Judd Gregg

Mr. GREGG

Mr. GREGG. On the issue of loopholes, the Senator is a leading expert in this Chamber. Mr. Conrad, the Senator from North Dakota, the chairman of the committee, has, on a number of occasions, said as to offshore tax planning, when you go on Google and put in ``offshore tax planning,'' you get 1.2 million hits on Google for sites you would go to to find out how to game the tax system. I was wondering if the Senator was aware, when you put ``Democratic tax increases'' into Google, you get 1.5 million hits.

Mr. GREGG. I thank the Senator for answering the question.

Mr. GREGG. I know the Senator from Massachusetts is waiting patiently, and I just have a couple of quick questions I wanted to ask the recent chairman, now ranking member, of the Finance Committee, who I think is regarded as an expert in the area of how we get at these people who are avoiding our tax system. He has obviously studied this issue. Could the Senator from Iowa give us his thoughts as to how much you could raise relative to loophole closing that is legitimate--I mean versus a stated number, which can always be fairly high? But what is the real number one could actually generate over the next 5 years, in the Senator's experience and as a result of his studying this issue?

Mr. GREGG. Madam President, $434 billion minimum; $900 billion, actually.

Mr. GREGG. That would be a 5-year number?

Mr. GREGG. I thank the Senator.

Mr. GREGG. Madam President, I am sorry to delay the Senator from Massachusetts, but it is only because the Senator from North Dakota has delayed him. It is important to note that the IRS Commissioner testified before the Budget Committee. He said the most we could probably recover over the next 5 years over and above what they have already recovered-- because they believe they have done a good job of expanding their actions in this area for owed but uncollected taxes--the most in the last year would be $20 billion, and the most over the entire period would be somewhere between $30 billion and $40 billion. That is the tax gap. There is no $400 billion sitting there. The Senator from Iowa, who is the expert in the area of these offshore activities, how you get to them, how you can structure better ways to get to them, has said--and I think in a very commonsense way, common sense being one of the things he is most respected for around here--if these type of dollars were available, he would have gone after them in order to take care of some other issues that are very important, such as the AMT. So I have referred to this budget as the budget from the Land of Oz because somewhere behind the curtain, somebody is supposed to develop all this money. Regrettably, there is probably no curtain and nobody behind it, even though the Senator from Iowa would probably be as close as you could get around here to somebody who has that sort of wizardry. He cannot produce and his committee cannot produce the type of dollars that are being proposed here unless you raise rates. I would ask the Senator from Iowa if he does not agree with that assessment and if he has any further comment on this issue.

Mr. GREGG. Madam President, I appreciate the enthusiasm of the Senator from North Dakota for his theory that you can get $434 billion from behind the curtain, but we have to at least acknowledge the fact that experts in this area, including the Commissioner of the IRS, the former chairman of the Finance Committee, the present ranking member of the Finance Committee, have all said you can recover some dollars here, but that type of pot of gold is not there. The yellow brick road the Senator wishes to follow, and which his bill is basically forcing us to follow, will increase taxes by $900 billion, and we know where it is going to come from. It is going to come from raising rates, raising rates on American workers and Americans generally. There is no other place to get it. If that were not the case, then we wouldn't have structured within this budget, or he would not, or the Democratic Party would not have structured within this budget all these mechanisms to absolutely guarantee that rates have to be raised. Point of order after point of order after point of order makes it virtually impossible to maintain rates where they are. You can throw up the smokescreen of, well, we are going to get it from here and there, but we are not going to get it from the place that is obvious. Well, if it looks like a duck and walks like a duck, it must be a duck, and the duck here is that tax rates are going up.

Mr. GREGG. Madam President, I am uncertain if he is the junior or senior Senator from North Dakota, but will he yield for a question?

Mr. GREGG. Will the Senator from North Dakota allow me to ask a question of the Senator from North Dakota who just made a passionate statement?

Mr. GREGG. Madam President, I wish to ask the Senator from North Dakota whether he supports an extension of the tax rates relative to capital gains, No. 1; relative to dividends, No. 2; relative to highest rate, No. 3; and relative to the rates regarding the death tax, or some modification of the death tax in years 2011 and 2012, No. 4.

Mr. GREGG. Madam President, not only did I not change the subject, I went to the essence of the issue. I have heard the Senator from North Dakota many times on this floor rail against the tax cuts that were put in place that generated this economic recovery. He has railed against capital gains, dividends, and the highest rates. This budget, as it is presently structured, can only accomplish its goal of raising the largest tax increase in history if it significantly raises rates. The representation was made here that the Senator from Iowa was somehow supportive of people who are inappropriately gaming the system. It is the opposite. His statement was all about how you address that, and how he has addressed that, and how he intends to continue addressing that. But he also was concise in his conclusion in saying that the most you can get from addressing that in a realistic sense is somewhere around $30 billion or $40 billion. The head of the IRS, whom we also want to have all the resources he needs--in fact, in the budget last year we gave him all the resources he felt he needed in order to expand recovery from people who owed taxes and were not paying them--has said the most he is going to be able to get in a 5-year period is probably $30 billion. So there is a huge issue of credibility here when there is a tax increase in revenues of $450 billion to $500 billion, half a trillion dollars over the President's number, and the only items that can be pointed to that you are going to cover that with are less than $70 billion, probably, or $80 billion. So you have $400 billion or $350 billion of new revenues that have to be generated somewhere. Ironically, that happens to be almost exactly the amount of increasing the rates to the levels that the Senator from North Dakota seems to want on income taxes, dividends, capital gains. It does not pass the commonsense test of, when a party ran for reelection, got reelected--obviously, international affairs had a lot to do with it, but a lot of that campaign was based on the desire to repeal the tax cuts the President put in place, especially on income-- and then comes to the floor of the Senate with a budget that raises taxes by an amount which is essentially equal to the raising of the income tax rates, it does not make sense to deny that the income tax rates are going to be the source for most of those revenues. Sure, we will get some money from the tax gap. Sure, we will get some money from a more aggressive approach on loopholes--which everyone wants to do but nowhere near the dollars needed in order to cover the obligations of this budget which assume the biggest tax increase in history, which clearly is going to come from raising rates. I just find it unfortunate that people are not willing to say what is going on here. Why is the Senator from North Dakota--the junior Senator or senior Senator, I am not sure--Senator Dorgan, why isn't he willing to simply say: I am for raising these rates, and admit to it?

Mr. GREGG. I am willing to yield for a question.

Mr. GREGG. I certainly would, as long as the question is brief and concise.

Mr. GREGG. I reclaim my time because that obviously was not a question. It was a rhetorical question at best, probably not even that. Senator Kennedy has been very patient. I hope the Senator from Massachusetts would note that I was the only one who, on a number of times, prefaced my remarks saying I wished to hear from the Senator from Massachusetts and did not just take his time willy-nilly. I think we should turn to the Senator from Massachusetts.

Mr. GREGG. How much time do we have left on our side?

Mr. GREGG. Madam President, before I yield to the Senator from Colorado, I wanted to talk about the education funding because it is important for us to understand that this President increased the funding for education more than any other in history as a percentage and in total numbers: a dramatic increase in funding for education; IDEA is up dramatically; No Child Left Behind funding, which was originally title I funds prior to our passing No Child Left Behind, up dramatically in the budget he sent up. He increased those accounts one more time by $1 billion for No Child Left Behind. Granted, we cannot and do not intend, and do not think it is good, to outbid Senator Kennedy on issues of spending. We are not even going to try. But the fact is, we have made a very substantial commitment to education funding under this Presidency and a substantial commitment to education generally. I want to talk about Pell grants because that is another area where we have done dramatic work. Senator Kennedy says Pell grants have held steady. Well, actually they have gone up. In fact, because the President put in place a program last year, which we paid for, we now have Pell grants, if you qualify for the Smart Program, which deals with math and science education, and you pursue those courses that we think are important to our culture and we do not have enough people pursuing, you can get Pell grants literally jumping up to $8,000 a year, a significant expansion of the Pell Grant Program. We have heard in the press that we cut funds--

Mr. GREGG. I probably do not have the time. Is it a quick question?

Mr. GREGG. That is correct.

Mr. GREGG. The point being, if people pursue courses which we think are important in this country, we basically double the amount of the Pell grant they will get, which is a fairly significant commitment to those individuals. We have increased the Pell Grant Programs generally also. But it started to make sense to focus dramatic increases in Pell grants on people and on disciplines that we think are important to our culture. The second point is that we have heard in the press and we have heard from the other side this idea that we cut education funding by $12 billion in the reconciliation bill 2 years ago. That is a total misstatement. That is an outright--well, it is so incredible, it rises to the ``L'' word. It truly is dishonest to make that statement. What we did was we reduced lenders' benefits under the student loan program by almost $20 billion, and then we took a big chunk of that money and put it back into student aid. So we actually increased student aid by approximately $9 billion in that reconciliation proposal. It was a significant shift of funds from lenders to kids who are going to school. When I read in newspapers such as the Wall Street Journal today, a reporter represented, which is basically the dialogue, the line of the Democratic National Committee that we cut student lending by $12 billion, it makes me angry. I oversaw that. I was not chairman of the committee. Senator Enzi was totally committed to student loans and oversaw this exercise. What we did was the opposite. So the dishonesty of the Democratic National Committee in putting out that type of information, and then the incompetence of the Wall Street Journal reporter for picking it up and saying that we cut student loans by $12 billion is absurd on its face. They wrote whatever the Democratic National Committee handed them as a cheat sheet. We cut lenders' subsidies by $20 billion, put $9 billion into student loans. I yield 15 minutes to the Senator from Colorado.

Mr. GREGG. I yield the Senator such time as I may still have remaining.

Mr. GREGG. Mr. President, I understand now that Senator Cornyn is going to offer an amendment. We have a unanimous consent agreement which would put him in order. So I yield to Senator Cornyn for the purposes of offering an amendment.

Mr. GREGG. This has been worked out. This is an appropriate way to proceed, and it makes significant progress. I would hope that tomorrow evening when we start this vote, we will have more than these amendments lined up. In fact, I hope we have five or six other ones to vote on so we would have quite a series of votes at 5 o'clock tomorrow night. That will get us on course.

Mr. GREGG. If I may add, reserving the right to object, tonight, if people wish to come down and speak on the resolution, this is a good time to do it.

Judd Gregg

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