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SEN. MCCONNELL: Okay. Happy St. Patrick's Day, everyone. The McConnells' County Down, which is right next to Belfast, Northern Ireland, a long time ago.
We're going to focus today on the budget, the president's $3.6 trillion effort to change America dramatically, which will double the national debt in five years and triple it in 10 (years). It spends too much, it taxes too much, and it borrows too much.
This week, Senate Republicans are focusing on the taxing part of it. And I've asked -- I want to now turn to our leader on the Finance Committee, Senator Grassley, to talk about the fact that it taxes too much.
SEN. GRASSLEY: Well, it is the biggest tax increase in the history of the country, whereas Republicans brought the largest tax decrease in the history of the country during the Bush presidency. We're in a situation where the national debt is being tripled over the course of this budget. The president, we'll give him the fact that he inherited a debt that was big, but don't forget, it was a bipartisan debt. There was a Democratic Congress and a Republican president. But let's not forget that this president is going to give us, just since he come to office two months ago, the biggest deficit -- $1.2 trillion just for this year -- from stimulus and from spending.
Now, when you have this sort of spending, someone has to pay. They want to make it out just a few wealthy people are going to pay, but eventually the middle class pays. And the middle class better get ready for the biggest tax increase in the history of the -- on them if this continues to go through.
I think the president understands this. I think the president understands that what he is doing is bad for the economy because he put off any tax increase until the year 2011. But isn't it true that if a tax increase is bad for the economy now, when we're in a recession, it's going to be bad for the economy when we are coming out of a recession?
I think what we have here is a philosophy that people think the government creates wealth. The government doesn't create wealth; the government only expends wealth. And we have to get this economy turned around. We have to rely on the private sector, the people that are pulling the wagon. You can't have everybody in the wagon; you've got to have people outside the wagon pulling.
SEN. KYL: During the campaign, then-candidate Senator Obama told the editorial board of the San Francisco Chronicle that under his cap- and-trade proposal, energy bills will "skyrocket," to quote him specifically. And he's kept that promise in the budget.
While the budget itself talks about punishing those in the upper stratosphere of income earners, the reality is that tax cuts -- tax increases in his budget will affect all Americans. The energy tax will cost every household up to $3,128 annually, and that's just the first version of it. The estimates are that eventually it'll be much greater than that.
So even though the president talks about only taxing the wealthy and giving everybody else a tax cut, the reality is that his budget proposals will vastly increase the burden on American families in America, just as he promised during the campaign.
SEN. ALEXANDER: Americans need jobs. Many people are out of work, and we should be doing everything we can to create new jobs. The president's tax proposal makes it harder to create new jobs. And it does it in this way: It raises taxes on small business, especially on small businesses that create 80 -- 60 (percent) to 80 percent of the new jobs that small businesses create are businesses with 20 or more employees.
Those businesses will -- the individuals who own those businesses will see their taxes rise to 40 (percent) or 42 percent, top rate. So half -- half the businesses that create most of the new jobs that businesses create will have new taxes, making it more difficult for them to have the profits necessary to create new jobs.
SEN. ENSIGN: The place I want to focus on in the president's budget is on charitable taxes -- the deduction going away or going -- becoming severely limited.
We have all heard from charities all over our country, whether it's those who are involved in medical research, the Susan G. Komen Foundation, juvenile diabetes, those who work with the disabled, those who -- you know, Big Brothers, Big Sisters, Boys and Girls Clubs -- charities all over our countries who really are what make -- part of what make America great. They're going to lose out on about $9 billion a year at a time where they're already hurting.
The economy has slowed down giving, and now we're going to give them a double whammy by increasing the taxes on people who, you know, give to charity. You know, and I've heard the Democrats say that that's not the reason people give, is because the charitable deduction. Well, that may be true; it's certainly true in my case. But the difference is, if you have a deduction in your taxes, that means you have more money that you're able to give to charity.
There will be a direct loss to money given to charities, and you know what that means? That means less money for medical research. That means less money for treatment. That means fewer people are going to be helped out there who truly need the help in our communities. The food banks are going to be hurt. Homeless are going to be hurt. Across the board, our communities are going to be less compassionate because they'll have less money to be compassionate with.
SEN. THUNE: The next tax increase in the president's budget is $1.4 trillion, which incidentally is the equivalent of Spain's GDP. But that doesn't even take into consideration how much revenue is actually going to come in; in other words, how much it's going to cost the American economy with the president's light-bulb tax.
The energy tax in this proposal, according to MIT researchers, which modeled the Boxer-Sanders bill a year ago, suggests that it is, as Senator Kyl mentioned, going to cost the average household in America $3,128 per year. That is a stunning amount of money to low- income and middle-income families in this county.
And so, when you total up the amount of the taxes that the budget incorporates or includes, $1.4 trillion I think is going to be the low end of that. This thing is going to tax way beyond that. The estimates that are used in terms of revenue in the president's budget for the energy tax are dramatically understated, and it's going to cost the American consumer -- particularly low-income and middle- income families who have to deal with those costs the most -- it's going to cost them the most in this particular tax bill.
So, we think it's a terribly bad idea, and we're going to be working very hard to point out to the American people the shortcomings in this proposal.
SEN. CORNYN: I'm proud of the fact that my state, Texas, is the number-one producer of clean, renewable wind energy in the country. That may surprise you a little bit because most people think of Texas as an oil and gas producer, and we do that too. We supply the needs of the nation, along with other oil-producing states right here at home.
This budget, though, raises taxes on small and independent oil and gas producers in America, making it even more likely that we will remain dependent on imported oil and gas from the Middle East. Likewise, at a time when we ought to be concerned about retaining and created new jobs, higher taxes on the domestic oil and gas industry and on the energy sector generally will make it less likely that we will be able to retain and create new jobs in the energy sector. That's why this budget is a bad idea, among others.
SEN. MCCONNELL: We'll take a couple questions, if there are any.
Q Senator Grassley, as the chairman -- the ranking member of the Finance Committee, the Democrats -- I know taxes are clearly a concern here, but Democrats are also talking about exacting an excise tax, a rather hefty one, on these AIG bonuses. Is that something you would approve? And can you also address your rather controversial comments about the AIG executives taking bonuses?
SEN. GRASSLEY: Yeah. At this point, all I can say on that is that Senator Baucus and I and other members of the Finance Committee are going to sit down and talk about what can be done in that area. Obviously, we've got -- have respect for the constitutional right to contract. I'm going to let lawyers make that determination, let the courts make that determination.
From my standpoint, it's irresponsible for corporations to give bonuses at this time, when they're so sucking the tit of the taxpayer. We need to make sure that we move along to give an ethic to corporate America.
So that brings me to answering your second question. I shouldn't have to answer -- shouldn't, because you ought to recognize rhetoric when you hear it. But I do believe very firmly, as I said back on October 1st -- and if you would read what I said on October the 1st, you wouldn't be surprised about what I said yesterday. And why it got attention yesterday, I don't know.
But I do know this, that corporate America needs an ethic like they have in Japan, where corporate executives take responsibility for what they doing and apologize to the people of Japan. We don't have that in this country, and we ought to have it. Corporation executives that run their corporation into the ground should not be rewarded for doing that.
Q Senator Snowe says that if her amendment, along with Ron Wyden, to the TARP bill had been adopted, on executive compensation, then these bonuses never would have been paid to AIG executives in this case. Did Democrats blow it when they dropped that from conference?
SEN. MCCONNELL: Well, what they really fouled up in my view is they gave AIG an extra $30 billion just two weeks ago. They would not have been without some influence at that point. And we -- the government has been heavily involved in AIG for some months now. It's shocking that they would -- the administration would come to us now and act surprised about these contracts. Why didn't they ask the question two weeks ago, before they gave them $30 billion?
As virtually everyone has said in one way or another, this is an outrage. And this administration could have and should have, through the process of providing for them another $30 billion two weeks ago -- just two weeks ago -- prevented this from happening. They had a lot of leverage prior to that infusion of $30 billion.
Q Will you follow up with Secretary Geithner?
SEN. MCCONNELL: I'm sorry?
Q Do you plan to follow up with Secretary Geithner?
SEN. MCCONNELL: I think I'll stick with what I just said. They just gave them $30 billion two weeks ago.
Q But -- (off mike) --
SEN. MCCONNELL: Where were they when they were about to hand them a check for $30 billion on this issue? It is hard to believe they were truly surprised about these bonuses a mere two weeks later.
Q Do you think --
Q (Off mike) -- a good idea -- is a good way to get that bonus money?
SEN. MCCONNELL: Do I what?
Q Do you think the tax code is an efficient way or a good way to get that money back from these executives?
SEN. MCCONNELL: What I'm wondering is -- what I'd like a full explanation of is how the Department of the Treasury handed over $30 billion a mere two weeks ago and didn't have any idea that this outrage was going to occur. That's the question that needs to be answered today. There will be a lot of suggestion about how to solve the problem moving forward. What I'd like to know first is how it happened, when we had extraordinary leverage a mere two weeks ago when we handed over $30 billion.