Introduction of Bill for Commission on Unfair Tax Breaks and Subsidies

INTRODUCTION OF BILL FOR COMMISSION ON UNFAIR TAX BREAKS AND SUBSIDIES

* Mr. UDALL of Colorado. Madam Speaker. I am today introducing another bill intended to help reduced waste and inequity in the Federal budget.

* There has been much discussion of individual spending items--``earmarks'--requested by individual members. They are not all bad, but I agree that some need closer scrutiny. That's why I have introduced a bill, H.R. 595, the Stimulating Leadership in Cutting Expenditures, or ``SLICE' Act, to give the President a constitutionally sound version of a line-item veto that can force Congress to reconsider individual spending items.

* But we need to recognize that earmarks are not the whole story. Much waste and inequity in the budget results not from 1-year spending items, but from ongoing tax breaks and subsidies that are built into the budget and will persist unless and until there are changes in relevant law.

* Like earmarks, not all tax breaks and subsidies are bad--in fact, I think many are good for our country and deserve to continue or even be expanded. One example would be the tax breaks and other provisions to promote renewable energy and to help Americans become more efficient in their use of energy. And there are other examples as well.

* But there is also an array of direct subsidies, tax breaks and indirect assistance created for the special benefit of a relatively small number of beneficiaries, sometimes at the expense of others.

* Too often, such provisions have persisted because of the phenomenon that once made it nearly impossible for Congress to close unneeded military bases--the cost of each one is relatively small in overall terms, but very important to a few States or Congressional Districts, with the result that the potential budgetary benefit of a reform is not great enough to overcome the strong opposition from its defenders.

* So, the bill I am introducing today would resolve this dilemma in the same way that an earlier Congress resolved the similar problem of eliminating unneeded military bases. It would do that by establishing an independent, bipartisan, and expert commission to review special-interest tax breaks and subsidies to see which should be ended or revised.

* But this would not be just another commission to produce another report fated only to gather dust on congressional shelves. Instead, like the special commissions that have reviewed military bases, it would be key to a process that would require Congress not just to read the report but to vote on whether to adopt its recommendations.

* Here's how my bill would work:
BIPARTISAN CUTS COMMISSION

* The Commission on Unfair Tax Breaks and Subsidies, or ``CUTS Commission', would consist of five members. Its chair would be a person named jointly by the Speaker and the Senate majority leader. The Speaker and the majority leader of the Senate would each pick one other member, and so would the minority leaders in each Chamber. Members would be chosen on the basis of their expertise and to represent a fair balance of views.

* The Commission's job would be to identify and evaluate payments, benefits, services, or tax breaks to see if they meet the test of a reasonable expectation that they will bring a return to the public at least equal to the value of the cost to the taxpayers.
SCOPE OF REVIEW

* The scope of this review would not include payments made to or tax breaks benefiting individuals, to state or local government or Indian tribes, or Native corporations organized under the Alaska Native Claims Settlement Act, or to nonprofit, tax-exempt organizations.

* It also would not cover support for research and development based on peer-reviewed or other open, competitive and merit-based procedures where the subject is in the public interest and the work is not likely to be done, or done with equal benefit to the public, by the private sector.

* Similarly, the review would not include payments or tax breaks primarily benefiting public health, safety or protection of the environment; the development and use of renewable energy; improved energy efficiency; or education.

* Finally, the Commission would not review matters of national security, including homeland security, compliance with trade agreements or treaties, or procurement contracts--and could not propose new programs or taxes or the termination of federal agencies.
RECOMMENDATIONS

* The Commission would have a year to complete its work. Within that time, it would first prepare a preliminary report for review by the Government Accountability Office, GAO, and then a final report to Congress.

* The Commission's report would specify which changes in subsidies the commission is recommending--and any recommendation supported by at least four of the five members of the Commission would be assured of prompt consideration by Congress.
LEGISLATIVE ACTION ON RECOMMENDATIONS

* Under the bill, recommendations with that high degree of bipartisan support on the commission would have to be introduced as bills, and each committee to which they were referred would have a 20-day deadline to reporting them.

* A committee could consider only amendments that would terminate or reduce an inequitable subsidy, except that the tax-writing committees could offset revenue increases with broad-based tax cuts, they could not use limited tax breaks of the kind that would have been subject to a line-item veto under the Line-Item Veto Act of 1996. If a committee failed to meet the deadline for reporting, it would be discharged.

* Bills reported from committees would go to the Rules Committees of each Chamber. If more than one bill is reported, Rules would consolidate them into one measure which would go to the floor. After 5 days, excepting weekends and holidays, a motion to proceed to its consideration would be privileged and not debatable and, if adopted, the bill would be considered under procedures limiting the time for debate. Similar procedures would apply to conference reports after each Chamber had acted.

* In short, Congress could not ignore consensus recommendations by the Commission. It would have to debate them and then vote on whether to adopt them.
POTENTIAL FOR SAVINGS

* It is not possible to say exactly how much this bill will save the taxpayers--that depends on what the Commission might recommend and how many of their recommendations Congress would approve. I have seen estimates that the kinds of subsidies and tax breaks covered by this bill could be costing tens of billions of dollars annually just in terms of special-interest spending programs, not to mention special tax breaks--such as provisions to suspend the tariffs on certain items--many of which are of particular benefit to just one or a few companies. So, I think the potential is considerable.
EQUITY AND ACCOUNTABILITY

* And as important as the savings that could come from enactment of my bill is the increased budget equity and congressional accountability that it would promote. Special-interest subsidies, whether through spending or tax breaks, are great for the beneficiaries but they aren't always great for the taxpayers and they often are harmful to competing companies or other entities that don't get the benefit of the subsidies.

* So, trimming or eliminating that kind of subsidies could save money and would remove inequities--and requiring those of us in Congress to stand up and be counted on whether to trim or eliminate some of them would increase our accountability to the taxpayers, to those hurt by the subsidies, and to the American people.

* For these reasons, Madam Speaker, I think this bill deserves the support of our colleagues. For their benefit, here is an outline of its major provisions.
OUTLINE OF COMMISSION ON UNFAIR TAX BREAKS AND SUBSIDIES (``CUTS') BILL

Commission--5 members: chair appointed jointly by House Speaker and Senate Majority Leader, plus one each appointed by House Speaker, Senate Majority Leader, and House and Senate Minority Leaders. Members to be chosen on basis of expertise and to reflect diverse views. No Federal employees on the commission, but agencies can detail people to provide technical expertise.

Duration--Commission would have one year to complete its review and report to Congress.

Scope of Review--Commission would review payments, benefits, services, and tax breaks provided to companies, joint ventures, associations, etc. but not to individuals, state or local governments, Indian tribes and Alaska Native Corporations, or tax-exempt nonprofits. Review would not cover support for research and development based on open, merit-based competition if it is consistent with public interest and federal agency purposes and private sector cannot reasonably be expected to do it as well. Also outside scope of review: matters involving public health or safety or the environment; development or use of renewable energy; greater energy efficiency; national security (including homeland security); or education. Review also would not involve matters needed to comply with international trade or treaty obligations or federal procurement contracts.

Report--Commission's preliminary report would be reviewed by GAO; final report would go to Congress with recommendations for changing or eliminating subsidies covered by commission's review. Any recommendation backed by at least 4 commission members would have to be introduced as legislation.

Action by Congress--Committees would be limited in amending bills to adopt recommendations by at least 4 of the 5 commission members and would have to report them for floor action with time limits on debate. So, Congress would have to act on those recommendations.

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