2008 FISCAL YEAR BUDGET
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Mr. CAMPBELL of California. Madam Speaker, tonight, and the next 60 minutes, we are going to talk a little bit about one of the major issues that will be on the floor here in the House of Representatives as people vote later this week, and that will be the budget of the United States Government for the next fiscal year, the fiscal year that begins later this year. It's called the 2008 fiscal year budget.
There will be several budgets offered; but if history is any guide, the one that is most likely to pass is the one that is being offered by the majority party, or the majority Democrats, in this case.
That budget is a travesty. Tonight, we are going to show you why, why that is not the budget that should pass, why that is not the budget that should govern the United States taxpayers' money over the next year. This budget that we will see later this week proposed by the Democrat majority has the largest tax increase in American history. Let me say that again: this budget you will see the Democrats propose this week has the largest tax increase in American history. It has no reform of any of the entitlements.
If we are going to save Medicare, we are going to save Social Security for future generations, as we will explain to you later, they are unsustainable. They have to be reformed. They have no reform whatsoever.
They do not save or preserve the Social Security surplus. You know, people pay Social Security taxes. When they do, they presume that money goes to pay for Social Security. Makes sense. That is why it's called a Social Security tax.
But, no, every year, a portion of that money is used to pay various other priorities of the Federal Government. The budget that the Democrats will propose this year for the next 5 years will not change that one little bit. Yes, this budget, Democrat budget later this week, is full of empty promises except one, to give you the largest tax increase in American history.
Now, let's bore into a few of these things. Let's look into a little bit of this in detail. In order to do that I have a few charts here. I don't want to have anyone have some flashback to Ross Perot, I know he had charts, so I have charts too. I have charts to show you what's happening.
This first one shows there is a misconception there, particularly on the Democratic side of the aisle, in spite of all the statistics, that somehow the deficit that we are in today was caused by the tax relief that was enacted back in 2003, that somehow allowing people at home to keep more of their own money to spend on their priorities, rather than Washington's priorities, that somehow allowing people to do that caused the deficit that we have today. It's absolutely not true.
If you look at this chart, you will see that total Federal revenues declined until 2003, when the tax relief was enacted, and they have risen and are now up somewhere around 46 percent. Since then, the Federal Government has 46 percent more revenue, 46 percent more money than it did in 2003.
I would ask the average American taxpayer at home, do you have 46 percent more money, more revenue, more income than you had in 2003? If you don't, you should understand, the Democrats believe that the 46 percent increase for the Federal Government wasn't enough, and that whatever you got, it was too much. Because they want to take some of what you have and put it right here in Washington, right here in the midst of the Federal Government.
So the tax relief did not cause the deficit, actually caused an increase in revenue. Spending caused the deficit, too much spending, something the budget, the Democrats are proposing the majority party does, is more. Their proposal over the next 5 years is to spend more and more and more, yet raise your taxes to do it. So they are taking the thing that is reducing the deficit and getting rid of it, and taking the problem that has created the deficit spending and giving you more of it. Let me show you a few more things why these tax reductions actually resulted in more revenue.
They stimulate the economy. When you have more money, what do you do with it? You save it, you invest it. You spend it, you create jobs, you do all kinds of good things with it. That is why after the tax relief was enacted in 2003, we created more jobs, lots more jobs, every single month, not a single month without more jobs created in this country since the tax relief was enacted.
What else did the tax relief do? It also increased gross domestic product. That is basically the size of the total economy. If you look, after 2003, it's not so good, but after 2003, gross domestic product has increased dramatically every single quarter. So many charts, they are falling down. The chart fell down and so did the unemployment rate after the enactment of the tax decreases. Again, here they go. Unemployment up close to 6.5 percent, and where is it now? Down around 4.5 percent.
These things are not coincidences. These good things that happened to the economy did not suddenly hit just when the tax relief went into effect by coincidence. No. The tax relief left billions and billions of dollars in the American public's hands and in the American taxpayers' hands so they could use it for their purposes and help the economy grow. That is what we should be doing more of, not less of.
But the proposed Democratic budget does a lot less of that. Let's talk for a second about how much less. This proposed budget has the greatest increase in taxes in American history.
Now, I could tell average taxpayers, people at home, how much is that? Oh, it's $392.5 billion a year. What does that mean? They don't know what that means. But let me tell you and bring it home a little better. It means $3,035 for the average tax return in America per year, per year, folks.
As people sit at home and they watch this, imagine the Democrats' budget is saying to you, $3,000 per year, you have to pay more here to Washington so they can spend it on more of their priorities.
We often hear, gee, in Washington, the spenders like to say, the tax and spenders like to say, oh, we need to do this, and we have to get the money. Where are we going to find the money if we don't raise taxes?
Well, I would say this, where is the average American going to find that money? Do you think they just will say, $3,000 a year, oh, that is no problem. That is just about $250 a month. That is nothing. I have got lots of that. That is no problem, we are happy to do that.
I don't think so. I think that would cause a tremendous impact on the average American family, a tremendous impact on their budget, and not a good one if it would have the reverse of all these effects. It would start to drive unemployment up. It would start to drive job growth down. It would start to the drive the economy down. We need to stop this budget that will appear here on the floor this week.
Now, I would like to introduce the gentleman from South Carolina (Mr. Barrett). Mr. Barrett, before you begin speaking, I would like to point out to you, because I have these figures broken down by State, that the average South Carolinian under the Democrats' tax proposal would pay $2,482.66 more tax per year. So you might tell me, Mr. Barrett of South Carolina, how do you think the average taxpayer in South Carolina is going to pay for that?
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Mr. CAMPBELL of California. I thank the gentleman for yielding.
I don't think it is a very good deal at all. What are they going to get for that? I think that is part of the question here. What exactly are they going to get for that?
Are they going to get some of the spending like we just saw passed in the bill last week, you know, maybe some things to help shrimp and peanuts and a few things like that? Is that the sort of stuff they are going to get? Are they going to get a bunch of earmarks? What are they going to get? I don't think they are going to get very much.
I yield back to the gentleman from South Carolina. Do you see much that your South Carolinian constituents will get for their $2,500 a year?
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Mr. CAMPBELL of California. Will the gentleman yield one more minute?
Let me just ask you one more question, and then we will go on.
The gentleman from South Carolina, so narrow it down. There will be a Republican alternative to the Democratic budget here that everyone on this floor will vote on this week. What are the major differences? I mean, could you lay out for me and for Madam Speaker and for anyone watching what are those differences?
And I yield.
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Mr. CAMPBELL of California. Thank you, Mr. Barrett from South Carolina.
Now, Madam Speaker, so you don't think that we are just trying to do rhyming people here, we go from Mr. Barrett of South Carolina to Mr. Garrett of New Jersey. But before I yield to Mr. Garrett from New Jersey, you know, I am from California, and California taxpayers, under the Democrats' proposal, would pay $3,331.09 more per taxpayer in California.
Now, I thought that was a lot. I thought that was a lot. It is one of the higher numbers on the page. But it is not as much as New Jersey. Taxpayers in New Jersey would pay $3,779.88 more in taxes under the Democrats proposal than they do now. And that is an average, again, per tax return filed per year. Almost $4,000.
I am glancing here and I think, Mr. Garrett, there is only one other State that is going to pay, have more of an increase and that is Connecticut than New Jersey. So I am curious, Scott Garrett from New Jersey, what exactly do you think and what will people in New Jersey think and how will they deal with $4,000 a year more taxes?
I yield to the gentleman.
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Mr. CAMPBELL of California. I was going to say, one thing that you can do here in Washington is print money. The average family can't. If the Democrats were to pass this budget and give them that $4,000 or $3,800 tax increase in New Jersey, your citizens in New Jersey can't print money like the Federal Government to just run a deficit, can they?
I yield back to the gentleman.
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Mr. CAMPBELL of California. Will the gentleman yield? $3,779.98 for the entire State of New Jersey.
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Mr. CAMPBELL of California. I think this discussion we are having right now gets to the core of the difference between what Democrats in Washington, how they look at things and how we Republicans in Washington look at things. They look at it from the sense of, well, if we don't raise these taxes, how is the government going to spend more money on this or spend more money on that, or how are they going to get to take that? Because that is what it amounts to. When you tax everybody else, you come here, the 435 of us, plus the 100 people in the other body, get to spend the money on the stuff they want to spend it on.
And so how can we spend that money if we don't do this?
You and I, Mr. Garrett, look at it from the standpoint of families, of taxpayers, of people. What are they not going to be able to do in New Jersey with that almost $350 a month? I mean, that is a nice car payment. That is substantial child care. That is a chunk of a house payment. It is a lot of different things to a lot of people. And we look at everything from the sense of the family, the taxpayer. They come first and the government comes second. That is not the way the Democrats in this town look at it, is it?
I yield back to the gentleman.
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Mr. CAMPBELL of California. Mr. Speaker, reclaiming my time, it is a matter of it is your money. When you earn it, when people earn the money, it is their money. It is not the government's money. It is their money and the government takes some of it for necessary operation to run government. But it is not like it is all the government's money and the government allows you to keep some. That is not the way we look at it.
I yield back to the gentleman
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Mr. CAMPBELL of California. Mr. Speaker, I thank the gentleman from New Jersey (Mr. Garrett) so much for his comments and his hard work on these efforts and on these proposals to recognize that it is your money first, taxpayers. It is your money first. It is not the government's first that they let you keep some of. It is your money, and you should keep all of it except for the minimum amount necessary to properly run the government.
Now let us talk about a few more things on these taxes. Some of the rhetoric that people may hear from the majority party here is that this tax relief in 2003, 2001, this just gave tax cuts to the rich. We hear that over and over: ``tax cuts to the rich.'' Well, as Mr. Garrett pointed out, a $70,000-a-year family of four in New Jersey is probably not rich, and they would be paying $1,500 or whatever the amount was that you said.
Let us look at some of this. Now, these are numbers in billions of dollars, Mr. Speaker; so they can't relate to per person. This is the total Democrat proposed tax increase. This orange slice stands for the people who save money because of the 10 percent income tax bracket. Now, the 10 percent income tax bracket is the lowest tax bracket that exists. It is at $15,000 of income for a married couple. So this amount of this tax is going to people with roughly a taxable income of about $15,000. That is rich? I don't think so.
Look at this slice right here, this red slice. This is people who get the child tax credit and the marriage penalty credit, these benefits which the Democrats have proposed to raise, to cut in half the child tax credit and to eliminate what was put in place sometime ago so that people don't get a penalty, don't pay more tax if two people both earn income get married. Under the old law, a lot of them pay more tax. Now a lot fewer of them pay more tax. This would get rid of that. Both of these phase out over a certain income level. So all of these are geared only for people at lower income levels.
Let us look at this chunk. This is the death tax, which can affect all kinds of people, whether it is the
person who is deceased or whether it is one of the many beneficiaries of someone who is deceased. And we know how the death tax has been destructive for family farms, family businesses, people wanting to pass their home that maybe has been in the family for generations, maybe only for a short period of time, but they want their children to have it, and they can't because the death tax got in the way.
We are scheduled to have the death tax continue to decline. But the Democrat budget has proposed to put it way back into full force and effect with a rate, I believe, of up to 55 percent.
And then look at this chunk, the biggest chunk of all the marginal rates. That means seniors with dividends and capital gains income and people at all other schedules in the different tax brackets within the Tax Code. These tax increases affect everyone, not just the supposed rich.
And let us look at what this would do to certain tax rates: the 35 percent tax rate would go to 39.6. A capital gains tax rate of 15 would go to 20. The estate tax would go from 0 to 55 percent. The child tax credit, from $1,000 to $500. And the very lowest tax bracket starting at taxable income, technically, of 0 would go from 10 to 15 percent. So, again, tax increases on everybody all across the board.
We talked a lot about taxes tonight. But as I said when we started this conversation, the reason we have a deficit is not because we lowered taxes. Lowering taxes stimulated the economy, created more revenue for the Federal Government. Mr. Speaker, the reason we have a deficit is because we spend too much. And here is a chart showing how spending drives the long-term problems:
Here is our spending today, roughly 20 percent of the economy; so already the Federal Government is spending about $1 out of $5 that exists in the economy. But if we leave things alone, if we allow spending to go forward and grow as it is in law now and if we just left all these things alone, it will go by 2049, you see here, up to nearly double that, nearly 40 percent of the economy. So $4 out of every $10 in the economy would be government spending.
Now, what this chart doesn't show is in countries where they have done this sort of thing before. The private part of the economy contracts. It doesn't have money for investment. It doesn't have money for growth. If government takes 3,331 more dollars out of each taxpayer in California, as the Democrats have proposed to do to spend on some of this stuff, they don't have that money to save. They don't have that money to invest. They don't have that money to buy things that help stimulate the economy. The government has it. The government doesn't save it. The government doesn't invest it. The government just spends it. And as we know, in a lot of cases not particularly wisely. So that is what happens if we leave spending alone. That is why we have a deficit.
Even with the Democrats' proposed tax cuts, which is the orange line here, Mr. Speaker, you see it isn't going to work. The spending increases much faster than even after those tax increases.
So I say to the people who have put together the majority budget, what do you plan to do here? Are we ever going to deal with this rapid exponential growth in spending? Or are you planning to raise these taxes further? Is the $3,331 per taxpayer in California just the beginning? Are we looking over a 10- or 15-year period of time at twice that? Three times that? Four times that? The sort of thing it would take to get anywhere near this spending level?
Chairman Bernanke is the Chairman of the Federal Reserve. And the Federal Reserve, I think there is pretty general unanimity on both sides of the aisle, as well as with the economists, that the Federal Reserve has done a pretty good job of managing our economy for some time, interest rates and inflation; and they tend to know what could set this economy off course and what could keep it on course. And I think they deserve a lot of credit for keeping the economy on course, not just over the last 3 or 4 years but over the last 15 or 20 years.
But Chairman Bernanke said just earlier this year that ``without early and meaningful action to address entitlements, the U.S. economy could be seriously weakened with future generations bearing much of the cost.''
What does he mean by that? When he talks about entitlements, he is talking about Social Security, Medicare, Medicaid, things like that that the government does. And he said if we don't deal with it early and meaningfully, if we don't take early and meaningful action to deal with the growth in these retirements, that the economy is in trouble.
Now, the Democrat budget that will be on this floor later this week, let's see, it is a 5-year budget. What reform of entitlements does it include? Oh, yes. Zero. None. Not one change. Nothing in the entitlements over the next 5 years. Is that early reform? I don't think so. Is that meaningful reform? Well, if zero is meaningful, then maybe; but I don't think it is meaningful reform.
So let us look at what happens if we don't reform. Again, here is revenue, this black line. That is income coming into the Federal Government, roughly the same tax rates that we have today. But look at what happens to spending. It goes from a little more than we are taking in right now to nearly double. Nearly double if we don't reform. That is why Chairman Bernanke said, Mr. Speaker, that we need early and meaningful reform or this economy is in trouble, as he said, with future generations bearing much of the cost.
Mr. Speaker, we have a lot of discussion about children around here and what is good for children and how we are going to help children. Let me tell you something I know is not good for children, and that is sending them this kind of price tag for us, for our Medicare, our Social Security, our Medicaid over the next 15, 20 years, and asking them to pay double, at least, the tax rates, the tax burden, that we pay because we didn't act.
We know this is coming. This is not a Republican chart. This is not a Democratic chart. This is prepared by the Congressional Budget Office, the Office of Management and Budget. Any number of nonpartisan government agencies agree. All the experts agree. On the Budget Committee that Mr. Garrett and Mr. Barrett and I sit on, every single expert who came in said that this entitlement spending, this planned growth in spending, is a disaster, a budget disaster, that we can see. It is a train coming down the track right into our eyes. But we are not blinded. It is not like we can't see it, Mr. Speaker. It is right here. We can see it. It is right here on this chart. We know it is coming, and we know the only way to deal with it is to reform these things.
So where are they? Where are those reforms? What will people do if that top tax rate rises?
Let me pull out one of these other charts. Just think about it. Doubling taxes. I realize it is quite a few years off, but if we don't deal with it now, we will get there. What does that mean? I guess that means the 39 percent rate would go almost 80 percent. That capital gains would have to go to 40. The estate tax, I guess you just take it all, which has happened in some countries before. The child tax credit, you probably get rid of it. And the lowest tax bracket would probably need to go up to 20 or 25 percent.
Those obviously aren't exact figures or anything like that, Mr. Speaker, but just to give a sense of what we are talking about here if we don't do something, if we don't change these processes and change this. Because if you look at this chart again, the reason we can see the train coming is, if we do nothing, absolutely nothing, to change Social Security, that is this one, Medicare and Medicaid is this one, interest on the debt is that one. If we did nothing to change existing law, it is not like you have to do more, that we have to take action to spend this money. This is the money that will get spent if we do nothing, if we leave it alone under existing law. That is why we have to take action, and it is for the kids.
Our kids can't bear this burden. People have said that if we allow this to happen that my children will be the first generation of Americans to have a lower standing of living than their parents. We have never had that happen in this country, and we should never let it happen in this country. The only way it is going to happen is if we shirk our responsibility today, because, gosh, it is 15 years off, let's deal with it later.
This isn't about destroying Social Security. This is about saving Social Security. Because you really can't pay for this. There isn't enough money in the economy. So we have to reform it. We have to change the way it works to save it.
That is why Republican budgets will say we should save the Social Security system. We shouldn't spend it. That is why it is part of the American Taxpayers' Bill of Rights, which a group of us Republicans introduced a few weeks ago, where we said if you pay money for your retirement it should only be spent on your retirement. It shouldn't be spent on something else.
This isn't about destroying Medicare or wrecking Medicare, as you will probably hear demagoguery on the other side. It is about saving it. It won't continue this way. There isn't enough money. We have to save it, and to save it we must reform it.
You will see proposals, you will see reform, but not in the Democratic budget that we see today. And that is what is so disappointing, Mr. Speaker. We can't ignore it. We shouldn't ignore it. It is right there. It is right before us.
Our children will look back at this time in the future as to what we did with their inheritance. And I don't mean about the death tax necessarily. I mean the inheritance of optimism that is so much a part of the American ethos, the optimism that the average American can always do better, that anyone can lift themselves up, that they can move things forward.
Instead, this is saying, no, we have to take more of your money. We have to move things backwards. You may not be able to have the same things that your parents had because we need more of your money for a failed and inefficient system.
That is not the America my parents left me, it is not the America that I want to leave my children, but it is the America that this Democratic budget is heading us towards.
Mr. Speaker, we do not need the largest tax increase in American history. We need to let people keep more of their money, not less. Families will not struggle because government doesn't spend enough. Families will struggle when government spends too much and takes too much of their money.
Mr. Speaker, we need a solvent Social Security system, a solvent retirement system, not one that takes the money that that is taken out of people's paycheck for their retirement and spends it on other things and not one that is unsustainable, that won't exist 20 or 30 years from now.
Mr. Speaker, we need a Medicare system, a healthcare system, where people control their own healthcare, where people control their own destiny, not where the government is telling them what to do and telling them how to do it and using one of the most inefficient methods and high cost to do so. We have to reform that, or it won't exist in the future.
Yes, this Democratic budget is full of empty promises. You will hear about them over the next few days and weeks. You will hear that they promise to spend more money on this and spend more money on that and spend more money on the other thing, and in some cases they are definitely planning to do that. What they are not telling you is where they are getting it, and they are getting it right out of your pocket.
In some cases, they are going to say we are going to spend more money on this and spend more money on that and grow this program and grow that program; and, as Mr. Barrett from South Carolina said earlier, they don't actually have the money in the budget to do it. They are just telling you, oh, yeah, we are going to do it. But we will find the money later.
Well, you can be sure where they are going to get that money, probably the place they get the other money, right out of the American taxpayer. It is the only place to go, unless you cut spending somewhere else, which we are very happy to talk about, very willing to do. That is always something you do in budgets, you set those priorities.
Yes, it is a budget filled with empty promises, except one, the largest tax increase in American history.
Mr. Speaker, American taxpayers deserve better, and I hope that we will defeat this budget later this week.