Jon Kyl

Mr. KYL

Mr. KYL. I thank my colleague.

Mr. KYL

Mr. KYL. Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.

Mr. KYL

Mr. KYL. Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.

Mr. KYL

Mr. KYL. The following Senators are necessarily absent: the Senator from Nebraska (Mr. Johanns), the Senator from Florida (Mr. Martinez), the Senator from Louisiana (Mr. Vitter), and the Senator from Georgia (Mr. Chambliss).

Mr. KYL. Madam President, I would say to my friend from Tennessee, of course, he knows the answer, having been a great student of history himself. If anyone would like to get one of the definitive works on this, it is a book called ``The Forgotten Man.'' The author is Amity Shlaes. It is very well written. One of the key points it makes is precisely the historical point that my colleague from Tennessee makes; namely, that about the time the United States began to come out of the Depression, President Roosevelt's view was it was time to try to balance the budget and as a result--as Hoover had tried to do when he increased taxes and the economy tanked, which is exactly what happened again. So we didn't just have one Great Depression; we had a period of time when our country was in depression, it started to get out of the depression, and then went back into depression until World War II, largely because of this increase in taxes. The combination of the Smoot-Hawley tariffs--which are an increase in taxes of a different kind--and the income tax rates plunged the country back into the Depression. If I could respond to the point about President Kennedy, he did exactly the opposite. We were in the doldrums, and he proposed, after he was elected in 1960, that we actually reduce the capital gains tax. Now, I remember this because I was taking a course in economics at the University of Arizona at the time and I wrote a paper on this. I went home, I believe it was over the Christmas recess, and I talked to my father about it. I said: President Kennedy is a Democrat, I am a Republican, but I think he is doing the right thing. My father said: He is doing the right thing. I remember writing that in the paper and my professor was kind of scratching his head because he looked at it in a more political way. Yet if you look at it in a purely economic point of view, when the economy is not doing so well, the last thing you want to do is to raise tax rates. In fact, you can do a lot of good by reducing taxes, which is what Kennedy did, and it had a very profound and positive impact. Those are the lessons history teaches.

Mr. KYL. That is correct, the Make Work Pay Act, which is actually nothing more than a spending program in the guise of a tax cut. But whatever that gives back to people, it only covers what has been taken from them in this energy tax, and, in fact, that is just the beginning. The energy tax, by all accounts, will explode to a far greater burden on every family than an initial burden of 800 bucks.

Mr. KYL. Madam President, I would say to my colleague that is exactly right. That is one of the reasons why in this so-called stimulus package, a 1-year relief from the alternative minimum tax was included because we knew that the net was now casting so wide it would incorporate 20-plus million people into the category of millionaires-- people who made $50,000; $60,000; $70,000. The problem was the rates were never indexed for inflation, so what only caught millionaires at one time is now catching decidedly middle-class taxpayers. The same thing could easily be done with the proposals that the administration has in the budget--a budget which, as we discussed last week, spends too much, taxes too much, and it borrows too much. We think we ought to spend less, tax less, and borrow less, which is one of the reasons we think the tax portions of the Obama budget are wrong.

Mr. KYL. Madam President, that is exactly right.

Mr. KYL. No. Madam President, this is the so-called mandatory cap- and-trade system that is included within the budget under which the Government would set how much businesses could produce in the way of carbon by their activity, and then, of course, they would pass the costs of this limitation onto their customers. Now, that only applies to people who either directly use energy, such as electricity or gasoline or you buy something that has been made with energy. I think that covers just about everybody. The point is, it will take, from every American family, at least $800 a year, which is the amount of the so-called tax cut the President--I have forgotten what he calls that in the budget.

Mr. KYL. Madam President, if I could also talk about some of the other effects of this. The problem with this kind of an energy tax is that when people use less energy, obviously they buy less, they travel less, and all of this curtails economic activity. It has been estimated the gross domestic product of the United States would be roughly 1 percent lower at the end of 2014 and 2.6 percent lower by 2030, just by having to pay this tax. As economic activity would slow, employers wouldn't need to hire as many workers. In fact, it is estimated that employers would create 850,000 fewer jobs by 2014 and 3 million fewer jobs by 2030. The effect on household income would be dramatic. It would reduce, on average, household income adjusted for inflation by $1,000 in 2014 and $4,000 by 2030. Of course, it is also a problem because not everyone will bear the same burden, and it is a very regressive tax, given the fact that people at a lower economic income level have to pay a higher percentage of their family income for energy than do higher income folks. So for a lot of different reasons, this is a very bad idea, and as my colleague from Tennessee points out, it is a terrible idea in the middle of a recession.

Mr. KYL. Madam President, let me turn to a slightly different aspect of this same problem. It is not just the energy tax in this budget that we are concerned about; it is also a variety of tax policies that will clearly and dramatically impact business--again, not what you want to do at a time of a recession. For example, it heavily taxes American corporations that have operations overseas. Now, we want to compete overseas. We don't want to just have American businesses here in America. Anybody who would go overseas to do business would be heavily taxed here. That will have a dramatic impact on our exports, which have been a big part of our economy and on our gross domestic product in general. Another thing it does at this time, which is dead wrong, is to indirectly impose a much higher cost on obtaining a mortgage because it limits the amount of mortgage interest deduction. One of the things that has enabled millions and millions of Americans to own their own home is because we have favorable tax treatment. They can take the mortgage interest deduction as a deduction from their Federal income taxes. So why would we limit the amount of deduction for your home mortgage, especially at this time when we are trying to encourage more people to buy homes and we don't want banks to end up with more bad loans on their books. Then, in addition, there are other tax rates that are allowed to increase rather than to continue where they are, and these are the rates on the income tax for the top two marginal rate categories. These are exactly the people who are reporting small business income. We know small businesses create up to 80 percent of the jobs in the economy, so there again, directly imposing a greater burden on the people who run and operate the small businesses in this country; precisely the group who needs to have more income in order to hire more people so we don't have as many unemployed. In all these ways, the budget is going to directly negatively impact our economic situation at exactly the wrong time.

Mr. KYL. The Senator from Tennessee can close after I finish my point. The point is, this is not the purpose of tax policy. The purpose of tax policy should be to raise the amount of money we need, and need legitimately, to run the Federal Government, and do so as fairly as possible. As they point out here, while the top 1 percent of earners in our country has earned 22 percent of the income, they pay 40 percent of the Federal taxes. The people who would get the brunt of the tax--those making above $200,000--pay 60 percent of the Federal income taxes in America. One wonders why a group that pays 60 percent of the taxes already and only comprises 2 percent of our population is being unfairly treated. As a result of the Bush tax policy, they are actually paying a higher percentage of income taxes than they did before the Bush tax cuts went into effect. I think maybe that is the answer to the question. If so, it is very distressing.

Mr. KYL. Madam President, before his conclusion, I ask unanimous consent to have the op-ed I referred to be printed in the Record.

Mr. KYL

Mr. KYL. The following Senators are necessarily absent: the Senator from Nebraska (Mr. Johanns), the Senator from Texas (Mr. Cornyn), and the Senator from Georgia (Mr. Isakson). Further, if present and voting, the Senator from Texas (Mr. Cornyn) would have voted ``nay.''

Mr. KYL

Mr. KYL. The following Senators are necessarily absent: the Senator from Texas (Mr. Cornyn), the Senator from Nebraska (Mr. Johanns), the Senator from Georgia (Mr. Isakson), and the Senator from Florida (Mr. Martinez). Further, if present and voting, the Senator from Texas (Mr. Cornyn) would have voted ``yea.'' The PRESIDING OFFICER (Mr. Warner.) Are there any other Senators in the Chamber desiring to vote?

Mr. KYL

Mr. KYL. Mr. President, I appreciate the question of my colleague from Tennessee. I also compliment the ranking member of the Budget Committee, the Senator from New Hampshire, who has tried to deal with budgets all the time he has been in the Senate. If I could begin by just asking him one question: How would you characterize this budget proposed by the President as compared with others, in terms of the taxes and the spending and the debt created? Is there some way to compare it with all of the other budgets that you have worked with, including all of the Bush budgets?

Mr. KYL. Mr. President, I first would answer my colleague from Tennessee. We ought to be spending less and taxing less and borrowing less. Our minority leader asked his staff to do some calculations. Just from the time that the new President raised his hand and was inaugurated as President, how much money have we spent? They calculated that we have spent $1 billion every hour. That is just in the stimulus legislation, this omnibus bill that was just passed last night, which is 8 percent over the stimulus bill, and we have not even added in the spending that is going to occur as a result of this budget which, as the Senator from New Hampshire said, in just the first year is a third more spending than even the previous year--$3.55 trillion. In addition to that, it makes much of the so-called temporary spending in the stimulus bill permanent. Some of us predicted that would happen, that when they have a new program in the stimulus bill they surely wouldn't cut it off after 2 or 3 years. We said they will probably make it permanent. Sure enough, and the ranking member on the Budget Committee can speak to that better than I, but a great many of these programs are made permanent. On health care, for example, the Senator from New Hampshire talked about that, but there is no effort to control entitlements. In fact, Medicare, Medicaid, and Social Security all rise between 10 and 12 percent, Medicare itself by $330 billion. This is increased spending, and it is permanent programs. We also wondered what would happen with respect to the Federal Government's growth as a result. According to a March 3 Washington Post article, ``President Obama's budget is so ambitious, with vast new spending on health care, energy independence, education, services for veterans, that experts say he probably will need to hire tens of thousands of new Federal Government workers to realize his goals.'' According to the article, estimates are as high as 250,000 new Government employees will have to be hired to implement all of this spending. I know we want to create jobs in this economy, but I wonder if the American people intended that we create a whole bunch of new Government bureaucrats to spend all of this money. This is not responsive to my colleague's question, but the one area where we do not have high unemployment is Government jobs. The unemployment in the country is about 8 percent now. In Government jobs it is between 2 percent and 3 percent, so that is not an area we needed to grow more jobs.

Mr. KYL. Mr. President, I would say that is getting to the heart of the matter. We can talk about these numbers all day. They are mind- boggling, they are very difficult to take in. But what does it all mean at the end of the day? I will respond in two ways. First of all, it makes us look a whole lot more like the countries in Europe that have been stagnating for years because they spend such a high percent of their gross national product on government. As the Senator from New Hampshire pointed out, we are headed in that direction under this budget. It is a recipe for a lower standard of living in the United States and makes us look a lot more like Europe. The second way goes back to the policy I think is embedded in this budget. The President has been very candid about this. He talks about it as his blueprint. He says this budget is not about numbers, it is about policies; it is about a blueprint for change. The Wall Street Journal on February 27 said: With yesterday's fiscal 2010 budget proposal, President Obama is attempting not merely to expand the role of the federal government but to put it in such a dominant position that its power can never be rolled back. That is the problem. It is the growth of Government controlling all of these segments of our lives. That is what this spending is ultimately all about, as the Senator from New Hampshire said, taking over the energy policy, taking over the health care, taking over the education policy, as well as running our financial institutions. It is not just about spending more money and creating more debt and taxing in order to try to help pay for some of that. It is also about a huge increase in the growth of Government and therefore the control over our lives. In a way, the Wall Street Journal says, ``In a way that can never be rolled back.''

Mr. KYL. I think the number was $3.27 trillion. I believe that was the correct number over the time of the 10 years. The Senator from Tennessee certainly knows a bit about education. It all was not spent. There were some policies that actually attempted to reduce some costs--of a program that works very well, that thousands of people in the District of Columbia depend upon to send their kids to good schools. That is the program we put into effect to give a voucher of $7,500 a year to kids to attend private schools, kids who would never have that opportunity otherwise. If I could ask a question of my colleague from Tennessee, since as former Secretary of Education he knows something about how to make sure our kids have the best opportunities for education in this country, why, with the District of Columbia costing about $15,000 a year to educate children and not doing a very good job of it according to all of the test scores, and thousands of parents wishing their kids had an alternative choice, somewhere else to go--when we create a program that provides a few of them, less than 2,000 a year, I believe, with a voucher that returns only half of that much money to the private school--$7,500, so it doesn't cost the public anything--why, when it gives these kids such a great opportunity, would our colleagues on the other side of the aisle, and the President, whose two daughters, by the way, attend one of the schools that kids would have to be taken out of because they can't afford to go there without the voucher--why would they remove that school choice and the voucher program?

Mr. KYL. Indeed. Mr. President, I thank the Senator from Tennessee. As this debate unfolds, I think our colleagues will see that Republicans have some better ideas. We want to spend less and tax less and borrow less. We believe we can accomplish great results in the field of energy, for example, in the field of education, in the field of health care--much more positively, much better results in the long run with a lot less burden on our children and our grandchildren in the future. As this debate unfolds, we are very anxious to present our alternative views on how to accomplish these results. The PRESIDING OFFICER (Mr. Cardin.) The Senator is notified that 28 minutes has elapsed.

Mr. KYL

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

Mr. KYL. Madam President, yesterday I spoke to my pending amendment No. 629, an amendment that would have required an assurance that none of the funds in the underlying legislation would be used to resettle Gazans in the United States. There had been a flurry of news stories suggesting that an Executive order by the President might have that result. In contacting the State Department, we have been assured that is not the case. As a result, I ask unanimous consent to withdraw the amendment and to have printed in the Record a letter from the U.S. Department of State, Michael Polt, Acting Assistant Secretary, addressed to me, dated March 9.

Mr. KYL. Madam President, I will read the two specific sentences from the letter that cleared up this matter. The letter says: These funds will be used to provide humanitarian assistance to Palestinian refugees and conflict victims in Gaza. None of these funds will be used to resettle Gazans in the United States. As a result of that assurance, the amendment is not necessary, and that is one less vote my colleagues have to take this afternoon. I note the absence of a quorum.

Mr. KYL

Mr. KYL. The following Senator is necessarily absent: the Senator from Nebraska (Mr. Johanns).

Mr. KYL. The following Senator is necessarily absent: the Senator from Nebraska (Mr. Johanns).