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Public Statements

The Fiscal Cliff

Floor Speech

Location: Washington, DC


Mr. THUNE. Mr. President, we are at the last hour, if you will, the last day for sure, in dealing with what has become probably the biggest fiscal crisis our country has dealt with in some time. I have heard a number of my colleagues from the other side come down and talk about the importance of getting a solution. We all want to get a solution. We do not want to have a situation tomorrow where tax rates go up on everybody across this country who has an income tax liability. We obviously do not want to see our defense have to deal with what would be deep cuts in our national security budget. Those are two things that will happen tomorrow unless Congress can act to prevent that.

So count me among those who want to see a solution. I certainly hope the negotiations that are occurring right now can conclude in a way that will give us an outcome that prevents those tax rates from increasing on Americans across this country and also put in place some things that would actually deal with the real problem. The real problem is our country spends too much.

We are where we are because we have not done our work when we should have previously. Think about the fact that for 3 consecutive years--3 years in a row--in the Senate, we have not passed a budget. We spend $3.5 trillion of American taxpayer money every single year, and for 3 consecutive years we have not had a budget. The majority leader and the chairman of the Budget Committee and others on the other side have said: We passed a budget control act in August of 2011 and that sort of serves as our budget.

Frankly, that is not the case. The law requires us to pass a budget. We have a budget act, enacted back in the 1970s, that requires the Congress, on an annual basis, to lay out a plan for how we are going to spend the American taxpayers' money. The reason we ended up with a budget control act back in August of 2011 is because we failed to pass a budget earlier in the year.

For 3 consecutive years in the Senate we have not passed a budget. That is not to say our colleagues on the other side of the Capitol--the House of Representatives--have not acted responsibly. You may disagree with how they did it, but at least they did it. They passed a budget. The Senate, of course, has not for now 3 consecutive years.

So we went through this entire year. Everybody knew this was coming. This is not a surprise. This is the most forecast and foretold disaster we have ever seen. As we approached December 31 and the deadline we are dealing with today, we knew that starting January 1 taxes were going to go up on all Americans, at least all Americans who have an income tax liability, and we knew these cuts that were put in place in the Budget Control Act in August of 2011 were going to occur.

There should not be any element of surprise. We have known about this for a long time. Yet for month after month after month after month this year, nothing was done about it. I say nothing in the Senate; again, the House of Representatives, early this year--last summer--passed legislation that would extend the tax rates for everybody for 1 year. They passed legislation that would replace the across-the-board cuts that will start to take effect on January 2 with responsible spending reductions that actually do something to bend the curve of all these runaway programs, entitlement costs that are going to bankrupt this country in future years. They made some necessary reforms. Again, people may not agree with them. Obviously, there should be a process where in the Senate we have an opportunity to vote on a budget and make amendments. Perhaps we would do it a different way. I might have voted for something entirely different. But the point is, I did not have anything to vote for. Nobody over here did.

We have been here for a whole year, and now we have people coming up and saying: Gee, I hope, I truly wish these negotiations will get us to an outcome. It is December 31. January 1 is tomorrow. It will be 2013. Taxes will go up. Everybody agrees it will be a disaster for the economy. We cannot allow that to happen. It will ruin the economy.

Where were we? Where were we for the past month and the month before that and the month before that, dealing with what we knew was going to be this very set of circumstances we face today?

I find it very hard to sit and listen to people come up now and wring their hands and talk about: Gee whiz, I hope we can get something done in the last day--as we put two people together basically to resolve this.

There was a discussion--in fact, everybody says: Well, you know, the people who are getting together--it was the President and the Speaker at one time; it was Senator McConnell and Senator Reid at one time; now it is Senator McConnell and Vice President Biden--but up until Friday, Senator McConnell, the Republican leader, had not been consulted, had not been advised, had not been involved in any of this. So he gets the call at the last minute to try and come in and sort of rescue this, starts a negotiation that goes over the weekend, and then Saturday night makes a proposal to the Senate Democrats, and was told: We will react to your proposal by 10 o'clock Sunday morning. Ten o'clock Sunday morning passes, 11 o'clock, noon, 1 o'clock, 2 o'clock. He comes to the floor and says: We have not heard back. Then the majority leader comes up and says: Look, we do not have a counteroffer. We do not have a proposal.

So Senator McConnell then gets on the phone with Vice President Biden, and that is now where those discussions are occurring. They are occurring between Vice President Biden and Senator McConnell.

But my point is this: There are two people in a room deciding incredibly consequential issues for this country, while 99 other Senators and 435 Members of the House of Representatives--elected by their constituencies to come to Washington and to represent them--are on the sidelines.

Why didn't we have a bill on the floor of the Senate we could actually debate? Why didn't we put something out here under regular order, open it, allow Senators to offer amendments, allow them to have amendments voted on? I might not have liked that outcome. Maybe I would not have. Maybe I could not have voted for the final product. But at least we would have had an opportunity to debate this, instead of waiting now until the eleventh hour, where two people are gathered in a private room, trying to negotiate something that has enormous consequences for this country and for our economy.

We are where we are because this process was grossly mismanaged up until this point. So now we are faced with a crisis. There is great drama. If we listen to all the TV stations--at least those that cover what is going on here--they are all talking about the fiscal cliff. Instead of a countdown to the new year, we have a countdown to when we hit the fiscal cliff.

What does that say? It is the most predictable financial crisis we have ever known about. We have known about it for months. We have known about it since the temporary tax provisions were put in place 2 years ago. Yet here we are in the eleventh hour on the final day trying to negotiate with two people in a room making decisions that will have a profound impact on the future of this country.

I have to say that as I think about those negotiations that are going on, most of what is being talked about is who will pay more in taxes. It is not a question of if, it is who is going to pay more in taxes. The ironic thing about it is that in those discussions--at least to my knowledge of them--there is very little being discussed, if anything, that deals with how this country is going to figure out a way to spend less, which is the problem.

OK, I mean, let's face it, Washington, DC, does not have a taxing problem, we have a spending problem. Now, Republicans have said and we are willing to consider, contemplate this idea of having more revenues in the equation. Granted, the President won an election and there is a majority of Democrats here in the Senate. That is their view. Obviously, we have a Republican House of Representatives that has a different point of view about how to solve this and is trying to do it by extending the rates for everybody so that nobody has their rates go up in the middle of a weak economy. There is a big difference of opinion about how to resolve this.

But I would argue to my colleagues on both sides that if what comes out of these discussions is something that raises additional revenue, that raises taxes on people in this country, it will not do anything to solve the problem. In fact, if you give the President of the United States everything he wants in terms of tax increases, you will raise enough revenue next year to fund the Federal Government for less than a single week. So what do we do for the other 358 days of the year? A single week--that is what all of these tax increases would amount to in terms of additional revenue.

This is not a revenue problem. This is a spending problem that can only be solved by having the political courage to confront the challenges that face this country, not just in the near term but in the long term, and get us on a sustainable fiscal path. That means we have to confront runaway spending and programs that, if not reformed, are going to bankrupt this country and saddle our children and grandchildren with an unbelievable burden of debt and a lower standard, a lower quality of life than anything we or any previous generation--well, not any previous generation but certainly our generation has experienced.

That is where we are today. We are talking about how much taxes are going to go up. And those taxes are going to hit people who create jobs. If you use the $250,000 level, there are about 1 million small businesses that will be impacted by these tax increases, and they employ 25 percent of the American workforce. So we have a lot of middle-class Americans whose jobs depend on the very small businesses that are going to see their taxes go up. This will impact middle-income, middle-class families in this country if taxes go up on small businesses.

If that level is raised to $400,000, it will affect fewer, obviously. If it is raised to 500,000, it will affect even fewer small businesses. But the point simply is this: You are hitting literally hundreds of thousands of small businesses that create millions of jobs for middle-class Americans with new taxes they will be paying, and that can't do anything but hurt the very economy we all say we want to get back on its feet.

So we are talking about tax increases at a time we ought to be talking about spending. Why do I say that? Well, if we go back to 2007, before the recession, the revenues coming into the Federal Government were about $2 1/2 trillion give or take, round numbers, about $2 1/2 trillion. Well, this year revenues coming into the Federal Government are going to be back to about $2 1/2 trillion.

We went through a terrible recession. People call it the great recession. It had a profound impact on the economy--obviously a lot less economic growth, and a recession leads to lower government revenues. So we had a period where government revenues dropped. Well, government revenues are now back to where they were in 2007.

Spending in 2007 was about $2.7 trillion. Today it is more than $3 1/2 trillion. So spending has increased by almost $1 trillion--almost $1 trillion in the last 5 years, at a time when the revenues have stayed relatively flat. But the point simply is this: The reason we are running a trillion-dollar deficit this year and the year after that and the year after that is because the spending of the Federal Government has exploded in the last 5 years. So this is not a revenue problem. The revenues are essentially the same as they were 5 years ago.

Arguably, people would say that if we have a growing economy, we ought to get more revenue. And we would if we had a growing economy. The goal ought to be to get the economy growing again in a more robust fashion so that we are generating additional revenues coming into the Federal Government that would make these problems, the dimensions of those problems look smaller by comparison. That is why policies that hurt the economy, that slow economic growth--and everybody concludes that raising taxes in the middle of a weak economy is a bad idea if you are interested in generating more economic growth and creating jobs. That, to me, seems to be just intuitive. I think everybody would agree with that, but certainly it is a well-known, documented fact among economists that if you raise taxes, you are going to have lower economic growth, you are going to reduce the rate at which the economy grows and expands and therefore allows for job creation in this country.

The best thing we can go to is to get the economy growing and expanding again, and then all of these problems look much smaller by comparison. That means having policies in place that allow small businesses to do what they do best, and that is to create jobs, that provide incentives to invest and to hire people. When you operate in a period of economic uncertainty like we have today with these uncertain tax rates, where you have tax rates that are going to go up, regulatory burdens that continue to go up, you constantly make it more expensive and more difficult for small businesses to create jobs. Creating jobs and growing the economy ought to be our goal. That is so counterintuitive, to think that raising taxes would somehow accomplish that goal.

So as we sit here on the last day before these tax rates go up, as we try to scramble now at the last minute to find a resolution, I would simply say and urge my colleagues that we not let this happen again, that we not be here next year or the year after waiting while two people sit in a room and try to cut a deal that most of us have not been privy to or consulted about.

The American people obviously are the ones who are ultimately impacted by that, but they have not had an opportunity to have a role in this, to observe what their elected leaders are doing to solve the big problems that face this country. We ought to be functioning the way the Senate used to function; that is, put bills on the floor, allow amendments to be offered and voted on, and then whatever that outcome is, ultimately the House of Representative will pass their version of it, perhaps we will have a conference committee, and hopefully we can get something we can put on the President's desk. That is the way it used to work.

But now we are sitting here because we have twiddled our thumbs for month after month after month in the Senate and not passed a budget, not dealt with this issue in any substantial or meaningful way, and now we are sitting here on New Year's Eve--on New Year's Eve. The countdown on the television is not how many hours and minutes are left until we hit the new year, the countdown on the television is the number of hours and minutes that are left until the country goes over the fiscal cliff.

Think about what that says about this process, about the Senate--100 people elected to make big decisions to advance the interests of and put this country on a better path to a better future that is more secure, more safe, and more prosperous for our children and grandchildren. That is what should happen, but it should have happened months ago.

So I hope we get a result here today that addresses some of these issues--certainly, hopefully, something that will address the tax issue. But that does not solve the problem. If the President gets everything he wants in new taxes, it will fund the government for less than a week. This is not a revenue problem. Washington does not tax people too little, it spends too much. Until we recognize that and deal with what is driving Federal spending, we are going to continue to saddle future generations with more debt, with more liabilities, and with a lower standard of living and lower quality of life than we have experienced. That is not fair to them.

It is time for us to demonstrate the political courage that is necessary to take on the big issues and to have the votes. Let's have a budget. Let's put it on the floor. Let's vote on it. Let's do something around here that matters, that is meaningful to the future of this country, rather than wait until the last day and the last hour and allow two people to sit in a room and decide the fate and the future of this great country.

I yield the floor.


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