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Mr. PORTMAN. Madam President, I rise in support of Senator Sessions' motion to recommit on a balanced budget. I think it is important that we have a balanced plan before us, as we have talked about a lot today, but that means balancing the budget, just as we ought to do in our families and people have to do in their businesses. States all around the country have to do it. Local governments have to do it.
Let's stop spending more than we take in. We can do it over time and without making the kind of severe cuts that were alleged earlier. We can do it by growing the economy and restraining spending. So I am happy to stand in support of that.
I stand here because I am worried about where we are headed. Our debt now is about $140,000 per household. Think about that. For all of the folks watching today, on average, $140,000 is what every household in America owes on this debt. This is now something that, in my view, can put us in a perilous situation. Our economy is already weak and we have this huge debt and deficit, which is something that worries me. I think our country is in trouble.
The Democrats have a proposal. Their budget is before us now and this is what we are talking about. It adds another $7 trillion to that debt. It actually doesn't deal with our budget problems. In fact, it actually makes them worse, which I will talk about soon.
Let me for a minute, if I could, talk about where we are. There is a lot of discussion on the floor about, Gosh, we need to raise more revenue and how this is not about spending; it is about taxes. Republicans are saying, No, the problem is spending. Let me explain why we are saying that. It is arithmetic. It is math. It is what the numbers show.
This is from the Congressional Budget Office. This is the nonpartisan group here in Congress that tells us how much we are spending, how much revenue we are bringing in, and then they make a projection. They did this about 3 years ago. They said, Here is where we are heading as a country. Here is where we are now. Tax revenue is the blue line and spending is the red line. By their projections, by 2015, a couple of years from now, we are going to be back up above the historical levels.
Historically, taxes have been about 18 percent of the economy, and that is the way economists like to look at it: What is the percentage of the economy? Revenue has been about 20 percent. So here is 18 percent and here is 20 percent. This has been the average.
What they are saying is, actually it gets up to just over 19 percent in a couple of years, by 2015, and then stays up above the historical average over the next decade. In fact, what they tell us is that over the next decade we are going to have the second highest amount of revenue that we have had in the history of our country except for one other decade.
So when we say it is spending, that is the issue. It is because the revenue which, as we know, impacts the economy--the more revenue we take out of the economy the harder it is for the private sector to get ahead and to create jobs. We are saying, by the projections of this nonpartisan group, they are going to be slightly above the average.
The problem is spending. What they tell us is that in a few decades--here is 2040--spending is going to get so high that there is no way to catch up to it with taxes. We can't even do it under the income tax system. It is impossible.
Why do we say spending is a problem? Because if we don't deal with this issue, our kids and grandkids are not going to have the economic future we hope for them. The prosperity of this country will go down the drain because this spending level will make it impossible to create prosperity. That is the issue before us today. Yet, again, we have a budget before us that, unfortunately, doesn't address that issue. In fact, I would argue that it makes it worse.
Some have said, Gosh, we ought to be increasing taxes $1 for every $1 of spending reductions. What I would say to that is pretty simple. This line here is about 19 percent of the economy. That is the revenue line. And that is very close to the historical spending line, which is about 20 percent. So let's take 19 percent as the revenue line. The Democrats, who have talked today on the floor about $1 of revenue for every $1 of spending cuts, what do they mean by that? Well, this is 39 percent up here, here is 19 percent. So if we take $1 from each as a percent of the GDP, it would go to about this line here. Where is that? Well, 19 and 39, it is about 29 percent. What does 29 percent mean? That means we would have a government bigger than we have ever had in the history of this country. Again, the average has been about 20 percent in this country. That means we would have to have huge tax increases to get to balance. Nobody on this floor, Democrat or Republican, is talking about tax increases of that magnitude.
Why? Because that would be about doubling the taxes in this country. So everybody listening today would be looking at their taxes and saying: My gosh, my taxes just went up by 100 percent. That is what that would mean. It would mean the biggest government in the history of our country, so the scope and the size of government would grow.
So when you hear "1 to 1,'' I hope you will just think about it in terms of what does this mean based on these projections that have been given to us by this nonpartisan group. It means a different country. It means a much bigger government. It means a much bigger burden of taxation. It means we end up not looking like the entrepreneurial, innovative America that has been on the cutting edge and has created the greatest economy on the face of the Earth.
That is our concern. That is why we say we have to deal with the spending. It is pretty simple. Again, it is really a question of math.
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Mr. PORTMAN. That is true. This chart is as a percent of the GDP. So, look, we all want the economy to grow. Actually, they projected it will grow under the Congressional Budget Office analysis. Even so, that growth in the economy cannot keep up with this great surge in spending.
So other folks have said on the floor over the last 24 hours: Well, gosh, let's go back to the Simpson-Bowles 3-to-1 ratio, where you have $3 in spending cuts for every $1 of revenue. That is what Erskine Bowles testified before the supercommittee on, that that was what their revenue was, $1 of revenue for every $3 in spending cuts.
That is also not what this budget does, this underlying budget, because it actually increases taxes dramatically. Even under their own calculus, again, it is 1 to 1. We have looked at it. We think the tax increase is between $1 trillion and $1.5 trillion in this budget. So it is the biggest tax increase in the history of the country.
What does $1 trillion mean--or $1.5 trillion? Well, it means that you are going to have to tax a lot of people other than rich people. I would refer you to an economic expert on this, a guy named Gene Sperling, who is down at the White House, who talks about these economic issues a lot. Here is what Gene Sperling said about raising $1 trillion. He said you cannot do it without hurting middle-class families. This is his quote:
[A] careful look at the math of these types of caps and limits [on tax preferences] shows that, once one takes into account the reality of their impact on the middle-class families and on charitable donation, plausible limits raise only a fraction of the $1 trillion or more some have suggested.
It is just too much to raise without going to the folks who are making less than $200,000 a year, less than $100,000, less than $50,000. So I would just suggest today that we have a problem in this country. It is a spending problem. Yes, we want to get the economy moving, and that will create more revenue. But we have to address that issue and, unfortunately, the budget before us does not do it.
In addition to having these huge tax increases--the biggest in the history of our country--this budget also has huge spending. The spending is actually an increase. When you wipe away the gimmicks that are in the budget that they have proposed--and we have talked a lot about OCO. That just means the spending in Afghanistan. They project that all this spending is going to occur that nobody expects is going to occur, so because it does not, they say, well, that is a savings. Then you are going to be able to spend more to make up for that.
Well, we are going to spend some more in Afghanistan. We all understand that. But we are not going to spend as much as the CBO projects. So those savings are not real, unfortunately. That is in their budget. That is a gimmick.
They also say: Let's do away with this so-called sequester. This is the thing that the Budget Control Act put in place. The Budget Control Act said: Let's find these savings of $1.2 trillion in spending. Yet in this budget, they say: No, let's replace that. So you have to add that as well because instead of $1.2 trillion, they are saying half of that is going to be new taxes. So that is less spending cuts.
So when you add all that up, and when you wipe all that away, it looks like the spending increases are about $900 billion over the next decade. So despite all these problems, we are talking about a huge spending increase.
Now, let's just talk for a second about what the spending increase is on. Here is the debt chart I have in the Chamber that shows the debt climbing to $24 trillion over the next 10 years, under the Murray budget, under the Democratic budget we are talking about today. But what is the problem? Well, we are starting to do more to get the discretionary spending under control. That means the spending that Congress appropriates every year.
But when you think about the budget as kind of a pie, 62 percent of that budget--the biggest piece of that pie--is not spending that Congress appropriates every year. Congress does not do it because it is on autopilot. That is interest on the debt that you have to spend; and then it is the very important, vital entitlement programs--Medicare, Medicaid, Social Security--but that are not sustainable in their current form.
By the way, everybody agrees with that. The President talks about it publicly. Everybody talks about it privately. But the fact is, these programs are incredibly important. We want to ensure that they can continue into the future. That is why we need reform--to preserve and protect them. Yet, unbelievably, this budget before us does absolutely nothing there. In fact, when you add up the changes on the entitlement programs over the next 10 years--which, again, is the biggest reason for these huge spending increases; in fact, as a percent of GDP, it is the only reason--all of the spending increases are because of those entitlement programs and interest on the debt, all of them as a percent of the GDP, all of them. Yet this budget does not touch it. In fact, it slightly increases spending as compared to the CBO baseline, as compared to what we are going to do anyway that the Congressional Budget Office just told us about.
That, to me, is the most amazing part of the budget. It is the responsible thing to do. Again, the President has talked about it. Members of both parties acknowledge this. We have to deal with this issue. If we do not, we are not going to be able to have these programs going forward.
Under their budget, the disability fund in Social Security--and a lot of people rely on disability--runs out of money in 2016.
Under their budget, the Medicare trust fund itself goes bankrupt in 2024.
Under their budget, Social Security's fund for senior citizens would go bankrupt in 2033, to the point that under law--remember this is just 20 years from now--a 25-percent benefit cut would be put in place.
That is what this budget would lead to. So it is hard for me to take it very seriously as a budget. It is, I guess, more of a political document.
The final thing I will say is, if we do this, if we go down this path of more spending next year, more spending the next year, huge increases in spending and taxes over the next 10 years, we will not only have a budget that is out of control--and, as I said earlier, risk us having a meltdown in terms of our economy because of a potential crisis we could have, like has happened in southern Europe; Greece is a country people talk about--but think about what it does to our economy.
This huge overhang of debt and deficits everybody now acknowledges is bad for the economy. Some people think it is worse than others think. But if you look at these studies--the Rogoff-Reinhart study has been talked about on the floor. I know that is the one that says, when you get to the level we are at now, you lose about 1 million jobs per year.
Well, something is happening in our economy, and I think a lot of it--the negative part of it--is because of this debt and deficit. We are living through the worst economic recovery since the 1940s. All of us are discouraged by it, Democrats and Republicans alike. The average growth rate was less than 1 percent over the last 4 years, and that is not acceptable to any of us. We have to deal with this issue because it is the right thing to do for our kids and our grandkids, as we have talked about, the right thing to do for these programs so they are viable and their trust funds do not go insolvent, but also for today's economy. If we do not deal with this issue we are not going to have people taking the risk, making the investment.
There are companies making money out there. Do you know what they are doing with it? They are keeping it on the sidelines because they are afraid of this, because they see this coming. They are worried about making the investments. That is how we are going to create the jobs.
Right now, in the weakest economy we have had in a long time--and the worst economic recovery since the 1940s--we are looking at unemployment numbers that are unacceptably high. We are looking at a place such as Ohio where we have a struggle with manufacturing. We are trying to get back on our feet. We are looking for economic growth again. We are not going to get it unless we deal with this issue.
The Heritage Foundation has looked at this budget, and they have done an analysis of it in terms of its impact on jobs, on the economy. They have said the budget will result in losing 800,000 jobs in our country. In my State of Ohio, they said we will lose 40,000 jobs. We cannot afford to lose 40,000 more jobs.
The nonpartisan Congressional Budget Office--which I mentioned earlier and is the group in Congress that advises us on the economy--has said this new debt will reduce long-term economic growth and cost jobs.
So, ultimately, this is about a choice. Do we want to expand government or do we want to expand the economy? Do we want to create the opportunity to get the private economy moving or do we want to grow the size and scope of government?
We have a fundamental choice to make in this Chamber with regard to this budget today. I am hopeful we will be able to amend the budget so we can take out some of the taxes and the spending and the borrowing, so that it is better for the economy. Even if we cannot prevail--and if this budget passes over the next couple days here--I still hope, as a Congress, working with the President, we can address this issue.
Once this budget debate is behind us on the floor, I hope we can sit down as Republicans and Democrats alike, as Americans, acknowledging that if we do not deal with spending, we cannot get this economy back on track, acknowledging that trying to tax, spend, and borrow your way to prosperity does not work. We tried it. We have seen the results.
We have also seen the opposite, over time, through the great history of this country. The time-honored principles that have made us this cutting-edge economy, that have made us the envy of the world, relied on entrepreneurship, innovation, keeping taxes low, keeping government spending under control, and encouraging the private sector to do what they do best, which is, to create jobs. This is why I oppose this budget. This is why I also support a better way, to bring back the jobs and get our country back on track.
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Mr. PORTMAN. Madam President, we have had a great debate here on the floor today about the budget. What we have heard is the fact that in the face of unprecedented debt and deficits, we need to get spending under control and grow the economy. Unfortunately, the Democratic budget that has been presented doesn't do that because it actually increases spending and increases taxes.
But there is an alternative, and that is to restrain spending in ways that are smart but also get this economy moving so we have more revenue and revenue the way we ought to get it, which is through growth. One obvious way to do that is through tax reform.
We just had a vote on a tax reform proposal. I am offering a couple of amendments that I want to talk about tonight. One is with regard to tax reform on the business side, where there is an amazing consensus now between Democrats and Republicans, the White House and the Capitol on how to get this economy moving again by ensuring that our Tax Code becomes more competitive globally--not to cut taxes, not to raise taxes, but in a revenue-neutral way to improve the way we collect taxes at the business level to be sure we can create more jobs at a time when we are suffering through the worst recovery we have had since the Great Depression.
Second, I am going to offer an amendment that ensures that we have the right information from the Congressional Budget Office and the Joint Committee on Taxation, which are the two groups who give us information here on Capitol Hill, as to what tax reform means because we want to be sure that as we reform our Tax Code, we do it in a way that is progrowth and projobs.
Fundamental tax reform should be done across the board, in my view, not just on the business side but also on the individual side. On the individual side, we have a great opportunity to broaden the base of tax and lower the rates to make the code again more progrowth. Most businesses in America pay their taxes through the individual Tax Code because they are what are called passthrough entities, about 85 percent of businesses--they tend to be smaller businesses. That is very important.
But tonight I want to talk about the other part of that, which is the business Tax Code that relates to primarily our larger companies and a lot of the international companies, so-called C corporations.
Back in 1986 we actually reduced the rate on the corporate side from 46 percent down to 34 percent. That was 1986. It was done in a bipartisan way with Ronald Reagan and Tip O'Neill, and the idea at that time was to take our tax rate down to the point that it was competitive, meaning that it was below the average of our global competitors.
In the intervening 2 1/2 decades, guess what has happened. Every single country of the developed world--the so-called OECD countries, our global trading competitors--every single one of them has reformed its tax code. They have lowered their rates, but they have also made their codes more competitive--every single country except us. So America has been on the sidelines while these other countries have moved quickly to improve their tax code. Why? Because they want investment, they want the jobs, and what has happened is, sure enough, they are more competitive.
Capital is now flowing outside of this country. We are losing headquarters. We are in a situation where if there is a foreign acquisition to be made, those companies in foreign countries have an advantage because they have a more competitive tax code. Our tax rate, which in 1986 was purposely put in place to be just below the average of all the developed economies in the world, is now No. 1. It is the highest rate in the world. That is a No. 1 we don't want to have.
Japan just lowered their rate last year, putting America as the top corporate tax rate in the world. This means, again, we are losing people, we are losing capital, we are losing headquarters, we cannot keep up.
So what is the solution? Well, let's go do what we did back in 1986 again, let's do it quickly, and let's do it on a bipartisan basis because everybody seems to agree that our current code is not competitive, that the rate is too high. We have some disagreements on how to correct it, but actually there is a growing consensus about that as well.
The White House has talked about this. In fact, in a February 2012 white paper issued by the Treasury Department, they said: Let's lower the rate of corporate taxation by broadening the base, meaning reducing or getting rid of a lot of the preferences that have built up in the Tax Code. By the way, hundreds of them have been built up in the Tax Code since 1986. So not only has our rate become high because other countries have lowered theirs, we have added more and more complications to our Tax Code.
It is not just the White House that is talking about this. In front of our committee, the Budget Committee, a professor came to talk to us--who was the Democrats' witness; this was not the Republican witness--who was gung ho also on doing corporate tax reform. This was the Democrats' witness. This is what he said:
..... corporate income tax's statutory rate of 35 percent is today far outside world norms. The rate needs to come down. ..... I therefore conceive of corporate tax reform as a roughly revenue neutral undertaking, in which the corporate tax base will be broadened through closing business tax expenditures and loopholes, and the resulting revenues used to pay down the corporate rate.
Pay down the corporate rate.
In the paper from the Treasury Department in February 2012, they said we should reinvest the savings we get from getting rid of some of these loopholes and expenditures and use it, as they said, to invest in lowering the rate.
So here we have an opportunity as a Congress--Republicans and Democrats alike--to do something that is good for jobs. By the way, the Congressional Budget Office has looked at this in terms of who benefits. It is not the corporate boardroom that benefits, it is the workers. They have said 70 percent of the benefit of lowering the corporate rate is going to go to workers in the form of higher salaries, better benefits, and more jobs.
By the way, the Congressional Budget Office has also said if you would like to get this economy moving, probably the best bang for your buck is going to be to do something on the corporate tax code because it has gotten so complex and the rate has gotten so high. If you do this, you are also doing something we ought to be doing generally in our Tax Code; which is you are not picking winners and losers. Instead of the government stepping in and deciding where resources are allocated, you have the private sector doing that, market forces doing that, which is going to help grow the economy.
So just as President Reagan and Democrats did in 1986, we should cap or eliminate inefficient tax preferences and loopholes, and we should use that revenue to reduce both the corporate rate and the individual rate, without adding to the deficit.
Another amendment of mine takes this same idea, which is tax reform on the individual-corporate side, and allows us, as legislators, to understand better what we are doing.
Right now, when the Congressional Budget Office and the Joint Committee on Taxation give us an analysis of taxes, they tell us the revenue is likely to be based on what they call a static score--a static score. It does not take into account the big macroeconomic changes you are likely to see from people's changed behavior from lower rates, for instance.
I will give you an example. Back in 2003, the capital gains tax, as you know, was reduced. So what did they say? Well, the Joint Committee on Taxation and CBO did their analysis, and they said: Well, that means, because you lowered the rate of taxation, you are going to get less revenue, right, because you have less taxes coming in. No. Because they lowered the capital gains tax, there was more economic activity. It turns out we actually got more revenue in. So in 2007 they said revenue was going to go down. In fact, revenues shot up. The same thing happened, by the way, back in 1997, the last time this Congress had a unified balanced budget. That was when Bill Clinton was President, and he worked with the Republican Congress to get some of the spending under control, as we talked about earlier. But they also cut the capital gains rate, and, lo and behold, as I recall, about $100 billion showed up on the revenue side that folks did not expect because we lowered the capital gains rate. Because of the behavioral change, the dynamic scoring, the macroeconomic scoring, showed that was going to happen, but the static score did not.
So as we begin to formulate what kind of tax reform we should do on the individual side and on the corporate side, wouldn't it be great if we had access to two kinds of analysis: one, the static score--and that will continue to be the official analysis; nothing changes there--but also why shouldn't we have access to the macroeconomic analysis--not done from the outside, not from groups from the outside that might have a pretty aggressive dynamic score, but let's just use the macroeconomic model that the Joint Tax Committee already does. In fact, they are required to look at it in three different ways. CBO already does. It does not add more work in the sense that this analysis is already being done; it is just that we are getting the benefit of it.
So this second amendment that I hope my Democratic colleagues will also support, as I hope they will the first one, says, quite simply: Let's have more information so we can make smarter decisions. Who could be against that?
Some have said: Well, we do not believe in dynamic scoring. Fine. If you do not believe in dynamic scoring, let's see what happens. We are going to have a static score, which will be the official score still--that is what we will have to use around here--and then we will have that dynamic score. Again, we want that so we can formulate a better tax proposal but also to know what the impact is going to be. We will see what happens.
My belief is that the macroeconomic score is more likely to be accurate, as it has been in the past, and over time I would not be surprised if this Congress decides: My gosh, that is more consistent with the behavior changes you are going to see with good tax reform. Let's make that part of the official analysis. But that is not what we are talking about tonight. The official score would still be the static score.
I believe this will enable us to be better legislators, and certainly it will enable us to have an opportunity, as we look at this budget deficit and these historic debts and the impact it is having on our kids, on our grandkids and on today's economy, to come together as Republicans and Democrats and do the two things that everybody knows have to be done: One, restrain spending, specifically to deal with these important but unsustainable entitlement programs--remember this: The Congressional Budget Office has told us in the report just about 2 weeks ago that the growth of Medicare, Medicaid, and Social Security, incredibly important programs--and that is why we need to save them--that growth will go up by 94 percent over the next 10 years. It nearly doubles. In fact, they have told us that as a percent of the economy, which is how they look at the spending--as a percent of the economy, the only growth in our spending over the next 10 years is going to be from these entitlement programs and interest on the debt. Other parts of our budget actually, as a percent of the economy, are going to be flat or even a little bit below as a percent of the GDP. But what is going to grow dramatically are these programs.
So we know we have to have entitlement reform to save these programs so that the trust funds do not go insolvent, which they otherwise will. But we also know as part of that we should do tax reform. Those two together--entitlement reform, smart reforms to make these programs work better to ensure they are there for the future,
and then tax reform that is progrowth, that is going to generate revenue, to help us because it will change people's behavior, which will change economic growth, which will, in turn, provide more revenue--revenue, really, the right way--will help us get the debt and deficit under control and at the same time give people the opportunity to get back to work, deal with the weakest economic recovery since the Great Depression, help us to get out of the doldrums we are in right now in this economy.
The shot in the arm that tax reform can give us--particularly if we have the right information from these organizations on the Hill: the Congressional Budget Office, the Joint Committee on Taxation--will enable us to move this country forward in ways that can be bipartisan, in ways that can be consistent with what the administration and the Congress are talking about: restraining spending, growing the economy.
I thank the Chair for letting me talk about this tonight. I look forward to having these amendments offered tomorrow. I hope my colleagues on both sides of the aisle will be willing to stand together and to say: Yes, we can do this. We can get this economy moving. We are going to have to change the way we deal with our tax system. We are going to have to retrain the spending. If we do that, our future can be brighter.
I yield back my time.
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