeing this week under Mr. Malicki's government a new cabinet go into place in Iraq. We are seeing progress there.
Similarly, if you look at the fact that we have tremendous costs related to Hurricane Katrina, unanticipated. We do have responsibilities there. And yes, as my friend from Fort Lauderdale said, it is essential that we do all we can to provide assistance to those who are truly in need and to help them get onto the economic ladder. That is why when you have a 4.7 percent unemployment rate, virtually full employment in this country, we are doing all that we can to find more opportunities, and that is what this measure is all about, and generating the kind of growth that will allow us to have the resources to meet these very pressing needs is essential as well.
If you don't vote for this bill, you are voting for a tax increase, you are voting for a tax increase on those middle income wage earners who are getting relief from AMT and on the job creators out there who are successful.
So I believe we have a win/win. I hope very much we will see Democrats join with Republicans to keep our economy growing, help us meet the pressing needs that are out there, and make sure we can have the kind of success for which the United States of America is known.
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Mr. DREIER. Mr. Speaker, my friend from Pasco understands this very well, and he has done a great job of providing leadership on these economic growth issues.
Mr. Speaker, my friend from Rochester and my friend from Fort Lauderdale are two people for whom I have the highest regard. I really do. I enjoy working with them on the Rules Committee, and I just had the thrill of participating in the Canada-U.S. Interparliamentary Conference with my friend from Rochester, dealing with areas of concern as it relates to our neighbor to the north.
But I have to say, as I listen to the arguments that are being propounded by both of my friends from the other side of the aisle, they represent little more than what I describe as the ideological baggage of the past.
Now, my friend from Rochester has just talked about the 1980s. It is true that we saw a tremendous increase in spending during the 1980s, a lot of increased spending in the area of national defense. And we saw the demise of the Soviet Union. The Cold War came to an end.
During the 1980s, Mr. Speaker, because of the 1981 Economic Recovery Tax Act, I think I am the only Member on the floor now who was here at that time, and I am very proud to have voted for that. We put into place across-the-board tax rate reductions, marginal rate reductions. And Mr. Speaker, what happened? We saw a doubling of the flow of revenues to the Federal Treasury during the 1980s.
People continue to try and rewrite the history of the 1980s, somehow implying that we saw the U.S. economy go right into the tank. We saw a surge in economic growth and a doubling in that flow of revenues to the Treasury. And so I think that this notion of class warfare, us versus them, is a tired, old, failed one.
Now, my friend just referred to the tax reduction that an American who is earning $40,000 will get juxtaposed to someone who is earning hundreds of thousands of dollars a year, who will get a $41,000 tax reduction. And he referred to the fact that someone will earn $40,000 and get a very small tax cut, and that person in the upper bracket will get a $41,000 tax cut.
I mean, I would ask my friend, does he advocate that the person earning $40,000 a year get a $41,000 tax cut?
Mr. HASTINGS of Florida. Mr. Speaker, will the gentleman yield?
Mr. DREIER. I yield to the gentleman from Florida.
Mr. HASTINGS of Florida. Absolutely not.
Mr. DREIER. The point that I am making, Mr. Speaker, is the fact that if you look at someone who is paying taxes, you look at what their tax liability is, and again I get to the point that we raise that we have seen the American people who are earning in excess of $200,000 a year, Mr. Speaker, having a tax payment to the Federal Treasury that is twice that of all other taxpayers, twice that of all other taxpayers, the rate of growth of that.
And so I think that we need to realize it is the job creators who pay taxes and it is the job creators who, with tax relief, will be able to create more opportunity in this country to make sure that those who are less fortunate, those about whom my friend from Ft. Lauderdale and I are concerned.
And to somehow imply that there is not concern on this side of the aisle for those who are trying to have opportunity in this country is a preposterous argument. We care even more, I would argue, because we are the ones who are guaranteeing everything possible to provide them with opportunity will be met.
And so I say, Mr. Speaker, that we are in a position where this measure is going to allow investors to plan and save. It will provide a little certainty. And we need to remember that more than half of the American people, 91 million Americans, are today members of the investment class. One of the things we need to note is that many people who are earning $40-, $50-, $60,000 a year, in fact, the income for the median shareholder in this country is $65,000 a year, not considered to be very rich, but they will be the beneficiaries of keeping this capital gains rate and the dividend rate at 15 percent.
And so that is why, Mr. Speaker, I believe that this is a measure which is going to be beneficial all the way across the board.
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Mr. DREIER. I thank my friend for yielding. And my friend has made several very important points, Mr. Speaker. And let me just go back to his earlier argument about the Clinton years.
The gentleman is absolutely right. We saw a surge in economic growth during the Clinton Presidency. It was economic growth that actually began before he became President. Virtually every economist has acknowledged that economic growth.
Mr. HASTINGS of Florida. Reclaiming my time to ask a question. Are you saying that those tax cuts didn't help this country?
Mr. DREIER. The tax cuts, yes. The tax increases did not help the country.
Mr. HASTINGS of Florida. And are you saying that those tax increases that you voted against and I voted for did not cause this economy to boom?
If we use that argument, my mom used to say something to me that was really interesting. She said, All you all do is go up there and say that the other people did it if it is bad, and if it is good, you did it.
If you use the doctrine of relating back, then if Bush didn't cause the deficit and Clinton didn't cause the surplus, and former President Bush didn't cause anything, and Reagan caused the economy to take off, by that standard, George Washington did it. My goodness gracious, man. The 1990s were real.
Mr. DREIER. If the gentleman would yield, I was just building my argument to talk about the great policies of President Clinton.
Mr. HASTINGS of Florida. I yield to the chairman.
Mr. DREIER. I thank my friend for yielding.
And, Mr. Speaker, what I was arguing is the fact that the economic growth that we saw during the 1990s began before Bill Clinton became President. Virtually every economist has acknowledged that.
Now, in 1993, we saw the largest tax increase at that time in our Nation's history. It was put into place, and I voted against it. I said, I am a Republican and I was born to cut taxes. I am proud of the fact that I voted against that tax increase.
I will never forget, late one night, Bill Clinton, in giving a speech to business leaders in Houston, Texas, said that he believed that that tax increase in 1993 was too much. He said he raised taxes too much. He later regretted that. He said that his mother told him he shouldn't, when he was tired, give a speech like that.
But the fact is I believe the truth came out in that speech that he delivered in 1994. I don't remember exactly when it was. But the tax increase went into effect in 1993.
Then we need to look at what happened in the 1990s. A year after the largest tax increase was put into place by President Clinton, what happened? For the first time in four decades the body that, according to article I, section 7, of the U.S. Constitution has the responsibility for taxing and spending changed hands. And what happened? In 1994, we won our majority, 12 years ago. And we immediately began our quest to cut taxes.
Mr. HASTINGS of Florida. Reclaiming my time, Mr. Chairman.
Mr. DREIER. It was a joint effort with President Clinton is what I am saying.
Mr. HASTINGS of Florida. A joint effort speaking well for divided government, and the precursor to what is coming in November when doubtless we have divided government again.
Mr. DREIER. God forbid.
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