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Public Statements

The Fiscal Cliff

Floor Speech

By:
Date:
Location: Washington, DC

Mr. HARKIN. Mr. President, over the last few decades, the real middle-class families in America--and when I say ``real middle class'' I mean those who are making $40,000, $50,000, $70,000, not $400,000 a year--have seen their jobs become more insecure and their wages stagnate. In fact, their income adjusted for inflation is less now than it was in the late 1990s. Their savings and pensions have shrunk or disappeared.

The cost of education has soared at the same time as the wealthiest Americans and large corporations grow ever richer and pay less and less in taxes. For example, just take dividends. Prior to 2003, dividends were always taxed as ordinary income. Now they are taxed at a less rate than the capital gains rate. Income of hedge fund managers is taxed at a lower rate than middle-class families--the so-called carried interest rule.

The share of our Nation's wealth going to corporate profits has been rising as the share going to wages and salaries is declining. This has led bit by bit, Tax Code change by Tax Code change, pension cuts by pension cuts, job outsourcing by job outsourcing to an economy that is out of balance, that threatens the very fabric of our society. That is because the gap between the rich and the real middle class grows ever wider. That is because our economy is driven from the middle out and not from the top down.

Our economy is driven by middle-class families with good jobs and money in their pockets to spend. So our first goal must be to put Americans back to work and to get our economy moving, to rebuild the real middle class now.

The average American across our land tonight--today--probably thinks what we are about here is just that, to solve our country's most pressing problem--creating new jobs, laying the foundation for future economic growth and, thus, reducing our deficits in the long term. But instead we are here tied in knots to avert a manufactured fiscal cliff which could have been avoided 6 months ago by the House passing S. 3412 to avert the tax hikes on 98 percent of Americans.

As I have said repeatedly, I will evaluate any such fiscal cliff legislation on how these proposed policies affect working families and the real middle class--again, the real middle class being those making $30,000, $50,000, $60,000, $70,000 a year. So I am disappointed to say, in my opinion, this legislation we are about to vote on falls short.

First, it does not address the No. 1 priority: creating good middle-class jobs now. Unemployment remains way too high. This bill should include direct assistance on job creation makers; for example, our infrastructure, education, and job retraining. How many jobs we see out there going wanting because people aren't trained for those jobs; yet we don't have enough money to put into job retraining. The legislation before us neglects our most pressing concern at the present time, and that is the lack of jobs and the lack of qualified people to fill those jobs.

Secondly, this proposal does not generate the revenue necessary for the country to meet its needs for everything from education to job training, infrastructure, and research and development. The idea that people earning $300,000 to $400,000 a year could not pay the taxes they paid in the 1990s when the economy was booming is just plain absurd. But that is what we are being told; that people who make $300,000 or $400,000 simply cannot pay the same taxes they would have been paying in the Clinton years.

Furthermore, these wealthiest Americans made a lot of money in the last decade. So what do we do? Now we are raising the estate tax exemption to $5 million. It was $1 million under the Clinton tax years. Now the few who are really wealthy, who made a lot of money, and who have accumulated this wealth, we now have raised the estate tax so they can pass it on without any of that gain ever being taxed because the heirs now get it with what they call a stepped-up basis. So none of that is taxed.

So what we see, then, are the few who are wealthy getting more and more wealthy. So wealth becomes even more concentrated under this system.

Now, some will say: What is the problem? You want to protect the middle class. They are in this bill. How can you object if some higher income individuals are protected as well? Well, I point out these are not unrelated matters. With government investments and government spending dropping, being squeezed every year by my conservative friends on the other side of the aisle, and with deficits remaining high, every dollar of sacrifice the wealthy forego is a sacrifice we will later be asking of real middle-class, modest-income Americans. Every dollar the top 2 percent of taxpayers do not pay under this deal, we will eventually ask folks of modest means to forego--to forego on Social Security or Medicare or Medicaid or Head Start benefits or other items that benefit the real middle class.

I believe it is gravely shortsighted to look at these issues in isolation from each other, especially since the Republicans have made crystal clear that they intend to seek mandatory spending cuts just 2 months from now using the debt limit as leverage.

No. 3. Why in this deal do we make the tax benefits for the rich permanent while the progressive tax benefits we put in place in 2009 to help people of modest means--why are those temporary? For example, the estate taxes that benefit the wealthiest are made permanent. The earned-income tax credit that affects the lower income, that is temporary. The income tax rates that are set now are going to be made permanent to benefit higher income individuals, but the child tax credit is made temporary. The AMT fix is made permanent, but the American opportunity tax credit for modest families to be able to afford to send their kids to college is made temporary.

In this deal we are about to vote on, logic is turned on its head. We provide permanent benefits to those who need it the least, and yet this deal sunsets the modest assistance to middle-class families--again, I repeat, middle class, real middle class; not $400,000-a-year middle class, I mean the real middle class.

I think it is quite telling that earlier this last evening, Grover Norquist said he is for this bill, but our former Secretary of Labor Bob Reich is opposed.

So maybe now I guess we are all believers in trickle-down economics. Not I. I guess we now redefine the middle class as those making $400,000 a year when, in fact, that represents the top 1 percent of income earners in America, not the middle class. So I guess that we now accept as normal practice in reaching bipartisan deals that the most vulnerable in our country, such as those who are out of work and who depend on unemployment benefits, can be held hostage as a bargaining tool for more tax breaks for the richest among us.

I am not saying that everything in this deal is bad. There are some good parts. But I repeat, I am concerned about this constant drift, bit by bit, deal by deal, toward more deficits, less job creation, more unfairness, less economic justice--a society where the gap grows wider between the few who have much and the many who have too little.

Mr. President, for these reasons, I must in conscience vote no on this bill.


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