Judd Gregg

Mr. GREGG

Mr. GREGG. I rise to speak about one specific element of the next four votes which has been come to be known as the Webb GI bill; a sincere attempt and a positive effort to try address to the issue of updating the GI benefits. I regret that that bill is being brought up in isolation and is not being juxtaposed with the Graham-Burr-McCain bill which also does the same thing, only does it in a much better way. I strongly support the Graham-Burr approach, which does not undermine retention while expanding benefits, the GI benefits to veterans. The problem with the Webb bill, as the Secretary of Defense has said, and senior leadership in the military have said, is the bill will undermine our ability to retain personnel in the military. That has also been the conclusion of CRS. The reason is because it has such a high incentive for people to leave the military after their first tour of duty in the military in order to take advantage of the educational benefits. The Graham bill, on the other hand, takes a different approach. It gives even more generous benefits, in many ways, especially to the families of GIs, people serving in the military, but at the same time it increases those benefits with the more years you serve. So the benefits go from $1,500 after 3 years of service, up to $2,000 after 12 years of service, and the ability to take those benefits and give them to your children or to your spouse is also authorized in the Graham bill, which does not occur in the Webb bill. That seems to me to be proper approach here. We do not want to undermine retention as we address the issue of improving benefits for people who serve in the military for us. This does not seem to me to be rocket science. It seems to me we should be able to get these two bills together, merge them in a way that produces this sort of a positive response where we significantly expand the benefit to people who have served us, for the ability to get educational benefits after they leave the service but at the same time do it in a way that does not undermine the capacity of the military to retain quality people. When the Secretary of Defense says this is going to cost us quality people, he is talking about national defense. These are the folks who have been trained to have the skills, who are extraordinary professionals whom we want to encourage to stay in the military. We do not want to create a system where we actually encourage them to leave the military. The Graham-Burr bill takes the approach of encouraging these folks to stay in the military and allow the benefits to accrue and grow so they can use them or their family members can use them. Thus, I think that is a much more positive and appropriate approach. So setting up the Webb bill as a freestanding vote without any amendments--that is the structure we have got here on the floor, no amendments to the Webb bill; it hasn't gone through committee, it has not gone through regular order, it is being brought to the floor to make a political statement-- basically is not constructive to getting the best product and the best benefits for our GIs, and also the best bill to make sure we have the strong and vibrant military in order to defend ourselves and have a strong national defense. Regrettably I have to vote against the Webb bill until we can get it in a posture where it addresses the issue of retention, where it addresses the issues raised by the Secretary of Defense, raised by the military leaders who work for the Defense Department, and raised by our own congressional study groups. Hopefully we can step back from this issue and do it right and do it in a cooperative way that will actually accomplish the goals which we all want, which is to significantly extend and expand benefits for education to people who serve us in the military, and at the same time encourage retention, at the same time allow these benefits to be passed down to the children of the persons serving us if that is their choice. I wanted to make that point clear prior to this vote. I appreciate the courtesy of the Senator from Mississippi. I yield back to the Senator from Mississippi any time I have. I yield the floor.

Mr. GREGG

Mr. GREGG. Mr. President, I also request to be added as a cosponsor.

Mr. GREGG. Mr. President, I ask for the yeas and nays.

Mr. GREGG

Mr. GREGG. No, I wouldn't, because $300 billion is a 5-year number. But I thank the Senator for making it clear that he agrees with the fact that $30 billion is a lot of money. Maybe he doesn't agree that $30 billion is a lot of money. I think $30 billion is a lot of money.

Mr. GREGG. I have the time, Madam President. I have the time. So we are talking about big dollars, real dollars and lots of new spending. Under any scenario, we are talking a number which is going to drive large tax increases not only next year but in the outyears for working Americans in this country, and it is not right to do that to them, in my humble opinion--well, in my opinion. It is not necessarily humble. I apologize. There is another point here that needs to be made, which is there is a claim in this budget that they have put in some sort of enforcement mechanisms called pay-go. They keep returning to pay-go as an enforcement mechanism. To begin with, they have waived pay-go, adjusted pay-go or manipulated pay-go on at least 17 different occasions for well over $175 billion in new spending. Pay- go is only used as a vehicle to try to increase taxes. If somebody wants to cut your taxes, they will claim pay-go and you have to increase somebody else's taxes to do that. But when it comes to spending around here, as we saw with the farm bill that rolled through here, pay-go has no relevance at all. It is adjusted by changing years. It is adjusted by moving numbers around. It is adjusted by, as in the SCHIP bill, artificially ending a program when you know the program is not going to end. It is scammed. So there is no credibility to claiming pay-go is in this bill. Furthermore, real pay-go isn't even in this bill. Real pay-go says you match the year of the spending to the year of the cost, the year it is going to be offset against. This bill doesn't do that. The first year of pay-go under this bill--- you can claim you are going to offset a new spending program in the fifth year under this bill. So you game that system right to the end. Then there is the alleged tax proposal in this bill--the Baucus amendment, as it is referred to. Well, we went through this exercise last year. The Baucus amendment was brought forward last year and the other side of the aisle put out a lot of press releases claiming they had extended the tax cuts within the Baucus amendment which included things such as the childcare tax credit and the spousal marriage penalty and I think R&D tax credit. They did a lot of press on that and there was a great deal of fanfare after they took the vote on the budget that claimed they were going to pass a bill which would accomplish these tax cuts, extending them. Where is the bill? Where is the bill? It never passed. There were no extenders passed. The whole amendment turned out to be a fraud. So they--well, it worked so well last year with the press release, they have done it again this year. They have done it again this year. They have claimed they are going to pass those extenders, which they didn't do last year, and they may do it this year, I don't know. I haven't seen anything yet that implies to me they are going to do it. But if they did do it, just to make darn sure that it actually never had any serious effect, they put language in the bill which basically creates a Rube Goldberg system where they take back the tax deductions if a deficit occurs. Well, they know a deficit is going to occur because they have already put in place spending initiatives which exceed the alleged surpluses they have in this bill. Just the veterans benefit we are going to vote on tomorrow theoretically, and which will pass here at some point, is going to knock out the alleged surplus. So all of these alleged tax extenders which theoretically they are going to pass and at least they are going to put press releases out on are not going to occur, because they put language in this budget which says if there is a deficit, those tax extenders are recaptured, and they end. They come to an end. So this budget is obviously, from our point of view--and it is our point of view. It is not their point of view. I don't argue with the fact that they believe they have put together a great budget. I mean in their mind, in the mind of the person who believes we should dramatically expand the size of government, dramatically increase taxes on the American people, this is a heck of a good budget. I don't argue with that. But from our perspective, when we think Americans should keep as much of their tax dollars as we can leave them with, because it is their money and they will spend it better, and they are more efficient using it than we are--we should keep a low capital gains rate; we shouldn't penalize seniors who have dividend income as their main source of income--from our perspective, this budget has the wrong priorities because it raises the taxes on capital gains and raises the taxes on dividends significantly. In addition, it has the wrong priorities because it expands spending significantly--$500 billion in new spending and entitlements. Remember: Probably the biggest threat we face as a nation--fiscal threat--in fact, the biggest threat after, in my opinion, the threat of Islamic fundamentalism and the terrorists using a weapon of mass destruction against us--is the impending economic meltdown of this country as a result of the burden that our generation, the baby boom generation, is putting on the next generation through the entitlement accounts. There is $66 trillion of unfunded liability, $66 trillion--a huge number. Nobody knows because it is hard to define what $1 trillion is. But if you take all the taxes paid since the beginning of this Republic--I think you are talking about something like $37 trillion--and if you take all of the net worth of the American people--all their cars, all their homes, all their stock--and add it together, you come up with something like $45 trillion. So we have a liability on our books which involves three programs-- Social Security, Medicare, and Medicaid--that exceeds the net worth of the Nation and exceeds the amount of taxes paid in this Nation since we began as a nation. That is a huge problem for us. You have to start to address it. One of the good things the President's budget did was suggest a couple of ways to address it. In fact, he sent up a proposal which would take about 20 percent of this problem as it relates to Medicare, which is the biggest part of the $66 trillion, and would have made Medicare 20 percent less insolvent--which is a big number, by the way. That was a big step. The proposals he sent us had no impact on the vast majority of beneficiaries--no impact at all. He suggested that wealthy Americans such as Warren Buffett, for example, qualify for the Part D premium under Medicare, under the Medicare drug program, or some other extraordinarily wealthy person, should pay a fair share--not all, but should pay a fair share of the cost of the premium of their drug program. That was a reasonable suggestion. What happened to it? It was rejected by the other side of the aisle. The President suggested that we use IT and disclosure of performance at different levels that medicine integrates with the patient so people could make more intelligent purchasing decisions, so employers and insurers could make more intelligent decisions but, more importantly, Medicare could. What happened to that idea? It was rejected by the other side of the aisle. The President suggested we should do something about the runaway cost of malpractice, about the trial lawyers essentially running up extraordinary costs on health care providers, especially doctors, and that we should do something to limit that. It is a reasonable suggestion rejected by the other side of the aisle. How much entitlement saving is in this bill? Zero. Zero entitlement saving is in this bill. Here we are facing probably the most significant fiscal issue of our time and we do nothing about it in this budget. In fact, under the present law, we as a Congress are required by something called the Medicare drug trigger to adjust Medicare spending to bring it down under what is known as a trigger level. It is a technical point, but Medicare Part D premium isn't supposed to exceed 45 percent from the general fund. And we have now gotten a directive from the trustees in the Medicare trust fund to act, and it would cost not a large amount of money in the context of this entire budget--$1.3 trillion.

Mr. GREGG. Billion, thank you. Billion. I got into my trillions. It would cost $1.3 billion to correct this. That proposal is nowhere in this budget; nowhere in this budget. It is hard to believe we couldn't even do $1.3 billion when we have been directed to do it, when we passed the law. It was our law that said we would do this if this problem occurred. Yet the courage isn't there to do even that in the area of entitlements, which is truly irresponsible, an act of malfeasance by the Congress. So entitlement spending remains unaddressed. Interestingly enough, I heard Senator Obama on the stump a couple of days ago--maybe it was a week ago--talking about how he was never going to allow anything to happen to the Social Security recipient or the Social Security trust fund. It is that type of language which absolutely guarantees our children are going to get a bill here that they can't afford, that our generation, the largest in the history of the country, which will double the number of retirees, is going to basically put a weight on our children and our children's children that will make their lives less enjoyable than ours because they will not be able to afford the dollars it costs to support our generation and still be able to buy their homes, send their children to college, and buy their cars because of the tax burden generated by the entitlement costs. So that irresponsibility is permeated in this budget when it does nothing on the issue of entitlements. Speaking of Senator Obama, I am entertained by the fact that this budget, which will have three-fourths of its life under the next President, must assume that the next President will not be Senator Obama because he has proposed $300 billion of new spending--$300 billion--in the first year of his Presidency. He proposed 187 new programs. We can only score 143 of them because the other ones were not specific enough. But if you score 143 of them, they add up to $300 billion of new spending just in the first year. As I said earlier, Senator Obama said he is going to pay for this by taxing the wealthy. That is what he said. But if you look at this budget, they have already spent that money. This budget already assumes the wealthy are going to be taxed. The $1.2 trillion tax increase in the budget assumes the top rate in the 2010, 2011, and 2012 period jumps back to President Clinton's level of 39.5 percent. So the budget, which already is projecting deficits in the $400 billion range, already presumes inside of it, as it is presented here, a jump in the top marginal rate, which is the rate on the richest Americans. That money is already spent. It was spent when the other side of the aisle decided to increase entitlement spending by $500 billion under this budget and increase discretionary spending by close to $300 billion under this budget. So where is he going to find the money to pay for his $300 billion of new programs? I don't know. But one thing is pretty obvious: We are going back to the future with enthusiasm. Yes, we can raise taxes and, yes, we can raise spending; that will become the theme not only of this budget but future budgets should we have a Democratic President and a Democratic Congress. This budget really doesn't do much to address the issues the American people need to have addressed. Those issues involve, No. 1, doing something on the issue of entitlements; No. 2, maintaining a tax law which creates productivity, which energizes entrepreneurship and says to small business people, go out and create jobs; No. 3, disciplines our fiscal house by containing discretionary spending under a trillion dollars. Those are not really that dramatic or that heavy a lift to undertake. There is no reason we could not keep spending under a trillion dollars on the discretionary side, no reason we could not have taken the small steps, like asking wealthy people to pay a bigger part of--or any part of--their Part D drug premium. There is no reason this budget could not have contained within it some initiatives which would have controlled discretionary spending and would have continued to promote the tax policy we have seen for the last 3 years, which has generated a massive increase in revenues for the Federal Government, especially from capital gains. Another course that was chosen--the course that is circular--goes back to the way we did things in the past when we had the last Democratic Congress. That course said you have to raise taxes because the American people don't know how to spend their own money, so we have to do it for them. It is a course that says the Government should always grow, and grow fast. There is nothing in the Government that should be reduced. It is a course that says we should add to the Federal debt at a radical rate. It is a course that says we should ignore real problems--the biggest problem we have, which is entitlement spending. I want to put in one footnote because I think it sort of encapsulates the whole discussion about discretionary spending. The Senator from North Dakota got up and said we had to keep the COPS Program, which was a great program, and put cops on the street. There isn't one program that their budget proposes that we eliminate on the discretionary side that I found. Everything either gets increased or is maintained. The COPS Program is uniquely appropriate to be eliminated. Why? Don't listen to me. Listen to President Clinton. He created the COPS Program, and he created it with this caveat: This will be a 3-year program. That is what President Clinton said--that when we get to 100,000 police officers on the street as a result of this program, this program will be terminated. That was the program that was proposed. Not only did we get the 100,000 police officers on the street--because I chaired the committee of jurisdiction at that time--we put 110,000 new police officers on the street using Federal funds. Then, following on the suggestion of what the original program was, and following the edict of President Clinton, we started to phase out that program. It should have been completely phased out. That was 8 or 9 years ago that we hit what the number was under this Federal program. The program is still here. It is a classic example of how programs work. Once they are in place, the interest groups that support them demand that they stay in place forever. Obviously, we all believe police officers do a great job. We admire them, respect them, and they protect us. But this program fulfilled its obligation. It did what it said it would do, and it worked. It should have been terminated, just like President Clinton suggested. Now, the other side of the aisle, 8 to 9 years after that event, is still claiming this program has to be kept and grown. That is the difference between our parties. We think when somebody puts in a program that says it will last 3 years, with certain goals, and those goals are met and the 3 years are over, the program should be ended and the American taxpayer should get to keep the money from ending that program. The other side of the aisle thinks we should continue the program forever, grow it, and take money out of the American taxpayers' pockets to pay for something on which we have already fulfilled the responsibility. That is the difference. It is a fundamental difference between our parties. They are in the majority. They have the right to write a budget however they want it. They have done that. It is a budget that has the world's largest tax increase, has significant increases in spending, significant increases in entitlement spending, crosses the trillion-dollar line on the discretionary side, does nothing about containing entitlements, and plays games with enforcement mechanisms relative to the budget. We would not have written this budget. That is why we are opposed to it. I yield the floor.

Mr. GREGG. Madam President, first, I thank the chairman of the committee, the Senator from North Dakota, for his generous comments and reciprocate by saying it is a pleasure to work with him. Obviously, we have disagreements or we wouldn't be in different parties. That is the purpose of democracy. You have disagreements and reach some conclusion that, hopefully, is constructive for all. The budget, unfortunately, tends to be a uniquely partisan statement of a party's political positions. Therefore, it is more difficult to reach agreement, especially when the Congress has both Houses of the same party. But that doesn't mean you can't do it in a cordial and, hopefully, constructive way, have your disagreements, and make your points. I appreciate that the Senator from North Dakota has always been cordial and professional and constructive, as has his staff, to say the least. I don't want to start off with too much hat tipping to the Senator from North Dakota; I don't want to get carried away. Let me simply say this: It is important that the Congress have a budget. It is uniquely the Congress's responsibility to have a budget. Although the President's budget gets soundly beaten about the ears here, the President's budget is not a factor in the sense that it is part of the congressional budget process. The congressional budget is uniquely an entity of the Congress. The Congress passes it. It does not go to the President for his signature. The elements of the budget which are most important, such as the allocations to the Appropriations Committee, such as reconciliation instructions, are uniquely the purpose of the Congress as a way of giving a blueprint and defining spending and tax revenues within the fiscal policy of the Congress. The Congress retains, under the Constitution, the right to the purse strings, and the budget is an element of exercising that right. So although the President sends up a budget under the Budget Act, that budget rarely, if ever, becomes law. I am not aware it has ever become law. It is simply a point for discussion. When you have a Democratic Congress and a Republican President, it tends to be discussed less other than in opposition by the Congress. So this budget is totally the responsibility of the Democratic Congress. It is passed by the Democratic membership of the Congress, not by the Republican membership of this Congress, and the President's input is at the margins, to say the least. But it is important there be a budget. Even though I may strongly disagree with it, I do think it is the responsibility of the Congress to do a budget. Thirdly, as a note of appreciation, I do thank the Senator from North Dakota for his insistence that reconciliation instructions not be included in the bill. Reconciliation is an extraordinarily strong hammer which is contained within the Budget Act which allows basically the Budget Committee to, hopefully, control the expansion of entitlement programs. Unfortunately, last year, it was used to expand Government, not to control the rate of expansion of Government, and that was a mistake, a serious mistake that undermined, in my opinion, the integrity of the act. I am glad we are not doing it this year, and I appreciate the Senator from North Dakota insisting on the Senate position on this issue. To address the budget specifically, this budget, as it is brought forward by our colleagues, by the Democratic membership, is a ``back to the future'' budget. You hear Senator Obama say he wants change. Well, this is ``back to the future'' change. It is essentially a restatement of things which always happens under a Democratic Congress. It says: Yes, we can raise taxes and a lot of taxes. It says: Yes, we can increase spending and a lot of new spending. It says: Yes, we can run up the debt and a lot of new debt. It says: Yes, we will not address entitlements and the fact that entitlement spending is a major threat to our fiscal integrity. It is a ``back to the future'' budget. The term ``tax and spend'' exists. It may be trite, but it exists because it is accurate. This budget has the largest increase in taxes in the history of the world. It has one of the largest increases in spending. It has a $500 billion increase in entitlement spending, a $200-plus billion increase in discretionary spending. The debt goes up $2 trillion under this budget. And it is on the watch of the other party. Those are policies of the other party that are being put in place, and they are not good policies. They are not healthy. They are not constructive for the American people. The budget, as I outlined, has the largest increase in taxes in the history of this world, especially this country, and it has an impact on working Americans. You hear a great deal, especially from Senator Obama, who is the presumptive nominee now of the Democratic Party after last night, that he is going to raise taxes to pay for all his programmatic activity, but he is only going to raise it from the wealthy. Well, this budget does not assume, to begin with, most of the proposals by Senator Obama to spend money, but it does assume a tax increase. It assumes a $1.2 trillion tax increase, and that tax increase cannot be paid for only by wealthy Americans. If you take the top tax rate in America, and you raise it back to the top tax rate under the Clinton years, which would be 39.5 percent, every year you will add $25 billion of new revenue to the Federal Government, assuming people do not try to avoid taxes and reduce their tax liability, which wealthy people tend to do because they get accountants to show them how to do that. Well, that does not come anywhere near covering the additional taxes which are proposed in this budget, the $1.2 trillion-- the $25 billion a year. No, it is the families who are going to pay that. Forty-three million families in America will be hit under this budget, in the year 2011, with a tax increase of $2,300 or more. Those are working families, by the way. A family of four making $50,000 will have a $2,300 tax increase. Seniors. Eighteen million seniors under this budget, in 2011, will see a $2,200 tax increase. Small businesses--the engine for economic activity, the engine for jobs in this country--27 million small businesses will see a $4,100 increase. There will be 7.8 million people brought onto the tax rolls who were taken off the tax rolls by President Bush. These are low-income individuals who no longer have to pay taxes as a result of the tax policies of the early 1980s. Those tax policies, by the way, worked. They worked. Yet there is tremendous opposition around here from the other side of the aisle to continuing those tax policies, as this budget points out. The capital gains--I think we have a capital gains chart in the Chamber--the capital gains revenues during the last 4 years have jumped dramatically--dramatically--as a result of getting a capital gains rate which Americans feel is fair and are willing to pay. In fact, over $100 billion has been collected in the last 4 years from capital gains--$100 billion--more than was expected to be collected by the Congressional Budget Office. Now, why is that? Why, when we cut the capital gains rate down to 15 percent, did we get more revenue? Well, as I have said before on the floor of the Senate, it is called human nature. If you say to somebody: We are going to give you a fair tax rate on your capital gains income, people will do things that generate capital gains. People do not necessarily have to do anything to generate capital gains. If you own a stock or you own a home or you own a small business and you feel the capital gains rate is too high, you would not want to sell that stock, home or small business because you would not want to pay all that money to the Government. But if the Government sets a fair capital gains rate--15 percent--then you say: All right, I will pay that tax in order to turn over that stock, in order to sell my business, in order to sell my home. I am willing to take that tax rate. So people go out and they do things which generate economic activity. They generate capital gains. That generates revenue to the Federal Government. That is what has happened here. We have generated significant amounts of revenue we did not expect because people were willing to undertake activity which was taxable. It has a second very positive effect, besides getting a lot of revenue in the Federal Government. A low capital gains rate--a reasonable capital gains rate--causes people to invest their money more productively. They go out and they take risks. Entrepreneurs take risks. Job creators take risks. Small businesses are started and jobs are created as a result of money being invested in a way that generates more jobs. It generates more activity, more entrepreneurship, more jobs. This bill assumes the capital gains rate will be doubled. This bill assumes the rate on dividends may be more than doubled, depending on what your bracket is. This bill is a massive tax increase on working Americans and seniors. By the way, it is senior citizens who take the most advantage--and that is logical--of capital gains and dividend income. Most seniors have a fixed income. It is a dividend income. It usually comes from a pension they are getting or they invested in while they were in their working years or they have a home they sold, so they have a capital gains. So the idea in this bill, which is to end the capital gains rate as it presently exists and raise it and to end the dividend rate as it presently exists and doubling it, that idea is going to disproportionately hit senior citizens. It is not going to raise the revenue that is projected in the bill because people are going to take tax-avoidance action. But because of the way CBO scores things--it is static around here; there is no dynamic scoring--they claim this is going to raise all this revenue. It will not. But the fact is, those tax increases will slow this economy and damage working Americans and working families, as was shown by the prior chart. That is not fair. Now, my colleague on the other side of the aisle will argue--and he argues all the time--that, no, we are not going to have a tax increase, even though the tax increase in the bill is the exact amount of money that CBO scores the ending of the capital gains rate and its increase and the ending of the dividend rate and its doubling--the exact amount of money that generates by CBO scoring. So CBO at least is presuming, and the Democratic Party in setting forward this budget is taking advantage of, revenues that are expected to come from a significant increase in capital gains rates, dividend rates, and general rates. But we hear from the other side: Oh, we don't have to do that. We don't have to do that. They try to fudge this issue by claiming: We are going to collect this all from the tax gap. As to the tax gap--the Senator from North Dakota probably went on for 15 minutes showing us buildings here and buildings there and subway systems here and subway systems there. Well, do you know something. We had testimony which totally rejects that. The Commissioner of the IRS came in and said: You couldn't possibly collect the type of dollars that are represented in this bill in tax increases from closing the tax gap. You can claim it in theory, but it will not happen in practice. This canard, so to say, has been used for years--years. In 1987, the Senator from North Dakota said: I pound away at the need for a share. He said: That includes the tax gap between what is owed and what is paid. He said that in 1987. In 1990, he said: It is both fiscally irresponsible and insulting to the vast majority of honest taxpayers in this country if we fail to tap this revenue from those who have not complied. Then again, last year, he said: If we collect 15 percent of the tax gap, it would be over $300 billion, and that alone would come close to meeting the revenue needs under our budget. That was last year's budget, by the way. How much did they collect from the tax gap? Zero. How much did they collect from the tax gap in 1987, when he first made this statement? Zero. How much did they collect in 1990, when he made the statement again? Zero. Throughout the 1990s, through the 2000s, the tax gap is not being closed. In fact, instead of being closed, last year, they cut the funding to the IRS, those elements of the IRS who would most logically be people who would go out and collect extra money if it was owed. So this whole tax gap thing is nice rhetoric, but it has no substance, and it is not defensible on its face in light of the numbers in this bill. What is in this bill is the largest increase in taxes in the history of this country--$1.2 trillion. Now, there is, in addition, the issue of the debt. The Senator from the other side is fond of pointing to the President, saying: He has increased the debt this much, he increased the debt this much. Yes, the debt has gone up significantly. I do not like that. Nobody likes that. But you cannot wash your hands of it when you produced the budget last year that added $200 billion to the debt--well, $400 billion it was going to add to the debt. I am sorry. I misstated. Over $400 billion will be added to the debt for the first Democratic Congress's budget-- $400 billion. This budget presumes another $370 billion to that debt. So this wall of debt chart--yes, the President of the United States, because he put forward budgets that increased the debt, deserves some significant responsibility here, but so do our colleagues on the other side of the aisle who are producing this budget. There is $2 trillion of new debt added to the wall of debt under the Democratic budget. You could reduce that. You could reduce that by not spending so much money, which gets us to the next point. The spending in this bill goes up significantly. We passed the trillion-dollar threshold--$1 trillion of discretionary spending--in this bill. Now, I suggested--and I agree it would maybe be a statement more of an attempt to make a point than a substantive event, but I suggested we set spending limits in this bill which would keep discretionary spending under $1 trillion. That would have meant that instead of increasing spending in this bill, as the Democratic proposal does, by $24.5 billion next year--which, by the way, is the 1-year number that goes up over 5 years and represents over $200 billion in new discretionary spending--they would have only been able to increase spending by $10 billion and then they would have stayed under the $1 trillion limit. But they couldn't even do that. I mean the desire to go out and spend is a genetic effect; it is a genetic existence in the Democratic position. That is why we have different parties. They believe the Government is better when it is bigger. They believe the Government is better when it takes your money and spends it. They believe Government knows how to spend your money better than you do and therefore, when they are in control--which they are and which they have been--they significantly raise your taxes and they significantly increase spending. This budget isn't any different. As I said, it is back to the future. Is this change? It is change that takes us back to where we were when we had the last Democratic Congress. Significant increases in spending, and the budget doesn't even account for most spending which we know is coming down the pike which has already been signed on to by the majority of this party on the other side of the aisle. For example, we have pending in the wings later today or tomorrow a supplemental that is going to add spending in the area of unemployment insurance of $15 billion, spending in the area of veterans of $54 billion. We have a farm bill coming at us that is a $300 billion bill. We have an AMT fix which this budget claims to pay for, but which we know won't be paid for, of $70 billion. The numbers go up and up and up and up, the debt goes up and up and up and up, the spending goes up and up and up, and the taxes go up and up and up. There can be no denying that. It is the way it is. I understand there is a difference of opinion, but I think it ought to be admitted to by the other side. There shouldn't be an attempt to obfuscate it by claiming we are going to get taxes from the Oz somewhere behind the curtain. The tax revenues are going to come out of working Americans. It shouldn't be claimed we are going to generate a reduction in spending when we are generating an increase in spending, and a fairly significant one. The other side of the aisle holds up this chart and says there is no real difference between the President's number and our number. ``Ours is a 1 percent difference.'' But 1 percent on $3 trillion is $300 billion. I don't know where they come from, but $300 billion is a huge amount of money-- a huge amount of money.

Mr. GREGG. I would yield.

Mr. GREGG. I reclaim my time then. The point is I don't consider $300 billion a small amount of money. Now, maybe it is a small amount of money in North Dakota, but I do know that $300 billion would run the State of New Hampshire for I think approximately 10 years. Maybe it would only run the State of North Dakota for a couple of years, because I know you have big budgets up there, but I think it is a lot of money, $300 billion. So that is--

Mr. GREGG. Well, Madam President, I am happy to reclaim my time. Thirty billion dollars is a lot of money in New Hampshire. It would run the State for 10 years.

Mr. GREGG

Mr. GREGG. I will just say it will be a motion to instruct.

Mr. GREGG. Mr. President, I send a motion to the desk.

Mr. GREGG. As I understand the order, we have pending the motion to instruct that I offered, the motion to instruct which Senator Kyl offered, the motion to instruct which Senator Conrad offered relative to the motion of Senator Kyl, the motion to instruct which Senator DeMint offered, the motion to instruct which Senator Boxer offered in relationship to Senator DeMint's motion, and this motion; is that correct? Is there anything else pending right now?

Mr. GREGG. The Conrad motion relative to the Kyl motion has not been sent to the desk.

Mr. GREGG. Relative to the unanimous consent agreement, other than the motion I have just sent to the desk, which is a trillion-dollar spending cap, we would still have available to be sent to the desk the motion relative to nuclear energy reserve and the motion relative to offshore drilling, with the side by sides.

Mr. GREGG. I thank the Chair. I believe all the motions that are pending, to the extent they still have time remaining on those motions pursuant to the unanimous consent request, that time is reserved; is that correct?

Mr. GREGG. So right now I will address the trillion-dollar spending one and have that come off that time which is, I believe, 30 minutes equally divided.

Mr. GREGG. What this instruction says is, we should not be spending $1 trillion on discretionary accounts around here. This budget for the first time, the Democratic budget, because of its increases last year on top of the increases in this budget, has hit the trillion-dollar mark. That should be a fairly big red flag, that we are now going to spend $1 trillion in discretionary spending. I have trouble comprehending what a trillion dollars is. I suspect almost everybody does. But if you take all the taxes paid since we began as a republic, I believe it totals something like $42 trillion. That would be over 200 years. So this one budget is going to spend a fairly significant amount of what has been raised in taxes since our country began. It is a big number, $1 trillion. It seems to me we ought to sort of maybe draw a line here, take a breath, and say: Let's stop. Let's think about what we are doing. Let's see if rather than spending this huge amount of money, we can't save a little money. Last year the Democratic budget, and then the Democratic appropriations bills, increased spending by $22 billion. That was what they proposed. It is not just a 1-year event when you raise spending around here by $22 billion. That compounds over 5 years. It is $22 billion plus $22 billion plus interest, plus $22 billion. It adds up. In fact, a 5-year number is probably closer to $220 billion, $250 billion, when you spend $22 billion in 1 year or increase spending by that much. So it is a lot of money. Last year they increased spending by $22 billion on nondefense discretionary spending. This year it is not absolutely clear, because it hasn't actually been disclosed to us, but we know it is going to be well over $20 billion on nondefense discretionary spending again. That is why the Democratic budget takes us over $1 trillion; $1.9 trillion, I believe, will be spent under this budget on discretionary spending. As I said, it is time for a timeout. That is what this motion to instruct says. It says: Let's go back and rethink this effort. Can't we somewhere in that trillion dollars find enough savings to get us back under $1 trillion? Shouldn't we certainly be saying we are not going to push the American taxpayer over the trillion-dollar number; rather, we will make a little extra effort to try to reduce spending in this account if we want to increase spending in that account, rather than constantly add on to the spending? This Democratic budget has absolutely no programmatic savings in it. The President suggested some programmatic savings. I believe his programmatic savings added up to about $15 billion. None of those was accepted and none of those was put in this budget. None of those are assumed. In fact, all it does is add to spending and add to programs. It is hard to believe that in a trillion-dollar budget, we couldn't find a mere 1 percent or 2 percent of savings by reducing programs which have either outserved their usefulness or which, in the order of priorities, we simply can't afford, and we should make difficult decisions of maybe not increasing them as much as proposed or maybe even reducing them. In most instances, we are talking about slowing the rate of increase. We are not actually talking about reducing. This is a red-flag motion. It says: Let's pause. Let's think about this. Do we want to blow through the trillion-dollar mark on the discretionary side of the ledger without having made some effort to try to save some money around here, to reallocate money, to set priorities, and to do what is affordable? I don't think we do. That is why we are calling on the conferees to take some action to bring this number back under $1 trillion. That means they have to save $9 billion, $10 billion. That is 1 percent. They ought to be able to do that. I know it is a lot of money, $10 billion, but on a trillion-dollar budget, it certainly ought to be a doable event. It does seem to me the American people deserve that type of effort. We could all earn our pay around here, a number of times over, if we were to save the American people $10 billion or $20 billion and allow them to keep that money so they can spend it and make their lives better rather than have the Government spend it for them. That is what this motion does. It instructs the conferees to bring this budget back under the trillion-dollar level in the discretionary side. With that, I reserve the balance of my time and suggest the absence of a quorum.

Mr. GREGG. I ask unanimous consent that the order for the quorum call be rescinded.

Mr. GREGG. Madam President, I ask unanimous consent to set aside the pending motion and send to the desk a motion on behalf of Senator Graham dealing with nuclear power.

Mr. GREGG. Mr. President, this motion to instruct is necessary because the budget, as it left the Senate and it is represented, has been agreed to between the House and Senate Democratic leadership and membership, with no Republican input other than the courtesy of telling us what they have agreed to, has in it the largest tax increase in the history of the world--the history of the world, not just the history of the United States. It is a $1.2 trillion tax increase. It means that all Americans' taxes will go up significantly as a result of this tax increase. Mr. President, 7.8 million people today who do not pay taxes will find that they are paying taxes. These are low- and moderate- income Americans who are not liable to pay taxes because their income has them in a level where there is no tax event, but under this budget resolution, which assumes the termination of the tax policies that were put in place in 2001 and 2003, those 7.8 million people will be returned to the tax rolls and will have to pay taxes. Families of four, earning $50,000--a husband, a wife and two children--in 2011, under this bill, would see their taxes go up $2,300. A single mom raising two kids--which is the toughest job in America, in my opinion--earning $30,000 a year, that mother would see her taxes go up by $1,100. That is a lot of food, a lot of clothing, and a lot of better lifestyle that will be lost to that family. A family of four earning $110,000 would see their taxes--that would be, for example, a mother who is teaching or a father who is teaching and a mother who is a police officer, one making $50,000 and one making, say, $60,000--that family with two children could see their taxes go up $4,300 under this bill. Small businesses--which are defined by the Democratic Party as the rich, will pay more taxes. In fact right now in the House of Representatives they are debating a bill which they claim taxes the rich, which it turns out are small businesses who file as individuals-- 75 percent of all individual returns with income above $300,000 include business income, and 83 percent of all individual returns with income above $1 million include business income. They will be subject to the high-end tax which the Democratic Party is proposing in the House. Meanwhile, small businesses, who pay 54 percent of all individual income taxes--those small businesses, 27 million in total, will see their tax bill go up by $4,100 under this budget resolution. That could easily put a lot of those small businesses out of business, that type of a tax hike. A lot of these businesses work at the margin. Even though they may have high income, they are still spending a lot of that in order to maintain their business. Elderly couples with incomes of $40,000, if the Democratic budget goes forward, an elderly taxpayer, someone over 65 with $40,000 of income, will see their taxes go up $2,200. That is a lot of money for somebody who is probably on a fixed income and does not have too many ways to increase their income and are trying to make fixed costs, which they also cannot reduce. To be hit with a $2,200 tax bill in 2011 is a pretty stiff penalty to pay so the party in power, the Democratic Party, can spend their money on some program they deem more appropriate than allowing that individual to keep their money in their pocket. Eighteen million seniors will see taxes go up under this bill as the tax policies of 2001 and 2003 are repealed and taxes are increased. There was an argument made on the other side of the aisle that we are not going to do that, we are going to collect this money from uncollected taxes. That argument has no viability any longer. They made that argument last year, and the amount of money which was collected from uncollected taxes went up a minuscule amount, so that argument has no credibility. There is an argument made, primarily by Senator Obama in his campaign for the Presidency, that all these new programs and all this cost will be paid for by taxing the wealthiest Americans--only the wealthiest Americans; that the other tax breaks will be left in place. This budget does not assume that. This budget does not assume that at all. This budget assumes the full repeal of all the tax rates as they were put in place in 2001 and 2003. In addition, it assumes the full repeal of the capital gains rate, full repeal of the dividend rate-- which, by the way, taxes on capital gains and dividends are paid disproportionately by senior citizens. They are the ones who sell their homes and end up with capital gains, they are the ones who have fixed incomes usually tied to dividends from their pensions. So that argument that this proposal is just going to tax the wealthiest of Americans does not fly, on the basis of the language of the Democratic budget. The Democratic budget says they are going to repeal and raise, by $1.2 trillion, those taxes--taxes which all Americans will have to pay. Senator Obama says if he just taxes the wealthy, he can pay for all his new spending programs. Those new spending programs total up to well over $300 billion a year. He has proposed over 185 new programs. If you score just 143 of those programs he is proposing--his new or additional programs--it totals $300 billion in new spending. That is on top of the new spending already in this budget resolution. This budget radically expands spending. It is well over $200 billion in new discretionary spending over the 5-year period of this budget and of course you put the Obama ``spend-orama'' on top of that and you are up another $300 billion. All of this is going to be paid for, allegedly, by just taxing the wealthy. You have to look at the language of the bill. That is not the way it is going to be paid for. As I outlined, it is going to be paid for by taxing working Americans, elderly Americans, single moms with families and individuals who run small businesses. In fact, if you took Senator Obama at face value, and what he is proposing, he is going to raise all of these taxes on the wealthy to pay for his $300 billion of new spending and the $200 billion in this bill. The $300 billion figure is an annual number, by the way. The maximum amount, if you were to return to the top rate in America, back to the rate during the Clinton years, which is what has been proposed by Senator Obama, the maximum amount that generates annually is $25 billion. The fact is, we will not get that much. These are wealthy people. They understand how to hire tax accountants and avoid taxes when taxes become disproportionate, and they view them as something that should be avoided rather than paid. The great advantage we have from the tax cuts which were put in place by President Bush and which caused this economy to expand and caused Federal revenues to grow in the most aggressive way in our recent history, was that tax laws have reached fair levels. Take, for example, the capital gains tax which, under this bill, under this budget, will be doubled. The capital gains tax today, because it is at a reasonable rate, 15 percent, is generating huge increases in Federal revenues. In fact, CBO estimated when the capital gains rate went to 15 percent, it would generate about $100 billion less than what it has actually generated over the last 3 years. And why did we obtain an additional $100 billion in tax revenue as a result of having a lower capital gains rate? For two reasons: One, because the capital gains rate was fair so people were investing in activity that was taxable, and they were not trying to avoid taxes by investing in nontaxable activity; and, two, because when you set a fair capital gains rate, what you do is incentivize people to go out, recognize their capital gains--in other words, sell the asset which they obtained gain in, and then take that new money they have gotten and reinvest it in some other activity which also generates capital gains. Instead of having the capital gains event locked down, instead of having assets held simply because people do not want to pay taxes, and those assets may be nonproductive assets, thus not having productive use of those dollars, a reasonable capital gains rate, which is what we now have in this country, causes people to go out and invest and act in the most efficient way with the money they have. As a result, not only do they generate more taxes to the Federal Government, $100 billion more than was estimated, but they also, at the same time, create more jobs. Because those dollars are used more efficiently, there is more entrepreneurship, there is more risk taking, and more people are willing to go out and take the risks to create a job because they know they are going to have a chance to get an adequate return, and their efforts will not be taxed away. But this budget rejects all of that. This budget rejects that whole concept. It says: Let's go back to the period where we taxed people at extremely high rates. And why? Why do they tax people at extremely high rates? Is it to reduce the deficit? No, the deficit goes up dramatically under this bill. Does it reduce the national debt? No, the national debt goes up dramatically under this bill. The reason they want your tax dollars is because they want to spend your tax dollars. There is a genuine philosophy on the other side of the aisle that says they know how to spend your money better than you do. You, the working American, you, the small business man or woman, you, the single mother, they know better how to spend your money than you know how to spend your money. Thus, they want to raise your taxes in order to reprogram it in some sort of program that they deem to be of a better social purpose than allowing the person who earned that income to keep their money in their pocket so they can make decisions which benefit them and their family with those dollars. That is the philosophical difference that divides us and could not be shown in a more stark way than in this budget as it left the Senate and which will be conferenced, because this budget repealed almost all the constructive tax policy that was pro-growth oriented in the President's proposals of 2001 and 2003, and as a result it drives this massive increase in the tax burden on the American people. This is not a tax on the wealthy. This is a tax on the middle class because it is middle-class America who will have to pay for the $1.2 trillion tax increase. To review the numbers, 7.8 million people who do not pay taxes today will have to pay them under this bill; 27 million people who run small businesses will see their taxes go up by $4,100; 43 million working Americans who have children will see their taxes go up by $2,300; and senior citizens, 18 million senior citizens, will see their taxes go up by $2,200. Obviously, we have a deep philosophical difference with the majority on this point. And that is why we are suggesting an instruction which says we should not proceed down the path of having the world's largest tax increase. Let's at least tell our conferees: Do not do that to the American people. Keep the tax laws at a level that is fair and is responsible. By ``responsible'' I mean the tax laws, as they presently are structured today, are returning more revenue to the Federal Government from our income tax than we have ever had in our history. And even as a percentage of the gross national product, they are returning more revenues to the Federal Government than has been the historical average. Mr. President, 18.7 percent of gross national product today is being collected in tax revenue. Historically, it was only 18.2 percent. So these tax laws have not reduced Federal revenue, they have actually increased Federal revenue, as I pointed out when I discussed the capital gains rates. We should not be putting in place a tax burden on working Americans which is going to be counter to the idea of creating jobs, creating economic incentives, and giving and allowing people to keep in their pockets money which they have earned and which they know better how to spend than we as a government know how to spend. I reserve the remainder of my time. I look forward to continuing this discussion as we proceed through the afternoon. The PRESIDING OFFICER (Mrs. McCaskill.) The Senator from North Dakota.

Mr. GREGG. Madam President, I ask unanimous consent that the order for the quorum call be rescinded.

Mr. GREGG. Madam President, I now suggest we yield back the time remaining on this motion and that we turn to the motion to instruct by Senator Kyl. So I ask unanimous consent to yield back all time.

Mr. GREGG. Madam President, to my knowledge we have not seen the side by side.

Mr. GREGG

Mr. GREGG. Reserving the right, I ask for an additional 2 minutes as well.