The Fiscal Cliff
Floor Speech
Mr. CARDIN. Mr. President, I take this time to share the views of many people who I have talked to in Maryland, and I am sure the same has been said in Oregon and around the Nation. People are frustrated by the inability of Congress to come together on solving the so-called fiscal cliff. We understand this needs to be avoided. Going off the fiscal cliff could cause major damage to our economy.
If we take no action by January 1, as I am sure most people are now aware, tax rates will revert back to the pre-Bush tax rates. The alternative minimum tax that shields tens of millions of Americans from paying extra income taxes will expire and tens of millions of Americans will be subject to extra taxes. The unemployment insurance program, the extended benefit program, will come to a halt. The payroll tax holiday will end, and individuals' take-home pay will be reduced. We would have a serious problem on Medicare reimbursement to our physicians. They would be subjected to a significant cut, close to 30 percent, which would have an impact on seniors and our disabled population having access to physician care, and we would go through what is known as sequestration, which is across-the-board cuts to almost all Federal programs, ranging from 8 percent to about 10 percent. That would have a major impact on our entire country. We have looked at the numbers in Maryland, and it could mean as many as 60,000 jobs lost in our own State of Maryland. We have a large Federal workforce, with 5.6 percent of our workers working for the Federal Government. That type of across-the-board cut would have an incredibly negative impact on the people of Maryland and throughout the entire country.
We have to avoid that. The impact on our economy is estimated to be about 3 percent. We would go from a positive growth to a negative growth, throwing us into a recession. I understand the frustration of why so close to the end of the year we haven't resolved these issues. We should have resolved them. We should come together, work together to get it done. But I want to point out to the people I represent in Maryland and to the people of this Nation that we have to get this done right. There is a lot at stake.
We have to make sure our country can grow, that we can create the jobs we need to be competitive in the future. We must make sure we deal with this budget crisis in a way that allows us to invest in education, in job training and in rebuilding our highways, our bridges, and our energy grids. We have to make sure we can compete as a nation. That is why so many of us have said we have to have a balanced approach to dealing with the fiscal cliff.
This morning, I listened to Speaker Boehner say the ball is in the President's court. I couldn't disagree more with the Speaker of the House. I think it is important to point out that since we have been working on trying to deal with this deficit issue, we have already agreed to over $1 trillion in spending cuts--in discretionary domestic spending--in some of the most challenging areas that affect our most vulnerable people. We have implemented that, and this is since the recommendations of the Simpson-Bowles Commission came out. We took action and we imposed caps on discretionary domestic spending.
Our Federal workforce has been through years, a couple years of pay freezes. We have seen programs that have been cut back and the support they give to people who need help. We have already contributed on the spending side. Is it enough? No. Do we need to do more? Absolutely. But we have done that.
The next piece that must be done is the revenue piece. We can't have a balanced approach unless we have the revenues. So many of my colleagues have talked about this. Historically, our revenues are around 20 percent of our economy. They are now in the 15-percent range.
We have a way to do this. The Senate has come together on a way to do this. The Senate passed legislation that has been in the House of Representatives where Speaker Boehner is the Speaker of the House. It has been in the House now for months. What that legislation does, first, it gives predictability to the taxpayers of this country. It says the first $250,000 of taxable income will be subject to the current tax rates and will not go back to the pre-Bush tax rates. That gives certainty to the taxpayers in this country.
I have heard people say: That affects 98 percent of the taxpayers in this country. You know what. It affects 100 percent of the taxpayers of this country. I wish to stress that. If we pass the bill that was sent by the Senate to the House that continues in January the current tax rates for those with taxable incomes up to $250,000; yes, for the typical taxpayer in Baltimore City earning $20,000 to $30,000 of income, they will save $1,400 in taxes; and, yes, for a taxpayer earning $40,000 to $65,000 of taxable income, they will save $2,000. But guess what. A person with $250,000 of taxable income will save about $7,000; and if they earn $500,000 in taxable income, they will save that same $7,000. If they earn $1 million of taxable income, they will get that tax break also. It affects 100 percent of the taxpayers of this country.
What we are saying is we have to have some revenue in this equation. We understand that. Those who are the most well off, do they truly deserve larger tax breaks than that? I would suggest not.
It is not just the tax rates we sent over to the House of Representatives, we also corrected the marriage penalty so that wouldn't change on January 1, the child tax credit, and the AMT--the alternative minimum tax I mentioned earlier. As to the alternative minimum tax, if we don't correct that, tens of millions of Americans will pay extra taxes in the thousands of dollars starting January 1.
I have heard many debates on the floor of the Senate and in the House where no one wants that to happen. Then pass the bill we sent over from the Senate. If we do that, taxpayers don't have to worry about those rates going up and it gives them a little bit of confidence, hopefully, before Christmas, which would make the season a happier season for all.
This is a balanced approach. As I said before, we started with spending cuts. We have done that. The next step, Speaker Boehner has to deal with the revenue side. If the House passes the Senate bill, it provides about $850 billion in revenue from not extending additional tax relief for those whose incomes are above $250,000. I mentioned we already did over $1 trillion of discretionary domestic spending cuts, which would give us $850 billion of revenue, and that is not enough. We are going to need more revenue. It is not going to be easy to find. But by closing loopholes, we can get some additional revenues. We have all talked about tax reform. We can get some additional revenue from tax reform.
That brings us to additional savings, and we agree we can get additional savings. I have taken to the floor and talked about the fact that we are bringing our troops home from Afghanistan. I applaud the efforts of the chair to try to get those troops home sooner, and I agree with him. But our troops are coming home and our baseline budget reflects a much higher Active troop level than we need. It is called the overseas contingency accounts. We know there are savings there that can be achieved and we can use in that balanced approach to bring our budget under better control.
Just as we have gone through base realignment and closures in the United States, we believe we can do that throughout the world and that can also save us some money in the military budget. So there are military savings that can be achieved.
Yes, we can and must achieve savings on the entitlement side. I was listening to my friend from Iowa talking about the cost of health care. I agree with him. Health care costs have gone up too dramatically in this country. We have to bring down the cost of health care. We started doing that with the Affordable Care Act by investing in prevention--preventing readmissions to hospitals and dealing with high-cost interventions. That will help us bring down the cost of health care. We have to do more in that regard. If we bring down the cost of health care, we save money in Medicare and Medicaid, and we save taxpayer costs, but we also help our economy. What a lot of us are concerned about is just trying to shift the cost to beneficiaries. That doesn't help our economy and that doesn't help solve the problem.
I take the floor now just to challenge Speaker Boehner and say to him it is time to act on the bill we sent over months ago. Let us take the next step and let us work together and develop a framework so our committees can work and achieve policy changes that can bring in the additional revenues we are going to need and the additional savings we know we can achieve. We can do that working together.
I started by saying there are many people in our communities who are frustrated we haven't gotten this done by now. I share that frustration. We should have gotten this done a long time ago. I agree with them. But let's now move this week with the House passing the Senate bill we sent them providing predictability for the taxpayers of this country going into this holiday season. Let's reassure them that next year their rates will not be increased, particularly in this fragile economy. Let's set up a framework where we can responsibly work to reduce health care costs--in greater amounts, I agree--reduce some military spending, and do what is right in a real balanced approach to get our budget in better balance so our economy will grow and create the jobs we need.
It is most important for us to have a climate where we can create more jobs and the type of jobs we want--invest in education, construction, et cetera. That is what we need to do. That is where we need to come together as Democrats and Republicans to get the job done. I urge my colleagues, let's work and get this done as soon as possible.
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