Judd Gregg

Mr. GREGG

Mr. GREGG. I will use my time. I will take the question off my time, not the answer.

Mr. GREGG. Madam President, will the Senator entertain a question?

Mr. GREGG. The Senator listed a whole series of accounts where spending has been increased. I was wondering if the Senator has added up that list he listed there. Is there a total? The Senator listed a specific set of numbers. I added it up to be about $14 billion. Is that incorrect?

Mr. GREGG. Madam President, I am trying to get to the bottom of the question of whether this budget increases spending over the President's number. The Senator from North Dakota has represented it does not. Yet Senator after Senator from the other side of the aisle has come to the floor and told us how much spending has increased.

Mr. GREGG. Madam President, of course it is not. It is a $205 billion increase over the President's number.

Mr. GREGG. Madam President, that is presuming after this time has expired, so we would not be equally dividing my 4 minutes.

Mr. GREGG. The additional time be divided equally.

Mr. GREGG. Madam President, there is a consistent inconsistency about the presentation from the other side of the aisle about this budget. The representation it does not raise taxes, on its face, is not consistent with the language in this budget. Why would we have had to have the Baucus amendment, which extended tax cuts and reduced taxes--or represented it did--by $180 billion, if there had not been a tax increase in the bill? There is a tax increase in the bill. In fact, the trigger language in this bill, which is now placed on top of the Baucus language, means the Baucus tax cuts--which were the original tax cuts of the President and they are being extended--will not come into fruition. They cannot possibly come into fruition because of the complexity of the trigger mechanism. They are subject to 60 votes. It is a Pyrrhic statement that those tax cuts exist. So this budget has a $916 billion tax increase in it. Then, the representation that it does not increase spending--it increases spending dramatically. This is a budget that does what Democrats do: It raises taxes and it spends a lot of money. That is the game plan. Then, there is the representation on the other side that they do not want to impact Social Security. Yet the budget takes $1 billion out of the Social Security trust fund in order to spend on their initiatives. They have a $200 billion domestic spending proposal on the discretionary side over what the President has. That spending comes directly out of the Social Security trust fund. It is a direct attack on the Social Security trust fund. There is, of course, no effort on the entitlement side at all to control spending. The debt goes up by about $2.5 trillion. But one of the key elements is this question of the trigger. I asked my staff to try to explain in layman's terms what this mechanism is that will allow the Baucus language to go forward, which would extend the tax cuts of the President of the United States. Well, in layman's terms, it is an alleged $180 billion extension of those tax cuts, which is subject to conditions only Rube Goldberg could appreciate. So we took a Rube Goldberg chart and we showed the different numbers that reflect what is happening. Essentially, the way this works is the tax legislation must include the following contingent provisions: None of the tax relief in this act shall have legal force and effect unless the Secretary of the Treasury and the Director of OMB project a surplus in 2012. So these tax cuts do not get extended if there is no surplus, and we already know the capacity to spend money on the other side of the aisle will wipe out that surplus because the surplus is such a close number. Secondly, the tax relief can cost $180 billion or 20 percent of the projected surplus, whichever is smaller. So not only do they probably not have a surplus so they can't have the tax cut they allege they have--and it is not a tax cut; it is an extension of the tax policies which are in place today--but they create a mechanism which says you are not going to get all of that, you are only going to get 20 percent of it, and you know it is not going to be $20 billion. What if the tax writing committees in their wisdom do not include the contingency clause? Well, then we switch to an entirely whole new set of miscellaneous conditions on the trigger. The House Budget Committee then has the following authority, the chairman: He will increase revenue numbers in the budget resolution to take away the tax cut if the Finance Committee doesn't include the contingency, and so instead of a budget increasing taxes to $736 billion, it actually ends up increasing taxes $916 billion. There were a number of people who were wandering around this Senate after the last budget left here saying: Oh, hey, we included the Baucus language which extends those tax cuts which we agreed with the President on, which are things such as the child tax credit, protection of married people from the spousal tax, the tuition tax credit, credits for teachers who use money from their own personal accounts to help out in their schoolroom. We extended all those. But now we find out they didn't, and they don't, because they have created this trigger mechanism which came from the House which had none of those extensions, which makes it virtually impossible to presume these extensions are going to occur. There are a lot of folks around here who are going to walk away with egg on their face, I believe. They are going to say they voted for a budget last time through where they extended those tax cuts, and this time they are going to try to claim they are doing it again when, in fact, what they are doing is setting up a clear action that can't be accomplished. It is another example of a consistent inconsistency of this budget. I reserve the remainder of my time.

Mr. GREGG. I suggest we extend the time until 3:50 and that the additional time be equally divided.

Mr. GREGG. Make it 3:55.

Mr. GREGG. Madam President, we heard the Senator represent that the administration doesn't have a surplus projected, and yet he used administration numbers to project a surplus, so more consistent inconsistency. But I think a more substantive issue here is the irony of the fact that the other side has such an aversion to letting people keep their own money through having reasonable tax rates, such as the spousal--not having penalties for people who are married, not having a child tax credit, having a tuition tax credit, paying teachers a credit for when they buy extra supplies for their classroom. They have such an aversion to those types of initiatives which let people keep their own money that they put in place a trigger mechanism to try to stop those things from occurring should they want to spend money to basically absorb that tax relief. The irony is they don't put in any trigger mechanism for the new spending they are proposing. There is a trigger mechanism here that says: Well, you can't keep your own tax dollars, you can't keep your own money; we are going to take it away from you in taxes, but there is no trigger mechanism that says when we spend a lot more money, which this proposal does, there should be some second-look mechanism to see if we can afford it. If we are running a deficit, why should we be adding new spending? There should be a trigger mechanism. Well, I think it is because there is a philosophical difference here, obviously. On our side of the aisle, we believe it is the people's money and it shouldn't be taken from them unless you absolutely have to take it, and that the Government doesn't spend the money better than people spend their own money. On the other side of the aisle, it is the opposite view. The additional irony or the additional inconsistency is those tax rates which have most benefited this economy and caused it to grow dramatically, and which have most benefited the Federal Treasury in that they have generated a huge amount of revenue we didn't expect, capital gains rates and the dividend rates are not included under any circumstances in this trigger exercise. The people who benefit the most from those are seniors, because seniors are the ones on fixed incomes and have dividend incomes. Seniors are the ones, when they get to that point in their life where they try to sell that asset which they have built up over the years--maybe a restaurant or a small business or their home--and they now are going to, under this proposal, get hit with a doubling of the capital gains tax, or almost a doubling, and a doubling to a 2\1/2\ times increase in dividend tax rates. No trigger mechanism, no matter how fallacious or fraudulent it is--which this one is--is even put in to try to protect them. This is a budget which is truly in the tradition and which is the philosophy of the other side of the aisle, which is that you raise taxes, you spend money, and we in Washington know a heck of lot better how to spend your money than you do, the American wage-earner, the American individual. We have been over this ground a lot, and you may think we are going over it again and again, and that is because we are stalling for time, actually. We are waiting for the House to take action, and we are hoping they take it fairly soon so we can move to a vote. Pending that, however, I do want to take a couple of minutes and thank my staff, led by Scott Gudes, who has done such an extraordinary job. They work ridiculous hours for low pay and they do it extraordinarily well. I want to thank the Democratic staff, led by Mary Naylor, who do an equal amount of hard work and probably get paid a lot more, I don't know. But they are special people, these folks who make this place run and work well, and we appreciate all they do. I also want to thank the chairman for his unrelenting courtesy and professionalism in running this committee. He is always fair with the minority. We appreciate that. We try to run a committee that has comity, with a ``t''; although there is a fair amount of comedy, with a ``d.'' As a result, I think of the personality of the chairman, and we are able to do that. I appreciate his efforts in that arena. He made the point that the country needs a budget. A bad budget we don't need. This is a bad budget. The fact is, the institution substantively does need a budget. We should not be running a government of this size--or any government--without something that gives you a blueprint. This blueprint is, obviously, a very poor one, a detrimental one, because it will grow the size of government and increase the burden of taxes, the deficit, and it raids the Social Security trust fund. Other than that, it is excellent. The fact is, a budget is important. So I am obviously of the view that should the Senator from North Dakota succeed in passing this budget, and we actually have a budget this year, to some degree that is an effort that he should be congratulated for, and it is something the Congress needed to do. I reserve the remainder of my time.

Mr. GREGG. What is the time situation?

Mr. GREGG. Madam President, we were summarizing the budget. I think this is important. I think the Senator makes my case because he holds up the chart about all the new spending they are doing, which is my point. They do $205 billion in discretionary spending. There is this tax increase issue. He holds up a chart that says we are doing the same tax as the President, but he doesn't allude to the fact that one of those bars is calculated under OMB and the other under CBO. If you used the same scoring mechanism, it would show a significant difference in taxes. The facts establish that they do not extend the tax cuts that the President was going to extend. They don't extend them. Then they have this phony trigger mechanism, which is a totally false presentation, which alleges they are going to extend some tax cuts when there is no way that triggering mechanism can work. If you were to accurately put this number down, it would be $916 billion because the trigger mechanism is clearly not going to be exercised, and the true tax increase in this budget is the same as the House tax increase as it left the House, which was $916 billion. I think people of fairness would look at the House budget and say, yes, the House won the debate, but there was this fig leaf put on to make it look as if there was some tax relief in here from the initial proposal. Clearly, the House number is the one that survived this process--the $916 billion in tax increases, which is the biggest in history, no two ways about it. Then you add to the debt. Yes, the debt will go up no matter whose budget you follow--the President's budget or the Democratic budget. The debt will grow. I take that as a given. But the fact is, the debt is going to grow significantly--$2.5 trillion--and it is the growth in debt that is going to be passed on to our children. A lot of it doesn't have to occur. At least $205 billion of it doesn't have to occur. That is the debt that will be incurred by spending which exceeds what the President proposed in the discretionary accounts. Then, of course, is this issue of mandatory savings, which I happen to think is the core failure of this budget, besides the tax increases and spending increases because it is the outyear when our children are going to have to start paying these bills, when their lifestyle is going to be contracted dramatically because of the cost burdens of the baby boom generation, and nothing is done in this budget to try to address that. The proposals out there are not radical. They don't even impact most beneficiaries--the reasonable proposals. We could have saved one-third of the outyear unfunded liability in the Medicare accounts by simply doing a couple of things which would not have impacted beneficiaries, other than really high-income beneficiaries, people who make more than $80,000 or $160,000, retired Senators for example, asking them to pay a fair share of their cost of Medicare Part D, the drug program. I see that my time is up. I am not sure we are ready to vote yet. I hope we are. I am not sure what the status in the House is.

Mr. GREGG. Reserving the right to object, I wish to join the chairman in expressing my appreciation to the majority leader and to our leader on this side, Senator McConnell. This was a complicated exercise, and the majority leader has been very cooperative with the Republican side of the aisle. We very much appreciate his courtesy to us. Am I to understand that the request was that we would now have 5 minutes--well, now we are down to 4 minutes equally divided, which gives the Senator from North Dakota 2 more minutes to make my case; is that correct?

Mr. GREGG. Madam President, I reiterate what I said earlier about the work of the staff, which was extraordinary and exceptional on both sides of the aisle. It was fair and very professional. These staff are truly outstanding public servants who work long hours and bring a commanding knowledge of policy, program, and, as one might expect, financial analysis. These are professionals who possess the skills to dig into the specifics of Federal programs and budgetary data, and they are just as comfortable dealing with ``the big picture'' and policy context of spending, revenues, and the overall budget of the United States. The Budget Committee staff members are truly an integral part of the Gregg team, which also includes my personal office staff in Washington and New Hampshire and my appropriations staff. Our Budget Committee staff is led by Scott Gudes and Denzel McGuire. The core of the Committee is our budget review group, professionals who are among the Nation's top budget experts: Jim Hearn, Cheri Reidy, David Pappone and Jason Delisle. Allison Parent provides our legal expertise as general counsel, assisted by Seema Mittal. Dan Brandt is our chief economist. Our health policy unit is headed by David Fisher and includes Jay Khosla, Liz Wroe, Melissa Pfaff, and until very recently Conwell Smith and Richie Weiblinger. Our team has a number of talented analysts who handle various, what we call ``budget functions'' or programmatic areas and various departments and agencies. This includes Vanessa Green, Winnie Chang, Mike Lofgren, Kevin Bargo, Jennifer Pollom and Matt Giroux. Along with some of the previously named staff, these analysts are experts on programs ranging from Department of Defense weapons systems to agricultural subsidies to FAA fees and modernization. Our communications office is headed by Betsy Holahan and also includes Jeff Turcotte and David Myers. Senator Conrad has mentioned our charts a number of times today. This office, and especially our webmaster David Myers, has worked tirelessly producing these--sometimes most creative--visual aids. Mr. President, I would be remiss if I did not recognize the outstanding nonpartisan staff that keeps the committee operating. This includes Lynne Seymour, one of the most professional and decent staff members ever to work in this institution of the Senate. Lynne, Andrew Kermick, George Woodall and Leticia Fletcher serve Democratic and Republican staff with dedication. Finally, I would like to reiterate our appreciation to Senator Conrad and the majority staff. They are a pleasure to work with. Mary Naylor and her staff, people like John Righter, Lisa Konwinski, Joel Friedman, Joan Huffer, Jamie Morin, David Vandivier, Ann Page, Sarah Kuehl, Cliff Isenberg, Jim Klupner, Stu Nagurka--just to name a few--they are hard- working professionals who give Senator Conrad and the Democratic membership on the committee 100 percent. Of course, the Senator and I have great respect for each other. I reiterate my praise of him and the majority leader's efforts in trying to get this conference report going and doing it in a fair and honest way. I yield back the remainder of my time.

Mr. GREGG

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

Mr. GREGG. Mr. President, I ask unanimous consent to proceed as in morning business for 10 minutes.

Mr. GREGG. Mr. President, I rise to express the sorrow of the people of New Hampshire and myself and Kathy, on the passing of Corporal Bruce McKay, who died in the line of duty as a police officer in Franconia, New Hampshire, last Friday, May 11. This is a traumatic event for us as a State and as this is the second time within a year a police officer has been shot in New Hampshire and died. To lose two of these gentlemen who were so extraordinary in the span of a year is truly a sad and difficult event for us as a State. Corporal McKay was, like so many police officers, just an exceptional individual who did his job of protecting us, of being out there on patrol, making sure that we are safe in our homes and going about our business on a daily basis. Corporal McKay worked in a very small town, the idyllic and pastoral town of Franconia, NH, a place where people go to get away from the hustle and bustle and threat and difficulty of the urban American lifestyle. It's right up in the mountains of New Hampshire, just past Franconia Notch, one of our most famous and beautiful spots. It is a place where many people have come to write and to live and movie stars and Supreme Court justices have retired there. It is not a place where you'd expect a violent act like this to occur. But doing his job on patrol, making what appeared to be a routine stop, he was attacked and shot to death by the individual he pulled over. This is a trauma not only for our State and for the Town of Franconia, especially, but even more overwhelmingly for his daughter, Courtney, and his parents, Bruce and Catherine, and our sympathies and prayers go out to them. We thank him for his service. We thank all officers of the law who put their lives on the line every day and serve us and give us the protection and safety which is so important to our lives. On behalf of Kathy and me, and to the extent I can, the people of New Hampshire, we express our condolences and our sympathies to his family during this extraordinarily difficult time. His service will be tomorrow. I had hoped to attend it, but unfortunately, the budget will be here on the floor tomorrow and as the ranking Republican on the budget, I feel it is my responsibility to be here to represent the Republican position on that bill. Our hearts and prayers go out to him and his family, and we send his family all our support during this very difficult time. I yield the floor and suggest the absence of a quorum.

Mr. GREGG

Mr. GREGG. Mr. President, first I thank the Senator from Texas for his elegant statement and accurate statement. I want to pick up where the Senator has left off. The Senator talks about the facts--and this is a fact--that revenues to the Federal Government have jumped dramatically in the last 3 years. In fact, in the last 3 years we have seen more revenues flowing into the Federal Government than ever in history, and the percentage of increase in those revenues has also been historic. As this chart clearly shows, we are now seeing revenues to the Federal Government which actually exceed the historic revenues to this Government. Historically, the Federal Government has gotten about 18.2 percent of the gross national product in revenue. Today we are up around 18.5 percent. We are headed towards 18.7 percent. That is a significant increase in revenues to the Federal Government. What effect does that have? As the Senator from Texas said, it has had a dramatic effect on the deficit. Because we have gotten all this additional revenue, it has caused the deficit to drop dramatically. The other side of the aisle argues: So what. Taxes are still too low on Americans. We should raise the taxes on Americans. So they brought out a budget which is going to increase taxes on Americans by about $700 billion. It is the largest tax increase in the history of the country, should that budget actually come to fruition--and it looks like it is going to pass, and I assume they are going to follow up on it. They mean what they say, on the other side of the aisle. What will that do to Federal revenues, that dramatic increase in taxes? What will that do to the economy? We are not sure, but we suspect it will slow the economy dramatically. Some of these great gains that we have seen in the economy, the 22 months of expansion, the 7.4 million new jobs, may be significantly impacted by that type of a tax increase. We also know it will create a Tax Code that is taking a lot more money out of Americans who work hard. We happen to believe, on our side of the aisle, we should let Americans keep the money they earn as much as possible, have a fair tax system, and as a result generate a benefit to working Americans by saying: Listen, if you are going to work hard, we are going to give you more money. We are also going to get more revenues, which is the way this has worked out. Why have we gotten more revenues even though we reduced the tax burden on the American people? The answer is pretty simple. It is called human nature. When you set tax levels at a fair level--which is what we have today--people are willing to go out and invest. They are willing to go out and take risks. They are willing to work harder because they know they are going to get to keep more of what they earn. What does that do? That creates a stronger economy which puts more people to work, and that is what we want, more jobs for people and, of course, the more jobs you have the more tax revenues you end up getting. In addition, especially in the area of capital gains, if you have a fair capital gains rate, which is what we have today, it causes people to go out and sell an investment which they might otherwise hold on to. If a person has an asset, say, a home or small business or stock, they don't want to sell that asset when they are going to have to pay 30 percent or 25 percent in taxes on that sale because they don't want to have to pay all those taxes for that asset they spent their whole life building up, trying to make ends meet, trying to create a nest egg for themselves. When you put a fair capital gains rate on that sale, which is today 15 percent--which is the fair rate which was put into place by President Bush's proposals--then people are willing to go out and sell that asset. When they sell that asset, what happens? Two things which are very good for the Federal Government happen. No. 1, capital gains occur so we get revenues; otherwise, we would not get those revenues because people would just sit on those assets; they are not going to sell them and pay the high tax rate. When you have a fair tax rate, they sell them, the Federal Government gets the revenues, and the second thing that happens is they take that new money they have from the sale of that asset and reinvest it. By human nature, they reinvest it in something that is more productive. So you have a more productive society, where capital assets are being used more effectively, and as a result you get this great job creation and this economic growth. In fact, in the area of capital gains, we have seen a dramatic increase in revenues. Capital gains have increased over what the projection was by CBO, the Congressional Budget Office, by 47 percent. It is a huge jump in revenues we didn't expect--or at least the Congressional Budget Office didn't expect--but which we received because human nature kicked in and people were willing to sell assets, take that money and reinvest it in things that are productive, create jobs, and as a result we got those revenues. That is why today the Federal Government is actually getting more in revenues than it got under the old tax law where the rates were a lot higher. That is why we have gotten more economic expansion, more jobs. That is the good news. From the other side of the aisle we hear this constant patter: The rich are not paying enough taxes, and these tax laws are disproportionate in their application. I think we need to talk about that a little bit because let's see what has happened as a result of reducing these tax rates. Basically, what has happened is that even with the lower tax rates today, wealthy people are paying more in revenues to the Federal Government than at any time in history. Today the top 20 percent of people in this country who have income are paying about 85 percent of the tax burden. Let me restate that. The top 20 percent of people with income in this country are paying 85 percent of the Federal tax burden. Under the Clinton years, the top 20 percent of people with income paid 81 percent of the Federal tax burden. So even though we have cut rates, we have actually created more revenues from high-income individuals. Again, you are going to say: How does that happen? Again, it is called human nature. If you have a high-income situation, individuals with a high income, they could either invest in opportunities which are going to produce taxable events or not produce taxable events. They have the position to do that. So if you have a fair tax rate they will take the risk. They will make the decision. They will be the entrepreneurs who create the job. As a result, they will make an investment which is taxable. But if you have a tax rate that is too high, which is what the other side of the aisle likes to have, then you basically create an atmosphere where these folks are going to go out and invest a fair amount of their money in things that are tax avoidance, legal tax avoidance but tax avoidance. They are going to invest in nontaxable events, stocks and bonds that do not generate income to them that is taxable. What we have done is we have created a tax law where essentially high-income people are willing to go out and take risks and do it in a taxable way that generates revenue back to the United States. As a result, we have the top 20 percent of American income earners pay more in taxes today, significantly more than they did under the Clinton years. The alternative is also fairly interesting. At the low end of the income scale, the bottom 40 percent of people who have income do not basically pay income taxes. Obviously, they pay withholding taxes, but as a practical matter that segment of our society pays virtually nothing in income taxes. They get money back, in fact, on the earned- income tax credit and other benefits the Federal Government puts in place. Under the law today, under President Bush's law, those bottom 40 percent of income earners are now getting about twice as much back from the Federal Government as they did under the Clinton years. So what is the combined effect of these two facts, of these two things? The tax law--even though we are generating a lot more revenue for the Federal Government, even though we are well over that mean number of 18.2 percent of gross national product, even though we have had jumps in revenue of 11 percent, 9 percent, 15 percent--we actually have a tax law today that is generating more revenue but is also more progressive. High-income individuals are paying more of the tax burden. Low-income people are getting more money back from the Federal Government. There is another factor that needs to be pointed out, and that is what is happening to senior citizens. Senior citizens disproportionately benefit from a low dividend tax rate. Why? It is logical, obviously. Most seniors are retired. If they have income, it is going to be Social Security, some pension program, or dividends, and most pension programs also involve dividends. So senior citizens are really the people who are benefiting the most from a low dividend tax rate. Yet the folks on the other side of the aisle have just passed a budget where they want to jump the tax rate on dividends by 100 percent. They want to go from a 15-percent tax rate to a 30-percent tax rate on dividends. Who are they going to hit? They are going to hit senior citizens, primarily. That is the people they are going to hit. If you look at the proposals from the other side of the aisle, they come out of a 1930s philosophy of economics, which was pretty soundly rejected in the 1960s, the 1970s, the 1980s, and the 1990s, but they are still attracted to it. It is a theory that says you just raise taxes. The Federal Government will get more money, and we will spend it for you. In other words, there is a theory that says we are smarter than you. We have been elected to the Senate. We are good members of the Democratic Party. We know more than you know. Therefore, we should take your money and we should spend it for you and we can spend it more effectively than you can spend it. That is a philosophy that should and has been rejected as we move toward a much more market-oriented economy. It is also a philosophy that presumes the higher taxes always generate more revenue to the Federal Government, which is not true. Higher taxes, actually, in many instances reduce revenues to the Federal Government because they reduce economic activity. They certainly reduce expansion of the economy, and they reduce the creation of jobs. Three Presidents have proved beyond any reasonable doubt when you lower income tax rates, you generate economic expansion because people are just people. They just have common sense. If they know they are going to be able to keep more of their money, they are willing to go out and work harder to get more money. But they also know if the Federal Government is going to take more of their money, and a disproportionate amount of their money, they are not going to work quite so hard. They are not going to take that risk. They are not going to create that restaurant or open that little small business, create those jobs, because they don't want to have to pay all of their money to the Federal Government. President Kennedy knew that and that is why he cut income tax rates and was successful in generating revenue to the Federal Government. President Reagan knew that and he cut income tax rates. As a result, the revenue to the Federal Government jumped and the economy expanded. President Bush has shown it once again: Cut income tax rates, expand the economy, and as a result get a fair tax level and human nature kicks in and revenues flow into the Federal Treasury. What is unique about President Bush's initiatives is that at the same time he has cut rates, he created this much more progressive system which I just outlined. The fact that high-income taxpayers are now paying so much more of the Federal share of income taxes than they did under the Clinton years, and lower income individuals are getting much more back than they did under the Clinton years, makes for a more progressive system. It also disproportionately benefits senior citizens, people on fixed incomes, because of the dividend rate. Unfortunately, though, we now have the Democrats presenting to us a budget which wants to take us to the French path, which essentially is going to dramatically increase the cost to the Federal Government, to Americans, and as a result dramatically increase the tax level on Americans. We will go down that path that France has gone down. I have to tell you, it doesn't work in France. Productivity is not up in France. Jobs are not being created in France. People don't want to go out and work harder in France. And they certainly do not have a more progressive or effective economic system than we have in the United States. I think we should reject the Democratic approach under their budget of raising taxes and stay with this tax law that is raising so much new revenue and is so progressive and has such a strong benefit for senior citizens. I yield the floor. I make a point of order a quorum is not present.

Mr. GREGG

Mr. GREGG. Mr. President, I thank the chairman of the committee for his cooperation. Obviously, he wants to get to conference. He wants to complete the conference on the budget. Although we disagree with the budget that was passed here--and I am sure we will disagree with the final product that is produced, regrettably--I think it is important the process go forward. It is not our intention to be dilatory, to try to slow this process down. That certainly is something we could do, but we certainly have no intention of doing that. Rather, we just want to be able to have a fair opportunity to make the points which we think are important relative to the budget. So I appreciate the chance to work with the Senator and the chairman's willingness to work with us to reach an accommodation that seems to be constructive, which is constructive, and which will hopefully move the process along.

Mr. GREGG. Mr. President, is this a morning business speech?

Mr. GREGG. I am going to be here for a while, so we can let the Senator from Florida go ahead.

Mr. GREGG. Mr. President, I thank the Republican leader for reminding us how we should be approaching the immigration issue, which is in a rational way. I wish to respond to a few comments that have been said, and then I want to offer the motion to instruct, which I have reserved in the order that has been entered into, and then yield to the Senator from South Dakota for his comments, and then, obviously, the Senator from North Dakota, I presume, will want to respond, if that is acceptable to the Senator from North Dakota as the procedure. To begin with, there has been a lot of references to what is going on in the area of tax policy and what the implications are, both relative to the death tax--and I did find it ironic that the Senator from North Dakota said it wasn't a death tax. Well, the only way you can pay it is if you are dead, or the only way your relatives can pay it. That is the only way this kicks in is to be hit by a truck. I think ``death tax'' is a fairly reasonable explanation of what it is. Regarding the issue of the tax cuts which are obviously at the essence of much of the debate relative to this budget, this chart reflects the underlying question of what these tax cuts have accomplished. The Senator from North Dakota correctly reflects the fact that revenues fell off as the tax cuts originally were put in place. That is correct. Why did they fall off? They fell off because we were coming out of the largest bubble in the history of organized cultures, an economic bubble, where the Internet bubble of the nineties exploded on us, caused a significant contraction in the economy, which obviously caused a contraction in revenues. That was coupled with the attacks of 9/11, which disrupted the economy to a degree that our economy has never been disrupted, except for the Great Depression and probably World War II. So those two events created a huge retardation of revenue. It was actually quite fortunate in the middle of that disruption, and a little bit prior to that, we had put in tax cuts during President Bush's first term which would stimulate the economy. As a result of those tax cuts going into place--yes, initially there was a revenue reduction, but that revenue reduction was in large part due to the bubble burst and the 9/11 contraction in the economy. Since that time, we have seen those tax cuts energize an economic recovery which has truly been historic and extraordinary, and it has done a great deal for our country from the standpoint of creating jobs, which is the bottom line most important thing we can do but also generating revenue to the Federal Government. We have now had 3 years of the largest growth in revenue in the history of our country, the largest growth, year after year. We are seeing revenues explode literally at the Federal level. They went up 11 percent in 2005 and 18 percent in 2006. They are projected to grow 18 percent in 2007. These growth rates are truly extraordinary. And revenues not only have grown year to year in an extraordinary way, but they have grown in a relationship to the overall historic burden of revenues paid by the American people to the Federal Government. Historically, the American people have paid 18.2 percent of the gross national product to the Federal Government. That is represented by the blue line on the chart. We are actually well above that now so that we are seeing a rate of income to the Federal Government of about 18.6 percent of GDP. That means we are actually generating more revenues to the Federal Government than we have on average generated to the Federal Government. We have a tax law in place which is doing a number of things. It is generating huge revenues, and it is generating revenues that exceed what has been the historical norm for this Nation, and it is a tax law which is creating jobs and causing the economy to expand. We have now had 22 straight quarters of economic expansion as a result of tax cuts, and we have had 44 consecutive months of expansion in jobs, 7.8 million jobs created. Those are massive expansions, people getting work. In addition, two of the essential elements of this tax cut, the capital gains and dividends rates, have actually generated a huge explosion of economic activity in this country because they have unlocked, in the instance of the capital gains area, funds which have been locked up for years in relatively unproductive assets have now been sold, the revenue has been turned over, and people have reinvested, entrepreneurs and risk takers, in items that have created more return, which has had two effects: It has created more jobs and more revenue to the Federal Government. The tax cuts have been good for this country from the standpoint of creating jobs, from the standpoint of economic growth, and from the standpoint of revenues to the Federal Government. Yes, one can look at this period from 2001 to 2003 and say revenues dropped. Yes, they did, but I would argue that was a function of the bursting of the internet bubble and 9/11 more than the tax cuts. But if you look at the most recent period, one cannot argue with the fact that we are seeing an explosion in revenues to the Federal Treasury, which has dramatically, in addition to the other two things, caused economic growth, jobs creation, the revenues, and has dramatically reduced the deficit of the Federal Government. In fact, we projected the deficit of the Federal Government. It was projected 3 years ago that it would be somewhere in the $350 billion range. It looks as if it is going to be under $200 billion, and significantly under $200 billion. And on a $3 trillion budget, you are basically talking a deficit number, which is really getting well under what has been the historic deficit of the Federal Government and, more importantly, had we not had the Katrina catastrophe where we had to spend over $150 billion approximately on that, and were we not at war, a war which we did not ask for when we were attacked on 9/11, we would be in surplus, significantly in surplus. These tax cuts have been good for this economy. They have been good for the country. They have been good for employment. They have been good for economic growth. They certainly have been good for the Federal Treasury. On the specific issue of the death tax, which is the motion which is pending, the motion by Senator Kyl, I think the point Senator Kyl makes is the one on which people should focus, which is what his proposal says is, we are going to put in place a compromise proposal on the death tax which was, ironically, a compromise proposed from the other side of the aisle. I think it was the senior Senator from Louisiana, Ms. Landrieu, who basically came up with this idea, which is we would have a higher rate for bigger estates, 35 percent, and for little estates, small businesses, farmers, ranchers, we would have a lower rate, and you would have an exemption of I believe about $5 million. This proposal makes a lot of sense. There is no reason why it should be a taxable event to die. A taxable event should involve economic activity. It should be you went out, made some money, and as a result you got taxed. But the way the death tax works is, the taxable event is that you, unfortunately, die. You end up getting hit by a truck, fall off your motorcycle, you get some serious disease, and as a result, your family gets hit with a tax bill. In many instances, if you are a small businessperson or you are running a farm or some other thing that involves one person and is the essence of the whole operation, that death is a huge, traumatic economic event, to say nothing, obviously, of the personal trauma that is involved. But that is a huge, traumatic event, if somebody runs a restaurant and he is the cook, the bottle washer, and maitre d', or runs a gas station, runs a small business or a farm; that person is usually the key person. When they die, that business is in extreme distress usually. That distress should not be multiplied and dramatically increased by having the tax man come in and say: I'm sorry, we are going to take half the value of your business, which is the way the law works now. So this proposal, which was a compromise worked out among a variety of people around here, and actually the essence of it was put forth by the Senator from Louisiana, makes a lot of sense. So what Senator Kyl has said is let's do it. Let's put it in the budget. The argument is, that is going to increase the deficit. That is a fairly specious argument because it is the essence of that argument: If you let people keep their own money, you are making a mistake. The Federal Government should take the money and then they should have to pay money to get their money back. They should have to pay more in taxes. It makes no sense at all. In addition, let's remember this proposal of the Democratic budget, as it left the Senate, had over a $700 billion tax increase in it. As it left the House, it has over a $900 billion tax increase in it. That is on the American people. What Senator Kyl is suggesting is you take a very small percentage of that huge tax increase that is in this budget and use it to basically put in place proper procedures and policies relative to the death tax. Motion to Instruct Conferees And that brings me to my motion to instruct. I ask unanimous consent that the pending motion be set aside and that my motion be ordered.

Mr. GREGG. That is fine to me, or yield it back and use the time altogether.

Mr. GREGG. Mr. President, I will speak quickly to this because I know the Senator from South Dakota has been courteous and is waiting, and I know he wants to speak to it. So I will highlight a little and then come back to the substance of it. The essence of this motion is that the $916 billion tax increase, the largest tax increase in history, which is in the House budget, be rejected; that the $700-plus billion tax increase in the Senate budget--again, that would be the largest tax increase in history were the House not outbidding us--be rejected; and that instead we extend a series of tax breaks which are already in place and which are very beneficial to the American people, including the $1,000 child credit, the marriage penalty relief, the 10-percent income tax bracket, the lower marginal rates for American families and small businesses, the earned-income tax credit for military families, the adoption tax credit, the dependent care tax credit, the college tuition deduction, the deduction for student loan interest, a $2,000 Coverdell education IRA, the 15-percent rate on capital gains and dividends, and essentially the Kyl death tax proposal. That is what this instruction would do. I would ask that, instead of increasing taxes by the largest amount in history on the American people, we continue tax policies which have produced this huge economic expansion. I yield to the Senator from South Dakota for his comments.