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Mr. WHITEHOUSE. Mr. President, let me first thank Chairman Levin for the immense amount of work and passion and good thought he has put into trying to accelerate the day when we can say good riddance to the sequester. He sees firsthand, as chairman of the Armed Services Committee, how much damage the sequester is doing to the military, to the soldiers and sailors and airmen and marines who honor us by their service, to the talented and loyal civilians who support their efforts. But families all across the country also are feeling the painful consequences of this sequester.
Just in my small State, Rhode Island, 8,100 folks have already seen their weekly unemployment checks reduced by $50. For a family struggling to get by, losing $50 can hurt. Federal rental assistance has been eliminated for 500 low-income Rhode Island families, which may cause some even to lose their homes.
Economy-wide, our nonpartisan Congressional Budget Office estimates that the $85 billion in sequester cuts this year will cost us 750,000 jobs nationwide. We have 12 million Americans out of work already. Why on Earth would we want to cut 750,000 more jobs?
As Chairman Levin said, it does not have to be this way. In fact, Leader Reid tried twice to bring up measures that would get rid of the sequester, but twice Republicans filibustered. Now they refuse even to allow the process to go forward that would negotiate a solution through the regular legislative process. They will not even let us appoint Senators to negotiate a compromise between the Senate and the House budgets.
It has been 61 days since we passed our budget, and each time we try to move the process along, Republicans object. If their rule is: I have to have it my way before I am willing to enter into negotiations and I need a guarantee, I would like some of that deal too. I have some things I feel pretty passionately about, and if they want to play by those rules, then we should all be playing by those rules. If not, then let's follow the regular order and let the process of democracy work.
From government shutdowns to Federal default, the other party has a strategy: to manufacture one crisis after another, each time holding our economy hostage to demands for radical policies that the vast majority of the American people reject.
They demand the end to Medicare as we know it. The American people want no part of that. They demand cuts to Social Security. The American people want no part of that. They refuse to close a single--not one, not a single--corporate tax loophole. Well, huge majorities of Americans want that to happen. But our friends do not care. They are extremists.
It is not just the American public, by the way, that rejects the extremist tea party agenda. So do economists. What economists say has been confirmed in practice by the experiences of other nations that followed the Republican austerity strategy.
Republicans say budget cuts are necessary to reduce the deficit, but their fervor ignores the established economic effect that has during a recovery. Right now, for every $1 we cut, the economy shrinks by more than $1. Their theory is when you cut $1 in government spending, that releases the economy to grow more rapidly. Well, the fact is, during a recovery the exact opposite is true. The way this is measured is through an economic phenomenon called the fiscal multiplier.
There have been a number of recent studies that try to identify what the fiscal multiplier is right now, and they range from 1.4 to 3.7, which means that for every $1 you cut, the economy takes a $1.40 hit. There is an extra 40-cent harm for each $1 cut to our national economy.
If this one is right, 3.7, then every $1 cut is $3.70 worth of harm to our economy. It is a multiplier of damage from government cuts. So shrink the GDP, which we do if we have a fiscal multiplier of 1, and collect less taxes. Less taxes means less of the deficit reduction that is supposedly achieved by the budget cuts. It is a vicious cycle that could keep our economy weak and our deficits high. We can go backward, and Europe proves it from Spain to Portugal to Greece.
Countries slashed their budgets and things got worse, double-digit unemployment and negative growth. We have a U.S. unemployment rate of about 7.5 percent. That is way too high, but it is way better than 27 percent in Spain, 27 percent in Greece, and 16 percent in Portugal. We had 2.3 percent growth last year. They had negative growth rates. Negative growth rates. Their economies contracted.
The evidence from the austerity experiment is in countries that cut the deepest hurt themselves the worst. As we can see, employment in the eurozone is worse by about 20 percent since the major austerity programs kicked in.
Over that same time period unemployment in the United States is better by about 25 percent. Their policies, unemployment worse by 20 percent; our policies, employment better by 25 percent. A lot of these Republican calls for harmful U.S. austerity cited a 2010 paper called "Growth in a Time of Debt'' by Harvard economists Reinhart and Rogoff. Republicans loved Reinhart and Rogoff. They cited them at least five dozen times on the House and Senate floors to justify their demands for budget cuts.
They cannot get enough of Reinhart and Rogoff. It turns out there is a big problem. There were numerous errors in Reinhart and Rogoff's computations; math errors, programming errors, dropping a column of data. Oh, oops. With the fiscal multiplier over 1, the best thing we can do to accelerate our recovery is to lift the harmful European-style sequester cuts. The Job Preservation and Sequester Replacement Act of 2013 would do just that, through September 30, giving us time to negotiate a broader compromise.
Cosponsored by Chairman Levin, Chairman Harkin, Senator Lautenberg, Senator Merkley, Senator Schatz, and Senator Warren, it would replace the sequester from the Buffet rule and from closing corporate tax loopholes, sensible tax changes that on their own we should do because they make the Tax Code fairer.
The Buffet rule would ensure that multimillion-dollar earners pay at least a 30-percent effective Federal tax rate. Last year we debated whether the top income tax rate should be 35 percent or 39.6 percent. But the fact is that many at the top, people making hundreds of millions of dollars in a single year, will not pay anything close to that rate. Why? Because the Tax Code is riddled with special provisions that favor ultra-high-income earners.
For example, investment income is taxed at the special rate of 20 percent. The so-called carried interest loophole allows billionaire private equity fund managers to pay this low rate. So many of them pay the same tax rate or even less than a hard-working average firefighter or brick mason in Rhode Island making $50,000 a year. So at $200 million a year, they are paying the same tax rate as folks making $50,000 a year. The Buffet rule follows the common sense that people earning millions of dollars a year, even hundreds of millions of dollars a year, should pay higher tax rates than middle-class families. It would also cut the deficit by $71 billion.
Another loophole, the so-called Edwards-Gingrich loophole, lets high-earning professionals dodge paying payroll taxes by calling themselves corporations. We close that too, saving another $9 billion. We save another $3 billion by going after a deduction that allows private jet owners to depreciate their planes faster than commercial aircraft are allowed to be depreciated, another commonsense change.
The fourth part of the proposal would contribute $24 billion to lifting the sequester by ending tax breaks for Big Oil. Over the past decade, the five largest oil companies have reaped over $1 trillion in profits. That is trillion with a ``t''--$1 trillion in profits. While they are making that massive profit, they nevertheless pull strings in Congress to keep billions of dollars a year that regular taxpayers have to cough up for them in tax giveaways. As with all of the elements in this bill, repealing Big Oil giveaways is something we should be doing anyway, just because it is the right thing to do.
Finally, we end a tax break for companies that ship jobs overseas. Believe it or not, the Tax Code allows manufacturers to indefinitely delay paying taxes on profits in overseas operations. Ending this unfair and un-American advantage would lower the deficit by another $20 billion. Each one of those five reforms would make the Tax Code fairer for all Americans. They are each worth passing for that reason alone. They are embarrassments in our Tax Code. Getting rid of them could stop the sequester while Democrats and Republicans work together on a balanced deficit reduction package; that is, of course, if we could get Republicans to actually work with us and negotiate and go through the regular order they have claimed for so long to seek, to get to a balanced and negotiated deficit reduction package.
But as Chairman Levin pointed out, at the moment they refuse to even appoint conferees to begin the process. They want to be assured they will have it their way before they even begin to negotiate. As I said earlier in the speech, if that is the way they are going to behave, I want some of that action myself. I have many things I feel very strongly about.
I could be in a position to say I will not allow us to go to conference either until we are clear that we are never going to do chained CPI and put that burden on our Social Security-receiving seniors. I could do that and say we are never going to go to conference unless I get a guarantee that we are going to get a carbon fee so the big polluters are paying their share and we are not having to subsidize what they are doing to our atmosphere and oceans. I could say those things. Any one of us could say those things.
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Mr. WHITEHOUSE. That is a guarantee of total gridlock and failure. That is why it is so important that no one in this body try to use that kind of hostage-taking extremist tactic, rather than allowing the regular order to continue.
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Mr. WHITEHOUSE. Nobody has spent more time and more energy and put more effort into the way in which American income gets hidden offshore so people can avoid paying taxes and corporations can avoid paying taxes than Chairman Levin. He is our expert. There are indeed other loopholes that are exploited, primarily by corporations but also by very high-income taxpayers, hiding money in the Cayman islands, putting assets into Ireland and other tax havens, and refusing to treat them as American, even though it is nominally an American company. There are enumerable tricks.
I will close by making one point. Very often people look at what we are trying to accomplish, and even actually pretty honest reporters will say the Democrats actually want to raise taxes. That is the fight. Republicans want to cut spending; Democrats want to raise taxes. No. We raised taxes once already. We raised the rates for people over $450,000 thousand a year in the last big agreement. What we want to do now is to go into the Tax Code and close down the loopholes. That is all we are looking for.
What most Americans do not understand is that if we look at how much money goes out the backdoor of the Tax Code through loopholes, through special rates, through exemptions and so forth, it is very nearly the same amount of money that is actually collected through the Tax Code and becomes the revenue of the United States of America. We let almost as much money out the backdoor of the Tax Code as we collect through the Tax Code. If we take a look at the areas where Chairman Levin has done so much good research, that money actually never gets into the Tax Code to go out the backdoor.
If we were to count that, in addition to the money that is allowed out the backdoor of the Tax Code, there is actually more that goes out the backdoor of the Tax Code and is avoided coming through the Tax Code than is actually collected as the revenues of the United States of America.
So it is a big number. The refusal of the Republicans to let us attack one single loophole, not one loophole--every loophole is sacred right now to them--I think is unjustified. I hope the people of America understand we are not looking at more tax rate increases; we are looking only at closing these loopholes. It is a rich field to pursue because more money goes through that than actually gets collected. You can bet, if you are an average American, that when those loopholes were being carved into the Tax Code, you were not in the room. The special interests were in the room.
That is why a lot of people want to defend them. But it is also a very good reason for making a more honest Tax Code that gets rid of these loopholes. But our friends want to crisis manufacture. They want to do crisis manufacture so they can force-feed on all of us bad economic ideas that Americans do not want. I think we need to resist that.
I yield to the chairman.
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