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Emergency Supplemental Appropriations for Iraq and Afghanistan Security and Reconstruction, 2004

By:
Date:
Location: Washington, DC

CONGRESSIONAL RECORD
SENATE
PAGE S12311
Oct. 2, 2003

Emergency Supplemental Appropriations for Iraq and Afghanistan Security and Reconstruction, 2004

Mr. KERRY. Mr. President, will the Senator yield for a question?

Mr. BENNETT. I am happy to yield to the Senator.

Mr. KERRY. Isn't it accurate that because it was a subchapter S corporation all of the deductions also flowed through to you? Isn't it accurate? All the deductions flowed through you?

Mr. BENNETT. Of course. The net amount I reported after the deductions was $1 million. So as far as the IRS was concerned, my income was $1.14 million. Under the Tax Code, the deductions to which the Senator from Delaware referred that go to people in these categories were all wiped out by the $1 million. All of my credits, all of my
deductions—everything was wiped out.

If we were to take the numbers the Senator from Delaware was talking about, and say, OK, you have someone with a $400,000 gross income, and that means his after-tax income is $312,000 because of the standard deduction, if he has a chunk of 401-K income on this from either an S corporation or an LLC corporation, or a partnership, all of those standard deductions go away very quickly as the number goes up.

The point of this is not to argue one way or the other about how the tax structure is; it is to say the Senator is inadvertently targeting a large number of small businesses where profits and growth money are being reported on individual returns rather than through corporate returns. The S corporations were made substantially worse after the Reagan years because of the summit at Andrews Air Force Base, and then what was done with the Clinton tax increases.

There are not as many people using the S corporations as there used to be because the advantage is not as great. But there is a still a very substantial amount of small business income that will be hit by the Senator's amendment. We are not just talking about Donald Trump and Jennifer Lopez. We are not talking about Michael Jordan. We are talking about people who are building businesses for whom $400,000 a year for the income of the business is a demonstration of a struggle. It is not a demonstration of the kind of opulence you find at the Delaware country club. It is survival. We didn't get to the point with the business I have described where we felt comfortable in cash flow until our earnings were well into the $10 million, $12 million, or $15 million area because of the demand for capital.

Mr. BIDEN. Mr. President, will the Senator yield?

Mr. BENNETT. I would be happy to.

Mr. BIDEN. We are trying to get this agreement. As a practical matter, this will come out of my time. I think the Senator has made his point.

Let me make a macroeconomic point and let some of my other colleagues respond as well. With regard to the small businesses, small business owners can still happen to be among the top 1 percent income earners. Only 2 percent of the small business owners fall into that bracket, a number which includes a lot of people who have passive participation with investment income in small business. These are not hands-on, mom-and-pop businesses. If you look at the sole proprietorships, those of hands-on owners, less than 2 percent are paying the 35 percent bracket. Therefore, 98 percent of the small business owners will not be affected by this proposal, as I understand from staff.

I will get back to this in our discussion. But I want to yield to my friend from Massachusetts because we are about to enter into a time agreement. I didn't realize we were running the time before the agreement is made. At any rate, I will reserve the remainder of the time while we are trying to work this out.

To respond to my friend, I understand his point. The bottom line is no matter how you cut it, this is affecting an incredibly small number of people for an incredibly important undertaking and the alternatives are worse by a long shot, in my view, that any negative impact in any sector in any way would come from this amendment.

[Page S12321]

I yield the floor.

Mr. REID. Madam President, we are moments away from offering a unanimous consent request. I don't know who is going to get the floor next, but whoever gets the floor, I ask if Senators will allow an interruption for the unanimous consent request. It should be coming in a matter of a couple of minutes.

The PRESIDING OFFICER. The Senator from Massachusetts.

Mr. KERRY. Madam President, thank you very much. I will proceed until such time as the unanimous consent request is put into effect.

I listened carefully to the comments of the Senator from Delaware, and obviously the Senator from Utah. I think the comments of the Senator from Utah do not really change the equation at all because the real question here is, Why is America being asked to pay this $87 billion? What is the context within which the average citizen of America, the average taxpayer is now being told, Whoops, we have a whole different situation here. We have to pay $87 billion in addition to the $79 billion Americans have already invested in the war to date.

Most Americans think this is sort of the bill for the war. It is not. We are well over $160 billion or $170 billion already once you add the $87 billion, and most people believe it is going to go beyond that.

The question is, What is the fair distribution of this burden in the overall context of our economy to the average taxpayer of
America? Is it right for President Bush and for the Republicans to be asking America to give an enormous tax cut to the wealthiest of Americans and spend the $87 billion, which also adds to the deficit for this year?

No one will come to the Senate and say the $500 billion deficit we are facing next year is going to be wiped out by growth in the economy when we are not even adding jobs in the growth to the economy today.

I yield to the Senator.

BREAK IN TRANSCRIPT

Mr. KERRY. The question we ought to be asking is, What is the right thing to do that is in keeping with the values of America? We have the worst economy we have had, the worst jobs economy since Herbert Hoover was President of the United States; 3.1 million Americans have lost their jobs, 2.7 million manufacturing jobs have been lost. All across America, people are watching outsourcing taking place as jobs are going to China, India, and other countries. They are not being replaced. We just picked up the newspapers a couple of days ago and saw that 2 million Americans have lost their health insurance retirement, it has been blown away for countless numbers of Americans. Health care has been lost for 2 million Americans. Governors across the country are raising taxes and cutting services. Infrastructure investments are being deferred.

What the Republicans and the President are asking is that we take another $87 billion and still keep a tax cut for the wealthiest people in our country who are doing the best, who are already the most comfortable, who are perfectly prepared to do their part to sacrifice, to contribute, not to grow the deficit—indeed, to relieve some of the financial pressure of this country, literally, to make things more fair in America.

What this is about is called fundamental fairness. Fairness. It is not about class warfare. This is not about redistribution. Is it fair in America to suggest that you can add to the deficit—which it will this year—to suggest all of the figures of this administration, which have been wrong, can be wiped away on the backs of the average American so that the wealthiest people in the country can keep their tax cut? That is the question. It is a pretty simple fundamental question.

If others want to come to the Senate and defend the notion, it is absolutely OK to be misled, to have major players in the administration tell us, it is only going to cost $50 billion; it will come out of the Iraqi oil; don't worry about it. And every one of those promises have been wiped away and left in tatters across this country.

Americans are angry about this. What is the Senate going to do? Stand here and defend the proposition that America in its current fiscal condition can support a tax cut for the wealthiest Americans at the expense of common sense and fairness? That is what this vote is about. That is what this choice is about.

It also is about the fundamental realities of how we got here. Last spring, our fighting men and women swept across the battlefields of Iraq. There is not anyone in the Senate who is not proud of what they accomplished in military terms.
Thanks to their courage and their skills, Saddam Hussein and his henchmen are scattered and that brutal regime is no more.
But in the aftermath of that military victory, just as many Members predicted, in the absence of building a coalition, in the absence of doing the diplomacy, in the absence of showing patience and maturity, in the absence of living up to our highest values and standards about how we take a nation to war, we are now in danger of losing the peace.

The clearest symbol of that danger is the target on the backs of young American men and women in Iraq. Today, soldiers in Baghdad fear getting shot simply going out and getting a drink of water. A squad at a checkpoint has to worry whether a station wagon coming at them is a mobile bomb. And troops moving in convoy take RPGs and improvised explosive devices, and we pick up the papers each day and hear the news about three, two, one more young American life lost because we failed to plan to win the peace adequately, we failed to put in place the greatest protection possible for these troops, which is what they are owed.

Now we know Iraq's infrastructure needs to be rebuilt and we face the challenge of forging a new government and giving it legitimacy under circumstances that were entirely predictable and entirely ignored by this administration. We were told by this administration, in their confidence—and, may I add, in their arrogance—that the Iraqis would see us as liberators.

They see us as occupiers—again, something many predicted absent the effort to try to globalize our effort. They see us as a foreign power ruling over their country, preventing self-determination, not providing it. We were told to expect elections and quick transition to self-governance. But now we know those elections may be many months away at best.

None of this was planned or predicted by the President or his war counsel. Eager to rush to war, the administration played down or, worse, ignored the likelihood of resistance. It lowballed the number of forces that would be needed to seize the alleged WMD sites, for which the war was fought, to protect the infrastructure, and underestimated the magnitude of the reconstruction task and the ease with which oil would flow for rebuilding. It refused to tell the American people upfront the long-term costs of winning the peace.

I remember the distinguished former President pro tempore and leader of the Democrats, the Senator from West Virginia, asking that question penetratingly, repeatedly. Yet those figures given have proven to be false or completely underballed. It refused to tell the American people those long-term costs, and it refused to do the work, to ask the international community to join us in this effort.

[Page S12322]

It was bad enough to go it alone in the war, but it is inexcusable and incomprehensible that we choose to go it alone in the peace. One of the reasons we are facing $87 billion is that the administration has stiff-armed the United Nations and has not been willing to bring other nations to this cause through the deftness of their diplomacy, the skill of their diplomacy.

Last year, President Bush had three decisive opportunities to reduce this $87 billion bill. That first opportunity came when we authorized force. That authorization sent a strong signal about the intentions of the Congress to be united in holding Saddam Hussein accountable. I thought, and still believe, that was the right thing to do. It was appropriate for the United States to help stand up at the United Nations and hold those resolutions accountable. It set the stage for the U.N. resolution that finally led Saddam Hussein to let the weapons inspectors back into Iraq. That was correct.

When I voted to give that authority, I said the arms inspections are "absolutely critical in building international support for our case. That's how you make clear to the world we are contemplating war not for war's sake, but because it may be the ultimate weapons inspections enforcement mechanism."

The Bush administration, impatient to go into battle, stopped the clock on the inspections, against the wishes of key members of the Security Council, and despite the call of many in Congress who had voted to authorize the use of force as the last resort the President said it would be.

Despite his September promise to the United Nations to "work with the UN Security Council to meet our common challenge," President Bush rushed ahead on the basis of what we now know to be dubious, inaccurate, and perhaps even manipulated intelligence.

So the first chance for a true international response that would have reduced this bill, that would have brought other countries to contribute was lost.

Then there was a second opportunity. After the Iraqi people pulled down the statue of Saddam Hussein in the square in Baghdad, there was a moment when British and American forces had proven our military might and the world was prepared to come in and try to assume the responsibility for helping to rebuild Iraq.

Once again, Kofi Annan and the United Nations offered their help. Once again, this administration gave them the stiff arm. They said: No, thank you; we do not need your help. And we proceeded forward without building the kind of coalition that would reduce the risk to our troops and without reducing the cost to the American people.

Then the third occasion was just the other day, when the President went to the U.N. General Assembly. Other nations again stood ready to help to provide troops and, hopefully, funds. All President Bush had to do was show a little humility and ask appropriately. Instead of asking, he lectured. Instead of focusing on reconstruction, his speech was a coldly received exercise in the rhetoric of redemption.

Kofi Annan offered to help. Again, we did not take them up on that offer in a way that was realistic. The President exhibited an attitude that was both self-satisfied and tone deaf simultaneously, once again raising the risk for American soldiers by leaving them alone, and once again raising the cost to the American people by leaving America alone.

I believe the President could have owned up to some of the difficulties. The President could have signaled or stated a willingness to abandon unilateral control over reconstruction and governance. Instead, he made America less safe—less safe—in a speech and in conduct that pushed other nations away rather than brought them to our cause and what should be
rightfully the world's cause.

So what of this cost of the Iraqi operation?

In the fall of 2002, OMB Chief Mitch Daniels told us the costs of Iraq would be between $50 and $60 billion. It is now already more than $100 billion more than that.

In January of this year, Secretary Rumsfeld said the same, and he added that "How much of that would be the U.S. burden, and how much would be other countries', is an open question."

Well, today it is not an open question; it is a closed question. We know the answer: The majority is being paid by the American taxpayers.

In March of this year, Deputy Secretary Wolfowitz testified in the Senate that Iraq is a "country that can really finance its own reconstruction, and relatively soon."

Did the Secretary mislead us or was the Secretary ignorant?

Again, in March, Secretary Powell testified in the Senate that "Iraq will not require the sorts of foreign assistance Afghanistan will continue to require."

When Larry Lindsey predicted the war may cost $100 billion to $200 billion, he was deemed so far off base by the White House that he was fired.

Now, a year later, Congress is set to appropriate over $160 billion, and the costs are estimated to rise to $350 billion to $400 billion over 5 years. Even Larry Lindsey's estimates are now low.

With so much so wrong, Americans are looking to the White House for direction and leadership. They want, and they deserve, straight answers to straight questions.

How long will we be there? How much will it really cost? How many American troops will it take? And how long will it be before we do what common sense dictates and get the world invested in this effort by not treating Iraq as though it is an American prize, a loot of war but, rather, treating it as a nation that belongs in the community of nations, dealt with properly by the United Nations, as we did in Bosnia and Kosovo and Namibia and East Timor and in other parts of the world?

So far, the White House, with all of its evasion and explanation, has been a house of mirrors where nothing is what it seems and almost everything is other than what the President promised. But Americans are also looking to us in the Congress for leadership.

The President has talked a lot about sacrifice in recent weeks. In an address from the White House, he said of Iraq, "This will take time and require sacrifice." In his weekly radio talk, he warned that "This campaign requires sacrifice." Even in his State of the Union Address, the President issued a call for sacrifice saying: "We will not deny, we will not ignore, we will not pass along our problems to other Congresses, other presidents, and other generations." But that is exactly what we are doing if we leave this $87 billion in its current form.

Also, there can be no doubt that the President has demanded that most of this sacrifice will come from the men and women in uniform. More than 300 troops have now already given their lives in Iraq. The Army is stretched too thin for its duties in Iraq. And troops who were promised that they would be home long ago remain in Iraq.

The President has called on the National Guard and Reserve at historic rates and put more than 200,000 guardsmen and reservists on active duty. The Pentagon has changed the rules so that a Guard unit's activation date does not start until the troops arrive in Iraq. That is a bookkeeping sleight of hand that keeps thousands of forces deployed even longer than they expected or were promised. And, incredibly, the President's call for sacrifice even included billing wounded troops for the cost of hospital meals. Fortunately, the Congress rectified that problem in this supplemental. But it is not yet law.

Despite all we are asking of the men and women in uniform, the bill we now debate appropriates $87 billion simply by increasing the Federal deficit. It asks no sacrifice of anybody in the United States today who can afford it. This is an off-budget, deficit-spending free ride.

The amendment Senator Biden and I and others are offering changes that. It will pay the cost of this bill. It will pay the cost of the entire $87 billion by simply repealing—not all, which I think we ought to do—a portion of the tax cut for the wealthiest Americans.

The Biden-Kerry amendment will ask those who can afford to pay this burden to do so, and make their contribution, make
their sacrifice to the effort to win the peace. It protects the middle class. It meets our obligations in Iraq. And it will help ensure that we have the resources necessary to accomplish our goals here at home, goals such as making health care more affordable, paying for homeland security, and keeping the President's promise to leave no child behind.

[Page S12323]

We should not abandon our mission in Iraq, and we understand the downsides of doing so. But we ought to demand that whatever we spend in Iraq be paid for with shared sacrifice, not deficit dollars.

We are already shortchanging critical domestic programs to pay for unwise tax cuts for the wealthiest Americans. In addition, the Bush fiscal record and its trillions in debt demand that we follow the commonsense approach of our amendment.

Since President Bush took office, the cumulative 10-year budget surplus has declined by almost $10 trillion. We have gone from the largest budget surplus in American history to the largest deficit in American history this year. We have added nearly $1 trillion to the debt inside of a single Presidential term. On top of that, we have passed a huge tax cut during wartime for the first time in American history. And that is the height of irresponsible, reckless budgeting.

The Bush administration blames the budget crisis on the Nation's response to September 11 and on funding for domestic programs, but that is a stunning misstatement of fact.

The simple facts are that the fiscal policies supported by this administration—tax cuts already passed, tax cuts that have
been proposed, significant increases in defense spending and money for Iraq, and additional interest on the debt—have caused more than half of this turnaround. As the debt piles up, the President claims that he bears no responsibility when he, in fact, and his policies are the primary cause.

Senator Biden and I are making a commonsense proposal. Rather than borrowing an additional $87 billion, we want to scale back a small portion of the tax cuts for the wealthiest Americans, for those making over $300,000 a year. The average income of those in that top tax bracket is $1 million a year. These Americans are not exactly hurting. Their real average after-tax income rose a remarkable 200 percent in the 1980s and 1990s, and their overall share of pretax income has nearly doubled over 20 years. That cannot be said of any other income group in the United States.

In the year 2000, the 2.8 million people who made up the top 1 percent of the population received more total after-tax income than did 110 million Americans who make up the bottom 40 percent. Think about that: The top 1 percent of Americans earned more income than the bottom 40 percent, and that is after taxes.

Mr. REID. Madam President, under the time allocated, we have some extra time. So on behalf of Senator Biden, I yield 2 minutes to the Senator from Massachusetts.

Mr. KERRY. It is simply not unfair to ask those earning the most, those who are the most fortunate, those who are the most talented, the hard-working Americans who are earning more than $300,000, not as a matter of any kind of targeting except for the fact they are the best off and have the greatest ability, to make this sacrifice without a negative impact on their lifestyle, on their choices, on their quality of life. This is a time for sacrifice. I believe it is appropriate for us to ask that in order to promote a free Iraq, in order to reduce the burden being placed on future generations of Americans, in order to reduce the burden placed on the middle class today, in order to have the least negative impact on our economy, the least negative impact on long-term interest rates, the least crowding out of borrowing by adding to the debt and crowding out private borrowing in the marketplace by public borrowing, the least negative impact on perceptions, the best way for America to deal with this problem of misinformation, this problem of promises broken is to turn to those the President seeks most to give the biggest breaks to most frequently and ask them to share the burden.

I hope my colleagues will do that, recognizing the sacrifice being made on a daily basis by 130,000 of our troops who live and die by what we do in the Senate and the House, in the Congress in Washington.

I thank the Chair.

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