Orrin Hatch

Mr. HATCH

Mr. HATCH. Mr. President, the American people deserve an accounting of what happened on the floor this morning. The citizens of Utah, whom I am honored to represent, and citizens all over this country thought the Senate would be voting on the cut, cap, and balance bill later this week. I am an original cosponsor of this bill in the Senate. I have signed the cut, cap, and balance pledge. I have always supported a balanced budget amendment to the Constitution. This year, it is one of my proudest achievements to have introduced S. J. Res. 10, a balanced budget amendment that is supported by every Republican in this body for the first time in all the balanced budget amendments brought to this floor. It is the strongest balanced budget amendment ever written--one that fundamentally deals with our spending crisis. I am honored to have worked with my colleague and friend from Utah, Senator Lee, in crafting this amendment. We worked with Senator Cornyn and 44 other Republicans as well. I am honored to be working with old and new friends, such as Senators Cornyn, Kyl, Paul, Toomey, Rubio, and many other Republicans in pursuing this constitutional amendment for the American people. The cut, cap, balance legislation the Senate tabled today culminates in a balanced budget amendment, but also includes the short-term deficit reduction that families and markets are demanding. Cut, cap, balance provides meaningful deficit reduction for the next year and spending caps for the years that follow. It sets us on a path toward a balanced budget. It addresses the gross overspending of the Federal Government in the short term, taking on the deficits and debt that are holding back economic growth and permanently burdening American families and businesses. Most importantly, cut, cap, balance would fix the problem of government overspending permanently. It would eliminate the bias in Washington for ever more spending by requiring Congress to send a balanced budget constitutional amendment to the States for ratification prior to any increase in the debt ceiling. The more the American people hear about this plan, the more they like it. They know the President has no plan. They know the markets are done with promises to cut spending down the road. They know raising taxes is not the solution to a government spending problem. The President and congressional Democrats know the people know this. That is why they have pulled out all the stops to kill this bill's momentum. The President threatened to veto cut, cap, balance. But that did not do the trick. So after the House passed cut, cap, balance, the President all of a sudden supported the so-called Gang of 6 proposal. His advisers knew they had a problem. All of his clever talk about raising taxes on oil companies and corporate jets and yachts was not distracting the American people from a simple fact: My friends on the other side of the aisle have no credible plan for balancing the budget. The President has no credible plan for balancing the budget. He has not offered anything that would help us get to a balanced budget, nor do I believe he ever will offer anything. They have speeches and executive summaries of bills that will be written down the road; they have plans and proposals for future spending cuts that remain a mystery to everyone; they have budget frameworks; but they have no plan. The chairman of the Senate Budget Committee has a budget outline. But here is the Senate Democratic caucus budget proposal. Let me refer to this goose egg up here on the chart. That is the Democratic caucus budget proposal--a big goose egg. As meager as this is, I have to hand it to them, it beats the President's budget proposal. The President has offered us nothing, and we have a big goose egg here in the Senate. The American people are done with this. The people of Utah know the same people who brought you the stimulus--the policy equivalent of taking $1 trillion in taxpayer dollars and throwing it into the Potomac River--the same people who brought you $2.6 trillion in new spending and $\1/2\ trillion in new taxes with Obamacare, are not credible when they now boast of their commitment to deficit reduction and balanced budgets. The most recent proposal is from the Gang of 6. We are still looking at this proposal. I will not condemn anyone who makes a good-faith effort to get to the bottom of our serious problems. Their efforts might be on the side of the angels, but the devil is in the details, and many of us have real questions about this proposal. Specifically, we want to know what the revenue impact will be, because by some accounts it will raise taxes by between $2 trillion and $3 trillion. At the very least, the American people understand that the President's desperate embrace of this plan is to avoid, once again, dealing with the deficit. Whatever its substantive merits or demerits, this proposal is a commitment to dealing with deficit reduction later. But later is too late. We need to deal with deficit reduction now. The people of this Nation are telling us this over and over. They are lighting up the Capitol switchboard. I am confident that my colleagues on the other side are hearing the message loudly and clearly: Balance the budget now. Get spending under control now. A last minute op-ed from the President telling us to ``go big'' on a debt deal is a little too late. We are facing our third straight year of trillion dollar deficits. Our debt is now over $14.3 trillion. The President has shown no serious signs of getting this fiscal crisis under control. He offered up a dead-on-arrival budget in February. When even his friends in the mainstream media panned his budget for its total lack of attention to our looming debt crisis, he offered his budget mulligan with a much ballyhooed speech on deficit reduction. But a speech is not a plan. Meanwhile, it has been over 800 days since Senate Democrats have produced a budget, thus abdicating their most basic of duties. The American people are finished with this dithering. They know what the solution is. The President and the majority leader no doubt saw the polling yesterday on the cut, cap, balance plan. Here is the bottom line: Nearly two-thirds of the American people support it. But that is only half the story. Here is the rest: Everyone likes cut, cap, balance--not just Republicans, not just Democrats. It makes sense. American families want deficit reduction, and with this plan they get it. No vague platitudes or speeches or rallies about reducing the deficit. This plan reduces the deficit and it fixes the underlying problem, which is Washington's predisposition toward more spending. The President frequently demands that Congress put partisanship aside and come to a deficit reduction agreement. But the American people are one step ahead of them. The cut, cap, balance plan, along with the balanced budget amendment to the Constitution, wins support across the board. Sixty-three percent of Democrats back cut, cap, balance. Fifty- three percent of those who oppose the tea party support it. Democrats threw everything they had at this bill. They absurdly called it the ``cut, cap, and destroy Medicare plan.'' What bull. The left is becoming a caricature of itself when it comes to demagoguery on the issue of Medicare. I think the American people have caught on that liberals claim that when the Republicans turn on the lights in the morning, they are working to destroy Medicare. Bull. These claims no longer have credibility. The left is out of talking points. Their constituents are telling them to pass cut, cap, balance. They know it won't destroy anything. It will save this country. So instead of having a vote on it, Democrats decided to pull the plug on the vote. Ordinarily, it is not a good idea to actively undermine the will of the people. But in this case, there is a method to their madness. The President and his hard-left supporters are in a real pickle. They refuse any structural reforms to our biggest spending programs--the programs that are driving our country toward a fiscal collapse--but they know they cannot come clean with the American people about the tax increases that will hit squarely on the middle class if these structural reforms fail to occur. So they do nothing. Unable to talk straight with citizens who are demanding a balanced budget, they do nothing. They focus on $21 billion in tax benefits that go to energy companies over 10 years when we have a $1.5 trillion deficit this year--this year. This is how Peter Roff at U.S. News and World Report put it: The president and congressional Democratic leaders are still dug in, trying to pull a rabbit out of their hat that will get them what the political coalition behind them demands: new taxes, new spending, and no real cuts. This is not going to happen. So unable to thread the needle between the President's hard-left base that refuses spending reductions and the majority of taxpayers demanding deficit reduction, what do they do? They punt. Today, they managed to avoid a vote on the bipartisan cut, cap, and balance plan. There was a great deal of bluster surrounding this dodge. To distract the American people from the fact that they were running from a fight, the rhetoric was laid on pretty thick. This is what we heard about this bill. According to my friends on the other side, cut, cap, and balance is ``as weak and senseless as anything that has ever come on this Senate floor.'' It is ``anathema to what our country is all about.'' This is ``some of the worst legislation in the history of this country.'' Now, let's be clear what they are talking about. They are smearing a bill that would balance the budget. They are trashing a bill that requires a balanced budget constitutional amendment. I personally am glad to know where the other side stands, but they do not stand with the American people. They certainly don't stand with my home State of Utah. The American people think balancing the budget is precisely what America is all about. Reining in spending, restoring the Constitution, and securing the liberty and prosperity of America's families is exactly what Congress should be doing. I am disappointed in what happened here today, but I am also confident this fight is not over. The left might be able to hide from a vote on balancing the budget by a simple motion to table--which they are hoping obscures their desire to not balance the budget--but they cannot hide from the markets and the legacy of debt President Obama has given this country because that is a real threat to our credit rating. Yesterday, Standard & Poor's made clear that avoiding the default was only one variable in their rating of U.S. credit. This is what Standard & Poor's said: We have previously stated our belief that there is a material risk that efforts to reduce future budget deficits will fall short of the target set by Congressional leaders and the administration. In this light, we see at least a one- in-two likelihood that we could lower the long-term rating by one or more notches on the U.S. within the next three months and potentially as soon as early August . . . if we conclude that Washington hasn't reached what we consider to be a credible agreement to address future budget deficits. Now, after years of reckless spending by President Obama and his Democratic allies, the chickens are coming home to roost. We face an imminent debt crisis, and a failure to take it on will impose a crushing burden on America's families and businesses. Our economy is stagnant, and the failure of the President to lead on deficit reduction now threatens higher interest rates and will slow it even further. This is Standard & Poor's analysis of the impact of a debt downgrade due to a failure of deficit reduction: We assume that under this scenario we would see a moderate rise in long-term interest rates (25-50 basis points), despite an accommodative Fed, due to an ebbing of market confidence, as well as some slowing of economic growth (25-50 basis points on GDP growth) amid an increase in consumer and business caution. For an economy that is slogging along with anemic growth and job creation, this warning should wake people up. It should make the President and the left get serious about deficit reduction. But, instead, the President is still casting about for a plan. It is important to remind people that we have a plan. It is called cut, cap, and balance. It culminates in a balanced budget amendment to the Constitution, and it is supported broadly by the American people. Some folks on the other side claim to be for a balanced budget. They claim to stand with the people. But on a party-line vote they voted to table this proposal today. When America's Founders came together in the summer of 1787 to draft our Constitution, they faced many challenges. But at heart they had a respect for republican government, they had a respect for the sovereign power of the American people, and they understood that the fundamental principle of popular sovereignty gave the Constitution its legitimacy. For that reason, the Constitution they wrote was clear that the voice of the people should be loudest on the most pressing issues. The provisions for amending the Constitution provided that on the most important issues, the people rule directly. The Constitution belongs to the people. It only became law because it was ratified by the people, and it can only be changed by the people. Our Nation is deeply in debt, and this debt now threatens the very liberty of our families and the vitality of our economy. It is a threat to current and future prosperity. Most importantly, it is a threat to limited constitutional government. The people know this. They know it in their guts. They know the problem here is spending. Our problem is too much spending, not too little taxation, and they know what the solution is: cut, cap, balance, and a balanced budget amendment to the Constitution. There will be talk now about moving on, but I am not moving on. Democrats want to write the obituary on this bill and turn to some new plan or framework this President produces one way or the other, I guess. But no plan this President produces will get us to balance. Cut, cap, and balance does. I am not so sure what my friends on the other side are afraid of. The founder of their party, Thomas Jefferson, had a deep respect for the democratic process and the sovereignty of the people. What are they so afraid of? Why not pass cut, cap, and balance? Why not send a balanced budget amendment to the States for ratification? If liberals have a better argument, they can lead a fight against the amendment in the States. All they need is 13 States to defeat the balanced budget amendment. Why not let the people decide? During the last Presidential campaign, the President frequently told his admirers: Yes, we can. Well, now the American people are saying it back to him. They are telling him they want to balance the budget and that we can balance the budget. We can and we should pass cut, cap, and balance and send a balanced budget constitutional amendment to the States for ratification. I will just repeat it: If the Democrats so hate the idea of a constitutional amendment to balance the budget, all they have to do is get 13 States to vote against ratification. We have to get 38 States to vote for ratification. That may seem like an overwhelming job, but I don't think so. I think the amendment would be ratified so quickly, Democratic heads would be spinning and, I might add, maybe even some Republican heads as well. All I can say is this country is in trouble. This country is on the way down to self-destruction unless we get it under control, and I don't see one program from the other side that even comes close to showing how we get this under control--except more taxes and more spending. I guarantee, if we raise taxes, they would spend every stinking dime of it. That has been the history of my 35 years in the Senate, as the most senior Republican. All I can say is we are not going to let them get away with it anymore. We are a minority now, but I believe we can get back in the majority. I think the Democrats would do themselves a great favor if they would vote for cut, cap, and balance and a constitutional amendment and let the people--let the people--decide. Let them make this decision. Come on, Democrats, all you need to do is get 13 States. What are you so afraid of? I think what is so fearful is that this waltz that has been going on of big spending all these years is going to come to an end. Mr. President, I suggest the absence of a quorum.

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

Mr. HATCH

Mr. HATCH. Mr. President, I ask unanimous consent that we recess subject to the call of the Chair.

Mr. HATCH

Mr. HATCH. I object.

Mr. HATCH. Mr. President, I want to take a few minutes to explain my objection to the legislation just offered by my esteemed colleague. I want to make it absolutely clear that a long-term FAA reauthorization is a priority for this country and a priority for myself, and I have said as much repeatedly. The consent request just offered by my colleague, even if accepted, would not prevent a lapse of current law. As my colleagues are likely aware, the House has completed legislative business for the week, so the only way to prevent a disruption to FAA funding is to pass Chairman Mica's bill the House passed earlier this week. I worked with Finance Committee Chairman Baucus to report a tax title from the Finance Committee to the bill that passed the Senate earlier this year. However, since then progress on a long-term reauthorization has been slow. I share House Transportation and Infrastructure Committee Chairman Mica's frustration that favors to organized labor have overshadowed the prospects for long-term FAA reauthorization. Last year the National Mediation Board changed the rules under which employees of airlines and railroads are able to unionize. For decades the standard has been that a majority of employees would have to agree in an election to form a union. However, the new National Mediation Board rules changed that standard so that all it takes to unionize is a majority of employees voting. This means that the NMB wants to count an employee who doesn't vote as voting for big labor. Somehow, organized labor is able to claim that it is democratic to appropriate someone else's vote without that person's input and participation. The FAA reauthorization bill that passed the House earlier this year will undo this heavyhanded rule and lets airline employees decide for themselves how to use their own votes. The House bill would merely undo a big partisan favor done at the behest of big labor, and put efforts to unionize airline workforces on the same footing they have been on for years. The House bill does not create a new hurdle for unionization; instead it restores the longstanding ability of airline employees to make decisions for themselves. As I said, it is unfortunate that kowtowing to big labor has effectively grounded efforts to get a long-term FAA reauthorization off the ground. The lack of a long-term bill is bad for airports all across the country because they don't have the funding stability to plan and complete projects. Kicking the can further down the road is not a viable alternative to actually doing what is in the best interest of passengers, commercial users of air transportation, and our airlines and airports. As a Senate conferee to the FAA bill, I stand ready to do everything I can to break the cycle of short-term extensions, and to do something that hasn't been done around here for more than 7\1/2\ years, and get FAA reauthorization off the ground. So, Mr. President, having said all of that, I ask unanimous consent that the Senate proceed to the immediate consideration of H.R. 2553, which was received from the House; that the bill be read a third time and passed, the motion to reconsider be laid upon the table, and that any statements relating to the bill be printed in the Record.

Mr. HATCH. Mr. President, I am getting a little tired of the National Labor Relations Board usurping the power of the Congress of the United States and enacting labor laws by fiat of the Board that are hardly going to be upheld by the courts, but nevertheless it will take years to reduce them and take them away. In this particular case the National Mediation Board has changed the longstanding rule when you vote to unionize, it is the vote of all employees. This means that you could have a vote, and this is what I think the House is trying to stop and to change. That means you can have a vote with less than half of the employees and it would be the majority of those who vote. Now, that has never been the law, it has never been the case, and it is clearly a heavyhanded approach towards the FAA, and I think that is one reason why the House has taken this very strong position. I understand my friend on the other side, and we are friends and we have worked together on some of the issues, and I have a tremendous amount of admiration for him and his ability to lead and express himself. He is one of the best people of expression in the history of the Senate, and I have great respect for him. But that is one of the main reasons why the House is up in arms and I have to say our side is up in arms as well. We have to stop this changing laws without the consent of Congress just by the fiat of those on the National Labor Relations Board and the National Mediation Board. It is not right and upturns hundreds of years of labor law, and, frankly, it is wrong and I am on the side of the House in this matter because of it.

Mr. HATCH

Mr. HATCH. Mr. President, I could not agree more with the Senator's point on the real driver of our deficit and debt. We have this debt because government is spending too much. But this is not a matter of personal preference; this is an indisputable and empirically verifiable fact. The systemic problem this country faces is too much spending, not too little tax revenue. I understand our friends on the other side of the aisle are in a tough spot. They know this, but their left wing base refuses any changes to the spending programs driving these deficits and debt. They don't want to scare off middle-class Americans by recommending the tax increases necessary to close the gap without major changes for spending programs. When it comes to offering any real plans, they have resorted to burying their heads in the sand, as indicated on this photo. They choose to ignore the real problem. They hope their friends in the media do the same thing--ignore the fact that they are ignoring the problem. As you can see from this chart, the problem is spending.

Mr. HATCH. That is right. They are talking about revenue, but the tax increases they are recommending are more distracting than illuminating. I think it is fair to say that all of the talk by the President and his congressional allies about corporate jets and yachts is a classic red herring. On this chart, it indicates this: The name of this fallacy comes from the sport of fox hunting in which a dried, smoked herring, which is red in color, is dragged across the trail of the fox to throw the hounds off the scent. Thus, a ``red herring'' argument is one which distracts the audience from the issue in question through the introduction of some irrelevancy.

Mr. HATCH. As you can see, that is what they are doing. I am glad the Senator brought this up. As I just read, my research found that the term ``red herring'' comes from the sport of fox hunting. Again, a red herring argument is one that distracts the audience from the issue in question through the introduction of some relevancy. In my view, all of these tax issues that President Obama and those on the other side of the aisle are discussing are red herrings. They want to distract Americans from the real driver of our deficits and debt and the real choices Democrats have to but are refusing to make. Let me walk through some examples. If we were to raise the depreciable life on corporate Jets from 5 years to 7 years, as the Democrats propose, it would yield us $3.1 billion over 10 years.

Mr. HATCH. To hear the President talk, you would think this is the key to balancing our budget. We all know he is overstating the case. It would provide only a month of debt reduction is about all it would do? Given its essential role in his deficit reduction proposals, you would hope so. But I am sorry to disappoint my friend from Alabama, because, according to our calculations, that amount equates to only 20 hours and 23 minutes of the debt over the next 10 years. Unfortunately, that doesn't even begin to solve the problem. Of course, as you can see here, $13 trillion, the Obama debt; there would be $3.1 billion over time with the corporate jet taxes; and remaining above the debt-- assuming they didn't spend more, which is an assumption you can't make--would be $12.9 trillion. Is the problem solved? Of course not.

Mr. HATCH. Well, in other words, by our calculations, the savings from this proposal would be even more meager. If Congress enacted this change, we could cover the debt from the Obama budget for all of 15 hours and 47 minutes. Again, this is not solving the problems of the burdensome debt the President is piling on.

Mr. HATCH. That is right.

Mr. HATCH. You would think so. But the other 3,651 days of debt under the 10-year Obama budget would not even be touched. There is a third red herring that has been thrown out there. Maybe that one closes the gap. We have all heard the President talk about hitting American oil companies by reducing or eliminating domestic energy incentives. This is a real priority of his and of congressional Democrats. We had a cloture vote on a bill by our friend from New Jersey to extract $21 billion in revenue from U.S. oil companies. The Finance Committee had a hearing where the other side touted the benefits of this tax increase by grilling the CEOs of the top five oil companies. If you listened to my friends on the other side, one would think an additional $21 billion would solve all our fiscal problems. Their rhetoric suggests this is the only thing standing between more money to send kids to college and provide school lunches. But I wonder if my friend from Alabama might put into perspective how much of the 10 years of debt under the President's budget this proposal would cover.

Mr. HATCH. Well, here is how many days of the 10-year debt of the Obama budget that would be covered. Keep in mind, this proposal originated from our friend from New Jersey, the head of the Senate Democratic campaign operation, and his tag teammate, the head of the Senate Democratic message operation--the so-called war room--the senior Senator from New York. I will let others decide whether this proposal was more political than substantive, but people should at least know the facts about this proposal before deciding. As a deficit reduction proposal, this is very weak tea. This is a much ballyhooed proposal, and it would cover the deficit for, in actuality, 5 days 18 hours and 47 minutes. As you can see, here is the oil rig proposal. We have a $13 trillion debt--actually it is about a $13.5 trillion debt right now--and you would save $21 billion from the extra taxes on oil and gas. Even at that, we would have a remaining debt of $12.9 trillion. So is the problem solved? Of course not.

Mr. HATCH. Well, I sure am. Anyone watching C-SPAN will see our friends on the other side making the argument day in and day out. When I hear this argument, I often think of a saying from the distinguished former chairman of the Senate Finance Committee, Senator Russell Long. When talking about tax reform, Senator Long said: Some might reduce the politics to this: ``Don't tax you, don't tax me, tax that fellow behind the tree.'' And since there are a lot more folks who aren't millionaires than are, the Democrats have calculated the politics of class warfare works. All of our problems could be solved if the rich paid their fair share, according to the Democrats. As politics, this might sound--I don't even think it sounds good, but as tax policy and its proposal to reduce our deficits and debt, this is the fourth red herring. It does not come close to fixing the deficit from the Obama budget. Our friends on the other side frequently cite the Tax Policy Center-- or TPC--for tax data. That makes some sense. TPC is a professional think tank that is a joint venture of two center-left think tanks, the Urban Institute and the Brookings Institution. With the exception of its director, Donald Marron, TPC is largely staffed by highly qualified tax professionals who worked in Democratic Treasury Departments and Democratic Hill offices. TPC is a solid professional outfit, but you can't ignore its institutional perspective. To be fair, I would say the same thing about the Heritage Foundation. Their institutional perspective is more likely to line up with folks on my side of the aisle. Nevertheless, I am drawing from TPC data, some of the assumptions with which I might not agree. According to TPC models and estimates, for 2011, American households earning more than $1 million account for 12 percent of the Nation's pretax income, they pay 19 percent of Federal taxes and carry an average tax rate of 29 percent. Even more critical from my perspective, these taxpayers also account for 38 percent of all flow-through income. Flow-through income is predominantly earnings from the ownership of small businesses. So raising rates on the rich will squarely hit those who create and expand the small businesses that need to be the engine of our economic recovery. But let us be clear about something: Higher taxes on these wealthy individuals will not only have adverse economic consequences, it will not even provide the deficit and debt reduction suggested by the left. Even if all the income--every dime they earned, of those earning more than $1 million--were confiscated with a 100-percent rate--with the unlikely assumption of no taxpayer behavioral response--for the year of confiscation, these higher taxes would yield about $893 billion. That would be a one-time confiscation. Surely none of these folks would continue to work, save, or invest in the future if the government were to confiscate all their income. They would have to cover all their other expenses, including State and local taxes, from savings. After taking everything from the folks behind the tree--in this case, the folks earning more than $1 million--how many days of the 10-year Obama budget debt would be eliminated?

Mr. HATCH. I say to my friend from Alabama, confiscating all the income from those earning over $1 million does not even fix 1 year of the 10 years of projected Obama debt. It would cover 244 days, 16 hours and 34 minutes. That is it. Not even 1 year. Look at this. Federal policymakers could kiss that revenue source goodbye after an event such as confiscation. So there you are: $13 trillion. Take the $893 billion. If we took every dime that millionaires make this next year, the $893 billion, we would be down to $12.1 trillion in remaining debt. Is the problem solved? Of course not.

Mr. HATCH. I wish it were too. I am surprised about this debate. The press is not pushing Democrats on what a joke their proposals about jets and yachts are, but the American people--the people I represent in Utah--understand these are red herrings. These proposals deal with the President's legacy of debt for less than 2 days--less than 2 days--over the next 10 years. Add in the much-publicized tax hit on the hated oil companies and you get another 5 days. So after all the demagoguery on jets and yachts and oil companies, you get about 1 week of deficit reduction. And even throwing in a one- time confiscation of all the income for taxpayers earning above $1 million, you can only add 244 days. Add it all up and there is still less than 1 year. All those tax increases don't even get to one-tenth of the debt President Obama will add over the next 10 years. It is class warfare. We all know that. All the talk from the White House and from our friends on the other side is on behalf of proposals that would address, at best, less than 10 percent of the debt forced on American families by the President's budget. I ask my friend from Alabama if he might conclude with the classic definition of a red herring.

Mr. HATCH. I thank my colleague for his kind remarks. I have to say that not only would it not impact it, but it would impact a lot of jobs. I remember when we did the so-called yacht tax back in the early 1990s, the left thought that was a wonderful thing. We got after all these rich yacht owners. When they found out that thousands and thousands of jobs were lost because of that bill, they immediately turned tail and got rid of the bill pretty quickly. What we haven't said is we are assuming the $13 trillion is going to stay the same. Actually, in the next 10 years there is a good chance it will double to over $20 trillion and possibly as high as $25 trillion or $26 trillion the way this administration is spending. Frankly, we are going to have a very difficult time ever coming out of this hole we are in right now. All I can say is I like the President personally, but he hasn't presented a program. He is calling on Congress to do it all, and we have our various problems here in getting together, but he hasn't led out on these programs, and neither have the other people down at the White House. In fact, one of the problems is I can't name one person at the White House who has ever created a private-sector job. And let's face it, they are good at creating public-sector jobs, but they are not very good at creating private-sector jobs. The real answer is to work our way out of them, and instead of talking about shared sacrifice, let's talk about shared prosperity by allowing the engine of this economy, the small business community, to pull us out. Even so, we haven't even talked about the fact that the deficit this year, in 1 year, is $1.5 trillion, $1.6 trillion. I might add that we are going to have at least probably close to $1 trillion deficit every year under the President's own actuarial program, every year up through 2020. You can imagine how we are going to continue to increase the debt without doing anything about it. Frankly, that is if his actuaries are right, and they are usually always wrong on the low side. That includes actuaries on both sides, to be honest with you. The expenses have always been more. I think what is important here is that we get real about working together and coming up with a way of resolving these tremendous debt problems. The future of our young people in this country depend on that, and I don't want to let them down. I want to thank my colleague for his colloquy with me and I appreciate it very much. Mr. President, I yield the floor.

Mr. HATCH

Mr. HATCH. Mr. President, I ask unanimous consent that I be permitted to speak until I finish my remarks.

Mr. HATCH. Mr. President, in recent days I have spoken several times on the matter of tax expenditures. I am going to address this subject again today. It is a timely topic. Everyone is talking about our out- of-control deficits and debt. There are divergent opinions on how best to deal with our Nation's increasingly perilous fiscal situation, but there is one thing everyone seems to agree on: Both the deficit and the debt are unsustainable. If we keep going down this fiscal path, the United States will face a crisis similar to that in Greece and sooner rather than later. The numbers could not be clearer. Federal spending as a share of our economy is trending at a pace 15 percent to 20 percent greater than its historical average of 20.6 percent of GDP. If we leave in place this year's level of taxation, including the marginal rate of relief between the 2001 and 2003 tax cuts, and patch the alternative minimum tax, or AMT, the Federal tax take will equal or exceed its historic share of the economy. Liberals suggest the deficit and debt can only be resolved with a significant tax increase. This is either deliberately misleading or sadly delusional. They are either selling snake oil to the American people or they refuse to come to grips with reality. Sticking their heads in the sand is not an option. As you can see, here are Federal taxes and spending as a percentage of GDP. The red line happens to be the spending line. And as you can see, we are way up here in the Obama 2012 budget. The blue line happens to be the average between 1960 and 2009. As you can see, it is way down here. Our spending is out of control. The markets and the American people understand the nature of our crisis. Nondefense discretionary spending is at historic levels and our entitlement programs are headed for bankruptcy. When former Speaker of the House Nancy Pelosi responded to the utter failure of President Obama and congressional Democrats to come up with a Medicare reform plan, she responded, ``We have a plan. It's called Medicare.'' That attitude is the recipe for bankrupting the Nation, a bankruptcy that will take our seniors down with it. The left might prefer to ignore reality, but here is the undeniable truth: Our Nation faces a spending crisis that tax increases cannot fix. I wish the media would get this. They are so enamored with the idea of a grand bargain on deficit reduction, a little spending reduction here, a little tax increase there, that they miss the fundamental point. The problem is spending, as you can easily see by this red line. It is way out of whack, and going back to the dry well of raising taxes on the rich is not going to work. The fact that Democrats in the Senate have not put forward a budget in over 800 days is neglecting one of the core constitutional responsibilities, and it is all the evidence we need that they are afraid of the bill coming due on all of their spending. They understand their hard left base will not accept structural changes to our biggest spending programs under any circumstances. But they also understand that the American people will not stomach for a minute the tax increases that will be necessary in the absence of such reforms. This is a difficult position to be in, so rather than deal with the facts, they traffic in obfuscation. This morning I heard the ranking Democratic member on the House Budget Committee following the President's lead and suggesting that removing some tax breaks for energy companies would fix our deficit crisis. Getting rid of those tax breaks would raise $21 billion over the next 10 years. Yet this fiscal year alone, in 2011, we will have a projected budget deficit of $1.5 trillion to $1.6 trillion. So where is the rest of our money going to come from? Last week I came under fire for stating what I thought to be a relatively noncontroversial fact. Here is what I said: In 2009, 51 percent of Americans had zero or negative income tax liability. Here is what that means. In 2009 only 49 percent--a minority of all households in this country--49 percent of tax units shouldered 100 percent of the Nation's tax burden. And 51 percent of the tax units--a majority of all tax units in this country--either owed nothing to the IRS or, better yet, got money back from the IRS in excess of their tax liability. Mr. President, 23 million of them got refundable tax credits, much more than they pay in employment taxes, which are Social Security. By the way, as they pay into Social Security, they only pay a third of what they will ultimately draw out according to the actuaries, but they are not paying income taxes. This should be no less controversial than saying the Sun rises in the east. This is not conjecture. It is a demonstrable fact, yet apparently touched a nerve. Because last week after raising this issue on the Senate floor, MSNBC and the liberal blogosphere, presumably armed with the talking points from the Senate Democratic war room, went ballistic, suggesting that I wanted to balance the budget by raising taxes on the poor. I am not surprised, but this completely misses my point, and the point is this: No matter what these Democrats tell you, the wealthy and middle class are already shouldering around 100 percent of the Nation's tax burden and 51 percent pay absolutely nothing in income taxes. Furthermore, because of this perverse distribution of Federal income taxes, there is no way to fix our deficit hole and pay down the debt by increasing taxes on the so-called rich. Here is the bottom line. All of the ``let's talk about taxes on the rich'' and closing loopholes and going after corporate tax breaks is meant to divert attention from the sad fact that the President's out- of-control spending puts Democrats in a position of having to raise taxes big time on the middle class since they are going to balance the budget without structural reforms to our largest spending programs. Tax increases on the wealthy will not get our Nation to fiscal balance. Even if we let the Bush tax breaks expire from the top income bracket, the total amount raised over 10 years would be $615 billion. That is over 10 years. Yet our deficit this year alone is $1.5 trillion to $1.6 trillion. This is why the issue of tax expenditures is critical. So everybody knows, I made it clear, I thought, in my last remarks that I don't want to tax the truly poor, those who would help themselves if they could. I do not want to tax them. But you can't tell me that 51 percent of all households are the truly poor. I don't want to tax them either, to be honest with you, but it is apparent we are going to have to find a better way of broadening the base of the tax system. Democrats talk about tax expenditures as though they were the holy grail of deficit reduction. Just close these loopholes and happy days are here again. The public is being misled in this type of debate, but don't take my word for it. Today the Associated Press had a story with the following lines: SPIN METER: Obama, Dems skirt issue on tax hikes. This is what the body of the article has to say: Proposals under consideration include raising taxes on small business owners and potentially low- and middle-income families. You won't hear about that from President Obama. Instead, the President focuses on the very rich and speaks euphemistically. Here are a few of the phrases the President has used of late of what amounts to raising taxes for some: What we need to do is to have a balanced approach where everything is on the table. He goes on to say: We need to take on spending in the tax code. The tax cuts I am proposing we get rid of are tax breaks for millionaires and billionaires, tax breaks for oil companies, hedge fund managers and corporate jet owners. You can't reduce the deficit to the levels it needs to be reduced without having some revenue in the mix. All those are quotes by the President. They are doing their best to hide their intentions, but the writing is on the wall. Democrats are angling for historic tax increases on the middle class, and the way they want to accomplish this is by reducing or eliminating tax expenditures. Cutting back tax expenditures is a convenient way for Democrats to tax middle-class tax-paying families without having to say they are raising their tax rates. As I noted last week, this is what we were talking about when Democrats discussed tax expenditures. They are talking about your pension. They are talking about your Medicare. They are talking about your ability to purchase a home or save for retirement or give to your church or put away money for your children's education. This is exactly what we are talking about. That is where the money is. It is not in bonus depreciation for corporate jets, and it is not in tax benefits for energy companies. When Democrats talk about tax expenditures and tax loopholes as a way to bring down the deficit and debt, they are putting a bull's-eye on the backs of middle-class American families. We heard a lot this morning about Republicans walking away from the President's grand bargain on deficit reduction. Well, I know that the people of Utah applaud Speaker Boehner for not signing on to this bogus deal. This morning the President's allies in the media were asking why Republicans walked away from this deal. With the President willing to put entitlement spending on the table, why aren't Republicans willing to put taxes on the table? It is worth noting that the President and his Democratic allies steadfastly refuse any structural changes to entitlement spending. Second, for Democrats, putting taxes on the table and tax expenditures means tax increases on the middle class, and that is a nonstarter. This issue of tax expenditures is confusing and demands greater clarity. As ranking member of the Finance Committee, it is my responsibility to correct the record on what the curtailment or elimination of tax expenditures would mean for taxpayers and families. If you listen to my friends on the other side of the aisle, you would think tax expenditures are ``spending through the Tax Code.'' You would think they are mostly loopholes in the tax law designed by and for special interests such as ethanol blenders. Another mantra you will hear too often uncritically reviewed by many in the media is that tax expenditures disproportionately benefit wealthy taxpayers. A few days ago I talked about what tax expenditures are and what tax expenditures are not. They are not spending. You can find the text of that speech from July 6 on the Finance Committee Web site. They are not, in the main, loopholes for special interests. The other day, I talked about the major features of family financial planning that would be upended if tax expenditures were curtailed. I referred to employee pension plans such as 401(k) accounts. I also mentioned charitable gifts and home ownership. If my friends on the other side are successful in cutting back tax expenditures, American families, workers, and investors can expect the cost of all of these activities to rise. If the cost rises, as a nation, we will be poorer because we will have less retirement savings, fewer charitable contributions and more expensive homeowners. You can find the text of that speech last Thursday on the committee Web site as well. Today I am going to consider the oft-repeated line that tax expenditures disproportionally benefit the wealthy taxpayers. For purposes of this discussion only, I will adopt the President's definition of rich; that is, singles with adjusted gross incomes over $200,000 per year and married couples with incomes over $250,000 per year. I wish to be clear that I do not lump all of these folks in with Bill Gates, Jr., LeBron James, Warren Buffett, or Gilligan's Island resident millionaire Thurston Howell, III. Here is good old Thurston who was the millionaire on Gilligan's Island. I am using the President's definition of rich because most of my friends on the other side use it. They also claim tax expenditures reside disproportionately with rich taxpayers. The Democrats' rhetoric on expenditures does not jibe with the reality of our Tax Code. The data is clear. Tax expenditures tend to skew toward taxpayers below the President's definition of the rich. If my friends on the other side examine the data, they will find their assertion about who benefits from tax expenditures does not square with the facts. They will find their assertion that tax expenditures disproportionately benefit the wealthy falls flat on its face. In much of the coverage of tax expenditures, it has been taken as an article of faith that they disproportionately benefit wealthy taxpayers. Similar assertions have come from the White House and congressional Democrats. The one exception is my friend, the ranking Democrat on the Ways and Means Committee, Sander Levin. Congressman Levin has cautioned against treating tax expenditures as rich persons' tax benefits. His position is well founded. The source for this assertion, that tax expenditures are tax benefits for the rich, is a Tax Notes article dated May 3, 2011. I ask unanimous consent to have it printed in the Record.

Mr. HATCH. The article is written by Roberton Williams of the Tax Policy Center or TPC. TPC is a tax policy think tank that is the product of two center-left think tanks. The article presents conclusions from a TPC distribution analysis of tax expenditures. The analysis concludes that about two-thirds of tax expenditures benefit the top quintile of households in the study. Viewers on C-SPAN may wonder what a quintile is. It refers to one-fifth of the given population. The TPC analysis is, therefore, measuring the top one-fifth of the population. According to that study, where does that top one-fifth of the population begin? It begins at $123,000 of household income. It should be noted that household income is a bit broader than the adjusted gross income which is the basis of the President's definition. According to TPC, that top quintile earns 55 percent of income and shoulders a huge amount of the Federal tax burden. They say it is 67 percent. Now, perhaps not too surprisingly, TPC finds that tax expenditures for the top quintile approximate that top one-fifth's share of the tax burden. With the exception of the refundable credit tax expenditures, a taxpayer has to pay income tax to benefit from the tax deduction credit or exclusion. Those asserting that tax expenditures are mainly wealthy taxpayer benefits are principally relying on TPC's distribution analysis. If confronted with the TPC data, it seems to me they have four choices. Their first choice would be to revise downward the income basis of their definition of ``rich.'' They could say we really did not mean families at $250,000 of income; we meant families of $123,000 of income. That would be similar to the adjustment made for ObamaCare. Joint tax distribution tables for ObamaCare showed that for every family below $200,000 who received an exchange credit, four families paid higher taxes. For every middle-class family who receives a premium subsidy, five pay higher taxes. That is just a fact. I guess I said five. It really would be four who would pay higher taxes. A second choice would be to revise the proportion of tax expenditures so that the tax expenditure dollar amount reflects the benefits attributable to taxpayers defined by the President as rich. The President's rich taxpayer definition is the top 3 to 5 percent of taxpayers. It means the group of taxpayers who are roughly 25 to 33 percent of the size of the group in the TPC analysis. Put another way, the TPC population of rich taxpayers is three to four times the size of the group the President and my friends on the other side define as rich. If a consistent definition of the rich were used, the dollar amounts of tax expenditures in play would be considerably lower. Since the goal of the group pushing the cutback of tax expenditures is to relieve spending constituencies of the pressure of curtailing spending, my guess is they will not choose to reduce the tax expenditure kitty. Their third choice would be to simply curtail or eliminate tax expenditures for higher income taxpayers. This, of course, could largely eliminate the preferential rates for capital gains and dividends. Let's take another look at this chart because it shows a big share of the capital gains tax expenditure goes to the top one-fifth. It looks as though about 95 percent of tax expenditures accrues in the top one- fifth. We see that about 50 percent of it accrues to the top one-tenth of 1 percent. Do we think it would make sense in the current economic climate to double or triple the tax hit on investment? At one point, at least, the President's answer was no. In August 2009 the President was asked by a resident of Indiana: [e]xplain how raising taxes on anyone during a deep recession is going to help with the economy. Here was the President's response: Normally, you don't raise taxes in a recession, which is why we haven't and why we've instead cut taxes. . . . You don't raise taxes in a recession. We haven't raised taxes in a recession. So what is their fourth choice? Their fourth choice would be coming clean with the American people. Under this option they would admit that tax expenditures disproportionately go to families who are not rich under the President's own definition. They would acknowledge that cutting back tax expenditures as part of a deficit-reduction exercise would hit the middle class and betray the President's promise not to raise taxes on middle-class families. As we can see, the proponents of these tax increases are in political quicksand, and there is additional evidence that they are sinking as they struggle against the facts. I would ask my friends on the other side to take a look at the Joint Tax distribution tables on many of the major tax expenditure categories. Joint Tax publishes these tables every year. They are available on the Joint Tax Web site. I have a chart that summarizes the percentages of tax expenditures that go to taxpayers under $200,000. I will have to bring that with me the next time. That is the break point that Joint Tax uses--the percentage of tax expenditures that go to taxpayers under $200,000. It closely squares with the definition of ``rich'' used by the President and his liberal allies. Anybody above $200,000 is rich under my Democratic friends' definition. Anybody under $200,000 is not rich. You can find this data in the tax expenditures pamphlet published annually by the nonpartisan Joint Tax staff. Now I wish to talk about the tax expenditures that Joint Tax distributes by income. I have listed them in order, from the largest in dollar volume down to the lowest in dollar volume. The first one is well known to tens of millions of our constituents. It is the mortgage interest deduction. If a taxpayer saves up a downpayment and borrows for a home, they can take the interest paid on the mortgage as an itemized deduction. That means 30 percent of the benefit of the mortgage interest tax expenditure goes to taxpayers over $200,000. Taxpayers with incomes below $200,000 receive 70 percent of the benefit of the mortgage interest deduction. Now, how do we measure whether the mortgage interest deduction disproportionately benefits taxpayers over $200,000? There is a line in bold letters that reads: ``Compare Total Federal Tax Burden.'' That is the baseline of how much tax is shouldered by the group of taxpayers above and below $200,000. We have a very progressive tax system. Taxpayers earning more than $200,000 shoulder 64 percent of the tax burden. Taxpayers earning less than $200,000 shoulder 36 percent of the tax burden. Taxpayers earning less than $200,000 receive 70 percent of the mortgage interest deduction while shouldering 36 percent of the tax burden. Who benefits from these tax expenditures? We are going to get into that. That means by a ratio of almost 2 to 1, taxpayers under $200,000 benefit from the mortgage interest deduction; and since $200,000 basically fits the definition of ``rich'' used by my friends on the other side of the aisle, we can see that other taxpayers who are nonrich, or the middle-income group, disproportionately benefit from the mortgage interest rate deduction. Now, let me talk about another tax expenditure. I am referring to the earned-income credit, or EIC. It is a refundable credit. That means taxpayers receive it whether they pay income tax or not. That is why the credit is basically scored as spending by the Congressional Budget Office--the CBO--and Joint Tax. There is a bit of irony about this tax expenditure because it is refundable. It is more popular with my friends on the other side than other tax expenditures. That is because those other tax expenditures go to taxpayers who actually pay income tax. The refundable credit is popular with my friends on the other side because it is a robust income-reducing mechanism. President Obama, in his famous exchange with Joe the Plumber, captured the economic theory supporting this policy when he said we need to ``spread the wealth around.'' Here is the irony. My friends on the other side derisively describe all tax expenditures as ``spending through the Tax Code.'' Yet the tax expenditures they most support are the refundable ones, such as the earned-income credit. It should come as little surprise that the left's favorite tax expenditure is the one that is scored as spending by congressional spending scorekeepers. Because the earned-income credit tax expenditure is refundable, we shouldn't be surprised to find that so-called rich taxpayers do not benefit from it. The chart confirms this point. The third tax expenditure is right here: the current $1,000-per-child tax credit. It is, by definition, limited to lower and middle-income taxpayers. We should not be surprised to find that none of it goes to higher income taxpayers, and the chart confirms this point: zero to taxpayers over $200,000; 100 percent to taxpayers under $200,000. Let's take a look at State and local taxes. It is the fourth one on here. The chart shows that 50 percent of this broad-based deduction goes to middle-income families. No. 5 on this list is a tax benefit near and dear to many of my fellow Utah families. It is the itemized deduction for charitable contributions or donations. Of all the tax expenditures listed on this chart--this big chart right here--this one, charitable itemized deductions--distributes in the highest proportion to taxpayers above $200,000 in income. The chart says 55 percent, right here; 45 percent for those under $200,000. Keep in mind, overall, taxpayers with income over $200,000 bear 64 percent of the tax burden. Now, this means proportionately, the charitable deduction benefits taxpayers under the $200,000 level more than taxpayers above the $200,000 level. Now let's take a look at No. 6 on this chart. It is the tax-free portion of Social Security benefits, right there. Anyone advocating a cutback on tax expenditures is advocating a cutback on the aftertax Social Security benefits for a big chunk of the senior population. Guess what. We are not talking about wealthy seniors. According to this chart, 2 percent of that favorable tax treatment of Social Security goes to seniors with incomes over $200,000. My guess is that few of the seniors benefitting from this policy own yachts or regularly fly corporate jets. No. 7 is the itemized deduction for real property taxes. Right now, their constituents take the edge off that heavy local tax hit with the itemized deduction. If many of my friends on the other side have their way and hack away or eliminate tax expenditures without also cutting their constituents' Federal tax rate, guess what happens. In the case of local property taxes, the net effect will be to raise the property tax rate by as much as 35 percent. Some of my friends may suggest that only those with villas are taking the property tax deduction. This chart says otherwise. It says 80 percent of the real property tax benefits go to taxpayers under $200,000. How about No. 9 on the list? No. 9 on the list is the itemized deduction for medical expenses. ObamaCare cut back on that one. But if my friends on the other side reduce or eliminate side tax expenditures to avoid dealing with out-of-control government spending, this deduction will be cut back even more. The chart shows on these medical itemized deductions that 89 percent of this tax benefit goes to taxpayers earning less than $200,000. No. 10 is the dependent childcare credit. This is a modest tax credit that working moms and dads can tap. Like the child tax credit, it mainly is used by middle-income families. The chart confirms it. It indicates that 96 percent of the benefits of this credit go to families earning less than $200,000. The final item on the list is the student loan interest deduction, as shown right here on this chart. This tax benefit is income limited. Not surprisingly, all of the benefit goes to taxpayers earnings learning less than $200,000--100 percent of the benefit. I do not think a lot of the recent college graduates using this deduction are in the market for a yacht. But if you listen to my friends on the other side, you would think because this benefit is labeled a tax expenditure, those who benefit from it have a schooner docked in the local harbor. I am not saying that only middle-income families benefit from tax expenditures. Wealthy taxpayers benefit from the lower capital gains and dividends rates. Let me refer to this chart of the 10 largest tax expenditures for the period 2010 to 2014. But the lion's share of tax expenditures goes to that part of the middle class that is already shouldering much of the Nation's tax burden. Most of the tax expenditures are either income limited or of limited value to wealthy taxpayers. Likewise, low-income families do not pay income taxes. They receive tax expenditures that are designed for the nontaxpaying population. So who is left? The answer is the taxpayers who are not rich by the President's own definition. The answer is middle-class families. On our side, the reaction to all these choices would be simple. Many on our side, including Ways and Means Committee Chairman Camp, have put it this way. Keep your hands off tax increases, including cutbacks in tax expenditures, for deficit reduction. Reserve those tax expenditures for tax reform. In that way, taxpayers receive a benefit--lower rates in exchange for a broader base. That broader base would include reform of tax expenditures, if Chairman Camp and I have our way. Any other approach is just another tax increase. And they on the other side will spend every dime of it. The President this morning gave another press conference. He asked what the holdup was in arriving at a deficit reduction compromise. The answer seems pretty obvious. Contrary to the President's vague assertions, the leftwing base he is depending on for his reelection refuses any meaningful structural reforms to the spending programs that are currently bankrupting our country. That means the only serious deficit reduction option available to Democrats is massive tax increases on the middle class. Democrats will not acknowledge the inevitable tax increases their agenda assumes, and Republicans will not give the President any cover in his drive to ``spread the wealth around.'' That is what is holding up this process. So let me offer a suggestion. Instead of berating Republicans for not signing on to historic and economy-crushing tax increases, when unemployment is at 9.2 percent, maybe the President should take his own party to the woodshed. Maybe he should ask the liberals in his party who refuse any meaningful structural reforms to entitlements to get serious. Maybe he could go on television and explain to the American people that we have over $60 trillion in liabilities and that tax increases are not going to bring that into balance. Instead, the President and his party sit around and spread the myth that simply getting rid of tax expenditures and loopholes--and they certainly are not loopholes, the ones I have been talking about--will fix our deficits and debt. We have two reasons to worry about that wrongheaded approach. One, to the extent deficit reduction energies are diverted to cutting back tax expenditures, pressure is taken off the root cause of the deficit and debt problem. That is, pressure that should be brought to bear on out-of-control spending programs is released. Two, the productive sectors of the economy--workers, small business owners, and investors--are burdened with yet more Federal taxes. For many reasons, cutbacks in tax expenditures are a deficit reduction dog that will not hunt. If you look at all individual tax expenditures, you can see these are the 10 highest tax expenditures by percentage. Let me go back to the preceding chart. If you look at all these tax expenditures, for the mortgage interest itemized deduction, 70 percent are people earning under $200,000; for the earned income tax credit, 100 percent; for the child tax credit, 100 percent; for the State and local taxes, other than real property, 50 percent; for charitable itemized deductions, 45 percent--yes, the rich had 55 percent by their definition--for Social Security benefits, 98 percent; for the real property tax itemized deduction, 80 percent; for the education credit, 100 percent; for medical itemized deductions, 89 percent; for the dependent childcare credit, 96 percent; for student loan interest, 100 percent. Look, my point is, we have to come up with a better Tax Code. I am dedicated to changing this awful Tax Code we have that is too complicated, too large, too expensive, does not do the job, and is a bunch of muttering around and puttering around by Members of Congress, and simplifying that Code so everybody knows which end is up. On tax expenditures, I am going to be happy to look at tax expenditures, but they should be reserved until we do real tax reform. If you have to give up some of these expenditures, then there better be appropriate reductions to account for that, and we have to do it by flattening out that tax system that we all know is completely out of control and completely difficult to comply with. As a matter of fact, I do not know of anybody on the Senate Finance Committee who fills out their own tax forms. I do not think most of us could do it because if you had 10 different tax preparers on a semicomplicated tax return, you would probably have 10 different approaches to it. That shows the pathetic system that is wrecking our country. To make it clear, when the President took over, the bottom 40 percent of all households did not pay income taxes. Yes, they paid payroll taxes, but 23 million of them got refundable tax credits, much more than they paid in payroll taxes. Keep in mind, I do not believe we should tax the truly poor. But now that is up to 51 percent in a little over 2 years under this administration of people who do not pay any income taxes. Are they all truly poor? I do not know. All I know is, it does not sound right that the majority of people, the majority of tax units in this country, do not pay income taxes, and the minority has to carry the whole burden. If they are truly poor, I understand and I would be the last one to tax them, and I think I have a 35-year record here of being fair to the poor and fair to families and, above all, fair to children. My name is on an awful lot of important bills around here, and I have led the fight on a lot of bills that help people in distress. So you can imagine how aggrieved I felt when one of our great television stations was distorting one sentence--it seemed to me one sentence--out of a 30- minute set of remarks on the floor that made it very clear that I do not want to tax the truly poor. But surely we have to have everybody participate. I actually think everybody ought to participate, even if it is only $1. We ought to all have some skin in the game. We ought to all help save this country, and we cannot do it without the middle class. And the middle class is not just the top 49 percent of all wage earners. This is an important issue, and it is one we have to resolve, and we have to resolve it fairly, we have to resolve it in a way that is meaningful and in a way that will help save our country too. I think I have more than made the case that you cannot pile it all on the so- called 3 to 5 percent, the so-called rich, which includes 800,000 small businesses, where 70 percent of all jobs are created. And everybody knows that is true. Every time you tax them and take moneys away from them like that, when they are paying pretty hefty taxes as it is, they hire less, they do less, they quit their businesses, some move offshore, some move their businesses to other countries, and some just plain give up. We cannot let that happen. We have to have a fair tax situation. We have to have Democrats and Republicans work on it together. We have to quit playing this card that basically pits one group of people against another. All I can say is this. I am concerned. I am pointing out difficulties in our Tax Code. I am pointing out difficulties in some of the arguments the President is making. And I have to say that anybody who reads my remarks fairly will know these points I am making are real points. These charts are important. As you can see, taxpayers earning under $200,000 will be bereft without these benefits unless we can revamp the whole Tax Code in a way that you do not have to have tax expenditures. Tax expenditures are certainly not spending--at least these ones we are talking about right here and now. So if you compare the total Federal tax burden, those earning over $200,000 pay 64 percent; those earning under $200,000 pay 36 percent. All of that is important for us to understand. Mr. President, I yield the floor.

Mr. HATCH

Mr. HATCH. Mr. President, yesterday I spoke about the matter of tax expenditures, and I would like to expand on that topic today. They are becoming a critical issue in negotiations over the debt ceiling. First, Mr. President, I ask unanimous consent that I be permitted to finish my remarks.

Mr. HATCH. Mr. President, Democrats say they want to eliminate tax expenditures. They refer to them as loopholes or spending through the Tax Code. This might be a good political argument, but it bears little relationship to the understanding of tax expenditures and tax law or tax policy. Yesterday, I outlined a general definition of tax expenditures. They are most definitely not spending through the Tax Code, as President Obama so creatively put it, and they are most definitely not, by and large, loopholes. Rather, they were intentionally included in the Tax Code by Congress in order to realize certain policy goals. Tax expenditures are an opportunity for families and businesses to keep more of their income. Unfortunately, rather than have a serious conversation about tax expenditures and tax policy, President Obama and his liberal allies are intent on setting new ground for juvenile public discourse. Faced with a $14.3 trillion debt--and going up every day--Social Security and Medicare Programs that are set for bankruptcy--ruining America's seniors--and a legitimate fiscal crisis that poses a clear and present danger to the Nation's security and the security of America's families and businesses, President Obama is again talking about shared sacrifice. Well, I like the term. The only thing is, I would prefer to have shared prosperity because all we are going to get out of this administration is shared sacrifice, which means everybody is going to suffer. I would like to have shared prosperity where everybody is lifted. The first time we really started hearing about this concept of shared sacrifice was in the debate over ObamaCare. For those who are unfamiliar with Washington-speak, this is what the President meant by shared sacrifice: I am going to raise taxes on families and businesses by over $\1/2\ trillion, and I am going to do it by shaking down businesses. He made them an offer they couldn't refuse: Pay up now or pay up more later. So when we started hearing again about shared sacrifice, we knew what was coming: more proposals for tax increases. But I have to say I remain shocked at how ham-fisted most of these proposals are. They are nothing but a series of bad talking points that can be used for the President's reelection campaign. These talking points were tired by the end of the 1936 Presidential election. I would not be surprised to see President Obama dust off Franklin Roosevelt's speeches and start railing against economic royalists by the end of the debt limit negotiations. Sadly, the Senate's leadership has followed suit. After making a big to-do about keeping the Senate in session to address the fiscal crisis, we are spending this week debating a nonbinding resolution demanding higher taxes on millionaires. Really? The Democrats' solution to $14.3 trillion in debt is to attack corporate jets. Seriously? Three billion dollars over ten years. The last time they did that, they wound up with their tails between their legs in 1990, and in 1993 had to reverse the whole thing because it cost thousands of jobs. I never underestimate liberals' lack of respect for the intelligence of the American people, but this is a new low. Do they think that ordinary Americans are so consumed with class hatred that they will respond like Pavlovian dogs to the criticism of corporate jets, and forget that it was programmatic liberalism, not bonus depreciation of corporate jets or tax benefits to energy companies, that got us into this debt crisis? This is how the left perceives Republicans. They want to score some cheap points against Republicans by going after corporate jets, as though all Republicans love corporate jets. I would venture to say that an awful lot of corporate jets are owned by very wealthy Democrats. What are we going to get next week, a tax on monocles and top hats? Maybe we will spend next week debating a nonbinding resolution on the need to tax madras blazers for the good of the country. Unfortunately, not all of the Democratic proposals are a laughing matter. They have been down this road in the past pushing tax increases on luxury items such as yachts. Today, the press ridiculed Republicans for ``defending the yachting class.'' There is no yachting class in this country, unless you count the Democratic party of Martha's Vineyard. But there is a class of people who build yachts. This is what happened to those people the last time the Democrats engaged in class warfare of this kind. In the 1990 budget deal, a new luxury excise tax was created applying to yachts, aircraft, jewelry, and furs, first applying to the 1991 year. The similarities are eerie. Faced with soaring deficits, Democrats insisted that revenues be part of the equation. And how did this work out? The tax was repealed in 1993 because, as the Democratic-controlled Senate Finance Committee report, as reported by the Budget Committee, explains: During the recent recession, the boat, aircraft, jewelry, and fur industries have suffered job losses and increased unemployment. The Committee believes that it is appropriate to eliminate the burden these taxes impose on the interest of fostering economic recovery in those and related industries. Republicans are not defending the yachting class. They are defending the people whose jobs will be lost to Democratic class warfare. Of course, the left cannot contain themselves to these targeted tax increases. Today we read in the paper that the President is eager to reform Social Security. Yet it appears he is only willing to do so if we let the 2001 and 2003 tax cuts expire, tax cuts which only last December the President acknowledged were necessary components of our economic recovery. I would not be surprised to see the old Democratic hobby horse, an increase in the Social Security tax max, make an appearance in the Democrats' list of demands. These are nonstarters, and everyone understands why. These broad- based tax increases would be a weight around our economic recovery. But the issue of tax expenditures continues to cause confusion and must be addressed. Those who advocate limiting or eliminating these tax expenditures suggest that they are spending and loopholes that benefit wealthy individuals. Yesterday, I offered a grown-up definition of what a tax expenditure is. Today, I wish to highlight what are in fact the top tax expenditures. What we will find is that the tax expenditures that would generate the largest amount of revenue are also those that are available to the middle class, enabling them to give to their churches and synagogues, and to save for a home, for college, and for retirement. To get at meaningful deficit reduction, Democrats would have to eliminate these expenditures. Is that what they want to do? That might be a good question at the President's next press conference. Maybe someone could give him a copy of this chart right here, and ask which of these tax expenditures he is willing to eliminate in the interest of deficit reduction: No. 1, exclusion for employer-provided health care. Is he going to get rid of that? That is 13 percent of all tax expenditures. How about home mortgage interest deductions? Is he going to get rid of that? That is 9 percent. How about preferential rates for dividends and capital gains? That is 8 percent. Exclusion of Medicare benefits. Are they going to do away with that? That is 7 percent. Net exclusion of defined benefit pension contributions and earnings. Are they going to attack our pensions? That is 6 percent. And earned income tax credit. My gosh, that is 5 percent. Deduction for State and local taxes, except real property. That is 5 percent. No. 8, net exclusion of defined contribution/earnings. That is 4 percent. How about No. 9, exclusion of capital gains at death? That is 4 percent. And how about No. 10, deductions for charitable contributions? That is 4 percent. I venture to say hardly any American is going to want to do away with all of those in the interest of getting more revenue so the Democrats can spend it back here. Look at that chart. It is a list of the top 10 tax expenditures. Maybe someone can give him a copy of this chart and ask which of these tax expenditures he is willing to eliminate in the interest of deficit reduction. I encourage all my friends to look at this chart. It is a list of the top 10 tax expenditures. With the rhetoric coming out of the White House, you might be surprised to learn that tax benefits for yachts and corporate jets are not in the top two. Not only do they not make the top 10, they don't even come close. If you take the so-called savings that would come from the corporate jet tax approach of the President, it would take us 3,000 years to even reach the approximately $800 billion stimulus package. In the context of the President's trillion-dollar deficits, they are statistical noise. So what are the big tax expenditures? No. 1 is an issue from the ObamaCare debate. It is the exclusion for employer-provided health insurance. The exclusion of employer-provided health insurance from income is the single largest tax expenditure, representing 13 percent of tax expenditures. Yesterday a Member of the other side's leadership pointed out that the largest tax expenditure is one for corporations. Boy, is he wrong. Here is what he said: The biggest single deduction is the employer's exclusion for health care premiums. So employers are able to exclude from income the amount of money they spend for health insurance for their employees. That's the biggest. Well, that is an incorrect description of the law that they are arguing. Employers always have been allowed, and should be allowed, a deduction for the cost of benefits they provide to their employees. Employee compensation, including the provision of health insurance to one's employees, is a cost of doing business and thus properly deductible by the employer so as to accurately measure the income, or profit, of the employer. That has never been considered a tax expenditure. The exclusion at issue, which is a tax expenditure, refers to the employee's tax treatment, not the employer's tax treatment. That is, most compensation that an employee receives from his employer is includable as taxable income. One of the few exceptions to that general rule is that employees do not include in taxable income the value of employer-provided health insurance. Coming in at No. 2 is the home mortgage interest deduction. This expenditure alone accounts for 9 percent of all tax expenditures. The third largest? There we have the lower rate on capital gains and dividends. Do away with this expenditure, and the rate on capital gains and dividends will almost triple in about 18 months. Capital gains and dividends represent about 8 percent of all tax expenditures. What is No. 4? Here we have an untaxed piece of Medicare benefits. Imagine that. I wonder how many folks on the other side realize this or even if the President does. When my friends on the other side categorically talk about cutting back tax expenditures as the yellow brick road to deficit reduction, I wonder if they know that hiding behind the curtain is an increase in the aftertax cost of Medicare. Do my friends on the other side realize this? A few months ago, a liberal group ran an ad showing my friend, the chairman of the House Budget Committee, Paul Ryan, pushing an old woman in a wheelchair over a cliff. His crime? Recommending policy changes that would prevent the inevitable bankruptcy of Medicare. I am not going to hold my breath waiting for this same group to pull the fire alarm, because the Democrats' talk of eliminating tax expenditures might result in seniors getting hit with higher taxes on Medicare benefits. But this is what the President and the Democrats are talking about. If they are serious about using tax expenditures to reduce the deficit, these are the things that will have to be on the table. These are the big expenditures. This expenditure is real. You can look it up in the handy tax expenditure publication from the nonpartisan Joint Committee on Taxation. It is significant, representing 7 percent of all tax expenditures, to the exclusion of Medicare benefits. At No. 5 is the pre-tax treatment for defined benefit pension plan contributions and the inside buildup on the accounts. This is a tax benefit that reduces the cost for those workers who make the decision to save for retirement. This represents 6 percent of all tax expenditures. What is No. 6? It is the refundable earned income tax credit, the EITC. When folks describe tax expenditures as spending through the Tax Code, this is one that could properly be labeled that way. Under congressional budget rules, this one, for the most part, scores as spending. That is not the case with the other tax expenditures on this list. Refundable tax credits score as spending because the government cuts a check to the taxpayer. With the other tax benefits on this list, the taxpayer is receiving a portion of the money back in the form of reduced taxes. There are some serious tax hikes there. This tax expenditure accounts for 5 percent of tax expenditures. No. 7 is the deduction for State and local taxes. My friends on the other side need to be particularly careful with this one. So far, they would hit seniors, families who have health insurance through their employers, people with mortgages, and anyone who owns stocks and bonds. But with this, many Democrats risk alienating every last taxpayer in their States. Removing this deduction is going to hit high-tax States hard. If you are from a so-called blue State, it is likely that constituents are already heavily burdened with State and local taxes. Take away this and you will, in effect, drive up the marginal rate of your constituents who take their deduction by as much as 35 percent. I am convinced that many of the inroads Democrats made between 2006 and 2008 were due to carefully crafted Trojan horse campaigns. Skillful operatives ran Democratic campaigns promising moderate tax and spending policies that would be respectful of families and businesses. But once that Trojan horse got inside the Capitol, and former Speaker Pelosi and President Obama took charge, frustrated liberals spilled out and started taxing anything that could move to pay for the largest expansion of government since Lyndon Johnson was in office. Removing the deduction for State and local taxes might be the final act that restores purple America to its traditional red hue. At 5 percent of all tax expenditures, this would represent a massive tax increase, this net exclusion of defined benefit pension contribution. And that is No. 7, after State and local taxes, except for real property. What is No. 8? This is the pre-tax treatment for the contributions workers make to their defined contribution plans and the inside buildup on the accounts. Many of us know of these retirement plans as 401(k) plans. At 4 percent of tax expenditures, this is a significant incentive to families to save for retirement. No. 9 is a bit more obscure but no less critical for families. It is the tax expenditure for the step up in basis at death. We all know the saying that nothing is as certain as death and taxes. Well, if this tax expenditure were eliminated, this step up in basis at death, this saying would take on an even darker meaning. Death could now be taxed twice. First, the decedent's estate might get hit with the death tax. Then the decedent's heirs would be taxed again on the gain embedded in any inherited asset should they decide to sell. This accounts for 4 percent of tax expenditures. We close with No. 10, the tax expenditure and probably the most important one to my constituents in Utah. It is the tax benefit for donations to charities other than education and health care institutions. When you make your weekly or yearly donation to your church, you can now deduct it for tax purposes. This charitable deduction represents 4 percent of all tax expenditures. The folks in my State all pay tithing--almost all of them. That is 10 percent of their gross income. I do it every year. I have to tell you, you would hit a lot of very charitable people and a lot of churches with the loss of that one, No. 10. Yet that is the smallest of the whole 10. As the chart shows, these widespread everyday tax policies account for almost two-thirds of tax expenditures. We are not talking about yachts or corporate jets. Now, I have already suggested it, but rolling back many of these expenditures would have an immediate adverse impact on American families and taxpayers. It would also undercut longstanding Federal policies promoting saving, home ownership, and charitable giving. Let's turn first to retirement security. About half of Americans save for retirement. The overwhelming bipartisan consensus is that this number is way too low. Ideally, all American workers would be saving for retirement. More savings means less financial stress on Social Security and Medicare. Most importantly, it means retirees can enjoy their retirement if they can rely on a nest egg. That is why there has been a bipartisan desire to incentivize retirement savings through worker participation in retirement plans. A time-honored method has been to offer a tax benefit up front in the case of the traditional defined benefit plan, traditional defined contribution, or traditional IRA. The benefit remains untaxed during the individual's working years. It is only taxed when received in retirement. By contrast, Roth pension plans and IRAs provide a tax benefit on the back end, when a worker retires and begins drawing on the account. Former Finance Committee Chairman William Roth captured the policy rationale best by noting the deliberate tax policy bias toward savings. Chairman Roth used to make the point with a rhetorical question. He would ask: ``Is there any bad saving?'' Of course, the answer is no. One thing we know for sure. Curtail or eliminate the tax expenditure for retirement savings and the after-tax cost of savings will rise. Savers will react. It is true that some will continue to save. But it is also true they will have less to save if they choose to do so. For middle income taxpayers, it will probably mean lower savings rates. Is that a good policy to put in place? Consider this: According to the Joint Committee on Taxation, for 2009 over half of households paid no income tax. Forty-nine percent of Americans shouldered 100 percent of the income tax burden. The half shouldering the income tax burden are also, generally speaking, the part of the population making sound personal decisions like saving for retirement. That behavior is good in both a micro and macro sense. In the micro sense workers are sacrificing current consumption for security and a better standard of living in the future. In a macro sense, the collective behavior of these citizens stabilizes our aging society. To encourage this kind of sacrifice, our tax policy provides a tangible tax benefit. Take away that tax benefit and, as with raising taxes on anything else, you will get less of the behavior. Take away the tax benefit, and you will get less saving for retirement. Does that make any sense? In order to avoid restraining the rapid growth in government spending, our friends on the other side would have us send the wrong policy signal to the half of our population that saves. They would add to the burden of those who are already shouldering the entire burden of funding the Federal Government. At the same time, by discouraging saving and personal responsibility we would further unleash the appetite of those who want us to spend more. Take another look at the chart. Add up the tax expenditures from defined benefit plans and defined contribution plans. They account for 10 percent of tax expenditures. Over 5 years, the revenue from these expenditures amounts to almost $700 billion. On a per-year average basis, it is $140 billion. That is an annual policy shift of $140 billion in incentives for private savings to $140 billion in incentives for growing government spending. Do we want a society where more saving is encouraged? Or do we want a society where dependency and more government spending are encouraged? Do we want to look more like Switzerland or do we want to look like Greece? The answer to this question is clear to the citizens of this country. Unfortunately, not all of their representatives seem to have thought through the implications of going after tax expenditures. To get at this from another angle, I would like to discuss the impact on taxpayers of cutting back some of these tax expenditures that come in the form of itemized deductions. I am going to examine the effects of cutting back these itemized deductions by applying President Obama's budget proposal to cap itemized deductions at 28 percent. It is clear that some in the White House are pushing this 28 percent cap hard in the negotiations over the debt limit. As noted before, itemized deductions generally are considered tax expenditures. But itemized deductions impact a number of basic, longstanding features of American life. Itemized deductions include the home mortgage interest deduction, the charitable contribution deduction, and the State and local tax deduction. The President is proposing to chisel away at these itemized deductions, and we should carefully reflect on what that would mean. President Obama has proposed repeatedly ``to limit the tax rate at which high-income taxpayers can take itemized deductions to 28 percent.'' It appears that this proposal is designed to lessen the benefit to higher income taxpayers of itemized deductions. The Joint Committee on Taxation says that this provision would mean the Federal Government would collect an additional $293 billion in taxes over 10 years. True to form, this is just another version of the same soak-the-rich play that the left has been running for decades. From their perspective, it is unfair that higher income individuals get a more valuable tax benefit than lower income individuals? But this perspective mischaracterizes a critical issue. The 35 percent bracket was established by Congress with an understanding that itemized deductions would allow a significant tax benefit. Had Congress known that higher income taxpayers would be disallowed some of their itemized deductions--as the President now proposes--undoubtedly Congress would have set that bracket at lower than 35 percent. So, taking away some of the benefit of itemized deductions for higher income taxpayers, while leaving the high-income tax rates at their current levels, upsets the balance struck by prior Congresses. Obviously, Congress is allowed to do this, but let's not pretend that these expenditures are loopholes or oversights by prior Congresses. The President and the Senate's Democratic leadership are free to do this if they choose, but they should at least come clean about what they are doing. They are significantly raising taxes on the people who are already shouldering the lion's share of the Federal income tax burden-- 98 percent of them, as a matter of fact. Even aside from the staggering character of this tax increase--one that would clearly violate President Obama's campaign pledge not to raise taxes on middle class Americans the macroeconomic impact of this cap is negative at best. President Obama's 28 percent cap would reduce the benefit from the home mortgage interest deduction. For 5 years now, our Nation has been experiencing a bursting of the real estate bubble. Current headlines indicate that this trend will continue for a time. Limiting the value of the home mortgage interest deduction would apply additional downward pressure on home prices--not only for high end homes, but for all homes. By repeatedly proposing to limit the benefit of the home mortgage interest deduction, is it the President's intent to further depress housing prices, or is this mere collateral damage from his desire to raise taxes. But the damage from this cap does not stop at the housing market. President Obama's 28 percent cap would also reduce the benefit from the charitable contribution deduction. This would almost surely reduce the amount of contributions people would make to churches, synagogues, temples, soup kitchens, shelters, universities, and museums. Is that the President's intention? Does the President know that these revenues might never materialize because the elimination of this deduction will step up pressure for direct government assistance for the poor, for students, and for the arts? Finally, this cap would reduce the benefit of the State and local tax deduction. I touched on this point earlier. High-tax States are able to soften the blow of their high taxes by pointing out to their citizens the Federal deductibility of such taxes. So, my colleagues from high- tax States might want to talk to their governors about the impact the President's proposed cap would have on State and local public finance. I want to be clear about something. Our Tax Code is a colossal, awful mess. And tax expenditures must be a part of any conversation about tax reform. But I want to emphasize that the conversation about tax expenditures should happen in a conversation about broad based tax reform--reform that flattens the code while lowering rates. The conversation about tax expenditures should be a sober one in the context of a meaningful discussion about tax policy. Unfortunately, the President has chosen instead to target tax expenditures willy nilly with little regard for the policy implications of these tax hikes. Make no mistake, whatever the President wants to call it--reducing spending through the Tax Code, closing loopholes, or making people pay their fair share--these are tax increases plain and simple. And they are tax increases on the middle class. There has been some criticism in recent days about Republicans for their commitment to a pledge many of them took against any net tax increase. I have to admit I am at a loss here. Conservative Republicans, convinced that taxes are already high enough, promise their taxpaying citizens that they will never support a net tax increase. They gave their constituents their word, and are sticking to it. Meanwhile, President Obama, who promised not to raise taxes on the middle class when running for office, vows to break this promise at every opportunity. And yet it is the conservative Republicans who are somehow lacking integrity? Hardly. I don't care how many blows I take from sophisticated Washingtonians and professional leftists for sticking by my pledge to the people of Utah. I will resist any effort by the President to include tax increases as part of the deal to increase the debt ceiling. I will do so for a number of reasons. First, our Tax Code needs a fundamental overhaul. It is a complicated mess that is lacking in fundamental fairness. Yet the President's proposal to reduce tax expenditures for deficit reduction, is a proposal to maintain a tax code that grows more burdensome by the day. The President's proposal essentially robs the government of the revenues that it might use later to flatten the Tax Code and lower rates. More importantly, I oppose the President's proposed tax hikes as a matter of principle. Flattening the tax base without any offsetting rate reduction is a tax increase. My friend, the ranking member on the Senate Budget Committee, Senator Sessions captured the point well in an interview the other day. I will quote Senator Sessions: We have to be honest and recognize that if you are going to eliminate systematically a host of deductions and keep the money or spend it for new programs, then you've raised taxes. . . . It just is unless we've changed the English language. The campaign against tax expenditures is a campaign for a tax increase. It is a tax increase that could send the wrong signal to those Americans who sacrifice current consumption and save for retirement. It could raise the bar for those Americans who want to experience the American dream of home ownership. It would mean the residents of high tax States would face even higher State and local taxes. And it could mean a cutback back in the volume of charitable giving. This is shared sacrifice that the Nation cannot afford. I prefer shared prosperity by cutting taxes and giving the small businesses and businesses the opportunity to use that money to hire people and get people working and get more people paying taxes. I think it is abysmal that the bottom 51 percent do not pay income taxes, and 23 million of them get refundable tax credits from the government that are far more than the payroll taxes they might have to pay, which are Social Security payments. I listened to my colleague from Vermont saying we cannot do anything on Social Security, we cannot do this, cannot do that, the poor people are going to be hurt. Where are they going to be when Social Security is bankrupt? Where are they going to be when Medicare and Medicaid are bankrupt? The way we are going, that is where they are going to be. We cannot keep spending like this, and we have to quit playing the phony game with tax expenditures. All I can say is we have to get with it around here and we have to start working together as Democrats and Republicans in the best interests of the American people, and that is reforming this awful Tax Code, getting taxes down for everybody, and taking care of the poor but also expecting everybody to have some skin in the game--except the really poor--and help our country pull out of the mess we are in. Mr. President, I suggest the absence of a quorum.

Mr. HATCH

Mr. HATCH. Mr. President, I ask unanimous consent that I be permitted to speak.

Mr. HATCH. Mr. President, it is nice to hear asking for a fair budget plan. We haven't had a budget from this administration now in almost 800 days. They have control of the Senate. Yet we haven't seen a budget from this administration. I get a little tired of the Obama approach toward shared sacrifice. Shared sacrifice is something. It sounds good. But I would prefer the Republican approach to shared prosperity, and that is what I think we are all about. When we talk about what shared sacrifice is, think about this. It is pretty irrefutable that the bottom 51 percent of all wage earners of all households do not pay income taxes. The top 1 percent of the so- called wealthy pay 38 percent of all income taxes; the top 10 percent are paying 70 percent of all income tax; the top 50 percent pay somewhere near 90 percent of all income taxes; 51 percent don't pay anything. But Democrats say, well, they pay payroll taxes. Everybody does that because that is Social Security, and they pay about one-third of what they are going to take out over the years in Social Security. On ObamaCare, a family of four earning over $80,000 a year gets subsidies. Think about that. And that is what we call the poor? We wonder why the money doesn't go far enough? When are we going to wake up and realize that the other side just spends and spends and spends. They want to tax and tax and tax so they can spend some more. My gosh. When are we going to wake up in this country and realize they are spending us into oblivion? I hear how they are so caring for the poor and so forth. The poor need jobs, and they also need to share some of the responsibility. We don't want the very poor people who are in poverty to pay income taxes--but 51 percent of all households? That is going up, by the way, because of our friend down in the White House and his allies. I wish I didn't like him so much. I would like to be able to let go here. I like him personally, and I want him to be successful, but he is not going to be successful by just taxing the daylights out of everybody around here. This Congress is currently engaged in as consequential a political debate as this Nation has seen in decades. Whether and what we raise the Nation's debt ceiling is a question that has consumed the markets in the Nation. I serve the people of Utah and I hear about this issue every day and the sustainability of a government that has grown far beyond any reasonable or constitutional limit and the cost of paying for all this government is foremost on the minds of tax-paying citizens who will be left holding the bag, even when President Obama is back in Hyde Park and Members of Congress no longer serve. The decision to spend less is only for a moment, but the debt incurred to pay for these government programs lasts forever. Fifty-one percent of all households don't pay income taxes. The Democrats say: Well, they pay payroll taxes. Yes, they do-- everybody does because that is Social Security--and 23 million of them get refundable tax credits that are more than they pay in payroll taxes. I wish I could report to my constituents that Washington is serious about addressing this spending problem. Unfortunately, in the last week, we seem to have hit a new low. President Obama's contribution last week was a press conference temper tantrum, where he offered policy proposals that might appeal to his leftwing base but will do nothing to avoid our coming national bankruptcy. Not to be outdone, Democratic leadership in the Senate has offered a nonbinding resolution designed solely to score some cheap political points that will jazz up the activist left through demagogic class warfare against individuals with high incomes. He is going to raise $3 billion over 10 years by taxing jet planes. It would take 1,000 years to reach what we have as a deficit for this year just from that one tax to jack up enough money to pay for just the deficit this year. Facing a full-blown debt crisis, this is how the Senate Democrats, following the President's lead, have chosen to spend this week, debating a nonbinding resolution. Episodes such as this leave me convinced the only real solution to our Nation's spending problem is a balanced budget constitutional amendment. Only a specific constitutional restraint will force Congress to make the tough decisions necessary to restrain the size of government, restore the integrity of the States, and protect the liberties of the American citizens and taxpayers. To demonstrate my commitment to restoring constitutional limits on the Federal Government, I have signed the cut, cap, and balance pledge. Along with a growing number of my colleagues in the Senate, Members of the House, grassroots groups, and Presidential candidates, I have committed myself to cutting spending, capping spending, and passing a balanced budget constitutional amendment as a condition for any debt limit increase. As this debate over how best to address our growing debt and annual deficits continues, I wish to address a technical but critical matter in these negotiations. I am talking about tax expenditures. I am ranking member on the Senate Finance Committee and I know a little bit about these. Over the next few days I am going to discuss this matter of tax expenditures and debt. Today, I am going to talk in general about what a tax expenditure is and what a tax expenditure is not. I will next turn to the tax policy areas implicated by current tax expenditures. For instance, home ownership is favored in our tax base with a tax expenditure. There is a deduction for home mortgage interest, a deduction for real property taxes, and an exclusion for income from home sales. These are tax expenditures. The Tax Code also encourages charitable contributions. Charitable deductions are available to citizens when they give to a nonprofit crisis pregnancy center, when they put money in the basket at church or when they give to their alma mater, just to mention a few charitable donations. In a third speech, I will attempt to shed some light on a widespread misconception about tax expenditures. That misconception is that tax expenditures disproportionately benefit high income taxpayers. But let's not get ahead of ourselves. My remarks are remarks about what a tax expenditure is. Unfortunately, my remarks are also largely about Democrats' plans to increase taxes. President Obama and his liberal allies are calling for a balanced approach on a revenue piece to deficit reduction. They want shared sacrifice. I want shared prosperity. We hear this from the press all the time. New revenues need to be a part of any deal to reduce the deficit. These are simply code words for a tax hike. I guarantee this. If we raise taxes, my friends on the other side will spend every dime of it. That is how they have kept themselves in power. Yet claiming they are helping the poor. Are 51 percent of our households so poor they can't participate in saving this country? It is clear the professional left is insisting that President Obama include tax increases in any negotiated agreement to raise the debt ceiling. Threading this tax hike needle through an electorate resistant to giving the government more money to spend is no easy task. Although his campaign team talks a big game about the popularity of tax increases, the President's own words suggest otherwise. Last week, in a shameful display of class warfare, the President did specifically call for some tax increases on the rich. That includes 800,000 small businesses, by the way, where 70 percent of the jobs come from. But that is the exception that proves the rule. By and large, the President avoids the effectual truth of his mission to get rid of tax expenditures--massive tax increases on the middle-class American families, to whom he promised immunity from tax increases when he was running for President. Instead, he and other members of the party of tax increases refer to tax expenditures as spending through the Tax Code. How seriously should we take his rhetoric? When the President said he wanted to address the Nation's debt by reducing spending through the Tax Code, it proved too much for even Jon Stewart. This is Stewart's analysis of the President's contention that we could reduce the deficit by attacking spending through the Tax Code: You manage to talk about a tax hike as a spending reduction. Can we afford that and the royalty checks you are going to have to send to George Orwell? That's the weirdest way of ``just say tax hike.'' That's like saying, I am not going on a diet. I'm going to add the calories to my excluded food intake. That was Jon Stewart. He hit the nail on the head. For sure it is easy to make fun. But what the President is trying to do with tax expenditures is no laughing matter. Liberals talk about tax expenditures as though they were just getting rid of wasteful spending. First, as a legal matter, tax expenditures are not expended. Outlays are checks cut from the Treasury Department and are defined as spending under the Congressional Budget Act. Yet most tax expenditures only lose revenue and do not include an outlay portion. Tax expenditures that only lose revenue contain no spending as defined by the Congressional Budget Act and as scored by the official scorekeepers for Congress, the Joint Committee on Taxation and the Congressional Budget Office. Second, as a policy matter, when it comes to tax expenditures, one person's loophole is another person's opportunity to save for college and retirement, finance a home, and tithe to your church. Here is the bottom line. Taking away or reducing tax expenditures is a tax increase, unless a tax cut of an equal or greater amount is enacted. One crucial myth I would like to dispel is that tax expenditures are spending. This chart, ``Revenue Loss Does Not Equal Spending,'' the Federal Government cannot spend money it never touched and never possessed. What tax expenditures do is let taxpayers keep more of their own money. The American people are the ones who earn their money through their ideas, their risks, and their labor. Whether we are talking about a successful business owner or a part-time worker just starting out, the money they earn is theirs. It is their money, and only by their consent is the government permitted to take some of it in taxation to pay for certain public goods. But Democrats have a different view. It is this view--one that is fundamentally at odds with our classical liberal Constitution and our Founders' respect for property rights--that contributes to the confusion over tax expenditures. Liberals think that all of the money that you earn belongs to the government. You have no independent right to the fruit of your own labors, because only by dint of big government are you ever able to make something of yourself. This view is foreign to most Americans-- Republicans or Democrats. It is a view that Alexander Hamilton and Benjamin Franklin and Abraham Lincoln would take issue with. But this is the political philosophy of the modern left. So when you hear tax hike proponents come to the Senate floor and say we are giving these businesses and individuals all this money in tax expenditures, they are incorrectly assuming that the government has that money to give in the first place. The government does not have this money to give. That money belongs first to the people that earn it--those businesses and individuals who are the American taxpayers. There are critical differences between spending and tax expenditures. For one thing, the government never touches the money that a taxpayer keeps due to benefitting from a tax expenditure; whereas, with spending the government actually collects money from taxpayers and then spends it. Here is a more telling difference. Reducing or eliminating a tax expenditure without lowering rates enough to reach a revenue neutral level will cause the size of the Federal Government to grow, while reducing or eliminating spending causes the size of the Federal Government to shrink. I am open to looking at eliminating or reducing some tax expenditures as part of comprehensive tax reform but only if tax rates are lowered enough to reach a revenue neutral level. Alternatively, reduction or elimination of tax expenditures could be balanced with new tax cuts that are of equal or greater value to the revenue generated by the eliminated expenditures. But if tax expenditures are reduced or eliminated without tax rates being lowered enough to reach a revenue neutral level, that is a tax increase, plain and simple. We have made clear that as a matter of law and political theory, tax expenditures are not spending. Now let's turn to an examination of what they are. Fortunately, we have definitions available. The Joint Committee on Taxation generally defines tax expenditures as deliberate departures from generally accepted concepts of net income, usually by way of special exemptions, deductions, credits or exclusions. Therefore, tax expenditures generally arise for individual income taxes and corporate income taxes. The Treasury Department differs from the Joint Committee on Taxation slightly in how it defines a tax expenditure. For example, the Joint Committee on Taxation labels deferral as a tax expenditure but Treasury does not. But whichever definition one uses, it is clear that the President and the liberal proponents of tax increases are using their own politically motivated dictionary. Tax expenditures have been erroneously described by many as loopholes. This is deliberately inaccurate. A loophole is something that Congress did not intend and would generally shut down, at least going forward, once it learned of the loophole. Tax expenditures, by contrast, were generally placed by Congress into the tax code deliberately. For example, the largest tax expenditure is the exclusion for employer-provided health insurance and benefits. The second-largest tax expenditure is the home mortgage interest deduction. We all know why they are there, and they are there for good reason. Tax expenditures are not loopholes. We are not talking here about some fancy tax scheme that a lawyer or accountant has discovered and now promotes to his clients as a way to game the system. These are broad-based tax incentives that benefit many Americans. The deduction for charitable contributions is not some loophole. It was a deliberate inclusion in the code that acknowledges the need for religious citizens to contribute to their churches. Even some of the smaller dollar tax expenditures were designed by Congress to go to particular industries or types of taxpayers--for example, the tax expenditure to encourage the purchase of corporate jets that Democrats included in the stimulus and that the President is now criticizing. Whether you agree with these particular tax expenditures or not, an honest debate requires recognition that they were designed by Congress with economic or social goals in mind and are not inadvertent loopholes. As a matter of law, policy and constitutional government, I fundamentally disagree with those who are pushing these tax increases as part of a deal to raise the debt ceiling. Our problem is spending that has grown out of control, not a lack of revenue. According to CBO's June 2011 long term budget outlook, taxes are already heading higher than they have historically been. From 1971 to 2010, revenues as a percentage of GDP have averaged 18 percent. Since the post-World War II era, from 1946 to 2010, revenues have averaged 17.7 percent of GDP. Yet CBO also projects that revenues as a percentage of GDP will exceed 20 percent by 2021. Even if all the bipartisan tax relief contained in the 2001 and 2003 tax acts is extended, revenues as a percent of GDP will increase to 18.4 percent. So I ask the question: With taxes already going higher than where they have historically been, should we raise them even more? For me, the answer is no. I know that most Utahns would agree, I believe most people in this country would agree, and I suspect that even most Democrats would as well. They certainly would if President Obama and the liberals who pose as advocates for the middle class came clean about just how high taxes on working families would have to go to pay for the hard core left's preferred level of government. The numbers do not lie. The deficit is a symptom of out-of-control spending that has grown dramatically in recent years and is reaching crisis levels. It is not a result of too little in taxes. Democrats can close all the loopholes they want, and it still won't balance the books. And the Democrats who are talking about the need to close loopholes and eliminate spending through the Tax Code need to be asked which middle class tax relief they want to get rid of as part of their deficit reduction plan. Do they want to get rid of the charitable deduction or maybe the mortgage interest deduction? Maybe they want to go after people's 401(k)s or IRAs or 529s. What is it going to be? Let me say something here. I am very concerned about where we are going. We have risen this year to 25.3 percent of GDP in spending. The last time we hit that figure was in 1945 at the height of the Second World War, when the government was taking over almost everything to keep us from losing that war. It is certainly over 23 percent right now. What is it going to be? At a press event tantrum last week, the President answered absolutely none of these questions. He needs to. He needs to get serious about cutting spending. Mr. President, I suggest the absence of a quorum.