In a speech on the Senate floor today, U.S. Senator Orrin Hatch (R-Utah), Ranking Member of the Senate Finance Committee, outlined how the President's plan to raise taxes on the top two marginal tax rates will severely hurt economic growth and job creation by hitting millions of small businesses with higher taxes. Hatch further called on the President to work with Congress to reform America's entitlement programs as a means of solving America's debt crisis.
"Republicans support low marginal rates because we know that by raising rates you hamper the efforts of investors, small business owners, and most importantly, the American workers they employ," said Hatch. "Republicans are averse to rate hikes that would have a detrimental impact on people's livelihoods. We are averse to rate hikes that would undermine the prospects for fundamental tax reform that promotes fairness and economic growth. And we are certainly averse to a discussion about increased revenue in the absence of serious talk about spending reform."
Hatch further called on the President to come to the table and offer solutions that will help preserve the long-term viability of the nation's entitlement programs.
"The President told the American people that he wants a balanced approach," said Hatch. "My hope is that the President comes forward with his own details on how he would fix the entitlement spending programs. And I mean real details on real proposals with real teeth; not the window dressing in the President's budget that even Democrats rejected."
Hatch concluded, "It is time for the President to put away his campaign talking points, engage in finding a balanced solution to our debt crisis, lead the country, and protect American small business, their workers, and our children from a dim fiscal future.
Below is the text of Hatch's full speech delivered on the Senate floor today:
Mr. President, in less than a month American taxpayers face the greatest tax increase in our nation's history.
Two years ago, the President and Senate Democrats opted to postpone these tax increases for two years. They did so knowing that raising taxes in a weak economy is an unnecessary and counterproductive jolt to the system.
Since then, however, the President has been single minded in arguing for tax increases on certain wealthy taxpayers. He and his Democratic friends promoted these tax hikes in the name of a so-called balanced approach to deficit reduction.
And now, with the country fast approaching the fiscal cliff, it is time to pay the piper.
But as the President issues ultimatums about what kind of tax increases are necessary to avert the fiscal cliff, it is worth noting that he has abandoned any pretense of seeking a balanced approach to deficit reduction.
Last week's proposal from the White House amounts to little more than massive tax increases -- by the way, far in excess of the tax hikes that he ran on or anything that Senate Democrats would support -- coupled with new spending.
And his response to Speaker Boehner's balanced plan is raise taxes today and next year we will come back and discuss raising taxes again.
The President's commitment to a balanced approach of new tax revenue and spending reforms has morphed, post-election, into new tax revenue and increased spending. And to cap it off, they have thrown in a fresh demand that would eliminate any limit on the federal debt.
The proposal outlined by Treasury Secretary Geithner last week, shows that if given the chance, Democrats will never use new taxes to reduce the deficit.
They will instead use it to pay for larger government, more public workers, and more government waste.
We need to have a serious conversation about our federal debt, which is now over $16.3 trillion and growing.
How do we get that number under control?
The President and his Democratic friends have suggested for years that they can do it on the revenue side, specifically by taxing the wealthy.
Yet, the new taxes on the rich promised by the President during the campaign, would reduce the next 10 years of deficits by only 8 percent.
So where is the rest of the money coming from?
We need to have a serious conversation about spending, but so far the President, Congressional Democrats, and the liberal interest groups that support them, have refused to engage.
All I can say is that Republicans are here, and we are ready to talk. We are ready to reach a balanced resolution that would spare the American people from the consequences of going over the fiscal cliff.
As we attempt to reach a meaningful resolution of this debate in the coming weeks, there are three guideposts that I keep in sight.
First, is the cliff itself.
Going over it would be the height of irresponsibility.
According to Congressional Budget Office, going over the cliff will reduce GDP growth to a negative .5 percent next year, throwing us back into recession and causing unemployment to surge to 9.1 percent or more.
But it seems increasingly clear that the President and Democrats in Congress are content to go over the cliff, regardless of the outcome.
Leading Democrats have expressed, on several occasions, their openness toward going over the cliff. The question is why. Why would the President do this? Why would Democrats jeopardize the livelihoods of hundreds of thousands of American workers and the economic security of their families?
Why are they putting raising tax rates on a few ahead of the wellbeing of all? Republicans are working to avoid this outcome.
We want to avoid raising tax rates. We have a good argument for that. We believe it hurts the economy by harming incentives to work, save, and invest.
Republicans have expressed some willingness to work with the President to raise revenue without raising tax rates, but the President refuses to budge.
After all, he argued during his reelection that the deficit reduction math does not work otherwise.
This leads me to my second guidepost in this debate. It is the President's math that does not work.
And his math is off in multiple ways. Let's start at the beginning. Last year's deficit was $1.3 trillion. Next year's deficit is likely to exceed $1 trillion for a fifth year in a row.
So what would the President's tax hike proposal raise in terms of revenue? What would it have done to last year's $1.3 trillion deficit? And what would it do to reduce our debt over the long-term?
If all of the 2001 and 2003 tax relief were to expire, it would reduce the deficit by $426 billion over one year. To put it another way, the full extension of the current bipartisan tax relief would cost $426 billion over one year.
That is a lot of revenue. But the President and congressional Democrats -- or at least most of them -- have no desire to see all of this tax relief expire.
In fact, their plan, should we go over the cliff, is to reinstate almost all of it. They say they only want to raise taxes on the rich.
So how much would it cost if we extended current tax relief for everyone but those making over $250,000, which some have set as the line for being rich?
Assuming that the estate tax stays where it is -- a fair assumption given the level of support for that policy even among Senate Democrats -- the cost of extending all of the tax relief except for those individuals would be $358 billion.
And given that certain Senators from high-income blue states are uncomfortable designating families making $250,000 a year as rich, it has been suggested that the current tax relief might be extended for everyone but so-called millionaires.
And how much would that cost? The one year cost of that tax relief would be $383 billion. There are a few different ways to look at these numbers.
One way is to compare the cost of the Democrats' tax plan with that of the Republicans. The one year difference between the Republican proposal of extending all of the tax relief, and the Democrats' proposal to raise taxes on the rich, is at most $68 billion and perhaps as low as $23 billion.
In other words, with a deficit of over $1 trillion, the President is willing to send us over the cliff for as little as $23 billion in additional revenue.
Another way to look at the numbers is to compare the cost of the Democrats' actual tax plan with the President's stated desire to raise revenue by $1.6 trillion.
I look forward to some enterprising reporter getting to the bottom of this one. The President says he wants to raise taxes by $1.6 trillion. And his Treasury Secretary suggests that Democrats are on board with this strategy.
Yet, the revenue generated by the proposals supported by real live Democrats seems to raise only between $353 billion and $383 billion.
So here's the question.
Where is the President coming up with another $1.2 trillion or so in tax increases that his fellow Democrats will support?
And I don't mean supported by Democratic pundits. I mean supported by the 20 Democratic Senators who will be facing their constituents in 2014.
The $1.6 trillion tax increase is lifted from the President's own budget. Later But that budget received no votes, Democrat or Republican, in either the House or Senate.
As I said, it is the President's numbers -- the numbers that Secretary Geithner was sent up here last week to promote -- that don't add up.
The President's insistence on a $1.6 trillion tax hike that is neither supported by the American people nor even elected Democrats isn't about deficit reduction.
It is about politics.
The President and Congressional Democrats think that they can bludgeon Republicans as the out-of-touch party of the rich because we support tax relief for everybody.
Let me say a few words in our defense.
First off, and I want to say this loud and clear, I could not care less about the financial well-being of the nation's rich.
Whether Warren Buffett is able to maintain his corporate jet is no concern of mine.
The continued ability of actors and entertainment industry executives to summer at Lake Como and winter in Saint Kitts is not on my list of priorities.
In fact, I believe that when we do finally engage in fundamental tax reform, it is worth our while to look at how these super rich shelter their wealth from the full burden of income taxation, while the middle class continues to suffer under both the income tax, and increasingly the AMT.
Still, I, along with most of my Republican colleagues, continue to promote the seamless extension of current tax policy.
And that is because of the impact of increasing marginal rates on small business owners, and the consequent impact on job creation and economic growth.
Republicans support low marginal rates because we know that by raising rates you hamper the efforts of investors, small business owners, and most importantly, the American workers they employ.
Republicans are averse to rate hikes that would have a detrimental impact on people's livelihoods.
We are averse to rate hikes that would undermine the prospects for fundamental tax reform that promotes fairness and economic growth.
And we are certainly averse to a discussion about increased revenue in the absence of serious talk about spending reform.
Mr. President, we keep hearing that Republicans are dug-in on the issue of taxes, and that their resistance to increased revenues is holding back the big balanced deal sought by the President.
This has to be one of the most misreported stories in my memory.
Many Republicans have stated openness to increased revenues.
But only as part of a balanced deal -- and only if revenue increases are coupled with entitlement spending reform.
This brings me to my third guidepost for this debate.
The President has shown a real stubbornness toward any reform of the spending programs that are the main drivers of our deficit and debt.
We hear constantly about the intransigence of Republicans with their anti-tax views.
Yet we do not see the same front page stories documenting the over-my-dead-body resistance of Richard Trumka and the AARP toward entitlement spending reform.
The President continues to call for a balanced approach to deficit reduction. But in practice, he is offering up all tax increases and no spending discipline. He has offered up nothing meaningful on entitlement reform.
The proposal put forward last week by Secretary Geithner was embarrassing. It did nothing to address spending, aside from wanting to increase it. But that is where the Democrats are. I understand the Democrats' predicament.
Right after the election, it appeared that the door was open. The President seemed willing to address tax revenue in a responsible manner -- a manner respectful of the legitimate concerns of the House majority and the 62.6 million individuals who didn't vote for him.
But within a week he was read the riot act by the unions and the AARP, who will resist any meaningful changes to the entitlement spending programs that are bankrupting the country.
I will soon outline a series of entitlement spending changes that could -- and should -- be supported on a bipartisan basis. The President told the American people that he wants a balanced approach. My hope is that the President comes forward with his own details on how he would fix the entitlement spending programs. And I mean real details on real proposals with real teeth; not the window dressing in the President's budget that even Democrats rejected.
The President has demanded a balanced approach. It is what he promised the American people. And it is what we are prepared to give him.
If the President wants to avoid going over the fiscal cliff, he can steer us away from it. The special interests, and his liberal base will no doubt cry foul, but they will follow him.
Not to put too fine a point on it, but if we go over the cliff, it will be because the President wanted it to happen. Even though he will never again run for any public office, he will have put cheap political points ahead of a reasonable deal that he claims to support.
This is deeply cynical, and the President should understand that when the history of this episode is written he will be portrayed not as a strong leader, but as one who wilted in the face of our generation's greatest challenge, caving to special interests over the wellbeing of the country.
When he faced the choice of tough statesmanship or easy accolades from his house cable network and a dead-ender base, he chose the latter.
It is time for the President to put away his campaign talking points, engage in finding a balanced solution to our debt crisis, lead the country, and protect American small business, their workers, and our children from an increasingly dim fiscal future.