Judd Gregg

Mr. GREGG

Mr. GREGG. I will not yield on that point. The next item: The second point is how much money have we generated from this tax cut. The tax cut has energized a significant increase in revenue to us relative to the budget. We have seen a 14-percent increase in 2005. We will see a 6-percent increase in 2006, and it is projected that this will continue to go up significantly as we move into the outyears. That is because as you reduce the tax rate on working Americans, you significantly expand the revenue of the Federal Government because people become more productive and they generate more activity, which generates income to the Federal Government. That has been proven over and over and over again. The tax cuts of President Bush have shown that, the tax cuts of President Reagan showed it, and the first person to show it in fairly definitive terms was President John F. Kennedy, who put forth his tax cut which generated significant revenues to the Federal Government. We are seeing a dramatic expansion in the revenue activity of this Government. To say anything else is inaccurate. Yes, the budget deficit is $314 billion, but it was supposed to be $440 billion or $420 billion. We have generated $100 billion of reduction in the deficit and almost all of it, almost all of it has been a function of new revenues coming into the Federal Government. There has also been essentially a freeze on discretionary spending, nondefense, which has been good, but essentially all that revenue has come out of this, come out of the fact that we cut taxes and we have generated more economic activity. So when the argument is made that the tax cuts are inappropriate and that we are generating cuts for wealthy individuals at the expense of low-income individuals, it is just not consistent with the fact. The fact is, this deficit reduction plan significantly reduces the deficit but does it in a way that does not impact low-income individuals. In fact, the new spending initiatives in this plan, which are fully paid for by offsetting reductions, dramatically benefit low-income individuals, especially those who are working, who are going to college, and who are trying to benefit from Medicare. Secondly, the tax provisions which will be coming in the next exercise, which is independent of this exercise, are provisions which are generally supported by most Americans. They are the deductibility of the R&D tax credit, deductibility of education credits, deductibility of savings credits, State and local taxes, sales taxes, and, of course, the AMT fix. The tax revenues of this country are going up dramatically on an annual basis, and they are projected to continue to go up. So we don't have a problem that we are an undertaxed society. We have a problem that we are not controlling spending. The pending amendment which I sent to the desk is an amendment to address the fact that we are confronting a very significant threat in the world called avian flu. This Congress, this Senate, has tried to address this issue a couple times, but we know the avian flu issue is a ticking time bomb out there. Whether it is going to happen today or whether it is going to happen--well, not today, obviously, but whether it is going to happen within 12 months or 2 years or 5 years, we know the threat should avian flu transfer from birds over to humans is huge because we have a record to look to, which is the pandemics of the early part of this century. We need to get ready for it, and we all recognize it, and there is an urgency to do that. It has been a bipartisan push to try to accomplish that. So this amendment essentially takes some of the dollars which have been saved in excess of the original reconciliation instruction and applies those dollars to try to address the pandemic situation. In trying to accomplish that, we have addressed what I think is a significant need. In addressing the avian flu issue, it is more than just a money issue. We all know that. There has to be an incentive for the vaccine industry to aggressively pursue some sort of cure to address not only avian flu but avian flu as it mutates through various systems. That has not been accomplished yet. But we know it will not be accomplished until we are successful in standing up to the vaccine industry and making sure that they have the resources to pursue an adequate treatment. This amendment tries to accomplish that, and thus I have offered it. At this point I yield the floor.

Mr. GREGG. No, I will not yield.

Mr. GREGG. I will not yield. I yielded to the Senator for 30 minutes when he asked for 10, and to tell you the truth, I don't think that was consistent with the comity of the Senate.

Mr. GREGG. No, I will not yield at this time. The tax relief package to which they are opposed, which is coming down the pike, which they allege is part of this package so they have to vote against the debt reduction deficit reduction package, let's talk about what is in that package potentially. The alternative minimum tax: Something like 8 million people will be added to the alternative minimum tax if we don't extend what is known as the patch, if we don't exempt those people from being added to it. That is a $30 billion item right there. The folks on the other side want to vote against the tax reconciliation bill. They want to raise taxes on 8 million people. They want to create a tax revenue of $30 billion by making the alternative minimum tax apply to middle-income Americans. That is their choice. The research and experimentation tax credit, the R&D credit, this is the credit which allows entrepreneurs, especially small businesses, to invest in R&D, which produces jobs, which makes our country more competitive, which keeps jobs from going overseas, which gives people careers. This is one of the most important tax initiatives in our Tax Code because it increases economic activity and increases opportunity and jobs. They want to vote against that one. Fine. Raise the taxes on small business and entrepreneurs who want to do R&D. That is the second largest item, $7 billion, that is going to expire in the next 2 years. The deductibility of qualified credits, teachers' deductibility. We talked about that before. When teachers go out and buy things for their classrooms, they get a deduction for it. If they want to raise taxes on teachers, go ahead, have a tax increase on teachers. The deduction for State and local sales taxes: Which States benefit from the deductibility of State and local taxes? Massachusetts, Connecticut, New York, New Jersey, Illinois, California--those are the high tax States. They are the ones with the highest sales taxes. How many Republican Senators are there from those States? I don't think there are any. But that is one of the items. They appear to want to raise taxes on people in those States by making their sales tax not deductible. I have to tell you, I come from New Hampshire. We don't have a sales tax or an income tax. If you want to eliminate the deductibility of sales taxes, it is no skin off our nose. But I don't think it happens to be that great a policy. But that appears to be the position that is being taken here, if you listen to the other side as they excoriate the package of proposals that is coming at us as a result of the reconciliation process: First, the deficit reduction bill, the debt reduction bill; second, the reconciliation bill on taxes, the majority of which includes these right here. And these are the ones that are expiring in the next 2 years. Then the third is the debt ceiling, which is put under reconciliation. Well, you know, we are at war. We had a downturn of dramatic proportions as a result of the bursting of the Internet bubble, and this country's expenses have gone up rather significantly because of those two factors--especially the cost of the war. In fact, if you look at discretionary spending, almost the entire increase is an attempt to fight terrorism and protect our Nation. Now, it may be that the other side of the aisle does not want to pay those bills, that they think we should not do a debt increase. Well, if you do that, the Federal Government defaults on its debt, chaos occurs in the marketplace, and people's savings will be wiped out not only in the United States but across the globe. Maybe that is the fiscal position of the other side of the aisle. A debt reduction bill is a technical step in the sense it increases our ability to borrow the money. We are going to borrow the money because we have the debts. It is like saying, when you get your credit card bill, you are not going to pay it. Well, the practical implication of not paying is you file bankruptcy. Maybe the other side's position is let's file bankruptcy. It seems to be we should do nothing. However, the rate at which that credit card is being charged--because this is the only bill that does that. This is a deficit reduction bill. The $39 billion bill that is pending before us is a deficit reduction bill. So if you are not going to vote for this bill, you have no credibility on the issue of whether you are willing to cut the deficit or debt. It is one separate bill.

Mr. GREGG. Mr. President, I had, as a matter of courtesy, yielded the floor so the Senator from Maryland could speak; he said for 10 minutes. It has now been a half hour. Cooperation does help in this institution. Cooperation also helps on bills such as this. The Senator from North Dakota has taken considerable time to talk about the reduction in the deficit in the 1990s and the fact that we went into surplus, claiming it as an action of the Democratic Party. The deficit reduction which occurred during that part, there was another player in that, and that was the Republican Congress which essentially asked President Clinton to pursue a course of a balanced budget. And with some reticence, the final agreement was reached, and a balanced budget bill was passed. It was passed in cooperation. There was cooperation from Republican membership with a Democratic President. It would be nice if we had that cooperation today from our Democratic colleagues. I find it uniquely ironic that they have decided to oppose a bill which reduces the deficit by $35 billion--that initially was the demand; it was a proposal put forward; now it is up to $39 billion--on the representation that, well, they can't support this bill because there may be a later bill that gives tax relief. You can't have it both ways. You can't claim you are for deficit reduction and for reducing the debt and then vote against the one opportunity you are going to have to do so. The one opportunity is this bill. This isn't a tax relief bill. There are no tax relief proposals in this bill at all. This is not a bill that in any way harms people of lower incomes. In fact, the vast majority of the new spending in this bill is directed specifically at low-income students and patients on Medicare and assisting both of them. The Medicaid proposals in this bill were crafted by the Finance Committee to make sure they focused on making that program more efficient. It will actually, if the language in this bill passes, have an impact on the pharmaceutical industry but not on low-income individuals who benefit from Medicaid. In fact, because it has significant expansion of the flexibility of Governors to deal with Medicaid, most of the Governors you talk to, any that are sort of good managers, are saying they can do a lot more. They are going to be able to deliver a lot more Medicaid services to a lot more people as a result of the language in this bill, even though it saves money in the Medicaid accounts, because they are giving Governors more flexibility. This is a bill which actually produces significant improvements in the delivery of services in this country to low-income individuals, especially those who want to go to college, those who are benefiting from Medicare, and those who are benefiting from Medicaid. At the same time, it reduces the deficit by $39 billion, or $35 billion if the amendment I just offered happens to be passed. To say that you are not going to vote for this bill because there may be some bill coming down the road that gives tax relief to people is not consistent, and then to argue that you are for deficit reduction on top of that. This is your opportunity to vote for deficit reduction. This is it. This is the only vote you are going to get--at least in this exercise of reconciliation--to reduce the deficit. So vote for this. And if you are not happy with the tax relief package, vote against the tax relief package. Take the good, which you allegedly claim you want, which is deficit reduction, and reject what you consider to be bad, which is the tax relief package coming later.

Mr. GREGG. The Senator from North Dakota's response was not in relationship to a question.

Mr. GREGG. Mr. President, point of order: No question was asked by the Senator from North Dakota. Is it correct to have an interchange of this nature?

Mr. GREGG. Mr. President, I ask unanimous consent that reading of the amendment be dispensed with.

Mr. GREGG. Mr. President, I send an amendment to the desk.

Mr. GREGG. And then back to me to explain the amendment.

Mr. GREGG. I want to get the amendment in the queue. I will offer the amendment and then I will let the Senator from North Dakota yield to you for whatever you need for an opening statement--15 minutes?

Mr. GREGG. After the Senator from South Carolina speaks, I intend to speak for 15 minutes and offer an amendment. Then it would be back to your side for whatever time you wish to take, so about half an hour from now.

Mr. GREGG. I yield such time as the Senator from South Carolina may use.

Mr. GREGG. Mr. President, I suggest the absence of a quorum.

Mr. GREGG. Mr. President, let me echo the comments of the Senator from North Dakota relative to his staff and himself. They are extraordinarily professional. As he mentioned, we do have some disagreements, but we do it in what I think is an appropriate way. We discuss the policy. We disagree on policy. But it is never personal, and there is always a cooperative spirit to try to do the business of the Senate. I greatly admire his professionalism and his staff's professionalism. I understand the Senator from North Dakota has another 4 hours. I regret we are not going to hear him speak for that entire period of time because this last hour was certainly ``chartlizing''; not scintillating but ``chartlizing.'' The Senator has made a number of points, some of which I actually agree with but most of which I must say I find inconsistent with the facts that are on the ground. With what do I agree? I agree with the fact we are headed toward a fiscal problem of immense proportions primarily driven by the fact that we have a tremendous baby boom generation that is about to retire. Yesterday I spoke at some length about that. That is why we need to initiate efforts to get under control spending of the Federal Government, especially in the mandatory accounts--mandatory accounts being those accounts which people have a right to, simply because of their situation, whether it is a fiscal situation or personal situation. They may be a former member of the military--veterans benefits; they may be of a certain age; they may be of a certain income. The most significant mandatory programs which are facing us are, of course, the entitlement programs benefiting retired individuals--Social Security, Medicare, and Medicaid. The only way you can address retired programs, mandatory programs, is through a reconciliation bill which is what we have before us today, a deficit reduction bill, because you have to change the law in order to accomplish changes in the ways those bills are going to spend money over the years to come. So the Republican Congress, the leadership and the membership, has stepped forward with an aggressive proposal to try to do that. It is the first time in 8 years that we have seen an effort to try to put some brakes on the rate of spending on the mandatory side of the Federal Government. Thirty-five billion dollars, $35 billion original instruction, and $30 billion is what the committees of the Senate have reported back in deficit reduction initiatives in this bill which is before us today. It cannot be discounted so casually, as the Senator from North Dakota has. He has essentially said it is not a deficit reduction because there will be a bill afterward that will give tax relief or it is not deficit reduction because the debt goes up. The simple fact is that those are inaccurate statements. This bill, if you vote for it, will reduce the deficit by $39 billion in its present form. That is a fact, a simple, incontrovertible fact. There will be a tax relief bill that will follow this bill. I wish to point out that my colleague from North Dakota--and he has openly said this--is going to probably vote for a lot of the amendments to that tax relief bill because they are good initiatives which need to be done. As he mentioned, the AMT, as he mentioned--I am not sure he mentioned it, but others have mentioned the State and local sales tax deductibility or deductibility of certain education expenses which teachers incur when they are trying to spend money on their classroom or the savings credit--all of these--or the R&D tax credit which makes us more competitive as a nation. The other side of the aisle is saying all those taxes should be raised on all those people. Are they saying that the 8 million people who fall under AMT should have their taxes raised? Are they saying people in the United States who get to deduct their sales tax should have their taxes raised? Are they saying that teachers who buy crayons for the classroom should have their taxes raised? Are they saying that small businesses, especially those that go out and invest in opportunity and creativity by doing R&D expansion, should have their taxes changed and raised? Maybe they are. Clearly, if they are claiming that the next bill, the tax relief bill, is a bad bill--that is what they are claiming because that bill is going to be made up primarily of those initiatives. We can get into a debate about dividends and capital gains, also. What has generated the revenue in this country in the last few years? We have seen one of the most dramatic expansions in revenue in this country in the last 20 years and rate of growth of revenue as a result of having cut taxes and given people more incentive to be creative, go out and invest, create careers for people, and create economics to create jobs. This chart shows, as we have watched the tax cuts put into place, that revenues have been jumping every year. Why? They are headed back to the historical mean where they have been traditionally. They have been jumping because people have had an incentive to go out and invest, to create economic activity, to take risks, to create careers, create jobs, and that is taxable activity which is coming back to the Federal Government. Sure, revenues have dropped dramatically, as many of the charts the Senator from North Dakota pointed out show. But the drop in those revenues was a function of two events which we had very little control over: the bursting of the bubble of the 1990s, which was the largest bubble in the history of world, bigger than the South Sea Bubble. It was the Internet bubble, and it burst. Quite honestly, we should have gone into a dramatic depression as nation as a result of that burst. But because this President had the foresight to put into place a tax credit on the productive side of the ledger, we did not see that dramatic economic downturn. We saw a reduction, and that reduction dropped revenues. We were hit with 9/11. Never before has this Nation been hit with an event like 9/11 where we lost thousands of people on our soil here in the United States. Pearl Harbor, obviously, is a comparable. But the civilian losses were overwhelming, and the economic loss was dramatic. We were hit with a body blow to our economy. So that line went down again. We had the bursting of the bubble, compounded by the single largest attack on our Nation certainly since Pearl Harbor, arguably exceeding Pearl Harbor in many ways, and the economic impact forced the economy down further. That is why the economy dropped. It wasn't the tax cuts that dropped the revenue. The tax cuts have been shown to increase revenues and will continue to increase revenues. For the other side to take the position that anything else is happening is wrong because the facts are clear. The revenues are going up, and they are jumping dramatically back to the norm, 18 percent gross domestic product for the revenue. A lot of that is a function of tax relief which we will be seeing in the tax package which will be coming here to extend those tax relief initiatives in the next bill. But this bill is about reducing the deficit by $39 billion, $35 billion being the original instruction. It is a huge step in the right direction. Now we should ask, I believe--and I think the Senator from South Carolina is going to make this point rather dramatically--what is the response from the other side of the aisle? The response from the other side of the aisle, as I believe the Senator from South Carolina is going to point out, is that their proposal is to spend more money. That is their proposal for reducing the debt around here. They are going to spend more money. That doesn't work. Since January, they have proposed spending increases which have exceeded or reached almost a half-trillion dollars in new programs, new initiatives, which isn't too surprising because that is the philosophy of the other side of the aisle. I don't think anyone takes that as a surprise. On the other hand, where is their proposal to cut the deficit, to reduce the debt, which the Senator from South Carolina talks about? We searched, and we found their proposal. Wow. Here it is. Here is the Democratic proposal on the budget. They have no budget. They haven't proposed a budget. Even when they were in the majority, they didn't propose a budget. At least they didn't bring one to the floor. They have no proposal at all to reduce the deficit or to reduce the debt. They do have a lot of concerns about our proposal. That is understandable because we wrote it. They didn't vote for it. There was not one Democratic vote for our budget. You wouldn't expect us to basically draft their language, but we are willing to take proposals, if they have them, to reduce the debt, to reduce the deficit, proposals which are constructive. But so far, there has been no budget from the other side of the aisle. There will be a lot of targeted amendments, I presume, to spend more money, which will raise taxes on working Americans and on Americans generally. But as a practical matter, their efforts to reduce the deficit or reduce the debt are extraordinarily limited, especially compared to what we have done. This is the summary of what this bill does. It is not the tax bill. This is not the tax relief bill. This is the debt reduction bill. It reduces by $71 billion entitlement spending, and $32 billion of new spending is put in place because we believed it was important to assist certain groups and because it was fair. The vast majority or large percentage of the $71 billion came from education accounts by reducing the corporate subsidies for lenders. Rather than take all of that money in deficit reduction, we believed a significant amount of that money-- about half--should flow back into student accounts to assist low-income students in getting a college education. It is a good proposal. The key to our Nation's capacity to compete is that we have creative and productive people. That means you have to send people to college. We have to help especially low-income kids get to college. This bill does that to the tune of $11 billion. Maybe the other side is opposed to that. In addition, we want to make doctors more available to patients. We want senior citizens, when they walk into a clinic or into their health care area, to be able to see a doctor. We know that under the present law, doctors are going to be cut by 4.5 percent in their spending, and they are going to drop out of the Medicare system. The Finance Committee decided to fix that and hold doctors harmless by essentially freezing their pay rather than cutting it 4.5 percent. That is where the money is. But the net effect of this bill is a $39 billion reduction in the deficit. You can say it is not much. I happen to think it is a lot. In South Carolina, $39 billion is a lot of money. In Ohio, $39 billion is a lot of money. In New Hampshire, $39 billion is a lot of money. This bill is a lot of money put toward debt reduction. In my opinion, we should be passing it and actually should be passing it on a bipartisan basis because if the other side genuinely wants to reduce the debt and reduce the deficit, they have to vote for this bill. This is their opportunity. I yield the floor to the Senator from South Carolina who will have a lot of thoughts on this issue.

Mr. GREGG. That would be great. I thank the Senator.

Mr. GREGG. As the Senator knows, I did yield to the Senator to make an opening statement. The understanding was it would be for about 10 minutes. It has been about 15 now. I am wondering if the Senator is planning on going on for an extended period of time.

Mr. GREGG. Will the Senator yield for a question?

Mr. GREGG. Mr. President, it is my understanding that at this point the Senator from North Dakota is yielding time to the Senator from Maryland, and it will be taken from the time of the Senator from North Dakota. After the Senator from Maryland makes his statement, I will reclaim the floor.

Mr. GREGG

Mr. GREGG. Will the Senator yield for a question?

Mr. GREGG. Mr. President, we actually now return to the deficit reduction bill, which some of my colleagues may have forgotten. But just to remind them, this bill saves $39 billion off the deficit, and is the first major attempt in 8 years to try to accomplish savings through the process of reducing the rate of growth of our entitlement accounts. In that context, we have a number of amendments, and we are glad Members have been coming forward with them. We cannot formally agree right now on what the sequence will be, but to outline what we think the sequence will be, it will be Senator Lincoln going now--we can be sure of that--followed by Senator Inhofe, followed by Senator Nelson, followed by Senator Lott this evening. And tomorrow morning, the first two amendments will be Senator Cantwell, dealing with ANWR, and then an amendment by Senator Grassley, dealing with agriculture programs. That is the game plan. Now, the understanding is that at 8 o'clock tonight we will complete our business today relative to the Deficit Reduction Act, and we will reconvene tomorrow, I believe, at 9 o'clock. Or is it 8:30? I am not sure. In any event, we will formalize that understanding in a few minutes, hopefully, after both sides have had a chance to review those amendments which I outlined. I now yield to the Senator from North Dakota to yield such time as he may.

Mr. GREGG

Mr. GREGG. Mr. President, I ask unanimous consent that the Senate proceed to the immediate consideration of Calendar No. 259, S. Res. 255.

Mr. GREGG. Mr. President, in a few minutes, under the regular order, we will proceed to the deficit reduction bill.

Mr. GREGG

Mr. GREGG. Mr. President, I ask unanimous consent that the Permanent Subcommittee on Investigations be authorized to meet on Monday, October 31, 2005, at 1 p.m., for a hearing entitled ``Corruption in the United Nations Oi1-for-Food Program: Reaching a Consensus on UN Reform.''

Mr. GREGG

Mr. GREGG. Mr. President, I ask unanimous consent that Tatiana Lamon be granted privilege of the floor during consideration of S. 1932 and votes that may occur in relation thereto.