Judd Gregg

Mr. GREGG

Mr. GREGG. Madam President, I yield the floor.

Mr. GREGG. Madam President, if the Senator will yield for one further question, what is the chairman, within his score, what is he anticipating as to how the death tax treatment would be dealt with?

Mr. GREGG. The death tax.

Mr. GREGG. If the chairman will yield further, and through the President, I would ask, in 2009, what is the exempted amount?

Mr. GREGG. That would be the minimum in 2009 also?

Mr. GREGG. Madam President, I thank the chairman for his courtesy.

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 Madam President, I ask unanimous consent the order for the quorum call be rescinded.

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 Madam President, I ask unanimous consent the order for the quorum call be rescinded.

Mr. GREGG. Madam President, I have given an amendment, which I hope to bring up at this time, to the majority as a courtesy. I am waiting for them to take a look at it before I offer it. Essentially, this amendment deals with reconciliation. Reconciliation is a fairly arcane exercise, but it has significant impact around here. Reconciliation is the tool the Budget Committee has, to put some teeth into our efforts to try to control spending. There are no reconciliation instructions in the majority proposal. I wish there were. I wish there were reconciliation instructions on entitlements, and I wish those reconciliation instructions had followed the suggestions of the President, as I said in my opening statement, where he made recommendations that were very reasonable and would not have affected beneficiaries but would have saved $8 trillion over the 75- year life of Medicare and would have helped move them toward balance by getting the providers paid correctly and by having very high-income individuals contributing to the cost of their insurance, especially drug insurance. But there is also another side to reconciliation, and that is, as committees are given reconciliation instructions which save money, sometimes they take that money and they spend it, which is not the purpose of reconciliation. Reconciliation should not be used for a cover event for the purposes of spending money. The majority has put in place a point of order that would make it very difficult to use reconciliation for the purposes of reducing taxes. It is perfectly reasonable that we should also make it very difficult for doing that for purposes of spending money. I didn't want to eliminate the ability to spend money. Some money is going to be needed, at least that these programs as they get adjusted in reconciliation should have, maybe, some adjustment. For example, 2 years ago, when the HELP Committee received reconciliation instructions on education accounts, they basically reduced the subsidy that went to lenders by approximately $20-some-odd billion, I think $21 billion or $22 billion. At the same time, they took some of that reduction in subsidy and put it toward expanding the Pell Grant Program, especially for people who were going into the math and science disciplines. That was a good policy decision, and I don't want to tie the hands of our authorizing committees excessively, but I think there has to be an understanding that reconciliation is primarily an effort to control spending and to discipline spending on the entitlement side of the accounts. It doesn't deal with discretionary spending. This amendment will essentially say that for every $10 you save under reconciliation expense, no more than $2 could be actually spent. So it says you can't spend more than 20 percent of the savings that are generated in a reconciliation exercise. It is an attempt once again to put some discipline in here. Why is it relevant to a budget that doesn't have any reconciliation at all? As I said, I wish this did have reconciliation. It is relevant because the House has put reconciliation instructions in, a very small amount. It appears to me the intention of the House honestly is to use reconciliation as a cover for spending, not as a cover for controlling spending--which would be, in my opinion, an inappropriate action. That is why I brought forward this language. I hope others would agree with me that that would be inappropriate and certainly inconsistent with reconciliation as a concept. I am handed a note to point out that when we did the reconciliation instruction in 2005, we had net savings in that of approximately $40 billion, which was the most recent large reconciliation instruction we pursued in this Congress and which was constructive and which actually, in the outyears, turns into very significant savings. This is basically to put in place a discipline which will allow us to be sure the Budget Act's purposes are not abused and it is not used to run interference and allow an easier path to greater spending on the entitlement side of the account. It is a very reasonable approach. It doesn't totally bind the hands of the authorizing committees but makes it clear that a budget should be for the purposes of a budget, which is to discipline the spending of the Federal Government, and having this discipline in place is appropriate. I would like to offer that amendment, hopefully in the near term, so we can get it in the queue here. At this point, I yield the floor.

Mr. GREGG. I can't speak for Senator Collins. I don't know if she needs a vote or not.

Mr. GREGG. Then let's proceed.

Mr. GREGG. I move to reconsider the vote and to lay that motion on the table. The motion to lay on the table was agreed to.

Mr. GREGG. Mr. President, we hope to also, later this afternoon, after Senator Grassley has proceeded with his two amendments, proceed potentially to amendments from the other side of the aisle relative to SCHIP and from our side of the aisle relative to SCHIP and then an amendment in response to the amendment of the Senator from Montana, the chairman of the Finance Committee. That would be the sequence I hope we can get to later today. Those are all important amendments. We would like to get them done. It would be constructive.

Mr. GREGG. Do we equally divide the time? Why don't we give Senator Kyl 40 minutes and your side 20 minutes.

Mr. GREGG. On SCHIP.

Mr. GREGG. The last 5 minutes.

Mr. GREGG. Madam President, it is my understanding that under the prior order, Senator Kyl is now recognized for an hour, with Senator Kyl having 40 minutes under his control and the Democratic side having 20 minutes under their control.

Mr. GREGG. Madam President, I think it is important to note what this amendment does. First off, the chairman has said it is not paid for. Well, actually, the Baucus amendment hasn't passed, so you can argue it is paid for. If the Baucus amendment does not pass, this amendment would have the same funds available to it. But that is a specious argument. It is straw dogs because the issue is the extension of the tax rates, which we have heard from the other side of the aisle are not going to be affected, that they are in favor of extending the tax rates. Well, if that is the case, then they cannot make the case that the tax rate can't be extended, which is the case they are making. I mean it is a little inconsistent, to say the least. So I think that is inside-the-park baseball but not even good baseball, by the way--bad baseball. But what is important to remember about these proposals which we have in this group is that first it addresses educational funding, tax breaks which benefit especially teachers who help out in their classrooms--very important. It puts the death tax in a better position than what was proposed by the Senator from Montana, and it basically takes the language which I believe was developed by the Senator from Louisiana, Ms. Landrieu, and uses that as the basis for the death tax. It does not go to full repeal, as occurs under the present law, in 2011, but sets the ceiling much higher and makes it much more reasonable and I believe gives a stepped-up basis and capital gains treatment, essentially, to death taxes, so that people do not get wiped out when somebody who owns a farm dies; if the primary owner dies, the family does not get wiped out and have to sell the farm, or a small business does not get wiped out. This mostly involves that issue, quite honestly, because high estates are not affected by this. We are not talking about the founder of some technology company who is worth hundreds of millions or potentially billions of dollars avoiding estate taxes--just the opposite. That person will still be subject to the estate tax. We are talking about setting the threshold high enough so that the family farm, the small business is not put out of business by the untimely death of an individual. You know, why should somebody be taxed for getting hit by a car? It makes no sense at all, but we try to straighten that out. The most important element of this proposal, in my opinion--although I am sure others focus on education more than the death tax issue--is the fact that it continues the very positive proposals which were put in place relative to the formation of capital in this country and, as a result, the creation of economic activity and the creation of jobs. The dividend rate and the capital gains rate, as opposed to those which are in place today, have had a massive impact on creating economic activity in our society and as a result have created a huge number of jobs and as a result has caused the revenues of the Federal Government to jump dramatically. The capital gains rate, for example, we have seen come in, and this chart shows it, at exceptionally high levels compared to what the estimates were going to be, dramatically high levels. We should have expected this because this is human nature. What happens is someone has an asset they have had significant appreciation in. Boom. What happens if they have got to pay a high tax on that asset if they sell it? They are not going to sell it, they are going to hold onto the asset. But if the tax rate is a fair tax rate, which is what we have in place today, then the person sells that asset. That has two very good effects. First, it frees up the cash from that event, and the person ends up paying taxes, which we would not have otherwise had because the person would have held onto the asset. Second, they will take that money and they reinvest it in a much more productive way. That is human nature. Also, as a result those dollars are being more productively used, creating more entrepreneurial activity, so it works well. The capital gains rate has produced dramatic increases in revenues. So we should keep it in place because it is doing what it is supposed to do. It got the economy going, creating jobs. But something which people do not focus on is that the cap disproportionately benefits senior citizens. If you raise the capital gains rate, you are basically raising the taxes on seniors in America because it is seniors who take advantage of the capital gains rate, because that, again, is human nature and logical. Seniors basically are not earning money in the sense they are out working daily. Most seniors or many seniors, the majority probably, a vast majority are retired, but they have assets. As they take those assets and they convert them, they pay capital gains. Those assets are usually at a pretty low basis since they were acquired when they were young or during their working years. So when you raise the capital gains rate, you are focusing a tax rate right on top of the seniors of this country. You have launched a torpedo at them. You are going to basically say to those seniors: You are going to have less money to use in order to make sure that your retired years work the way you expected them. Not only does that work for captal gains rate, it also works for dividends. The dividend rate is also disproportionately used by senior citizens. Well, that is again human nature; it tells you that seniors do not have earned income, what they have is dividend income because they have invested or their 401(k) has been cashed out or their IRA has been cashed out or their defined benefit plan is suddenly getting them some revenue. They get dividend income. When you raise the dividend income tax rate, you are taxing, again, seniors. So it is totally reasonable, from a standpoint of continuing strong economic activity and from a standpoint of maintaining a reasonable tax burden on Americans, and especially seniors, that we continue these tax rates as they are. That is why this is a good proposal.

Mr. GREGG. Madam President, I understand at this time we go to Senator Cornyn; is that correct?

Mr. GREGG. I would ask Senator Cornyn to yield me 1 minute.

Mr. GREGG. What the Senator from North Dakota did was make a very good case for the Kyl amendment or a very bad case against the Baucus amendment. The Baucus amendment was $195 billion, not $132 billion amendment-- $60 billion-plus is deficit spending. The allegation that the Kyl amendment, under this present structure, is $70 billion of deficit spending matches apples to apples. The two amendments are essentially the same in the area of deficit spending, so you cannot argue that one is not deficit and one is deficit. It is the opposite. They both have the same practical effect on the deficit. What the Kyl amendment does, however, is at least extend the tax cuts or tax rates that actually create significant economic activity, which we have shown through the capital gains rate have generated significant revenues to the Treasury. Whereas, although I agree with the Baucus tax rates, most of those taxes rates, in fact all of those tax rates, are socially driven. They are good social policy, but they do not generate economic activity. Amendment No. 511

Mr. GREGG. Will the Senator yield?

Mr. GREGG. Madam President, I send a modification of the Sessions amendment to the desk.

Mr. GREGG. I ask unanimous consent that the amendment be so modified.

Mr. GREGG. Madam President, I support the amendment of the Senator from Texas. He is basically getting at the essence of the SCHIP issue. SCHIP has become nomenclature. It has become a motherhood term. It is being used as a smokescreen to dramatically expand the amount of money we spend as a Federal Government on health care and basically take a big bite out of what I would call the nationalization effort in health care because it has been expanded well beyond its purpose. Its purpose should to be take care of children in need and make sure they have proper health insurance. We all agree on that. What the Senator from Texas is proposing is to do exactly that, make sure this program is directed at children. However, we have seen State after State and some of our biggest States use this program for adults and for families up to $68,000 of income. That is not about low-income kids being taken care of. That is about trying to nationalize the health care system. If we are going to spend all this new money on SCHIP--and I think we need to spend some additional money on SCHIP--let's make sure it goes where it is supposed to go, to needy kids. That is why the amendment of the Senator from Texas is such a good amendment.