John Thune

Mr. THUNE

Mr. THUNE. Mr. President, I rise today to talk about the need to extend the current tax rates and to reject the tens of billions of dollars in higher taxes the President and Senate Democrats want to impose next year. I believe the upcoming vote or votes will be some of the most important votes the Senate holds this year. As early as tomorrow, we will hopefully vote on tax plans that represent two competing philosophies. One plan, introduced by Majority Leader Reid and supported by Senate Democrats and the President, proposes higher taxes on American entrepreneurs, investors, and small business owners. The Democratic plan represents the philosophy that if only the government could raise enough money, Congress could somehow spend our way to prosperity. It is a viewpoint that holds that the Federal Government can spend hard-working American tax dollars better than they can. Rather than leaving the money in the private economy where it can be invested or spent by private citizens, this view holds that the government should instead bring these dollars here to Washington, DC, to redistribute them through the Federal bureaucracy. This philosophy was probably best articulated by the President recently when he said, ``If you've got a business--you didn't build that. Someone else made that happen.'' In other words, no one is extraordinary by virtue of their hard work and accomplishments. When someone works hard and succeeds, we should not celebrate that person as an example to others, we should instead take from him or her in order--again, as the President said--to ``spread the wealth,'' to quote another of his lines. I am hopeful that the tax-and-spend philosophy of the Reid tax plan, however, will not be our only option. I hope we will also have the opportunity to vote on legislation introduced recently by Senator Hatch and Minority Leader McConnell. This plan takes a very different approach by following the view that now is not the time to raise anyone's taxes. This view holds that our American free enterprise system works best when government gets out of the way, leaving Americans free to pursue their hopes and dreams. One way we can leave Americans free to pursue their dreams is by not raising their taxes next year. And we especially should not raise taxes when Americans are struggling to get by. Ironically, the view that we should extend current tax policy at a time when the economy is weak was articulated, interestingly enough, by the President just 2 years ago when he signed an extension of all of the tax rates. At that time, President Obama said that raising taxes would have ``been a blow to our economy just as we're climbing out of a recession.'' Interestingly enough, real GDP growth when he made that statement was around 3.1 percent. That was the average when the President made the statement that if we raised taxes, it would have ``been a blow to our economy.'' Well, real GDP growth this year is on a pace to average 2 percent and possibly less. Those numbers are consistently being revised and being revised downward. If it did not make sense to raise taxes when our economy was recovering, why does it make sense now to raise taxes as our economy is slowing? How does it make sense to raise taxes in an environment where over 23 million Americans are out of work or underemployed, when the unemployment rate has been stuck at over 8 percent now for 41 consecutive months? The votes tomorrow are incredibly important--not because either plan is likely to become law immediately but because Americans deserve to know where their Senators stand when they go to vote this November. Do you stand for stable tax rates that encourage work and investment or do you stand for increasing taxes on the very businesses we rely on for job creation? Do you stand for a free enterprise system that rewards hard work and innovation or do you stand for making it more difficult for small businesses to grow and succeed? These are the important choices that will have a real impact on hard-working Americans and on our economy at large. Consider the Reid tax plan. According to the Joint Committee on Taxation, this plan will impose a tax increase on nearly 1 million business owners. Proponents of this increase are going to argue that it will only affect a small segment of our economy. Yet the Joint Tax Committee estimates that the President's tax increase in the Reid plan will hit more than 50 percent of all income earned by businesses that pay their taxes at individual rates. These are so-called passthrough businesses, and they apply to S corporations, partnerships, sole proprietorships, and LLCs. They are the ones who are going to see their cost of business go up next year for no other reason than the desire by the Senate Democrats to ``tax the rich.'' Small businesses, which accounted for two-thirds of the net new jobs over the last decade, will be particularly impacted by these tax increases. According to a survey of small businesses by the National Federation of Independent Business, 75 percent of small businesses are organized as passthrough businesses. NFIB also found that the businesses most likely to be hit by the Reid tax increases are those businesses employing between 20 and 250 employees. According to the U.S. census, the data that they collect, these businesses employ more than 25 percent of the workforce. So the million small businesses that, according to the Joint Committee on Taxation, will see their taxes go up under this proposal employ 25 percent of the American workforce and account for over 50 percent of all passthrough income. So you are going to see taxes go up dramatically on over 50 percent of passthrough income and on small businesses that employ 25 percent of the American workforce. Does that make sense in this economy? It should be no wonder that the political party advocating this kind of tax policy has also presided over the weakest economic recovery literally since the end of World War II. The impact of the Reid tax increase on small business will be bad enough, but unfortunately these tax increases will have significant ramifications for our entire economy. According to a study released earlier this month by Ernst & Young, the Reid tax plan would hurt our economy in the long term. According to Ernst & Young, the tax increases in the Reid plan would reduce economic output by 1.3 percent. This would mean $200 billion less in economic activity if translated into today's economy. The Ernst & Young study estimates that the tax policies in the Reid plan would reduce employment by one-half percent, meaning roughly 710,000 fewer jobs. The study estimates the Senate Democrats' approach will reduce the Nation's capital stock by 1.4 percent and investment by 2.4 percent, and this approach will reduce aftertax wages by 1.8 percent. So we will be reducing investment, costing the economy over 700,000 jobs, and reducing aftertax wages for hard-working Americans in this country. Yet here we are talking about a tax increase that would do dangerous damage and harm to our economy. I would say, these aren't partisan statistics compiled by Senate Republicans. These are the estimates by a respected accounting firm as to what will happen if we follow the tax policies proposed by Senate Democrats and the President. We will have less economic growth, fewer jobs, and a lower standard of living in the long run. These numbers simply confirm common sense. If we want individuals and businesses to spend and invest more, we shouldn't raise the amount of the income they have to pay to the Federal Government, and that is what this does. We have major tax policy decisions to make, decisions reflected in the votes we will take tomorrow. Do we want to encourage capital formation in this country? In other words, do we want to encourage investors to put their capital at risk so that businesses will have money to make new investments? Well, by raising the capital gains tax rate from 15 percent to 20 percent for some investors, the Reid bill will make it less attractive to invest in our economy. According to an Ernst & Young study from February of this year, the top rate of capital gains will rise from 56.7 percent on January 1 of next year, after taking into account corporate, investor, and State taxes. This will be the second highest combined capital gains tax rate in the world among OECD and BRIC nations. America already has the highest corporate tax rate in the developed world. It appears as if the Senate Democrats are going for No. 1 when it comes to capital gains taxes as well. If there is anything I can say that is positive about the Democrats' tax increase plan, it is that at least they rejected the President's proposal to nearly triple the tax on dividends paid by upper income Americans. Even Senate Democrats, who are not shy about raising taxes, understand the President's proposal to impose a top rate of over 40 percent on dividend income would be terrible for millions of seniors who rely on dividend-paying stocks and for those American companies that rely on dividends to raise capital. Instead, the Reid bill would increase the top rate on dividends from 15 percent to 20 percent. I believe this tax increase is bad policy, but it won't be nearly as harmful as the President's approach would have been. On another issue of critical importance, however, the Senate Democrats have decided to run to the left of this liberal administration, and this is on the issue of the estate tax, better known as the death tax. The Reid plan would impose a huge new death tax on family farms and businesses next year. Under current law, businesses and farms are exempted from the death tax on the first $5 million of the value of an estate. Values above this amount are taxed at a top rate of 35 percent. I believe we ought to completely eliminate the death tax, and I have introduced legislation, with 37 of my colleagues, to do so. But the current death tax treatment exempts the large majority of family farms and businesses from the tax. The Reid plan, however, would allow the death tax to revert to the provisions in effect before 2001. This means, under the Reid plan, that family farms and businesses will face a top death tax rate of 55 percent on estates above $1 million in value. This is a massive death tax increase on tens of thousands of small businesses and family farms across America. In fact, according to the Joint Committee on Taxation, the Reid plan will increase the number of estates subject to the death tax in 2013 from 3,600 estates under current law to 50,300 estates under the Reid proposal. According to the Joint Committee on Taxation, the Reid plan will subject 20 times more farming estates to the death tax in 2013--a 2,000-percent increase. The Reid plan will subject 9 times more small businesses to the death tax--a 900-percent increase. If the death tax policy in the Reid plan were made permanent over the next 10 years, the number of small businesses subject to the death tax will increase from 1,800 to 23,700, and the number of family farms subject to the death tax would increase from 900 to 25,200. That is all data put together and reported out by the Joint Committee on Taxation. The reason for this massive expansion of the death tax is because the $1 million exemption amount is much too low, given the value of successful farms and small businesses today. I will use my State of South Dakota as a good example. Take family farms in South Dakota. According to the Department of Agriculture, the average size of a farm in my State is 1,374 acres. According to the USDA, the average value per acre of cropland in South Dakota is about $1,810. This means the average value of a farm in my State is nearly $2.5 million. So if you have a death tax law that only exempts $1 million and has a 55-percent top rate on everything above that, imagine what that is going to do to the average farm in a State such as South Dakota. And South Dakota is not unique in that regard. We have seen land values rise across America's heartland, from Nebraska to Missouri to Montana. Let's be clear: The Reid bill would subject many more families to a punitive double tax--the death tax--when a loved one passes away. It will make it much more difficult to pass family farms and businesses from one generation to the next. And we should never forget that most family farms are land rich and cash poor. Lots of assets, land values, and those sorts of things, but what you don't want to see happen is a family farm that can be passed on to the next generation have to be liquidated to pay the IRS because of a punitive death tax. That is precisely what this policy, as proposed by the Democrats' plan, would do. The USDA estimates 84 percent of farm assets are comprised of farm real estate. That is where most farm and ranch families have their assets. That means family farms don't have extra cash on hand to pay the death tax. Instead, they will have to sell off land or take on additional debt in order to pay these higher taxes. That is exactly what we don't want to see happen in this country. I don't believe the President's proposal--which is a $3.5 million exemption and a 45-percent top rate--is adequate, but it is much better than what Senate Democrats in the Reid plan have proposed. Let me summarize, if I might. Tomorrow we are going to vote on the Reid proposal to raise taxes at a time when Americans are hurting and our economy is fragile. The Reid proposal will impose higher taxes of more than $50 billion on successful small business owners and families. It will hurt our economy, reducing economic growth and job creation at the same time it lowers wages for hard-working American families. It will impose a new death tax of $31 billion on 43,100 family farmers, ranchers, and small businesses. We will also vote, I hope--I hope--on the Hatch-McConnell alternative plan to keep tax rates where they are, to prevent a tax increase on any American next year. In addition to keeping tax rates where they are, the Hatch-McConnell proposal provides instructions to the Finance Committee to report out fundamental tax reform legislation by 12 months from the date of enactment of the bill. The Hatch-McConnell approach is the correct approach: Prevent a tax increase now and move to fundamental tax reform next year. Of course, extending current tax law temporarily is only a short-term fix. What is needed is comprehensive tax reform, much like the Tax Reform Act of 1986. Real tax reform will drive economic growth higher, will lead to robust job creation, and will result in more revenue to the Federal Government. But real tax reform is going to require Presidential leadership, something that has, unfortunately, been lacking over the past 3\1/2\ years. Perhaps next year we will have a President truly willing to commit to tax reform, a President who is not content with simply releasing a 23-page framework for corporate tax reform. But until we get to comprehensive fax reform, the least we can do now is to ensure Americans do not face a massive new tax hike during a weak economy. I hope we will get that vote tomorrow. I hope Senate Democrats will find their way to give us a vote on extending the tax rates for all Americans so that small businesses aren't whacked with a big tax increase next year, so that our economy doesn't get plunged perhaps into a recession, and we don't see that unemployment rate tick even higher. Those are the results, those are the outcomes, those are the types of things that are going to happen, according to all the independent analysis, with the tax proposal that is before us today. Remember, there is always this idea that somehow, if we raise more taxes, we will be able to pay down more of the debt. Well, I have to say, it has been my experience that when there is money around Washington, DC, it gets sucked up and it gets spent. I think a lot of Americans would welcome the idea of seeing their taxes going to pay down the debt, but what we will see is a massive tax increase on Americans used to grow government here in Washington, DC. That is not what the American people want, and that is not what we in the Senate should be for. Mr. President, I yield the floor.

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

Mr. THUNE

Mr. THUNE. I thank the Senator from New Hampshire for yielding on that point--more important, for the great work she is doing as a member of the Armed Services Committee. She has been a very active member of that committee and a strong and clear voice for New Hampshire and for America's national security interests. I might also add that we serve together on the Budget Committee, where really this should have originated. Unfortunately, since we did not pass a budget, it is very hard to have a plan for how to proceed with spending the taxpayers' money, and this is what you end up with. Because we have this process put in place where, if action is not taken to avoid it, we have an across-the-board sequester that would occur at the first of next year--half of which would come out of the defense budget--we need to be able to find out exactly how these cuts would be implemented. The thing we do not know is how the administration plans to implement this. I think that is what the transparency act that passed in the House of Representatives is designed to get at. By the way, it was an overwhelming vote, 414 to 2. The House of Representatives, in an overwhelmingly bipartisan way, weighed in on the issue about whether the administration ought to spell out in clear detail to the Congress and the American people how it intends to implement its sequestration plan. I might say, it is going to be very difficult for us as Members of the Congress to come up with an alternative replacement plan if we do not know what their plan is for implementation. We know half the reductions are going to come out of defense--at least that is the plan--the other half out of nondiscretionary spending. It is clear this would have a profound impact on the defense budget on top of the $\1/2\ trillion in cuts as part of the Budget Control Act last summer. I say to my colleague from New Hampshire, she has very clearly and well laid out the impacts--as have been delineated and described by many of our service chiefs, by many of our military leaders in this country--what those impacts would be on our national security, on our readiness. Also, I think she has elaborated extremely well about the economic impact, what it is going to mean in terms of jobs in our economy. For a moment, I want to come back to this fundamental point because I believe it is one that should not be missed by people who are following this debate; that is, if the Budget Committee and the Senate had done their work in the first place and passed a budget, we would not be where we are today--if we had actually passed a budget. The Senator from New Hampshire--I think this is her second year on the Budget Committee. Even before she got here, we had not passed a budget. I got on the Budget Committee in this last session of Congress, so it has been 2 years since I have been on the committee, but it is a committee without a purpose, without a mission. If you are not going to pass a budget, I am not sure why you want to have a budget committee. The other thing that is interesting about this is that we are not going to pass any appropriations bills. Not only not a budget, but in the Appropriations Committee here in the Senate are usually 12 bills that come across the floor. The majority leader said he is not going to bring appropriations bills to the floor. I think the House of Representatives passed nine appropriations bills. They passed a budget. The Appropriations Committee here in the Senate has been moving and passing appropriations bills out of committee, but the leader of the Senate has said we are not going to move appropriations bills this year. We did not move a budget. We are not moving appropriation bills. So what you end up with is a budget control act like what we passed last summer that takes these Draconian whacks out of the defense budget and puts America's national security interests at risk and in great peril. I ask my colleague from New Hampshire, who, as I said, is a member, along with me, of the Senate Budget Committee, might this situation have been avoided had the Senate done its work as it is supposed to do in an orderly way, followed the law, actually passed a budget, actually worked on getting appropriations bills on the floor of the Senate? Might we have avoided what is before us; that is, these devastating, disastrous, and what some have described as catastrophic cuts in our defense budget? It seems to me at least that is where you end up when you do not do your work in the first place. To my colleague from New Hampshire, I simply ask her, as a member of the Budget Committee, might we not be in a different situation if we had passed a budget now for 3 years?

Mr. THUNE. I think the Budget Control Act, which passed last summer, created this process, and led us to sequestration, which is where we are today. This is a function and a clear outcome of having not passed a budget. It is ironic in many respects because, as the Senator from New Hampshire has pointed out, the first fundamental responsibility we have as Members of Congress is to tell the American people--the taxpayers who pay the bills for this government--how we are going to spend their money. This is now the third year in a row that the Senate has failed to do that. Again, I might simply add that the House of Representatives did do a budget, has been passing appropriation bills, has been following the law in accordance with what has been the practice around here up until the last 3 years of actually working on a budget. When we are borrowing 40 cents out of every dollar we spend, it would strike me that it would be important we go through an exercise and figure out how we are going to start whittling away at the deficit and get the debt at a more manageable level and how we are going to spend the American taxpayers' dollars. As the Senator from New Hampshire pointed out--again, I don't think we can emphasize this enough. Last summer we already called for $1/2 trillion in defense cuts, and that was half of the amount of reductions that were made last summer. It was about $1 trillion, a little over that, overall in spending cuts last summer. Those were immediate spending cuts, half of which came out of defense; $487 billion was already taken out of the defense budget. So what we are talking about now is another $1/2 trillion over the next 10 years on top of that $1/2 trillion. In other words, $1/2 trillion out of the national security budget. The President's own Secretary of Defense has said it would lead to the smallest ground force since 1940, since before World War II, and the smallest fleet of ships since 1915, almost a century, and the smallest tactical Air Force we have had literally in the history of the Air Force. That is what we are talking about. That is the dimension of the problem we are referring to. It completely impairs our ability to project power in many of these critical areas of the world. The world is a dangerous place, and it is not getting any less dangerous. It is getting literally more dangerous, according to the headlines, every single day. Our ability to project power in the Middle East, Asia, and all the areas of the world we need to keep an eye on will be in serious jeopardy. I want to make a serious observation about that, and it is important to me. My State of South Dakota is home to a bomber base. One of the key ways our Nation projects power is through the use of the bomber fleet. Our bomber fleet is aging. Nearly half of the fleet was built before the Cuban missile crisis of 1962, if you can imagine that. So it is highly important we modernize our bomber fleet and Secretary Panetta has stated that the development of the next-generation bomber would be delayed by sequestration until well toward the middle of this century. So we are talking about dramatic reductions in our ground forces, Navy, and Air Force. All the assets we use to protect this country and defend America's interests around the world would be at great risk if this sequestration goes into effect. As the Senator from New Hampshire has appropriately pointed out, the No. 1 priority we have is to defend this country. If we don't get national security right, the rest of this conversation, including all the other things we talked about, is secondary to defending and protecting America and the American people. This is a very serious debate, and I would come back to the question the Senator from New Hampshire posed in the first place, and that is yesterday the House of Representatives passed by a 414-to-2 vote a piece of legislation that would require the administration to tell us how they intend to implement these cuts by program, project, and activity level. That way we know with some detailed specificity how these proposed cuts are going to take effect, and that would allow us to come up with an alternative plan and perhaps be able to replace and substitute other cuts elsewhere in the budget for what are going to be disastrous cuts in the defense budget. I introduced companion legislation here in the Senate very similar to what the House passed yesterday. I hope the Senate will pick up the House bill and move it and pass it so we can get the administration and the President to engage in this discussion about what they intend to do in terms of implementing sequestration. Then perhaps they can work with us to avoid the catastrophe we are referring to and talking about. This has been documented and validated by all of our military leadership and would be a very serious and dangerous reduction in America's national security resources and in our ability to keep our country ready and able to defend America and America's interests around the world. I appreciate so much the leadership of the Senator from New Hampshire on this issue. I know the Senator has been very active in trying to get the administration to provide more information with regard to what the impact should be on the defense budget as a member of the Armed Services Committee. I also think they ought to furnish all the information on these cuts not only on the defense part but the nonnational security part of the budget. Defense represents 20 percent of all Federal spending, but we are going to get half of the cuts. The proportionality of this is a real issue, in my view. That happened last summer. Half of the cuts made last summer came out of defense even though it is only 20 percent of Federal spending. Half of the cuts in this sequestration would come out of the defense budget, even though it represents 20 percent of all Federal spending. I would hope, as my colleagues here in the Senate continue to hear from people around the country who are impacted by this--not only our military leadership but also those whose jobs are going to be impacted by this--that there will be a new sense of urgency, a new intensity to try to resolve this issue, and that is to get the administration to show how they intend to implement sequestration. I look forward to working with my colleague from New Hampshire to make that happen. I hope our colleagues on the other side, the Democratic leadership, will agree to moving that legislation.

Mr. THUNE

Mr. THUNE. Mr. President, today I recognize Tyler Dutton, a legal intern in my Washington, DC, office, for all the hard work he has done for me, my staff, and the State of South Dakota over the past several weeks. Tyler is a graduate of South Dakota State University in Brookings, SD. Currently, he is attending Emory University Law School in Atlanta, GA. He is a hard worker who has been dedicated to getting the most out of his internship experience. I would like to extend my sincere thanks and appreciation to Tyler for all the fine work he has done and wish him continued success in the years to come.

Mr. THUNE

Mr. THUNE. I don't think the Senator from Alabama is wrong at all. In fact, that is what much of the news stories that have been printed in the last few days and reporting on the subject have said. Some of our colleagues on the other side have essentially concluded this is leverage--leverage for them to get higher taxes. It strikes me, at least, that there is a tremendous risk associated with allowing the country to go over a fiscal cliff--which includes not only these Draconian cuts to the defense budget but also tax increases that would occur on January 1, to go over the fiscal cliff, risk plunging the country into a recession, raise the unemployment rate which is already at historically high levels, all to prove a point about raising taxes. But that appears to be--at least by the reporting. There was a story in the Washington Post over the weekend that said: Democrats threaten going over the fiscal cliff basically to get higher taxes out of Republicans. That, to me, seems like a terrible trade to make, to risk the country going into a recession, to risk these tremendous cuts in our national security priorities, just simply so they can get higher taxes.

Mr. THUNE. The Senator from Alabama is correct. That is one of the remarkable things about this. The Commander in Chief, of course, is tasked with the responsibility of being just that, the Commander in Chief. Yet when it comes to the national security interests that we have and to at least spelling out how he would implement what we believe are going to be some disastrous cuts to the defense budget, he is not even informing us about what his ideas are with respect to that so we can react to that. More importantly, he doesn't seem to be the least bit interested in addressing this. There is a huge silence coming out of the White House--the Senator from Alabama is absolutely correct--and it has to change if we are going to be able to fix this. It starts by at least him presenting a plan, and the Senator from Alabama and I have introduced legislation in the Senate that would require that, much like what passed in the House today, and that is where it all starts.

Mr. THUNE. Mr. President, I would say to my colleagues who are here on the floor that this is a defining moment for our country. The most basic responsibility and the most important priority we have as Americans is to defend the country. If we don't get national security right, the rest is conversation. We can talk about all these other things in the budget--we can talk about all the other priorities the country has, all of which are important--but if we fail to defend the United States of America, we have failed the citizens of this country. It is the No. 1 priority we have. It is the most important responsibility and obligation we have as public servants here in the Senate--to make sure we are taking the steps necessary to keep this country strong and secure from threats both here at home and abroad. What happened--and how we got to where we are today--goes back to the fact that we haven't passed a budget for 3 years in the Senate. I need to remind my colleagues why we are where we are today. The reason we are here is because for 3 consecutive years now the Democratic majority in the Senate has not done the most fundamental responsibility we have, which is to pass a budget that addresses our national security interests. What did we end up with? We ended up last summer with the Budget Control Act--something cobbled together at the eleventh hour to avoid a deadline on raising the debt limit--and we put in place a process where a supercommittee would look at ways to define long-term savings so we could avoid the sequester. But the sequester was put in place as a result of the Budget Control Act, which was put in place because the Senate hasn't passed a budget now for 3 straight years. That is why we are where we are. Having said that, we need to fix the problem. And the problem is we have defense cuts that are going to cut very deeply into our national security interests, and we even have the Secretary of Defense coming out and saying these cuts would be devastating. The President's own Secretary of Defense has made a statement to that effect. With sequestration, we would have the smallest ground force since 1940, the smallest number of ships since 1915, and the smallest tactical Air Force literally in the history of the Air Force. That is the dimension of the problem we are talking about, as has been described by the experts who are supposed to know these things. As I said, the President's own Defense Secretary has made these sorts of statements. One of the problems we have, of course, is we don't even know what the full impact of the sequester will be because the administration hasn't put a plan forward. So we are awaiting that plan. Today the House of Representatives voted 414 to 2 to require the administration to at least submit to Congress and to the American people how they intend to implement sequestration so we can at least have a better idea about what these impacts will be, where are they going to make the cuts, by account, so we can examine that and come up with a plan, hopefully, to replace those deep unbalanced cuts in the defense budget with reductions elsewhere in the budget. But we don't know that because we can't get the administration to put forward the plan we need to move forward with our proposals here in order to do away with what we think will be a very dangerous cut to America's national security. I hope the Senate will do something to address that. We can start by taking up the bill passed in the House, pass it here in the Senate, and require the administration to put forward a plan about how they are going to implement the sequester. As has already been pointed out by the Senator from Alabama and others, we are talking about basically a 50-percent cut in the defense budget--or 50 percent of the cuts coming out of the defense budget on top of $487 billion in cuts that were already approved last year. So we are talking about another huge amount of reduction, up to about another $\1/2\ trillion on top of what already is $\1/2\ trillion in cuts that came last year. Remember, the defense budget, as has been pointed out, only represents 20 percent of all Federal spending, so we are going to take half the cuts out of 20 percent of the budget. Where is the proportionality in that? And as the Senator from Alabama has highlighted, what we have done essentially is we have shielded many areas of the budget. So a lot of the things some of our colleagues on the other side of the aisle don't want to see cut are protected from this. Yet we are going to make huge, steep, Draconian, and dangerous cuts in America's national military and national security budget. I would hope we can at least act on what the House of Representatives did earlier today by a 414-to-2 vote, pick up that legislation, and require the administration to tell us how they are going to implement these reductions. Then let's go to work on a bipartisan basis and try to come up with a plan whereby we can avoid what will be a disaster, as has been described by every national security expert out there, for our national security interests. We live in a dangerous world. We can't avoid that. The United States of America is looked to for leadership around the world. We have to continue to ensure we can protect this country and America's interests around the world. In order to do that, we have to make sure our military is resourced in a way that enables them to protect our interests. We cannot continue to go forward with this sequester, which would dramatically and in a very dangerous way harm those national security interests.

Mr. THUNE. That is correct.

Mr. THUNE. That is correct.

Mr. THUNE

Mr. THUNE. Mr. President, today I wish to recognize Garden City, SD. The town of Garden City will commemorate the 125th anniversary of its founding this year. Located in Clark County, Garden City was first settled in 1882. However, it was not until 1887 that the Chicago, Milwaukee & St. Paul Railroad line was built and sparked the official establishment of the town. By the end of 1887, Garden City had a post office, a railroad depot, and a grocery and hardware business. In the years that followed, Garden City became an agricultural center for the area, especially for potatoes. The first potato crop in the Garden City area was planted in the early 1900s. By the 1940s, half a million bushels of potatoes were being harvested from the area each year. South Dakotans living in the Garden City area have a proud tradition of hard work and remain committed to their strong heritage and traditions. Though many things have changed in the last 125 years, the quality of character of Garden City residents has remained something of which the town should be very proud. Garden City has been a tight-knit community for the past 125 years, and I am confident that it will continue to serve as an example of South Dakota values and hospitality. I would like to offer my congratulations to the citizens of Garden City on this landmark occasion and wish them prosperity in the years to come.

Mr. THUNE

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

Mr. THUNE. Mr. President, one of the foremost threats to our economy is the fiscal cliff. This is an issue my Republican colleagues and I have been talking about for several months now, calling for more transparency in the sequestration that will occur at the end of the year, a replacement of the defense sequester, and actions to prevent a massive tax increase on the American people. Senate Democrats--who have only recently acknowledged the looming fiscal cliff--are now threatening to go over the cliff unless Republicans agree to increasing taxes on America's small businesses during this difficult economic period. Think about that. Senate Democrats are willing to put our economy at serious risk and our national security in jeopardy unless Republicans agree to a massive tax increase on America's small businesses. The headline from a news story in the Washington Post from over the weekend says, ``Democrats Threaten To Go Over Fiscal Cliff If GOP Fails To Raise Taxes.'' They quote, ``Senior Democrats say they are prepared to weather a fiscal event that could plunge the nation back into recession,'' if the New Year arrives without an acceptable compromise-- which they have defined to be a major tax increase on small businesses in this country. Think about the impact of that and what that means to people across this country. We have had now, for the last 3 years, a complete failure in the Senate to produce a budget. We are now faced with this fiscal cliff which consists of the sequestration, the across-the-board cuts that would occur early next year if nothing is done to prevent them, the tax hikes, and we are going to reach the debt limit, all threatening our economy in an already anemic recovery. It is hard to overstate the magnitude of the tax increases that are going to hit our economy starting next year if we don't act. Over the next 10 years, this tax increase would result in nearly $4.5 trillion in new taxes on American families and entrepreneurs. What does that mean to the average family in this country? The Heritage Foundation recently published a study that estimated the tax increase per tax return in every State. For example, for my State of South Dakota the Heritage Foundation estimates that the average tax increase per tax return would be $3,187 in the year 2013. I would say to my colleagues on the other side of the aisle, many of whom I think generally believe in Keynesian economics, that the average family in South Dakota could do more to stimulate our economy and create new employment by keeping their $3,187 and spending it as they see fit, not as Washington sees fit to spend it on their behalf. Taxmageddon is a very apt description that has been applied to this fiscal cliff when you consider the impact of these tax increases not just on individual families but on our entire economy. Until recently we could just speculate about the impact of these tax increases on our fragile economy, but the magnitude of the damage was in dispute. Not anymore. Last month, the Congressional Budget Office gave us the most definitive estimate yet of the impact of the nearly $\1/2\ trillion of tax increases that would hit in 2013 when combined with the more than $100 billion of spending cuts that would occur under the sequester I mentioned earlier. The Congressional Budget Office projects the combination of the massive tax increases and the sequester will result in real GDP growth in calendar year 2013 of only one-half of 1 percent. Think about that, one-half of 1 percent. We are right now growing somewhere--they think-- in the range of 1.9 percent or 2 percent this year. But next year, the real GDP growth would amount to only \1/2\ percent. And the picture is even bleaker if you consider that CBO projects that the economy will actually have a decrease in GDP of 1.3 percent in the first half of 2013. So you have the Congressional Budget Office saying that over the entire year of 2013, the likelihood is we will grow at one-half a percentage point if we don't address the fiscal cliff. But in the first half of next year, we actually see a decrease of 1.3 percent of economic growth. According to CBO, a reduction of 1.3 percent of economic growth in the first half of next year would ``probably be judged to be a recession.'' That is according to the Congressional Budget Office, which is the nonpartisan authoritative referee we use to evaluate the impact of the spending and debt tax issues. This morning, the Chairman of the Federal Reserve Board of Governors, Ben Bernanke, testified before the Senate Banking Committee, and he said: Fiscal decisions should take into account the fragility of the recovery. That recovery could be endangered by the confluence of tax increases and spending reductions that will take effect early next year if no legislative action is taken. The Congressional Budget Office has estimated that if the full range of tax increases and spending cuts were allowed to take effect--a scenario widely referred to as the fiscal cliff--a shallow recession would occur early next year. . . . That is according to the Chairman of the Federal Reserve Board of Governors Ben Bernanke in his testimony as recently as this morning. He talked about a shallow recession occurring next year and the endangerment of the recovery that is under way if we have this confluence of events happen at the end of the year. He went on to say: These estimates do not incorporate the additional negative effects likely to result from public uncertainty about how these matters will be resolved. In other words, the economic uncertainty that is associated with all these things happening at the end of the year are impacting the economy today as people are looking at how they are going to make investment decisions, and that our economy is likely to experience negative effects from that public uncertainty above and beyond the direct impacts that CBO has incorporated into its analysis. So let's be very clear about what the fiscal cliff means. We are not talking about a slight slowdown of a few tenths of a percent. What we are facing is the difference between positive growth on the one hand-- which will mean more jobs and higher incomes--and a potential recession on the other hand. We can, and must, provide Americans some certainty as to what their taxes are going to be next year. The House of Representatives has already agreed to hold a vote to extend all of the existing tax rates before the August recess in order to avert the fiscal cliff. They are going to act on this sometime before we go out in August to extend all of the rates before the end of the year so there is certainty for those who are making economic decisions. Unfortunately, thus far the Senate and the Senate Democratic leadership has only agreed to hold a vote on a plan to raise taxes on nearly 1 million small businesses. This tax increase on individuals earning more than $200,000 a year and families making more than $250,000 a year will raise taxes on more than half of all income in America earned by S corporations, sole proprietorships, LLCs, partnerships, and other passthrough businesses that pay their taxes at the individual rates. A point of clarification: That applies to a lot of mom-and-pop businesses in this country. We are talking about that restaurant owner, that electrician, many of whom are organized in the fashion in which their income flows through their individual tax return and they pay at the individual tax rate. The Joint Committee on Taxation has estimated that the number of businesses that would be impacted by that is 940,000. So almost 1 million small businesses would see their taxes go up as a result of the fiscal cliff and tax rates expiring at the end of the year for those individuals who are making more than $200,000 and families making more than $250,000 a year. According to the National Federation of Independent Business, the small businesses most likely to be hit by the Democratic tax increase employ 25 percent of the total workforce. So we are talking not just about the small businesses that are going to be faced with higher taxes, but we are also talking about a huge portion of the American workforce in this country. Twenty-five percent of the employees in this country work for those small businesses that, according to the Joint Committee on Taxation, will see their taxes go up as a result of the President's proposal. We essentially have in front of us three choices: We can let all the tax rates expire, which we know is going to plunge our economy back into a recession; we can do what our Democratic colleagues want to do, which is to raise taxes on successful small businesses and entrepreneurs, slowing our economy even further and risking--according to the Congressional Budget Office and the Chairman of the Federal Reserve Board--a recession; or, we could do what the House of Representatives will soon pass and what I would suggest, and that is we can prevent a tax increase from hitting anyone and give the lackluster economic recovery at least a chance to gain some steam. That is what we ought to do. We ought to do what the House of Representatives is going to do, and that is to extend the rates for a year so that people in this country have some certainty as to what their tax rate is going to be at the end of the year. I hope my colleagues here in the Senate--and the Senate Democrats in particular--will realize the severity of the fiscal cliff, and come to the table to prevent this massive tax increase and the unbalanced and troubling cuts that will occur to our national security if we don't take steps to avert this fiscal cliff. We have to prevent the dangerous cuts to our national defense that are scheduled to go into effect under sequestration by finding savings elsewhere in the budget. In order to do that, we need a detailed plan from the administration as to how they plan to implement the sequester. Members of Congress on both sides of the aisle have called for more transparency on the sequester from this administration, but they have so far failed to produce a plan. That is simply unacceptable. I will continue to work to see that a requirement be enacted so the administration will finally be transparent with the American people and give all Members of Congress a clear idea as to where the cuts are going to be applied. Our economy is weak. We know that growth in the first quarter was a mere 1.9 percent. Expectations for the second quarter have been downgraded. We have witnessed now for 41 straight months unemployment above 8 percent. We have 23 million Americans who are either unemployed or underemployed and 5.4 million Americans who have been unemployed for a long period of time. We have a weak economy. The amazing thing about this debate is that 2 years ago the President of the United States said that raising taxes would strike a blow to the economy. That was at a time when we had 3.1 percent economic growth. We now have, as I said, according to the estimates, 1.9 percent economic growth for the first quarter of this year, and expectations for the second quarter have already been downgraded. So with 41 straight months of unemployment above 8 percent, 23 million Americans underemployed or unemployed, and the weakest recovery literally since the end of World War II, now is not the time to raise taxes. Who in their right mind would think it would make any sense at all to raise taxes when you have an economy that is growing at such an anemic rate, particularly given the fact that 2 years ago, when we had more robust economic growth, the President said at that time that it would strike a blow to our economy if we raised taxes. Here we are with economic conditions that are much worse, circumstances that have deteriorated since then, and he is proposing a tax increase on 1 million small businesses that will have a ripple effect all across our economy and hurt job creation at a time we cannot afford that. There was another study, an analysis that came out today done by Ernst & Young in which they analyzed the tax hikes that would occur on small business next year and came to the conclusion that it would cost 700,000 jobs in our economy, that it would cost us 1.3 percent of economic growth--which is again consistent with what the Congressional Budget Office has said--and that it would reduce wages to people in this country by 2 percent. So you now have the Ernst & Young study out there which suggests that not only does this impact the small businesses out there that are going to see their taxes go up, but it puts at risk and in jeopardy jobs for hard-working Americans and a wage base that would actually shrink if, in fact, we drive the car over this fiscal cliff. We cannot afford to do that. It is irresponsible to have people out there saying that they are so anxious to prove some point or to win some argument on raising taxes that they are willing to see this country run the risk of plunging into a recession and raising the number of people who are unemployed in this country. It really is. I have to say that when I saw some of the remarks and some of these stories and some of the reporting about statements that are being made by our colleagues on the other side and Members of their staff with regard to the fiscal cliff and the willingness on the part of many of our colleagues to suggest that this country could go through and endure even more difficult economic times than what we are already experiencing, even higher unemployment than what we are already seeing, it was really pretty remarkable and truly unfortunate. I hope folks will walk back from that position, walk back from those remarks, and enter into a discussion about how we might be able to provide the necessary economic certainty for our job creators and our small businesses, how we can get people back to work, how we can grow and expand this economy. Frankly, extending the tax rate should only be the first part, the short-term solution. The long-term solution is to get tax reform, comprehensive tax reform. People on both sides of the aisle agree with that. If we could enter into a discussion about how we could reform our Tax Code in such a way that it broadens the tax base, lowers the rates, does away with loopholes and deductions, coupled with entitlement reform--that we all agree has to be dealt with or we are going to continue to see the country on a fiscal trajectory that is completely unsustainable over time, is going to lead to the situation we see many European countries dealing with today--that is what we ought to be focused on. We ought to be providing certainty to our businesses, extending rates at least for now until such time hopefully next year when we all agree we need to sit down and solve this tax mess we have in this country, this Tax Code that has become way too complicated, and come up with something that is more simple, more clear, more fair, and something that makes us more competitive in the global marketplace. Right now, we are losing to a lot of countries around the world simply because we have a tax code that makes American businesses noncompetitive in the international marketplace. Tax reform, entitlement reform, a comprehensive energy policy, regulatory reform--it is not that hard to fix this if we have the will, the political will to do it. But we cannot start by saying to small businesses in this country that we are going to raise your taxes next year, run the risk of plunging the country into a recession and increasing the number of people in this country who are unemployed. That is the exact wrong prescription. We ought to be providing certainty, extending the rates, and getting into a discussion and hopefully action on legislation that would reform the American Tax Code to make us more competitive in the world, do away with the costly, overreaching, excessive, and burdensome regulations that are making it more difficult and more expensive to do business in this country; an energy plan that makes sense, that relies upon American sources of energy; and a spending plan, a budget--something the Senate has not done now for 3 years, an actual budget. Lo and behold, go figure that we could actually do a budget in this country that puts us on a more sustainable fiscal path by reforming entitlement programs, that will actually save Social Security and Medicare for future generations of Americans. That is the long-term prescription for what ails America. But certainly in the short term it makes matters much, much worse when we talk about piling a tax increase on the very people we are looking to, to create jobs and get this economy back on track. I hope this Congress will come to its senses about this and that we will vote down any proposal that would raise taxes on hard-working small businesses and entrepreneurs in this country and instead give them the certainty they need for the months ahead, until such time as we can deal with the issue of tax reform. I yield the floor. I suggest the absence of a quorum.

Mr. THUNE

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

Mr. THUNE. Madam President, before too long here we are going to be voting. We are going to have three votes, I think, on whether we are going to move forward on a tax bill. I frankly think there are things in the underlying bill that is before us today that would do some good. The bonus depreciation provision is something many of us have supported in the past. We think that is good tax policy with regard to encouraging small businesses to invest, by giving them a quicker way to write off those capital investments. So there are some things in the underlying bill that make some sense. But the whole exercise we are going through here is a charade for a couple of reasons. One, you cannot originate revenue measures in the Senate. That is something that has to happen in the House of Representatives. So anything that comes out of here, if it were to pass, would be blue-slipped by the House of Representatives. You have a constitutional issue to deal with here in the first place. Secondly, you have a procedure, a process set up whereby there is not an opportunity for us to offer amendments. We put a tax bill on the floor, a piece of legislation, a vehicle that ought to be open to amendment. There are many of us with ideas about things that we think would promote economic growth and create jobs in our economy, but we are not going to have the opportunity to offer those amendments. Frankly, a tax debate is something that many of us welcome. We think that talking about taxes is certainly something that, if you are someone who is concerned about the economy, if you are someone who is concerned about getting Americans back to work, certainly talking about the Tax Code and its impact on our economy is a very relevant debate. Frankly, we ought to be headed toward a reform of our Tax Code which today is way too complicated and, frankly, it needs to be overhauled. But in the interim, we have coming up now on January 1 of next year a bunch of tax provisions, current tax policy, that expires. In anticipation of that, we have a lot of businesses that are very concerned. There is uncertainty out there among job creators in our economy about what is going to happen on January 1, and is Congress going to act to put off these tax increases that will occur on January 1 or are they going to allow them go into effect, in which case many businesses would be dramatically impacted by having higher tax burdens, making it more difficult for them to create jobs. I do not think there is anybody out there, those who study economics, even those of us who do not, just as a matter of common sense, on a very practical level, who would think that raising taxes on people who create jobs, on small businesses, would be something that would be good in an economy that you are trying to get back on its feet, trying to get to recover. In fact, the President of the United States in 2010 said it would be a blow to our economy if tax rates went up on small businesses. Well, that was back at a time when economic growth was a little over 3 percent. Here we are 2 years later. Economic growth is much slower. We are growing at a more sluggish rate, about 2 percent. There is a concern that even that is going to slow down as we approach the end of the year. And yet we have this threat hanging out there on the horizon, looming, of higher taxes on small businesses, the very people we rely upon to get Americans back to work, to create jobs, and to get this economy growing again. What we ought to be thinking about is what can we do to promote economic growth. We ought to be thinking about what are those tax policies we can put in place. I hope that will be the purpose of tax reform when we get there. I hope that is soon as well. As I said before, I think tax reform is critical if we are going to see economic growth and if we are going to do away with the complex Tax Code we have today and replace it with something that makes much more sense, it is more clear, more simple, more fair for American businesses and people across this country who are filing their tax returns every year. But we ought to be looking at what can we do to promote economic growth. All of our tax policy ought to be oriented around getting this economy growing and expanding again, because in so many ways that helps address many of the other problems we are confronting. We have this huge out-of-control debt problem. Obviously it needs to be addressed through spending reductions, trying to make government more efficient, smaller, more limited, rather than the government we have seen here the last few years that continues to grow as a percentage of our economy. The government as a percentage of our economy today is at the highest level we have seen literally since the end of World War II. We are at about--24 or 25 percent of our entire GDP now is represented by Federal spending. So we have got to get government under control, which means we have got to address some of the drivers of Federal spending, including Medicare, Medicaid, Social Security. That means these entitlement programs so many people rely upon, in order to save them, have to be reformed. If we are going to get them on a sustainable fiscal path, if we are going to make sure they are there for future generations, we have got to reform our entitlement programs and get the government spending back at a more reasonable level, more consistent with what we have seen historically, which is about 20 to 21 percent of our entire economy. So it starts there. But then you have to couple the reductions in government spending with economic growth. The way ultimately that we get to where we need to be as a Nation is we have to get the economy growing and expanding again. It is counterintuitive to me and to most Americans, I think, to suggest that the way to do that would be to raise taxes on the very people you are looking to to create jobs and to grow this economy. Those are our small businesses. So when the President came out earlier this week and suggested we ought to allow the tax rates to expire for people who make more than $250,000, what he was talking about, according to the Joint Committee on Taxation, was almost 1 million small businesses, almost 1 million small businesses, if we do not take steps to avert it on January 1. They are going to see their taxes go up. Those small businesses I am referring to employ 25 percent of the American workforce. Most of them are small businesses organized as subchapter S corporations, LLCs, which means their income flows through to their individual tax returns and they pay at the individual rate level. So as a consequence, when you start raising taxes for people above $250,000, you are hitting 1 million--almost 1 million, I should say--of those small businesses that are going to be faced with higher tax burdens and higher tax liabilities. That to me is completely counterintuitive to what we ought to be thinking if we are interested in getting the economy growing again. We should not be making it more difficult, more expensive for small businesses to create jobs, we ought to be looking at what we can do to lessen the burden on our small businesses and to keep that tax burden, that regulatory burden, at a level that does not create impediments and barriers to them going out and investing and creating jobs. The President's proposal is exactly the opposite of what we should be doing. And 53 percent of the income I mentioned--these companies that are organized, small businesses as S corporations, LLCs--53 percent of that income would be faced with a higher tax burden come January 1 unless we take steps to avert it. What the President proposed essentially was allowing taxes to go up on those very small businesses. So I hope not only will we turn down the President's proposal, but that we will be thinking about what we can be doing to simplify the Tax Code, that would lower rates businesses in this country pay, and provide incentives for them to get people back to work. Again, by that I mean policies that promote economic growth. There are so many things we ought to be doing that we are not doing now that I think would provide the necessary policies to encourage and enable small businesses to grow their business, make those investments, and put people back to work. There are a number of things that our small businesses face that are not directly related to the Tax Code but indirectly related: regulatory burdens and more agencies spending time on more regulations making it difficult and more expensive to create jobs. Regulatory reform ought to be part of an agenda here. If we are serious about policies that will grow the economy, we ought to deal with the overreaching regulations that create excessive burdens for the small businesses and couple that with tax reform. One of the burdens we have placed on small businesses of late is the ObamaCare legislation we passed a few years ago. There has been some debate about the question of whether the individual mandate is a penalty or a tax. We know one thing: It is a cost that will be borne by a lot of people across this country. We also have the mandate or requirements imposed upon small business--employer mandates that will increase the cost of our small businesses--the cost of doing business for them out there. All of these things that have been put in place drive up the cost of doing business, make it more difficult and expensive to create jobs in this country--rather than looking at what we can do to make it less expensive and less difficult to create jobs. Regarding the health care bill, we talked about the individual mandate and who is impacted. By the way, according to the Joint Committee on Taxation, 77 percent of the people who would be impacted by the individual mandate tax are people who make less than $120,000 a year. The President promised, when he was running for office, he would not raise taxes on anybody who makes less than $250,000 a year. Clearly, one of the many broken promises in the health care bill was the individual mandate and its impact on the very people on whom he said he would not raise taxes--middle-income Americans who make less than $120,000 a year. According to the Joint Committee on Taxation, 77 percent of those people would see higher taxes. It is a significant amount of tax, $54 billion over the next 10 years. If you think about the amount of revenue raised by the individual mandate tax, it is actually more in revenue than would have been raised by the so-called Buffet tax designed to get millionaires in this country to pay more in taxes. So we are levying a tax on middle- income Americans that actually is going to exceed in revenue the amount raised by the so-called tax on millionaires. It is ironic, but that is exactly what the ObamaCare bill will do. In addition to that there are a series of other taxes that are imposed on people across this country. Many of them strike at middle- income Americans. There are about $250 billion in taxes that are imposed on our economy that will be passed on, in many cases, to consumers, and the impact is to raise the cost of health care. Taxes on health insurance plans, taxes on pharmaceuticals, taxes on medical devices, self-insured health plans--a whole range of taxes that are included in the ObamaCare legislation, are going to hit middle-income Americans squarely in the face. Not only do we have the individual mandate tax but all these others that are included in the ObamaCare legislation that will hit working people across this country. Look at all the burdens associated with those taxes and the regulations that are coming out of many of the agencies in our government now, and all you see, if you are a small business, is a higher cost of doing business, more uncertainty about what is going to happen in the future, and it is just that much more difficult when it comes to making determinations about growing your business or starting a new business and creating the jobs that are so important to our economy. When we talk about the economic circumstances that we are in today, everybody focuses on the unemployment rate, of course. We have now had more than 8 percent unemployment for 41 straight months. We have 23 million Americans who are either jobless or underemployed in our economy. And 5.4 million Americans have been unemployed for a long period of time. We have the weakest recovery, literally, since the end of World War II. Yet what is the prescription that the President and many of his allies in Congress have for that? Higher taxes. It is higher taxes on the people who create jobs. Can you think of anything that makes less sense if you are really interested in economic growth and creating jobs? That is absolutely the opposite of what we ought to be doing. We should not be raising taxes on those 1 million small businesses-- subjecting them and the 25 percent of the workforce who work for them to the possibility that there will be higher taxes. Their jobs can be in jeopardy. We ought to look for ways to provide certainty, and we should extend the existing rates so small businesses out there trying to make decisions about what they are going to do in the future can know for sure what the rules are, but, more importantly, also know that their taxes will not go up on January 1. There is a Congressional Budget Office analysis out there which suggests that come January 1, when we hit the so-called fiscal cliff, which includes the increase in the tax rates as well as the sequester on spending that was put into place as part of the Budget Control Act, that if nothing is done to avert that fiscal cliff, in the first 6 months of next year we will see up to 1.3 percent less economic growth. But just as important, not only is that a factor we deal with next year, it is also something that impacts us right now, today, because the CBO also found it could cost a half point of economic growth this year, right now. It is because of this uncertainty, because of the specter of tax rates going up on small businesses come January 1 of next year. What we ought to be doing instead of talking about what we are going to do or raising taxes on small businesses in this economy is looking to extend the rates that exist today so those rates don't go up, giving businesses certainty, and then following up on that next year with tax reform which broadens the tax base, lowers rates, gets us more competitive in the global marketplace, and is more clear, more simple and fair for American businesses. Until that happens, the very worst we could be doing now, in my opinion, is raising taxes, for all of the reasons I just mentioned. It creates uncertainty, obviously, and raises the cost of doing business in this country. It hits the very people we are hoping are going to lead us out of this economic malaise we are in today. Again, I also say with regard to this issue, the issue of taxes is so important to businesses. The issue of regulations is so important to businesses. Those are things, if we are serious about an agenda to get Americans back to work, we ought to be focused on. That is why we ought to be repealing ObamaCare. That $248 billion in taxes--that is not the total amount of taxes; it is over $500 billion in taxes that will be imposed as a result of ObamaCare. These are the taxes that hit middle-income Americans, according to the Joint Economic Committee. Not only do we have the $248 billion or $250 billion that hits middle-income Americans, we have an additional 3.8 percent tax on unearned income that would hit high-end earners, as well as a new Medicare tax on high-end earners. We have so many taxes coming at this economy now it is hard to fathom. That should not be complicated by doubling down with our small businesses and essentially telling them that come January they are going to see their rates go up. For the people paying the 35-percent rate today, it would go up to 39.6 percent. Capital gains will go up from 15 to 20 percent. Dividend rates are going up from 15 to 39.6 percent. This is a very real issue, a real-time issue. It is having an impact on the economy today. We should do everything we can to avoid that. I hope when we are through with what is a charade, and we have the votes on this bill--which, as I said, because the revenue measures don't originate in the Senate; they originate in the House, they would be blue-slipped if it passed here because this is a process where Republicans are not allowed to offer amendments. This is a tax vehicle on the Senate floor. But in the terms we use in the Senate, the majority leader has ``filled the amendment tree,'' making it virtually impossible for Republicans to offer amendments that we would like to see debated and voted on. When this charade is completed, I hope the majority leader will decide we need to have a debate about taxes and what we can do to promote economic growth, a debate on whether we are going to extend the rates that will expire January 1, meaning higher taxes for nearly 1 million small businesses to whom we are looking to get us out of this recession and get Americans back to work. I hope that will be the debate and vote we will ultimately have when this particular political exercise is completed today. I yield the floor.

Mr. THUNE

Mr. THUNE. Mr. President, are we in morning business?

Mr. THUNE. Mr. President, when Congress began debating health care in 2009, the goal was to lower the cost of care and give Americans the care they need from a doctor they choose. Americans were promised that if they liked the insurance they had and the doctor they had, they would be able to keep the plan and to continue to see the doctor they liked. Americans were promised that the negotiations would be transparent and televised on C-SPAN. Americans were promised the bill wouldn't add a dime to the deficit, and that it would lower the cost of care. Americans were promised their premiums would go down by $2,500. Americans were promised this President would not raise taxes on families with incomes below $250,000. Instead, Congress passed a massive governmental takeover of the health care industry. In the last 2 years, we have seen that Americans can't keep the insurance they had, continue to see the doctor they like, and are paying more for health care now than they would have if this administration had not pushed through the massive 2,700-page bill. The law adds billions to the deficit. And at the end of the day, Americans will find they are left holding a bag full of empty, broken promises. Today I want to focus on the broken promises of taxes. The President pledged not to raise taxes on individuals making less than $200,000 and families making less than $250,000 per year. Yet the new individual mandate tax--which the Supreme Court affirmed as a tax increase--will raise $54 billion in new taxes, largely on middle- income Americans between 2015 and 2022. In fact, according to the Congressional Budget Office, 77 percent of those projected to pay the tax in 2016 will be those earning less than $120,000 per year. Americans earning less than $120,000 clearly meet the President's definition as middle income. The Congressional Budget Office projections confirm that at least three out of every four Americans subjected to the new individual mandate tax will be the same middle-income taxpayers President Obama promised would not see their taxes raised by one dime. In fact, when asked by George Stephanopoulos of ``ABC News'' in September of 2009 if the President rejected the notion that the individual mandate was a tax, the President stated, ``I absolutely reject that notion.'' The President wasn't equivocal and he didn't leave any room for interpretation. So let's be clear. This President and the Democratic leaders here in Congress sold ObamaCare as if it did not contain significant new tax increases on the middle class. Yet what they now know what they were selling was an incredible bait and switch. They were in fact enacting $54 billion in new individual mandate taxes primarily on the middle class by calling it something else. I would note that this tax increase is larger than the ``Buffett rule'' tax increase the President has spent much of the year promoting. The Supreme Court ruled that the individual mandate is not constitutional under either the Commerce Clause or the Necessary and Proper Clause of the Constitution. So there are only two options: Either the individual mandate is a tax--and it happens to be a tax that falls hardest on the middle class--or it is unconstitutional. It is estimated that average tax on an American subject to this new tax increase will be about $1,100 per year. And after paying this tax, these Americans still won't have health insurance. We should not forget that the national health insurance tax is not the only tax increase in ObamaCare affecting individuals. Starting next year, individuals will be able to save less money, taxfree, in Flexible Spending Accounts to pay for their own healthcare expenses. Currently, there is no statutory limit on FSA contributions, though many FSAs set their own limits. Starting next year, ObamaCare will cap the amount Americans can save in a Flexible Savings Account at only $2,500 per year, and ObamaCare will limit tax deductions for those with the largest health care needs by reducing the medical expense deduction from expenses above 7.5 percent of adjusted gross income to expenses above 10 percent of adjusted gross income. So at the very time ObamaCare is driving up health care costs, it is also making it more difficult for American families to pay for their own healthcare needs. These tax increases don't even take into account the new 3.8-percent tax increase on investment income or the almost 1-percent Medicare surtax that will be imposed on higher income Americans starting in 2013, making it more expensive for small business owners to hire new workers or otherwise invest in our economy. These taxes on individuals are in addition to the ObamaCare taxes on businesses, such as the new medical device tax or the tanning tax. We know these taxes on businesses will ultimately be passed through to consumers of health care, driving health care prices even higher. In fact, of the $552 billion in new taxes included in ObamaCare, according to the Joint Committee on Taxation and the Congressional Budget Office, the Joint Economic Committee has estimated that roughly $250 billion is tax increases that will hit the middle class either directly or through the health care products they consume. In addition to this new national health insurance tax of $1,100 a year and other increases in ObamaCare, Americans will see that health care costs will continue to rise. Despite the President's promise that his health care plan would reduce insurance premiums, premiums have increased by over $2,200 since Obama took office, according to the Kaiser Family Foundation. And according to the President's own Actuary at the Centers for Medicare and Medicaid Services in a report from this month on national health expenditure projections, premiums under the new health care law will rise faster than if we had done nothing at all. I want to quote from that report. In 2014, growth in private health insurance premiums is expected to accelerate to 7.9 percent, or 4.1 percentage points higher than in the absence of health reform. Think about what is actually being said here. The cost of health insurance would have gone up a lot less per year had we done nothing than what we did with this bill, which is to increase those expenditures for health care by about 7.9 percent. Americans are going to be stuck paying higher costs for health insurance medical devices due to the tax on these sectors that this bill imposes. Americans know firsthand that we are going to continue to struggle with an economy that is not performing well. The unemployment rate remains above 8 percent for 41 consecutive months. On the immediate horizon the American people stare down an enormous tax increase, from a health reform law they didn't want and still don't want. Americans are also seeing this law has impacted our economy. According to a recent poll, 48 percent of businesses that are not currently hiring list the potential cost of health care regulations as a reason for not seeking new employees. And according to the Congressional Budget Office, ObamaCare will mean 800,000 fewer jobs over the next decade. The last 3 years have made it very clear that ObamaCare is making our economy worse by driving up costs and discouraging job creation. Moving forward, Congress needs to start by repealing ObamaCare. We need to repeal ObamaCare and enact commonsense, step-by-step reforms that protect Americans' access from the care they need, from the doctor they choose, at a lower cost. Republicans will not repeat the Democrats' mistakes. We will not rush to pass a massive bill the American people don't support. We need to do this the right way: No backroom deals or 2,700-page bills that no one has read. This President owes it to Americans to admit his broken promises, and to work with Republicans to put in place real health care reforms that will actually help lower health insurance costs for individuals and families and ensure that Americans can get the care they need when they need it. The taxes I have mentioned in the health care law are going to add up to a massive tax increase on average ordinary Americans. All the analyses that have been done by the Joint Committee on Taxation, the Congressional Budget Office, and the Joint Economic Committee come to that very same conclusion. This is a tax that is going to hit middle-class Americans, notwithstanding the President's promise that he wouldn't raise taxes on those making less than $200,000 a year. Seventy-five percent of that tax burden from that individual mandate tax--which is $54 billion--will hit those making less than $120,000 per year. So the whole idea of promises made and promises broken I think is the narrative that has attached itself to this health care reform law. I submit that the Congress and the President need to work together to repeal this law and to work in a constructive way to put in place commonsense, step-by-step reforms that actually will drive the cost of health care down for Americans, because that is the one thing that Americans, as they look at the health care economy today, want to see. They want to know their costs are going to go down rather than up, and they continue to see these increases in premiums year over year and that continues to affect our economy. The mandates that are imposed upon employers in this health care law as well are going to lead to fewer jobs. That is the outcome of this health care law. It is higher costs for Americans, and it is going to mean fewer jobs for American workers. Coupled with that, we have seen as recently as yesterday the President saying he now wants to raise taxes on those small businesses in our country. The tax he has proposed on those making more than $250,000 a year, interestingly enough, hits 940,000 small business owners. Fifty-three percent of the passthrough income would face higher taxes as a result of the proposal he made yesterday. The people who run those businesses employ 25 percent of the American workforce. So we are talking about huge new burdens on our economy at a time when we absolutely cannot afford it: 41 consecutive months of 8-percent or higher unemployment; 23 million Americans either unemployed or underemployed; 5.4 million Americans who have been unemployed for a long period of time; and the weakest recovery literally since the end of World War II. Those are the economic circumstances we find ourselves in today, and now we have proposals coming out of the White House, in addition to the burdens imposed by ObamaCare, that would lead to higher taxes on the very people we look to to get us out of this economic circumstance, and that is our small businesses and entrepreneurs, all of whom are going to be faced with higher taxes because of the President's proposals. We can do better for the American people. We can get this economy growing again with commonsense health care reforms, commonsense tax reforms, regulatory reforms that lower the cost and the burden of doing business in this country, a comprehensive energy policy that will make sure we are developing our own energy sources in this country, and getting Federal spending under control. We need a smaller Federal Government and a bigger, more robust private economy. You cannot do that by continually piling more taxes and more regulations and more mandates and more requirements on the very people who create jobs. The American people deserve better and we can do better. Mr. President, I yield the floor.

Mr. THUNE

Mr. THUNE. Mr. President, today I wish to honor six brave airmen with the North Carolina Air National Guard who died or were seriously injured while fighting South Dakota's White Draw Fire. Lt. Col. Paul Mikeal, Maj. Joseph McCormick, Maj. Ryan David, and Senior Master Sgt. Robert Cannon were killed July 1 when their C-130 firefighting plane crashed near Edgemont, SD, as they battled a large forest fire in the Black Hills. Two crewmembers survived the crash but were left in critical condition. Men and women in our armed forces put their lives on the line every day for their fellow servicemembers and for all Americans. They serve in the hope that these daily sacrifices will ensure a safer and more prosperous United States. Their actions are not in vain nor forgotten, and members of our armed services are continually in our thoughts and prayers. Airmen fighting these fires are necessarily exposed to dangerous conditions in order for firefighters on the ground to have the chance to contain these wildfires. The importance of these domestic actions by the Air National Guard cannot be overstated. They are fighting to save our homes, our businesses, and our communities from devastating fires, often flying in very dangerous terrain. The names of the fallen airmen will be added to a memorial at the unit's headquarters and their service likewise praised. Great Americans such as these continue to answer the call whenever and wherever they are needed. Our hearts go out to the families and friends of Paul, Joseph, Ryan, and Robert, and I ask my colleagues to join me in commemorating the lives of these men.

Mr. THUNE

Mr. THUNE. Mr. President, today I wish to recognize the 50th Anniversary of the Flandreau Santee Sioux Tribe Pow wow in Flandreau, SD. The Flandreau Santee Sioux Tribe is located in Moody County and gained full recognition in 1934. Beginning in 1962, the Pow wow became an annual, cultural event. Originally, pow wows were a time for religious ceremonies and the celebration of life. Held in the spring, it was a time for the community to come together to meet up with old friends and make new ones. The Pow wow is still a community event used to strengthen and preserve the Native American culture for generations to come. The rich culture of tradition is shown in the dancing, the clothing, the food and the community that comes together every year for this unique and extraordinary event. I wish to offer my congratulations to the members of the Flandreau Santee Sioux Tribe on this milestone anniversary and wish them continued prosperity in the years to come.

Mr. THUNE

Mr. THUNE. Mr. President, today I recognize Pierpont, SD. The town of Pierpont will commemorate the 125th anniversary of its founding this year. The town was founded in 1887 when the Chicago, Milwaukee, and St. Paul Railroad Company was persuaded by area farmers to build a side track to what is now Pierpont. Though much has changed since 1887, Pierpont still relies heavily on agriculture, and area farmers remain a driving force in the community and economy. Located in Day County, Pierpont has a very proud history and heritage. However, Pierpont residents are also always looking forward and trying to better their community for future generations. They have a reputation for organizing new events to draw visitors to the Pierpont area. This creative and hard-working spirit is certainly something that should make the entire town proud. The citizens of Pierpont are also incredibly dedicated and devoted to their families, friends, neighbors, and anyone just passing through. They are always ready to lend a hand, a welcome smile, and help out whenever a need arises. This spirit of stewardship makes it easy to see why so many will be attending Pierpont's 125th anniversary celebration this July. Pierpont has been a tight-knit community for the past 125 years, and I am confident that it will continue to serve as an example of South Dakota values and traditions. I would like to offer my congratulations to the citizens of Pierpont on this landmark occasion and wish them continued prosperity in the years to come.

Mr. THUNE

Mr. THUNE. Mr. President, today I recognize Reptile Gardens in Rapid City, SD and congratulate the men and women who have educated the public about wildlife in the State for 75 years with the world's largest reptile zoo. Reptile Gardens was founded in 1937 by Earl Brockelsby, a man renowned for his love and passion for reptiles. Since its inception, Reptile Gardens has drawn tourists from across the Midwest and the Nation and entertained many with alligator wrestling, exotic bird shows, and snake shows. Reptile Gardens houses many rare species of reptiles and amphibians. Through 75 years of business, Reptile Gardens has seen its Sky Dome set on fire, a flood in 1977 and dwindling numbers due to World War II, and has overcome these obstacles through the strength and determination of its employees. I would like to commend the men and women at Reptile Gardens for providing the State with 75 years of education and entertainment.

Mr. THUNE

Mr. THUNE. Madam President, I come to the floor today to talk about our economy, the threat of the pending fiscal cliff, and the need to address the challenges we face. Two years ago last week, the Obama administration hailed the advent of the ``Summer of Economic Recovery.'' The President claimed, ``The economy is headed in the right direction.'' Vice President Biden confidently predicted the creation of 250,000 to 500,000 new jobs a month. Meanwhile, Treasury Secretary Tim Geithner published an op-ed in the New York Times boldly entitled, ``Welcome to the Recovery.'' Well, 2 years later, Madam President, Americans are still waiting for the recovery. Today's jobs figures are well below the 250,000 to 500,000 jobs per month Vice President Biden forecasted. This year, the economy created a dismal 77,000 jobs in April and just 69,000 jobs in May--less than half the 150,000 jobs that are needed each month just to keep up with population growth. Unemployment--which the White House predicted would shrink below 6 percent by April of 2012--has remained at or above 8 percent for 40 straight months. Looking at the facts, it is clear the private sector is not doing fine. In fact, the President's economic policies have made the economic situation in this country worse. The President seems to prefer more stimulus spending from Washington, DC, but the President's $831 billion in stimulus money has not led to the job creation he claimed it would. Under this administration, there has been a record 4 years with deficits over $1 trillion. The Federal Government now borrows roughly 40 cents out of every $1 it spends. The fact is we do not need more government spending that explodes the national debt. Instead, we need to cut reckless government spending and tackle the mounting debt crisis through tax entitlement reform. If we don't take action soon, our country could end up in the kind of financial disaster that Greece and Spain are now facing. The economic situation in Europe is a clear warning sign for our country that if we don't get on a sustainable fiscal path, we will face a similar fiscal crisis. Our children and grandchildren should not have to pay for Washington's inability to stick to a budget. We owe it to the next generation to leave the country better than we found it. Yet it has now been over 3 years since the Senate last passed a real budget. In part because of the Senate's failure to pass a balanced budget, we face a pending fiscal cliff that must be addressed before the end of the year. Financial markets and job creators are going to react to the uncertainty coming out of Washington. We need to act now, rather than kick the can down the road to a lameduck session of Congress at a time when it will be very difficult to make these types of decisions, where things are going to be rushed and Members are not going to have an opportunity to focus in a thoughtful way on the right solutions for this country's future. One aspect of the fiscal cliff we are talking about is the pending $1.2 trillion sequestration scheduled to go into effect on January 2, 2013. I, along with Senator Sessions and others, have pushed for more transparency from the administration as to how they plan to implement sequestration, a provision that was adopted just last week as part of the farm bill. This information is critical so Congress and the American people have a full understanding of sequestration's impact. If Congress is going to consider delaying or replacing the defense sequester, we need this information in order to make those decisions. House Republicans passed a bill last month that replaces the defense sequester scheduled to go into effect next year, and it does so by finding savings elsewhere in the Federal Government. Yet the administration continues to stonewall requests by Congress to help us better understand where the planned sequester cuts will take place. On the tax side, a family of four earning $50,000 per year would see their tax bill increase by $2,200 next year, according to the House Ways and Means Committee and the Joint Committee on Taxation. The Joint Committee on Taxation also estimates that nearly 1 million business owners would face higher taxes if the top two tax rates increase. Yet not one vote has been scheduled in the Senate to prevent this ``taxmageddon.'' In contrast, House Republican leaders have a different view, and it is expected the House will consider an extension of the current tax rates next month which will then come to the Senate. The economy continues to grow at a very slow rate. Unemployment remains above 8 percent. Congress must get to work to jump-start our economy and put this country on a sustainable fiscal path. We need to act now rather than to kick the can down the road. To put a fine point on that, we already know the fiscal cliff we will run into at the end of the year is going to have a profound impact on the economy next year because the Congressional Budget Office and other analysts have looked at it and determined it could cost us as much as 1.3 percent of economic growth in the first half of next year--which, translated into actual jobs numbers, is about 1.3 million jobs that would be lost--because of this fiscal cliff, if it is not dealt with. But there is also a more immediate concern. That is the uncertainty created by the fiscal cliff. Decisions that are being made right now by people across this country, by job creators, small businesses, and investors are shaped by and based upon the fiscal cliff that is going to occur at the end of the year. The Congressional Budget Office has also suggested this is not only something that is going to have an impact down the road, but it also could have an impact right now as the economy contracts as a result of that uncertainty and investors and small businesses and job creators take their capital and keep it on the sidelines as opposed to putting it to work creating jobs and growing their businesses. The Congressional Budget Office has suggested it could cost us one-half percent of economic growth, not next year but this year. That is why it is so important we work together to address the fundamental issues that are going to impact this economy before the end of this year. As I said, we have to address the rates. The rates that are going to expire at the end of the year include the marginal income tax rates, the dividend rates, the capital gains rate, estate taxes, and all kinds of other provisions in tax law that expire at the end of this year. If one is a small business or an investor and they are thinking that starting January 1 of next year they are going to be facing a massive tax increase, obviously, they are going to think long and hard about putting their capital to work now to create jobs and grow the economy. In fact, I think for many small businesses, as they look at the circumstances they find themselves in, they are faced not only with the fiscal cliff, the potential tax increases, but also a massive amount of regulation that makes it more difficult and more expensive for them to create jobs. Those are the issues we should be focused on because the most important thing we could be doing right now is getting the economy growing and expanding again and creating jobs for American workers. That is not going to happen if we don't take steps to avert what is clearly a terrible disaster waiting in the future with the fiscal cliff and all the tax increases that are going to occur at the end of the year. The Joint Committee on Taxation has said 53 percent of passthrough income would face higher taxes on January 1 of next year. That is all the S corporations, all the small businesses, all the folks out there in our economy, the entrepreneurs, who are the people we rely upon to get our economy going again and to put people back to work. They are looking at those types of tax increases, starting January 1 of next year, that are going to make it very difficult for them to make the investments that are necessary to get this economy growing at a rate that will generate the kind of job creation that will get Americans back to work, that will get this unemployment rate back down, and start creating confidence in the American public about the future of our economy. I would close by again saying this is not something we can afford to kick down the road. We have done that for way too long. We have a massive problem ahead of us with regard to entitlement spending which has to be addressed in the form of entitlement reform. We need to reform our Tax Code to make it more simple, more clear and more fair and to create a more competitive Tax Code with the countries around the world with which we have to compete. We need to do something about this burden of regulation being placed upon our businesses, which is making it more difficult for them to compete in the world marketplace and certainly making it more difficult for them in the near term to do what is necessary to get jobs created in this country and get Americans back to work. I hope we can do that. It would be my expectation that the Senate, if and when the House passes legislation to extend the tax rates--which I am told they are going to do sometime next month. I hope the Democratic majority in the Senate will take that up and that we will put a bill on the President's desk that will provide the kind of certainty that is necessary for our small businesses and our job creators as they look at the future that will enable them to move forward with those investments, put their capital to work, and put American workers back to work. I yield the floor.

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

Mr. THUNE

Mr. THUNE. Mr. President, today I wish to recognize Monroe, SD. The town of Monroe will commemorate the 125th anniversary of its founding this year. First known as Warrington, Monroe was named after the fifth President of the United States, James Monroe. The first settlers, predominantly German and Dutch, came to Monroe to build a community for their children and future generations. Most settlers lived in sod houses and relied on agriculture because the land was fertile. As did many young communities during that time, Monroe felt more than its fair share of hardships, including a fire that destroyed many businesses on Main Street in 1915. With hardships, there also came success. With community cooperation, the tenacious town rebuilt and now celebrates 125 years of hard work and dedication. Monroe has been a successful community for the past 125 years, and I am confident it will continue to serve as an example of South Dakota values and traditions. I would like to offer my congratulations to the citizens of Monroe on this landmark occasion and wish them continued prosperity in the years to come.

Mr. THUNE

Mr. THUNE. Mr. President, today I wish to recognize Orient, SD. The town of Orient will commemorate the 125th anniversary of its founding this year. Orient was platted on October 3, 1887. Known as the southern terminus of the Roscoe and Orient branch of the Chicago, Milwaukee, and Saint Paul Railroad, Orient grew in the coal and lumber trade. As is the case with many South Dakota communities, Orient maintains ample opportunities for outdoor activities such as pheasant and duck hunting. Orient's close proximity to the Lake Louise recreational area provides its residents with beautiful hiking trails, camping areas, and fishing. The residents of Orient have built a welcoming and close-knit community. Orient has been a successful community for the past 125 years, and I am confident it will continue to serve as an example of South Dakota values and traditions. I would like to offer my congratulations to the citizens of Orient on this landmark occasion and wish them continued prosperity in the years to come.