CONGRESSIONAL BUDGET FOR THE UNITED STATES GOVERNMENT FOR FISCAL YEAR 2009--Continued -- (Senate - March 11, 2008)
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Mr. HATCH. Mr. President, I rise to express my opposition to and disappointment with the fiscal year 2009 budget resolution before us today.
Interestingly enough, I listened to the Senator from New York talk about how the rich are getting away with things. Well, the upper 1 percent of all taxpayers paid 39 percent of all income taxes the last time I heard. The upper 5 percent paid 60 percent of the total income tax in this country. The upper 50 percent pay 97 percent of all the total income tax in this country. The bottom 50 percent generally pay almost nothing, and a good percentage of them get money from the Federal Government. So what is he talking about?
I think it was Yogi Berra who once said, ``This is like deja vu all over again.'' I am sure he was not talking about the Federal budget when he uttered these oft-quoted words, but he might as well have been. As I look at the budget resolution before us today, and as I listen to the arguments on both sides of the aisle, it seems to me that we could be talking about last year's budget resolution. The numbers are somewhat larger, but the arguments are about the same.
Now this might not be so bad if the budget resolution were a good one. No, you would not hear me complaining about a repeat of a budget that strengthened our economy, addressed our near-term problems, and prepared this country for the longer-term budget challenges of the future. Unfortunately, this is not the case. In fact, quite the opposite is true.
Once we were through with that resolution last year, it didn't even resemble what the budget resolution was calling for. In fact, I have been here for 31 years, and not one day has the conservative point of view been dominant in the Senate. The liberal point of view, with almost all liberal Democrats and a few liberal Republicans, has held sway. That is where all the spending is coming from.
Instead, we are, once again, talking about a budget that raises taxes by an unprecedented amount, which will do untold harm to our economy, exacerbates our near-term problems by not holding spending in check, and totally ignores the longer-term mandatory program challenges of the future.
Much has already been said on this floor about the budget resolution and its failings. I could add a great deal more, but instead I choose to focus my remarks on three premises on which this budget is based. Three premises that, unfortunately, are false. And every child in Sunday school knows that false premises are like the house whose foundation is built upon sand. We all know that a house built upon sand, or a budget built upon false premises, cannot stand.
The first faulty premise underlying this budget resolution is that it would not raise taxes on Americans. I know that my colleagues on the other side of the aisle have said and will continue to say that this budget does not raise one cent in taxes. Technically speaking, this is true. However, while the document before us may contain no actual tax increase language, it does nothing to prevent the largest tax increase ever, which is set to occur at the end of 2010 if the 2001 and 2003 tax cuts are allowed to expire as scheduled.
The American people need to ask a simple question of this budget. What is it doing to make sure that my tax bill does not go up in 2010?
They will be met with deafening silence.
Now, those on the other side will try and explain this deficiency away. They will argue that allowing a tax cut to expire is not the same thing as raising taxes. Well, try telling that to the 116 million American taxpayers who will face higher taxes if these tax cuts are allowed to expire. Try explaining this nuance to the 43 million American families who, on average, will owe $2,300 more, and to the 18 million seniors who will pay an average of $2,200 more.
This is not small potatoes. Families that do not consider themselves rich, that struggle to make ends meet, and that are doing all they can to make the mortgage and save for college, are going to get hit with massive tax bills. They are going to see their paychecks shrink by hundreds of dollars every pay period. This is real money. Money that families could use to pay medical bills or pay tuition, and instead it is going to go to the Federal Government.
It will not be much fun trying to explain this to the owners and managers of 27 million American small businesses. Try telling them that their higher tax bill is not really a tax increase. No, not at all. It is merely the reversal of a temporary lower tax rate they should have been grateful to have gotten for a decade, due to the generosity of Uncle Sam, who no longer deems it necessary to throw such favors their way.
Good luck selling that one.
I will tell you one thing--I do not want to tell the hundreds of thousands of Utah families, seniors, and small business owners that the extra dollars we were letting them keep for a few years are now needed for more urgent things, such as higher spending in Washington.
So if this is not a tax increase, I do not know what is. The other side can call it what it wants. But if the end result is more money coming to Washington, and less money staying in the paycheck, the family budget, or the small business expansion account, this is a T-A-X, Tax!
We have heard the other side talk about how they are for extending the middle-class elements of the 2001 and 2003 tax cuts. We have even heard them say that the budget resolution provides for this, through the adoption of an amendment offered by the Senator from Montana. $323 billion for middle-class tax relief. Does any of this sound familiar? It should, because the same amendment was offered, and adopted, in last year's budget resolution.
I have a question about that tax relief. Where is it? What happened? Last year's Baucus amendment offered pretty much the same kind of tax relief as this year's version. But, why did we need to adopt it again? The answer, of course, is that nothing happened because the tax changes necessary to carry out the stated intent of this amendment were never brought up in the Finance Committee or on the floor of this Senate. This is a shell game.
The reason why is that you have to look at the fine print on this amendment to see what is really going on. The Baucus amendment allows only for the consideration of so-called middle-class tax relief. It does not, however, provide a means to offset the lost revenue. Under the Democratic pay-go rules, along with the $323 billion of tax relief that the Baucus amendment purports to offer, there is an asterisk with fine print that says, provided that the revenue can be found to offset it. My goodness.
So this explains why we need the Baucus amendment again. The reason we did not provide that middle-class tax relief is that we could not find the revenue to offset it. But what about what my friend and colleague, the distinguished chairman of the Budget Committee, says? He points to the tax gap and says we can get the money there. All we have to do is stop some of the leakage in our tax system.
I agree with my colleague from North Dakota. I agree that we should be able to reduce the tax gap. It is too large and it is inexcusable why $200 to $300 billion or more in taxes that are due go uncollected each year. But you know what? Our tax system, as leaky and clumsy and unfair and antiquated as it is, is the envy of much of the world as far as the percentage due that we collect.
Can we do better? Of course. Do we need to crack down on tax abuse domestically and overseas? Indeed we do. Can we raise enough money by closing the tax gap to offset the revenue loss of the amendment of the Senator from Montana? Not even close. As Senator Grassley very eloquently demonstrated on this floor on Monday, the real potential for revenue from the tax gap is very, very small in comparison to what the other side is claiming. If not, then where are the specific proposals from the other side to do it? Why haven't they been enacted, if it is so easy to get this revenue?
The tax increases inherent in this budget resolution will do untold damage to our economy. Even if the other side can find the votes to increase taxes enough to overcome the pay-go problem associated with some of the middle-class tax relief proposed by the Senator from Montana, we would still be doing major harm to the economy.
We can perhaps look to the model provided for us by the chairman of the Ways and Means Committee in his so-called Mother Tax bill. It is so named because my good friend Chairman Rangel said it represents the Mother of All Tax Reforms. His ranking member, Congressman McCrery, more aptly describes it as the Mother of All Tax Hikes.
I can tell you right now, as much as I hate to say this about my friend Charlie Rangel, Congressman McCrery is right. This ``mother'' bill includes plenty of tax offsets. It would increase the income tax rates across the board to where they were in 2001, with the top rate exceeding 40 percent at the margin. This may sound as if it would affect only the wealthy, but this is another false premise. In reality, it would affect millions and millions of small and midsized businesses, the great majority of which pay their taxes through the individual Tax Code.
How is this going to help us solve the economic problems our Nation is facing? This budget is nothing but a recipe for disaster.
The second faulty premise underlying this budget resolution is that the increase in spending it authorizes will solve our long-term economic problems. Yes, I think we have heard this before as well. Yes, it was last year in the fiscal year 2008 budget debate. That budget resolution called for $205 billion in increased spending over 5 years, and this number ballooned to $350 billion over 10 years. Apparently, this amount was not high enough, so this budget ups the amount to $210 billion over the next 5 years, and it will have the same ballooning effect over the years beyond because the spending gets built into the baseline. That is the danger of a seemingly small amount of additional spending. It is insidious. It seems relatively small in the first year, and so it may be, but the way we do budgeting in Congress has a way of multiplying the seemingly small increases so they are huge in a few years. There is a compounding effect.
In his opening remarks on Monday, the distinguished chairman of the Budget Committee talked about the need for additional investment in America. He spoke about priorities in education, energy, infrastructure, law enforcement, weatherization, health care, uninsured children, food, drug safety, veterans, and much more.
I know the Senator from North Dakota is sincere, and I know he works hard and is very effective in presenting his side of the argument. I have much admiration and affection for him. I care a great deal for him. He has a very tough job, and he does it well.
The Senator from North Dakota is right about the needs of this country--they are unlimited, just like the needs of the typical American family. The needs of the American people as a whole are unlimited. The problem in both situations is that we do not have unlimited resources, and neither does the family. We have to make choices, and we have to set priorities. It would be nice if we could simply take care of every problem in this Nation by spending the money that is needed, just as it would be great if every American family had enough money to solve all of its problems. But that is not reality.
In reality, we are in serious financial trouble in this country. Money trouble, if you will. When a family faces reality and knows it has money trouble, that family will sit down at the kitchen table and decide where to prioritize and what has to go. That is exactly what we need to do at the national level.
The Senator from North Dakota is correct about another point, and that is that the discretionary portion of our budget is getting squeezed. According to Comptroller General David Walker, the portion of discretionary spending in 1966 was 67 percent of the total budget. By 1986, this portion had dropped to 44 percent. By 2006, a couple years ago, it was down to 38 percent.
This shrinking percentage of discretionary spending, however, is not because we are spending less in terms of nominal dollars. The fact is we spent almost twice as much on discretionary programs in 2007 as we did in 2000. However, our mandatory spending is increasing so much faster. This growth in the entitlement programs, such as Medicare, Medicaid, and Social Security, is squeezing out our ability to grow the amount we spend on discretionary programs.
But the answer is not to increase discretionary spending even by what the proponents of this budget are calling a very small amount. We are going in the wrong direction, and this small amount will compound into a large amount in a few years. And guess what. Once we spend and it gets built into the baseline, it is almost impossible to get it out.
This leads me to the third faulty premise underlying this budget resolution, and that is it is safe to ignore our longer term problems with Medicare, Medicaid, and Social Security. I know if I were to separately ask each Member of this body if we need to do something about the growth of these programs, there is a good chance that every single Senator would agree we cannot afford to ignore them and that something has to be done to save our future. But as I looked over this budget resolution, I cannot seem to find the part that addresses the growth of these programs, and yet the Government Accountability Office tells us that between now and 2032, spending on Medicare and Medicaid alone will grow about 230 percent. At the same time, our GDP will grow about 70 percent if we are lucky.
Let me share some truly frightening numbers with you. The Government Accountability Office recently computed the fiscal exposures we face as a nation from our unfunded obligations under Social Security and Medicare. In 2007 dollars, our total unfunded liability for future Social Security benefits, assuming the law does not change, is $6.8 trillion--that is trillion dollars. This is a number of galactic proportions, so big that it is hard to comprehend. But I have to tell you, it pales in comparison to the amount of our unfunded liability associated with Medicare, which is more than $34 trillion--that is trillion dollars, $34 trillion. When this is combined with all other major fiscal exposures, the GAO estimates that our total unfunded liability is almost $53 trillion. That is with a T. This amount is nearly as high as the total household net worth of Americans, which is $59 trillion.
In other words, we are nearly bankrupt as a nation. Within a few years, we will absolutely be bankrupt if something is not done. It is clear that this path is not sustainable. We all know it. Our children know it, and our grandchildren are going to find it out the hard way. They are going to blame us if we do not act to turn things around. It is as if we are all in a ship floating down a river. The waters are quite calm now, but the map shows that a very high and dangerous waterfall is ahead of us. We know if we do not turn the ship around, disaster awaits. But it is not an easy thing to do. We know we cannot turn it around in 1 year. It will take a lot of work and sacrifice. It will take pain.
It is easy to say we should wait, that this is an election year and a new captain and maybe a new crew will be taking over after the election. But I say to my colleagues, we cannot afford to wait. In the midst of the calm water, we can hear the roar of the waterfall. We are coming to it very quickly, and if we wait too long, catastrophe will result. The budget before us does nothing about the cataclysm just down the river. It is a fatal flaw.
I started by mentioning that the rich do pay a lot of taxes right now. Actually, the rich are paying more after the tax cuts than they were paying before. The fact is, the upper 1 percent of the rich--the last time I saw the figures, and it is even worse now--are paying about 39 percent of all income taxes--the upper 1 percent of all taxpayers. And the top 5 percent pay about 60 percent of all taxes. And the upper 50 percent pay almost 97 percent of all income taxes. Think about that. The bottom 50 percent pay little or none and many of them get largess from the Federal Government. So this idea that the rich need to pay more is a phony argument. It is time people got called on that argument. It is phony, it doesn't make sense, and we have to get with it around here. We cannot keep bringing up these phony budgets such as this with all the budgetary gimmicks this one has in it.
I don't blame the distinguished Senator from North Dakota. He has a side that is fractionated. They want to spend more--that is how they keep themselves in power--and he has to find gimmicks and some way of justifying additional spending, and this budget is filled with additional spending, additional taxes, and a lot of budget gimmicks that should not be in it.
I urge my colleagues to reject this budget resolution. Let's get started on one that recognizes the dangers ahead and begins to turn this ship around before we hit that cataclysmic waterfall.
Mr. President, I suggest the absence of a quorum.
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