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Public Statements

The Fiscal Cliff

Floor Speech

By:
Date:
Location: Washington, DC

BREAK IN TRANSCRIPT

Mr. PAUL. Mr. President, some of you may have heard that there is something called the fiscal cliff approaching and that we must do something about it or we will go over that cliff. But if you want to fix and do something about going over a cliff, you have to know what is the fiscal cliff. Well, the fiscal cliff, apparently, is taxes going up. So it must be a bad thing if your taxes go up.

People have said: Well, it is kind of like having people drowning. And people are drowning. What does that mean? That is a bad thing. Taxes going up is a bad thing. So what are they telling us? Let's save 98 out of 100 of them. Well, that sounds pretty good. I am for saving as many as we can. But that sort of implies that our policy is that drowning is a good thing; that we are going to let 2 percent drown; that raising taxes is bad if it happens to everyone--it is a cliff--but it is OK if it only happens to one or two people, and maybe you do not know them, and maybe they are rich people and we don't care.

Does anybody work for rich people? Does anybody know somebody who works at a car lot selling expensive cars but that person only makes $40,000 a year but he sells cars that are purchased by rich people? Does anybody remember the yacht tax? We were going to go get those rich people--had a special tax on yachts. Guess who lost their jobs. The working guy making $50,000 and $60,000 a year, because the rich people went to the Bahamas to buy their yachts. This is not about getting rich people. This is about what it will do to the economy, what it is going to do to the average middle-class person who works for a rich person.

But you have to understand what the fiscal cliff is. You have to understand that the President is telling you that it is a cliff and it is bad, and everybody on television thinks it is terrible to go over the cliff. What is the cliff? Taxes going up. But if it is bad for taxes to go up for a bunch of people, why it is good for taxes to go up on a small portion of people?

You say: Well they are rich. They can afford it.

Here is the problem. The rich pay most of the taxes in our country. The top 2 percent pay half of the taxes. What you are saying is that they are rich and they can afford it. But that is half of the Nation's income that will have increased taxes. You will take money from the productive sector, which is the private sector, and you will put it into the nonproductive sector, which is Washington.

So if you want ditches to be dug and then to be filled again, send more money to Washington. But if you want jobs to be created, if you want the economy to thrive, you should want to leave that money in your community. It should not matter to you whose money it is or who has it, you want that money--in my case, we want that money in Kentucky. We do not want to send it to Washington because there is no objective evidence that the money is well spent up here. There is no objective evidence that we are good with money up here. We should not send more money up here. We should leave more money in the private sector.

Now, Milton Friedman recognized this when he said: Nobody spends someone else's money as wisely as you spend your own. That in a nutshell, that in one sentence explains to you why the private sector is more efficient than the public sector. The public sector--it is not our money. So those of us up here who will spend it--that is why they spend $1 trillion more than they have each year. That is why they break their own budgetary rules. That is why there is no budget. That is why we live in an era of runaway spending. That is why your government is insolvent, your government is bankrupt.

Guess what. When you raise taxes on 2 percent of the people, there is a chance you will not get any more tax revenue because when you raise tax rates, you sometimes get less revenue. And the converse is true--sometimes you lower rates and you actually get more revenue. In the 1920s we lowered tax rates, and we got more revenue. Guess what. The rich paid a higher percentage of the revenue when we lowered rates.

We did it again in the 1960s under Kennedy. We did it again under Reagan. We grew at 7 percent one year under Reagan because we lowered rates and we unleashed an economic boom. That is what we want.

Do we want a government that is just envious, jealous, and wants to punish people or do we want a government that has sane and rational policies that will allow the economy to grow? That is what happened in the 1980s. We had 7 percent growth one year. We had millions of jobs created.

Mark my words. You will raise tax rates, and you will feel good because you went after and got those rich people because you said you were. You campaigned against rich people, you have enough envy whipped up in the country, you are going to get them, and you are going to stick it to those rich people. But guess what. You may not get any more revenue, you may not get any more economic growth, but you can say: I stuck it to the rich people.

That is what we are talking about. Some of you may say, well, we are going to do this, but maybe we will do something about spending at the same time. The one thing they are taking off the table is spending restraint. There will be no spending restraint. In fact, whatever deal comes out of here will increase spending. That is part of the deal. We are going to raise taxes, and we are going to raise spending. Tell me what is good about that.

There is a cliff approaching. It is not the cliff we hear about on TV. The cliff is a debt cliff. There is a debt crisis in our country. We now have a debt that equals our GDP. Our debt equals our economy. We are borrowing--while we are today dithering over a deal that will do nothing--we will borrow $4 billion today. We are borrowing $50,000 every second. Each man, woman, and child in this country owes more per capita in debt than they do in Greece.

So, by all means, let's complete a deal today so we can go home. Let's complete a deal. Let's raise taxes. Let's stick it to those rich people. Let's not touch spending, and let's pretend as if we have done something. The deal will do absolutely nothing to save this country.

Two-thirds of our spending is entitlements. The President has taken entitlements off the table. We will not reform the entitlement programs. Why are the entitlement programs broken? Is it Republicans' fault or Democrats' fault? No, it is your great-grandparents' fault. They had too many kids. It has nothing to do with partisan politics. There were a whole bunch of babies born after the war, and then there have been less babies born with each generation. It is nobody's fault, but it is not working. We spend more on Social Security than comes in in taxes. That is a problem.

On Medicare, it is even worse. We spend $3 for every dollar we collect in Medicare. Does anybody think that is going to work? It has been going on for a long time now and it is getting worse. We owe $35 to $40 trillion on Medicare, and it is not getting any better.

So what do the retirement groups say? AARP says: Absolutely, don't touch it. Oh, that is great. That is part of the solution. Don't touch it.

What does the President say? Entitlements are off the table.

What does the majority leader say? We will not do anything about entitlements. Oh, well, great. This is going to be a real great solution. We are really going to do a lot--but we are going to stick it to rich people.

I hope nobody works for any of these rich people. I hope nobody sells any of this stuff to rich people.

So the thing is, look at what is going on up here, and when you ask for action, don't ask for any action. We have to figure out what the problem is before we can get to what we need to do.

People say, well, we have raised taxes; we just need more revenue. Spending, as measured as a percentage of the economy, 4 years ago we were spending 20 percent of our GDP. We are now spending 25 percent of our GDP. When we say on our side that it is a spending problem, it absolutely is, it absolutely is, and it is out of control.

Guess what. Most of it is called mandatory spending. That means entitlements. We can't do anything about it. They are now taken off the table.

Now, about a year ago, you may remember there was this big debate, the Budget Control Act. There was a big debate over raising the debt ceiling, and they attached to it some slowdown in spending. Now, these were not cuts; the sequester is not a cut in spending. It is repeated all the time on TV that the sequester is a cut, but it is not a cut; it is a slowdown in the rate of growth. But it is at least going in the right direction.

So what is the one thing we hear now that is going to be part of this deal? We are going to get rid of the sequester. So the one even pretend, make-believe attempt to try to slow down spending, they are going to jettison it. They are going to kick the can down the road--but we are going to get those rich people. We are going to attack those rich people.

We have to wake up soon as a country. We are literally insolvent. Some say, well, we are a great and powerful country. Bad things could never happen to us. It can, and it has happened to great civilized countries. Do you know what they do. Great and civilized countries can destroy their currency. We have printed trillions upon trillions of dollars, and we are in danger of destroying the very value of our currency.

So instead of having a President who runs around saying he is going to stick it to rich people, what we really need are honest people to go around the country and say to people: If you are working class or you are retired, the government is stealing from you. The government is stealing your savings through big government. On the one hand, they offer you something. They offer you baubles. They offer you something for free: Here is a cell phone. Just take the cell phone and vote for me. It will be OK.

The problem is, it is not free. On the one hand, you get the free cell phone. On the other hand, you get $4 gas. On the other hand, you get food costs rising.

Why do prices go up? Because we run a deficit giving you free stuff, and then we print money to pay for it, and that steals value from what you have. It is not that gas is more precious; gas is rising because the value of the dollar is shrinking. Food is rising because the value of the dollar is shrinking.

So big government isn't your friend, and deficits are not your friend. We hang in the balance up here and nobody is serious about it.

What is the one thing that has been taken off the table? Spending. We will not cut any spending. So we are looking for a deal that will raise taxes, which everybody seems to equate with drowning--except we are only going to make a few people drown, and they are rich anyway. But I think drowning is a policy. Drowning, even if it is selective drowning, being in favor of selective drowning is not a good policy.

What I have said and what I tell people is let your representatives know. Let your Senators know that you would rather have some kind of serious fix to the problem rather than kicking the can down the road; that you would rather have them actually do something that would allow the economy to grow, would allow jobs to be created, and, as a consequence, government would bring in more revenue.

The only thing proven to ever bring in more revenue is economic growth. What is going on right now? We are growing at a little under 2 percent. When the President, 2 years ago, extended all the tax rates and chose not to raise tax rates, we were growing faster. He said we don't want to rock the economy, and he agreed to extend all tax breaks. But now I think he is hell bent on raising taxes.

Realize that what you are going to get is raising taxes, more money taken out of the private sector and given to the government, the inefficient sector. Don't count on that new money coming in going to make the debt smaller; count on it funding more programs.

You will notice, if you look carefully at whatever this fiscal cliff deal is, there will not be spending cuts, but there will be spending proposals. So we are going to try to tax rich people more and get more money. It may not work because often you raise rates and get less revenue. We are going to try that, but we take the money that we get from rich people, and we are going to immediately spend it on more foolhardy programs, which is what we have been doing up here. We are not going to fix the problem, we are going to perpetuate the problem.

What I would argue for is we should be doing the opposite. We, the Republican Party, the party of limited government and low taxation, should have no part in this. We should have no fingerprints on this, and we should in no way support anything that raises taxes because it is bad economic policy.

So I, for one, will not support any proposal that comes out that does not cut spending and raises taxes.

Mr. President, I yield the remainder of my time, and I suggest the absence of a quorum.

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