John Larson

Mr. LARSON of Connecticut

Mr. LARSON of Connecticut. Mr. Speaker, I thank the Democratic leader for yielding, and I thank the gentleman from Michigan for joining us here. As Mr. Hoyer stated at the outset, this is a very dangerous bill and a very dangerous precedent for this body and the other body and for Congress in general. It was Lincoln who said: ``A House divided cannot stand.'' And in this bill, when you pit the sick against the well, the poor against the wealthiest 1 percent, blue State against red State, small business against large corporation, you begin to see the inequity in the bill. Rich Neal, the lead Democrat on the Ways and Means Committee, lamented that this was a lost opportunity--a lost opportunity because there was ample time to come together both in the committee and here on the floor to do something constructive for the country, put the Nation back to work, and resolve issues that President Obama had put forward that I know have been on the front burners of everyone's concern to get lower taxes, and greater fairness in equity across the board, but that didn't happen. Now, much is said about process, and people pooh-pooh that, but here are the facts: It was Ronald Reagan who said: ``The facts are a stubborn thing.'' Back in 1986, the last time we impacted policy of this nature, the Ways and Means Committee, in fact, had 30 hearings in the committee, 12 subcommittee hearings, 450 expert witnesses, and 26 days of markup before it came to the floor for debate. It was done bipartisanly, in fact, done between Ronald Reagan and Tip O'Neill because they knew that this would be the best way to get cohesive, comprehensive tax reform. That is not what happened here. There were zero hearings in the committee on this bill, zero subcommittee hearings, no expert witnesses, not a single person from the State of Maryland or Connecticut. Mr. Speaker, I include in the Record a letter from the Commissioner of Revenue Services from the State of Connecticut that details factually, not based on averages, what happens to people in States who use itemized deductions like the State and local property tax deduction, like medical deductions, et cetera, all of which have a direct impact on them, all of which are going to find our citizens paying more money, in fact, not getting a tax cut, getting a tax increase so they can pay for lowering the rate of an individual who is already receiving $11 million from an estate tax gift. November 8, 2017. Hon. John B. Larson, House of Representatives, Washington, DC. Dear Congressman Larson: Thank you for opportunity to comment on the federal tax changes being considered in H.R. 1. We appreciate your leadership in trying to set the record straight as this partisan effort is rushed to judgment with no real input and much fiscal uncertainty. Unfortunately, what we see so far from a national and state perspective is very troubling. Some of the proposals to reduce taxes on corporate and pass-through business income could provide needed economic stimulus nationally and for states like Connecticut. Unfortunately, on balance, H R. 1 is fundamentally flawed: Even the low estimate of a $1.5 trillion cost is not paid for and is really massive federal tax deficit spending. The nation has been down this road before and surely we should have learned something from the worst economic recession in modern times. Otherwise unaffordable tax cuts have long been part of a political strategy to ``starve the beast.'' Due to its long term unfunded cost, this Republican tax plan will compel big cuts in federal funding, such as Medicaid, that are important to states like Connecticut. Contrary to all the talk of a ``middle income tax cut,'' the plan actually represents a huge windfall to the very wealthiest federal taxpayers and is truly regressive. For our own state of Connecticut, over 75% of the tax cut goes to the top 1% who would pay 8.5% less on average. Everyone else would see a trivial 1.2% reduction in federal tax liability and many will actually owe much more in federal income taxes. As discussed more specifically below, the proposed plan shifts most of the tax cost and the least of any tax benefit to states in the Northeast, Great Lakes and West Coast regions of the country. Thus, Connecticut and similar states will even more disproportionately pay in federal taxes far more than is received in federal benefits--further subsidizing regions of the country where states make far less of a state and local tax effort. Drilling down a bit further, several aspects of this partisan plan will hit especially hard: Eliminating deductibility of state income tax paid is worth an estimated $8.7 billion to mostly 1 middle income Connecticut taxpayers Capping deductibility of local property tax paid at $10,000 will increase federal income taxes for a significant proportion of Connecticut taxpayers who claim $4.9 billion. Any benefit to lower and lower moderate income taxpayers from higher standard deductions and child care credits will likely be more than offset by the shell game of imposing a higher lowest rate bracket of 12% and replacing the current $4,050 personal exemption with a $300 deduction that is proposed to end in 5 years. Eliminating deductibility of medical/dental expenses will be $1.6 billion hardship for Connecticut taxpayers at all levels who are out of work and have catastrophic medical costs. Eliminating deductibility of student loan interest only adds a further financial burden for primarily younger taxpayers and their families already struggling with educational indebtedness. Sadly, these and many other significant issues of fiscal irresponsibility and tax unfairness seem to be of no concern in the partisan rush to pass legislation before taxpayers see through the slogans and realize the costs. Indeed, glimpses of what may be in the Republican Senate version suggests that it will only get worse. Thank you for your efforts to speak out for our Connecticut taxpayers and set the record straight. Sincerely, Kevin B. Sullivan, Commissioner. Mr. Speaker, I will tell you, if that weren't the cruelest cut, what is built into this legislation, and it is why process matters, because of the way this bill came to the floor through budget reconciliation primarily so the other body can get around their other arcane rule of cloture, but so that they could pass something with the minimal amount of votes. So no hearings, no expert witnesses, and only a minimal amount of votes--51 in the Senate--to pass a bill. I say that because there is a trigger mechanism here that the gentleman from Maryland knows better than anyone else in either Chamber called PAYGO, PAYGO provisions that he fought for to make sure were in the bill because of our ongoing concern about staggering deficits. It is why most people call for this bill minimally, including most Republican economists, to be revenue neutral. We would add that it be distributionally neutral as well so that it doesn't impact the middle and the lower classes. But this bill here, the cruelest cut of all is that it triggers an automatic response that will result in a $25 billion cut to Medicare. Nobody at home recognized this. Many people in this Chamber didn't even know that it existed because there were no public hearings, there were no expert witnesses. This was jammed through so that people could achieve a political win. How about we focus on the American people winning for a change and doing something that is not going to put them in jeopardy? I wondered why so many on the other side had professed to be concerned about the deficit but turned a blind eye as we passed what amounts to be $2.3 trillion in new deficits. Then it dawned on me. This provision that is in there would allow sequestration to go forward without a vote and would cut Medicare by $25 billion. I have asked people when we have held forums back in our district. People are writing, people are calling, people are calling their Senators in an effort to stop what is a blind, dangerous precedent that would take $25 billion out of a program that desperately needs this. I know the gentleman from Maryland knows this better than most. I know the State of Maryland, like the State of Connecticut, also itemizes deductions, and I believe it leads the country in that because, as they noted back in 1913, it would otherwise be double taxation. Mr. Speaker, I thank my colleague for allowing us the opportunity to come down here and speak to the dastardly nature of this bill and what lies ahead, and I thank him for his continued leadership in making sure that we wage this fight in every way to the end until we are able to stop that.

Mr. LARSON of Connecticut

Mr. LARSON of Connecticut. Mr. Speaker, I also include in the Record a letter from AARP, who is in opposition to this bill.

Mr. LARSON of Connecticut. Lastly, Mr. Speaker, I include in the Record a letter from the Congressional Budget Office, which details out the other shoe to fall in this legislation. Congressional Budget Office, U.S. Congress, Washington, DC, November 13, 2017. Hon. Steny H. Hoyer, Democratic Whip, House of Representatives, Washington, DC. Dear Congressman: This letter responds to your request for information about the effects of legislation that would raise deficits by an estimated $1.5 trillion over the 2018-2027 period, specifically with respect to a sequestration--or cancellation of budgetary resources--in accordance with the Statutory Pay-As-You-Go Act of 2010 (PAYGO; Public Law 111- 139). The PAYGO law requires that new legislation enacted during a term of Congress does not collectively increase estimated deficits. The Office of Management and Budget (OMB) is required to maintain two so-called PAYGO scorecards to report the cumulative changes generated by new legislation in estimated revenues and outlays over the next five years and ten years. If either scorecard indicates a net increase in the deficit, OMB is required to order a sequestration to eliminate the overage. The authority to determine whether a sequestration is required (and if so, exactly how to make the necessary cuts in budget authority) rests solely with OMB. CBO has analyzed the implications of enacting a bill that would increase deficits by $1.5 trillion over a 10-year window, without enacting any further legislation to offset that increase. In accordance with the PAYGO law, OMB would record the average annual deficit on its PAYGO scorecard, showing deficit increases of, in the example provided, $150 billion per year. If the bill were enacted before the end of the calendar year, that amount would be added to the current balances on the PAYGO scorecard, which for 2018, show a positive balance of $14 billion. (For years after 2018, the balances range from a $14 billion credit to a $1 billion debit.) Without enacting subsequent legislation to either offset that deficit increase, waive the recordation of the bill's impact on the scorecard, or otherwise mitigate or eliminate the requirements of the PAYGO law, OMB would be required to issue a sequestration order within 15 days of the end of the session of Congress to reduce spending in fiscal year 2018 by the resultant total of $136 billion. However, the PAYGO law limits reductions to Medicare to four percentage points (or roughly $25 billion for that year), leaving about $111 billion to be sequestered from the remaining mandatory accounts. Because the law entirely exempts many large accounts including low-income programs and social security, the annual resources available from which OMB must draw is, in CBO's estimation, only between $85 billion to $90 billion, significantly less than the amount that would be required to be sequestered. (For a full list of accounts subject to automatic reductions, see OMB Report to the Congress on the Joint Committee Reductions for Fiscal Year 2018, https:// go.usa.gov/xnZ3U.) Given that the required reduction in spending exceeds the estimated amount of available resources in each year over the next 10 years, in the absence of further legislation, OMB would be unable to implement the full extent of outlay reductions required by the PAYGO law. If you wish further details on this estimate, we will be pleased to provide them. Sincerely, Keith Hall, Director.

Mr. LARSON of Connecticut. Mr. Speaker, before I begin, I include in the Record, first a letter from the Commissioner of Revenue Services in the State of Connecticut, who has detailed out the impact of this tax on Connecticut residents. November 8, 2017. Hon. John B. Larson, House of Representatives, Washington, DC. Dear Congressman Larson: Thank you for opportunity to comment on the federal tax changes being considered in H.R. 1. We appreciate your leadership in trying to set the record straight as this partisan effort is rushed to judgment with no real input and much fiscal uncertainty. Unfortunately, what we see so far from a national and state perspective is very troubling. Some of the proposals to reduce taxes on corporate and pass-through business income could provide needed economic stimulus nationally and for states like Connecticut. Unfortunately, on balance, H.R. 1 is fundamentally flawed: Even the low estimate of a $1.5 trillion cost is not paid for and is really massive federal tax deficit spending. The nation has been down this road before and surely we should have learned something from the worst economic recession in modern times. Otherwise unaffordable tax cuts have long been part of a political strategy to ``starve the beast.'' Due to its long term unfunded cost, this Republican tax plan will compel big cuts in federal funding, such as Medicaid, that are important to states like Connecticut. Contrary to all the talk of a ``middle income tax cut,'' the plan actually represents a huge windfall to the very wealthiest federal taxpayers and is truly regressive. For our own state of Connecticut, over 75% of the tax cut goes to the top 1% who would pay 8.5% less on average. Everyone else would see a trivial 1.2% reduction in federal tax liability and many will actually owe much more in federal income taxes. As discussed more specifically below, the proposed plan shifts most of the tax cost and the least of any tax benefit to states in the Northeast, Great Lakes and West Coast regions of the country. Thus, Connecticut and similar states will even more disproportionately pay in federal taxes far more than is received in federal benefits--further subsidizing regions of the country where states make far less of a state and local tax effort. Drilling down a bit further, several aspects of this partisan plan will hit especially hard: Eliminating deductibility of state income tax paid is worth an estimated $8.7 billion to mostly middle income Connecticut taxpayers. Capping deductibility of local property tax paid at $10,000 will increase federal income taxes for a significant proportion of Connecticut taxpayers who claim $4.9 billion. Any benefit to lower and lower moderate income taxpayers from higher standard deductions and child care credits will likely be more than offset by the shell game of imposing a higher lowest rate bracket of 12% and replacing the current $4,050 personal exemption with a $300 deduction that is proposed to end in 5 years. Eliminating deductibility of medical/dental expenses will be $1.6 billion hardship for Connecticut taxpayers at all levels who are out of work and have catastrophic medical costs. Eliminating deductibility of student loan interest only adds a further financial burden for primarily younger taxpayers and their families already struggling with educational indebtedness. Sadly, these and many other significant issues of fiscal irresponsibility and tax unfairness seem to be of no concern in the partisan rush to pass legislation before taxpayers see through the slogans and realize the costs. Indeed, glimpses of what may be in the Republican Senate version suggests that it will only get worse. Thank you for your efforts to speak out for our Connecticut taxpayers and set the record straight. Sincerely, Kevin B. Sullivan, Commissioner.

Mr. LARSON of Connecticut. Second, Mr. Speaker, I include in the Record a letter out of a cross section of constituents who are directly and adversely impacted by this tax increase.

Mr. LARSON of Connecticut. Mr. Speaker, I include in the Record a transcript of an interview with our esteemed chairman, Kevin Brady, and Heidi Przybyla that appeared on ``Morning Joe.'' Kevin Brady-Morning Joe Transcript--Friday, November 3 Heidi Przybyla, USA Today: This economic growth that you all are promising, it cannot happen unless the cuts occur at the same time. In fact the Joint Committee on Taxation's economic model assumes that the type of tax cuts that you're doing now that are not paid for could actually be a drag on economic growth. Can you please speak to that? Brady: The reason we moved back towards a balanced budget is one, there is substantial growth, miss, but again, that won't do it. You have to simplify the code, eliminate so much of these special breaks on the business and the individual side as well. It's the combination of both of those that gets you back to a balanced budget over time. That's why people complain `Look you're really simplifying the code dramatically, there's a lot of things that go'. Not everyone is happy about that but that is what, sort of the tough choices you have to make, along with growth, to make sure this moves us toward a balanced budget. Przybyla: But that is not what's happening here. This is still, regardless of these loopholes that you're closing, it's still a big blowhole in the deficit and that is not what the model was in '86 for instance when Reagan did it. This model that I'm speaking of still assumes that this could be a drag on economic growth because you're not doing the type of spending cuts, not just simplification in the code, but spending cuts. Brady: Here, one, there are a number of models on growth and I'm sure there will be a healthy debate, that's a good thing. What we know is this dramatically grows the economy in revenues not just here in Washington, but state and local levels as well. But you make a great point: tax reform alone, alone won't get us to a balanced budget, we have to have spending constraints along with that. As I know, as House Republicans, we are turning toward welfare reform and how we tackle our entitlements in a way to save them. That's all part of the steps it takes to get us back to a fiscally responsible area. But I do know this, is you want to see continued deficits and debts, just stay with a slow growth economy like we saw the last ten years. We know what that produced.

Mr. LARSON of Connecticut. Mr. Speaker, let me begin by preempting our distinguished chairman and, for the Record, state that a middle class family in the State of Connecticut, from West Hartford, with a combined income of $125,000, with a mortgage and a kid in college, according to the Joint Committee on Taxation and to the Department of Revenue Services in the State of Connecticut, will see a tax increase of $767 next year. Then with the clever clawback provision--that Grover Norquist kind of clawback provision that gives with one hand and takes away with the other--in 2023, that hardworking family in the middle class will see a $1,667 increase. So why are we here? It is pretty easy to figure out this. These are honorable people, but sometimes they are called upon to do a political task, or as Mr. Collins put it: My donors are basically saying, ``Get it done or don't ever call me again.'' Speaking of New York, my colleagues in New York and New Jersey, because we are donor States and because we make itemized deductions, we find ourselves in the situation where we are paying double taxation. Don't take our word for it. Just ask a member of your own caucus. Ask Peter King, who describes this as the most massive redistribution of wealth at the expense of teachers, machinists, and people who are of the professional class whom you have found that you want to tax their success. But what adds insult to injury above all else, aside from being a donor State and double taxation, is the cruelest cut. We take a Pledge of Allegiance. We pledge allegiance to the Constitution. But some of you pledge allegiance to Grover Norquist. In doing so, you want to make sure that you can shrink Social Security and Medicare up so small you can drown it in the bathtub. That is what this does: $25 billion will come out of that.

Mr. LARSON of Connecticut. Mr. Speaker, I yield 3 minutes to the gentleman from New York (Mr. Crowley), the chairman of the Democratic Caucus and a great leader on the Ways and Means Committee.

Mr. LARSON of Connecticut. Mr. Speaker, I yield the gentleman from New York an additional 15 seconds.

Mr. LARSON of Connecticut. Mr. Speaker, I yield 3 minutes to the gentleman from South Carolina (Mr. Clyburn), the son of a preacher man, who always speaks truth to power.

Mr. LARSON of Connecticut. Mr. Speaker, I yield 1 minute to the gentleman from New York (Mr. Engel), the lead Democrat on the Foreign Affairs Committee who understands the impact of double taxation from a donor State.

Mr. LARSON of Connecticut. Mr. Speaker, I reserve the balance of my time.

Mr. LARSON of Connecticut. Mr. Speaker, I yield 1 minute to the gentlewoman from Texas (Ms. Jackson Lee), the voice of Houston.

Mr. LARSON of Connecticut. Mr. Speaker, I yield to the gentlewoman from Texas (Ms. Jackson Lee) for a unanimous consent request. (Ms. JACKSON LEE asked and was given permission to revise and extend her remarks.)

Mr. LARSON of Connecticut

Mr. LARSON of Connecticut. Will the gentleman yield?

Mr. LARSON of Connecticut. How did they do that?

Mr. LARSON of Connecticut. Why would they do that? In the face of these fires and in the face of so many in California understanding that impact, why is it that they did this?

Mr. LARSON of Connecticut. Were there any hearings?

Mr. LARSON of Connecticut. So there have been no hearings.

Mr. LARSON of Connecticut. They didn't fix it. And yet here we are, on the verge of voting on a bill that will impact 100 percent of the economy and 100 percent of the Tax Code. No hearings?

Mr. LARSON of Connecticut. Mr. Neal, you suggested in the process, at the outset, that this was a missed opportunity, and then you went back and gave a historic tutorial on how we got here. How is it that we got here and arrived here with no public hearings and no expert testimony?

Mr. LARSON of Connecticut. In your history of serving on this committee--and we are joined by Mr. Levin and Mr. Kind and Mr. Welch. And, Mr. Levin, I have to ask you this, too. In your serving on this committee, has there ever been a bill of this magnitude or proportion that has been brought out without a public hearing, without expert witnesses? Mr. Thompson had a raging fire in his district that we heard him, from his own lips, what it did and how it devastated Sonoma and Napa Valley, and no hearings. Is there a precedent for this?

Mr. LARSON of Connecticut. Mr. Speaker, Mr. Kind stood up earlier and talked about the fact that the other side, who claim to be deficit hawks, all of a sudden, they are an endangered species. I don't know if the gentleman from Wisconsin wants to expand upon that and further ask the gentleman from California.

Mr. LARSON of Connecticut. Mr. Speaker, could I just ask for the gentleman to clarify something? You said earlier that you came down here, and you rarely come down here. This is a Special Order. The reason that you are here, the reason that Mr. Davis is here, Mr. Welch, Mr. Levin, and reason that Mr. Neal, Mr. Kind, and myself are all here is because we haven't had the opportunity to have a hearing and have expert witnesses. Have you had any expert witness?

Mr. LARSON of Connecticut. Mr. Speaker, I thank the gentleman for his leadership on this committee and also for the tutorial that he gave us earlier today about how we got to this spot. I think it is important because, for most Americans listening out there, what you are witnessing is the tyranny of the majority. What I mean by that is, when the minority doesn't get an opportunity to bring forth witnesses, to have hearings--and you heard Mr. Neal talk about the more than 30 hearings in the committee, the more than 12 subcommittee hearings, the 450-plus experts that we never got to hear from--you understand the position that we find ourselves in. As I said earlier, this impacts 100 percent of our economy and 100 percent of our people. We all swear an oath of allegiance to the Constitution, but apparently on the other side, they swear an oath of allegiance to Grover Norquist because that is more important than fulfilling our constitutional responsibility and going through regular order and having the experts. It is more important to take a pledge to Mr. Norquist and pass something politically in as pure a bare-knuckle way as you possibly can without any amendments being made in order and rushing the bill to the floor in haste, without any concern for the ramifications that it has other than fulfilling a pledge to Mr. Norquist, and also a pledge, as we have heard from some of their Members, to their donor base. That is what has frustrated us on this side of the aisle. I think Mr. Neal said it very clearly, we had a missed opportunity here. Mr. Kind mentioned that we still have that opportunity. If there are enough people on that side of the aisle--and we know there are. We know regionally, as Mr. King and Mr. Zeldin have said, that this tax bill represents the greatest shift that we have seen in wealth in this country from the middle class of the Northeast and West Coast to the rest of the country. It is unconscionable that this would take place under the guise of trying to say that you are providing middle class tax relief. I went to the commissioner of revenue services in the State of Connecticut and asked: How will this impact our citizens? It represents an increase in taxes for the middle class, not this so-called tax cut that the other side has perpetrated. I want to point out this claw that exists within here. Because even for those States, red State or blue State, where you think you might receive a de minimis tax cut today, it is clawed back within 5 years because they put something in the Code, commonly referred to as a ``chained CPI.'' And that has dire ramifications.