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Mr. THUNE. Madam President, I come to the floor today to talk about our economy, the threat of the pending fiscal cliff, and the need to address the challenges we face.
Two years ago last week, the Obama administration hailed the advent of the ``Summer of Economic Recovery.'' The President claimed, ``The economy is headed in the right direction.'' Vice President Biden confidently predicted the creation of 250,000 to 500,000 new jobs a month. Meanwhile, Treasury Secretary Tim Geithner published an op-ed in the New York Times boldly entitled, ``Welcome to the Recovery.''
Well, 2 years later, Madam President, Americans are still waiting for the recovery. Today's jobs figures are well below the 250,000 to 500,000 jobs per month Vice President Biden forecasted.
This year, the economy created a dismal 77,000 jobs in April and just 69,000 jobs in May--less than half the 150,000 jobs that are needed each month just to keep up with population growth.
Unemployment--which the White House predicted would shrink below 6 percent by April of 2012--has remained at or above 8 percent for 40 straight months.
Looking at the facts, it is clear the private sector is not doing fine. In fact, the President's economic policies have made the economic situation in this country worse. The President seems to prefer more stimulus spending from Washington, DC, but the President's $831 billion in stimulus money has not led to the job creation he claimed it would. Under this administration, there has been a record 4 years with deficits over $1 trillion. The Federal Government now borrows roughly 40 cents out of every $1 it spends.
The fact is we do not need more government spending that explodes the national debt. Instead, we need to cut reckless government spending and tackle the mounting debt crisis through tax entitlement reform.
If we don't take action soon, our country could end up in the kind of financial disaster that Greece and Spain are now facing. The economic situation in Europe is a clear warning sign for our country that if we don't get on a sustainable fiscal path, we will face a similar fiscal crisis.
Our children and grandchildren should not have to pay for Washington's inability to stick to a budget. We owe it to the next generation to leave the country better than we found it. Yet it has now been over 3 years since the Senate last passed a real budget.
In part because of the Senate's failure to pass a balanced budget, we face a pending fiscal cliff that must be addressed before the end of the year. Financial markets and job creators are going to react to the uncertainty coming out of Washington. We need to act now, rather than kick the can down the road to a lameduck session of Congress at a time when it will be very difficult to make these types of decisions, where things are going to be rushed and Members are not going to have an opportunity to focus in a thoughtful way on the right solutions for this country's future.
One aspect of the fiscal cliff we are talking about is the pending $1.2 trillion sequestration scheduled to go into effect on January 2, 2013. I, along with Senator Sessions and others, have pushed for more transparency from the administration as to how they plan to implement sequestration, a provision that was adopted just last week as part of the farm bill. This information is critical so Congress and the American people have a full understanding of sequestration's impact. If Congress is going to consider delaying or replacing the defense sequester, we need this information in order to make those decisions.
House Republicans passed a bill last month that replaces the defense sequester scheduled to go into effect next
year, and it does so by finding savings elsewhere in the Federal Government. Yet the administration continues to stonewall requests by Congress to help us better understand where the planned sequester cuts will take place.
On the tax side, a family of four earning $50,000 per year would see their tax bill increase by $2,200 next year, according to the House Ways and Means Committee and the Joint Committee on Taxation.
The Joint Committee on Taxation also estimates that nearly 1 million business owners would face higher taxes if the top two tax rates increase. Yet not one vote has been scheduled in the Senate to prevent this ``taxmageddon.''
In contrast, House Republican leaders have a different view, and it is expected the House will consider an extension of the current tax rates next month which will then come to the Senate.
The economy continues to grow at a very slow rate. Unemployment remains above 8 percent. Congress must get to work to jump-start our economy and put this country on a sustainable fiscal path. We need to act now rather than to kick the can down the road.
To put a fine point on that, we already know the fiscal cliff we will run into at the end of the year is going to have a profound impact on the economy next year because the Congressional Budget Office and other analysts have looked at it and determined it could cost us as much as 1.3 percent of economic growth in the first half of next year--which, translated into actual jobs numbers, is about 1.3 million jobs that would be lost--because of this fiscal cliff, if it is not dealt with.
But there is also a more immediate concern. That is the uncertainty created by the fiscal cliff. Decisions that are being made right now by people across this country, by job creators, small businesses, and investors are shaped by and based upon the fiscal cliff that is going to occur at the end of the year. The Congressional Budget Office has also suggested this is not only something that is going to have an impact down the road, but it also could have an impact right now as the economy contracts as a result of that uncertainty and investors and small businesses and job creators take their capital and keep it on the sidelines as opposed to putting it to work creating jobs and growing their businesses. The Congressional Budget Office has suggested it could cost us one-half percent of economic growth, not next year but this year.
That is why it is so important we work together to address the fundamental issues that are going to impact this economy before the end of this year. As I said, we have to address the rates. The rates that are going to expire at the end of the year include the marginal income tax rates, the dividend rates, the capital gains rate, estate taxes, and all kinds of other provisions in tax law that expire at the end of this year. If one is a small business or an investor and they are thinking that starting January 1 of next year they are going to be facing a massive tax increase, obviously, they are going to think long and hard about putting their capital to work now to create jobs and grow the economy.
In fact, I think for many small businesses, as they look at the circumstances they find themselves in, they are faced not only with the fiscal cliff, the potential tax increases, but also a massive amount of regulation that makes it more difficult and more expensive for them to create jobs.
Those are the issues we should be focused on because the most important thing we could be doing right now is getting the economy growing and expanding again and creating jobs for
American workers. That is not going to happen if we don't take steps to avert what is clearly a terrible disaster waiting in the future with the fiscal cliff and all the tax increases that are going to occur at the end of the year.
The Joint Committee on Taxation has said 53 percent of passthrough income would face higher taxes on January 1 of next year. That is all the S corporations, all the small businesses, all the folks out there in our economy, the entrepreneurs, who are the people we rely upon to get our economy going again and to put people back to work. They are looking at those types of tax increases, starting January 1 of next year, that are going to make it very difficult for them to make the investments that are necessary to get this economy growing at a rate that will generate the kind of job creation that will get Americans back to work, that will get this unemployment rate back down, and start creating confidence in the American public about the future of our economy.
I would close by again saying this is not something we can afford to kick down the road. We have done that for way too long. We have a massive problem ahead of us with regard to entitlement spending which has to be addressed in the form of entitlement reform. We need to reform our Tax Code to make it more simple, more clear and more fair and to create a more competitive Tax Code with the countries around the world with which we have to compete. We need to do something about this burden of regulation being placed upon our businesses, which is making it more difficult for them to compete in the world marketplace and certainly making it more difficult for them in the near term to do what is necessary to get jobs created in this country and get Americans back to work.
I hope we can do that. It would be my expectation that the Senate, if and when the House passes legislation to extend the tax rates--which I am told they are going to do sometime next month. I hope the Democratic majority in the Senate will take that up and that we will put a bill on the President's desk that will provide the kind of certainty that is necessary for our small businesses and our job creators as they look at the future that will enable them to move forward with those investments, put their capital to work, and put American workers back to work.
I yield the floor.
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