Pat Toomey

Mr. TOOMEY

Mr. TOOMEY. I don't know the history of litigation against most colleges, including Hillsdale.

Mr. TOOMEY. This is not my understanding. I do understand that my colleagues on the far left do not have a fond opinion of Hillsdale, but I do. I actually think it is a wonderful institution, and I commend them for their choice, as other colleges, of forgoing taxpayer money that they could be taking, the burden they could be imposing on taxpayers, but they choose not to. I think any college in that category, whether it is Hillsdale or any other college, ought not to have to pay the tax on the endowment.

Mr. TOOMEY. Why would you choose to mischaracterize this provision the way you just did? You said it is for one college, and you know that is not true. This is criteria available to any college in America, and any college that takes it will get that benefit.

Mr. TOOMEY. If my colleague doesn't like that provision, he can offer an amendment to strike it. This is a wide-open process.

Mr. TOOMEY. Mr. President, the Senator from Oregon referred to many other deserving schools. I don't know which of them choose to forgo this taxpayer money, and if any of them do, then they qualify. If you do not like the provision, you are free to offer an amendment to strike the provision. That would be my recommendation.

Mr. TOOMEY. Mr. President, I ask unanimous consent that there now be 30 minutes, equally divided, for debate only, with no amendments or motions in order, and that the majority leader be recognized at the conclusion of that time.

Mr. TOOMEY. Mr. President, taking the time in opposition, first, I want to acknowledge that we share the goal of making the individual tax rates permanent, and I hope we will have an opportunity to do that, but, more importantly, I want to thank the Senator from Virginia for acknowledging and complimenting our work, acknowledging that we have cut taxes for working-class and middle-income families. There are people who came down here during the course of the last couple of days suggesting that somehow wasn't true. I appreciate your honesty in acknowledging that we did, in fact, cut taxes for middle- income families, for working-class families, so much so, in fact, that you want to make our policy permanent, and I commend you for that. Unfortunately, you also added a huge tax increase on the very businesses that are going to help drive our growth. By lowering our rate to 20 percent, which is what we do in our bill and which you would undermine, we would lose the opportunity to create new businesses, existing business growth, and the wage and job growth we want to drive. I would suggest we work together on making our individual tax cuts permanent in the future, but I would urge my colleague to oppose this amendment in the current form.

Mr. TOOMEY. Mr. President, the pending amendment No. 1846 offered by Senator Kaine has unknown budgetary effects. Therefore, I raise a point of order against this measure pursuant to section 4105 of H. Con. Res. 71, the concurrent resolution on the budget for fiscal year 2018.

Mr. TOOMEY. Mr. President, Hillsdale College has been unfairly maligned on the Senate floor. The fact is, Hillsdale College was the first college in America to prohibit in its charter any discrimination based on race, religion, or sex and was an early force in the abolition of slavery. But it is not really about Hillsdale college, exclusively. This is a broader idea. The idea here, and it is in this amendment, is that for any college that chooses to forgo Federal funding for its students-- chooses not to be a burden on the taxpayers that way--it is reasonable for us to respond by sparing that college a tax on the endowment fund. That is all. Now there are colleges, a number of colleges, including one in Pennsylvania, that choose this mode. They would prefer to have the freedom to operate as they see fit rather than have to deal with Federal regulations, and I suspect that is a big part of what the real problem is on the other side of the aisle. But, folks, I think it is a perfectly reasonable proposition that if a college chooses to forgo the very substantial funds available to it from Federal taxpayers, it is OK to say that it will be exempt from this endowment. So I urge my colleagues to vote no on the amendment.

Mr. TOOMEY

Mr. TOOMEY. Mr. President, I just want to respond to my friend from Oregon. I have enjoyed the many, many conversations that he and I have had on tax reform and other policies, but I want to strongly disagree with his characterization of this process. What our friends on the other side of the aisle want to do is to be able to kill tax reform by filibuster. That is their goal here. That is what they want to do. In fact, they were kind enough to be explicit about it in a letter that they made public, in which 45 of the 48 Democratic Senators stipulated the terms under which they would be willing to work with us on tax reform. One of them--one of those terms--included that we had to use a process that would allow them to kill it by filibuster. They put that in writing. There were 45 of the 48 who signed the letter. Now, how could we proceed and deliver the tax relief and the tax reform that we want to provide for the American people and our economy with the Democrats holding the threat over our heads that they would be able to kill it by filibuster?

Mr. TOOMEY. Let me finish my point. Then I will be happy to yield. Mr. President, obviously, it would be malpractice for us to allow them to kill this that way. So we have taken an approach that fully allows unlimited Democratic participation, but at the end of the process, it is a simple majority vote, and a minority will not be able to kill this bill by filibuster. In every step along the way, our Democratic colleagues have had every opportunity to weigh in, to engage. We had I don't know how many hearings on this. We had a full markup in the committee. Unlimited amendments were offered, debated, voted on. Here, over the next--I don't know--day or two, I expect that we will have many more amendments. There is no limit to the amendments that our Democratic colleagues can offer. It is not true to say that the reconciliation process precludes bipartisan participation. I hope that it doesn't. This bill cuts taxes for middle-income families. That is a fact. It is not a convenient fact for some of my friends on the other side of the aisle, but it lowers taxes for working-class families and for middle-income families. That is a fact. It is going to help encourage tremendous economic growth by allowing our businesses to be competitive. That is a fact, and we will get into why, and we will get into the details. The fact is that this is exactly what our economy needs right now. More importantly, it is exactly what our constituents need right now. There is nothing about this process that precludes my Democratic colleagues from offering their amendments, engaging in a debate, and supporting the product in the end. By the way, I am still hopeful that there will be some support in the end because I think that it is going to be pretty hard to explain opposition to working-class and middle- class tax cuts and corporate tax reform that is going to generate strong economic growth. I am happy to yield to the Senator from Ohio.

Mr. TOOMEY. I thank the Senator from Texas and the Presiding Officer. Let's describe what is really going on. There are two big accomplishments with this legislation that I am really proud of, and they are the reason that this is going to succeed and that this is going to be a big success for the American people. The first thing we do is we absolutely directly lower the tax on lower income and middle-income Americans, hard-working families, and folks who live paycheck to paycheck. The fact is, virtually all of them are going to get a significant tax cut. That is fact No. 1. The second fact is, we fundamentally restructure the way we tax business so that we can be competitive, so that our workers can compete and win against companies from anywhere in the world, so that we will have more jobs, more companies, and existing companies will expand. Those are the two things we are trying to do. That is what is in this bill, and that is why this is a great deal for the people I represent. Let me go through these individually. The first is on the individual side of the Tax Code. I have said it before, and I will say it again. It doesn't matter how many times my colleagues on the other side get this wrong, the fact is, we are lowering taxes for every single income category--absolutely, no exceptions, every category, and they know it. They absolutely know it. We do this through a number of mechanisms. We double the standard deduction, so that on the first $24,000 that a couple earns, they pay no tax at all--none, zero, nothing--and then the income above that is taxed at very low rates, and there are other deductions that are available beyond that. The fact is, that is one of our tools. Another is that we lower the rates. The rates that are applied to income are lower under our bill than under current law. We increased the child tax credit dramatically. That is another huge source of savings for people who have children in our country. That is a fact. Let me start with this simple chart, which is a simple and compelling fact that is going to be hard for our colleagues on the other side to ignore. A family of four who earns a median income, which is $73,000 in America--a family of four: mom, dad, and two kids--is going to save $2,200 a year in a lower tax bill. Their taxes go down by $2,200 a year. How is that not a tax cut? How is that not good for that family? It is, and that is a fact. That is absolutely typical. That is just one illustration. The second fact--and this chart is a little bit harder to read, but the folks on the Joint Committee on Taxation quantify whether people in different income categories are going to pay more or less. It is broken down into narrow incremental changes in income, showing people who earn less than $10,000; people who earn between $10,000 and $20,000; $20,000 to $30,000; all the way up. This column is titled ``Change in Federal Taxes.'' In every single category, the dollar amount goes down. It is negative because every category of Americans is going to have a savings. We designed it that way. By design, there is a tax savings for all working families, all categories of income, all middle-income families. That is the reality. That is a fact that is illustrated here. And it is not my word; it is the Joint Tax Committee in their report of November 27. Finally, let's take a look at the last chart. What this shows is who gets the biggest percentage of relief, because it is not uniform across all the different categories of income. What do we see? The biggest tax cuts tend to be for the folks who have more modest income. Again, this is not my data. This is from the Joint Committee on Taxation, completely independent of us. The higher income folks get some tax relief, but it is not as much, relative to the percentage increase of savings for lower income and middle-income people. So those are the facts. We can have lots of discussions about things on which we disagree, and we disagree on a lot of things. These guys want higher taxes. We like lower taxes. These guys like to redistribute wealth. We like people to be free to earn more and keep more of what they earn. There are lots of differences, but let's at least stick to the facts. These are the facts. Now, let me move on to a discussion about the other big part of it. I said that there are two big accomplishments in this bill. One is direct tax relief for the people we represent. That is a fact. The second is making the changes to our business Tax Code so that we can actually have the economic growth we have been waiting for and have the prosperity we have been waiting for. The fact is that we have lived through the weakest economic recovery in American history. In every past severe recession--even ordinary recessions--the economy has always come roaring back, and we have achieved economic growth that puts us back on the path we were on before the recession. That is what is normal for America--strong economic growth. It didn't happen this time. It didn't happen after the great recession, and it is not just a coincidence. Now, as my colleague from Texas pointed out, there are some folks on the other side who think that America isn't the country it was and just can't really have strong economic growth anymore. That is absolutely nonsense. It is ridiculous. We are entirely capable of restoring the robust growth that allows our constituents to have a better standard of living. There is nothing about America that has lost that ability to grow and prosper. That is ridiculous. What has happened over the last 8 years is that we have had the wrong policies. President Obama and our Democratic colleagues got everything they wanted when they had complete control of the government: huge tax increases, massive wasteful spending bills they called the stimulus, government virtual takeover of healthcare, massive overregulation of the whole economy. Lo and behold, the result was exactly what we feared--really weak economic growth, actually unprecedented weak growth for an extended period of time. Well, one of the problems they inflicted on us was some really bad tax policy and multiple tax increases. While the rest of the world has been making their tax code on the business side more competitive and more aggressive, we have actually gone backwards. We haven't had a major reform since 1986, and the incremental changes have been counterproductive. So here is a big chance to make a huge improvement. One of the things I am most excited about with this is that I am completely convinced that the passage of our bill is going to address one of the most persistent and really maddening challenges that we have, which is stagnant wages of working Americans. They have been stagnant for years. So you might ask: Why are they stagnant? Again, it is not a great mystery, and it is not an accident. Under the Obama administration era, we saw a collapse in the growth of invested capital. That means investment in the kind of equipment that makes workers more productive. It is growing worker productivity that allows us to have higher wages. Think about it this way. You go to a construction site, and you have two guys digging holes. One guy is operating a backhoe, and one guy is swinging a shovel. Which one is getting paid more? I guarantee you every time it is the guy operating the backhoe, and it is not because there is a minimum wage there that forces it. It is because the guy operating the backhoe is more productive. He has a set of skills, and he is using them on a big piece of expensive equipment. He is able to dig a lot more dirt in any unit of time than the guy swinging the shovel. When business is able to put capital to work, workers become more productive and they make more money. That is what is going to happen under our bill. One of the things we do, fundamentally, about the business side of our Tax Code is that we lower the cost of investing in that new equipment--that new tractor, that new vehicle, that new machinery, filling that new plant with the ability to produce more goods and services. Our bill makes that more affordable, and when you make that more affordable, guess what, businesses buy more tractors and factories and backhoes. When they buy those things, someone has to operate them. That means they are creating new jobs. Guess what. Someone else got to have a job in building it in the first place. I know that some of our colleagues don't understand how that leads to growth. They don't understand. So I am trying to explain this. If you have more invested capital, you increase the productive capacity of the economy, you produce more goods and services, you have more workers needed to do that and more wages. Guess what. Businesses don't go out and raise wages because they wake up one day and decide: Oh, I think I will be generous today. That is not what happens. What happens is they have to compete for workers. They need more employees. There is a limited number, and so they start bidding up wages. That is what I want to see, and we are going to see that. We are going to see so much demand for workers that companies have no choice but to offer more compensation, better terms. That is how people have a higher standard of living. That is how they get the pay raise they ought to have. Let me mention another provision in our bill that is extremely constructive. We are fixing a badly flawed international treatment for our multinational companies. I think our Senator from Oregon, our Democratic colleague, has acknowledged real problems in the way our system works. The short version is that we have a system that encourages companies to move overseas. Has anybody heard of inversions? I think we all have. Why do companies invert? It is because there is a tax code that drives it. It is now very hard to explain and justify why you would headquarter a multinational company in the United States when we see uniquely put multinational companies at a competitive disadvantage because of our tax system. So we are changing that so that we can compete. It is very good to have multinationals headquartered in America. I have a number of them in Pennsylvania. There are great jobs in Pennsylvania supporting all of their business domestically and supporting a lot of their business internationally. Now, in order to cover the cost of what we are doing--the tax reductions, the rates reductions, allowing the lower cost for deploying capital--we have some offsets. We have ways that we are asking business to pay more taxes, in some respects, where it will not be harmful for economic growth. We limit the amount of interest that a business is going to be able to deduct going forward. We limit deductions that favor certain industries over others. We limit deductions for certain fringe benefits, and we close a lot of loopholes. That helps us generate the revenue that allows us to have the constructive pro-growth features, like lower marginal rates and lowering the cost of putting capital to work. So that is what we are trying to do here. That is what we do in our legislation. The effect of this is very, very clear. A large number of economists have acknowledged that it is going to mean more business investment, more new businesses being launched, businesses moving from overseas back to America, expansion of existing businesses. All of that activity requires more workers--all of it--to fill the additional jobs that are going to be created. That means more jobs, but it also means upward pressure on wages if everyone has a job now because businesses are going to have to compete. To be continued.

Mr. TOOMEY. Mr. President, I thank the Senator from Massachusetts for his kind courtesy in agreeing to let me take 2 minutes to reply to my friend and colleague from Maine. If this legislation is signed into law, we are going to have a smaller deficit in future years than we are on a path to have now, and I want to explain why. Fundamentally, I think most of us agree that tax reform done properly generates more economic growth than a terrible tax code. The right incentives lead to stronger growth. This is not a simple tax cut; this is a complete overhaul. We have $5.5 trillion worth of tax reductions, mostly offset with $4.1 trillion of base broadeners. It is a net of about $1.4 trillion. The effect is to fundamentally change the incentives--incentives to invest, buy new capital equipment, bring money back from overseas, start new businesses. They are powerful. The question becomes this: How much more economic growth do we need to generate in order to have additional Federal revenue that will offset the static score at which this bill is scored? We know the answer to that; Joint Tax has given us the answer to that. What we need is a mere four-tenths of 1 percent of extra economic growth on average over the next 10 years. If we get that--less than one-half of 1 percent of economic growth--then we will fully fill in this hole and, relative to current policy, have a smaller deficit than we are on track for. We are talking about going from 1.9 percent economic growth, which is the current CBO's term projection, to 2.3. This year we are running at 3 percent, even before we do this. I strongly urge my colleagues: If we pass this--if you care as much as I know the Senator from Maine does about our budget situation, if you care about our deficits, if you would like to have smaller deficits and less debt, pass this legislation. Let's have the economic growth that is going to swamp this really modest score as a percentage of the revenue that we are forecasted to take in. Again, I thank the Senator from Massachusetts for his kind courtesy.

Mr. TOOMEY. I am not going to support any cuts for people who are on the program and need----

Mr. TOOMEY. Those benefits.

Mr. TOOMEY. We need this program for the next generation too.

Mr. TOOMEY. Mr. President, I believe the Senator from Vermont is next up, and he has graciously agreed to let me take 2 minutes of time out of our side now, before he speaks, so I appreciate that. I thank Senator Sanders. Our colleagues were talking about a number of topics. One that they brought up was the SALT controversy, and the other was the individual mandate. I am going to very briefly touch on these and hopefully have a chance to expand on these at another time. Let's be very clear about what SALT is. This is an acronym for the State and local tax deduction. This is a provision in the Federal Tax Code that allows taxpayers to deduct from their Federal return the State and local taxes that they pay. Some States have very high State and local taxes, and others have relatively low ones. So what we have now in the current law is a mechanism by which low-tax States are required to subsidize high-tax States. It is not only States, by the way; it is also within a given State. But I don't know how it could possibly be fair to force my constituents who live in, say, Dauphin County, PA, and have relatively modest services and pay a modest amount of taxes--why they should pay more in income taxes to subsidize someone who gets to live in a multimillion dollar condo in the Upper West Side of Manhattan, but that is exactly what happens. What we are doing is neutralizing this. We are saying: No, you are not going to be able to have this subsidy. Everyone is going to pay their own State and local taxes, and we will have a lower rate of Federal income tax as a result. Let's be very clear. This benefits the wealthiest taxpayers. It is the wealthiest taxpayers who take the State and local tax deduction. A big majority of ordinary taxpayers take the standard deduction. They don't itemize. They don't take the State and local tax deduction. This is a blow for fairness among the States, but also within a State where you have varying tax jurisdictions. The second thing I want to point out is the individual mandate repeal. That is what we call it. In honesty, as we all know, what we have done is--we are zeroing out the penalty, the tax imposed on people who cannot afford or do not wish to purchase an ObamaCare plan. That is all we are doing here. Not a single person is disqualified. Not a single person loses the benefit. There is no reduction in reimbursements to any healthcare providers. There is no spending. There is no reduction in spending. The word ``Medicare'' doesn't come up; ``Medicaid'' doesn't come up. What we are simply saying is this: If you find that these ObamaCare plans are not suitable for you and your family or you can't afford them, we are no longer going to hit you with a tax penalty for the fact that you can't afford this plan that is not well suited for you. That is all. Again, let's be clear about who this affects. This terrible tax hits low-income people the hardest. In Pennsylvania, 83 percent of the people who pay the individual mandate tax make less than $50,000. What a terrible offense to our sense of freedom--the idea that the Federal Government would force someone to purchase a product or a service that they don't want to buy, a service or product that doesn't meet their needs, and then hit them with a tax if they don't purchase it. It was always a very bad idea. This is a blow for freedom, and it is a tax relief measure, especially for low-income people. I thank the Senator from Vermont for giving me this time.

Mr. TOOMEY. Sure.

Mr. TOOMEY. Will the Senator yield?

Mr. TOOMEY. Thank you.

Mr. TOOMEY. I thank the Senator. I just want to make a quick point. The Senator from Vermont is concerned that we are going to cut Medicare or Medicaid. Neither word appears in the bill. Furthermore, if that were our plan, this would be the perfect vehicle to do it. It is reconciliation instruction. We could do it without requiring a single Democratic vote. We could do it. We could finish it. We have control of the House. If we had any intention of doing that, this would be the vehicle. But the words don't even appear.

Mr. TOOMEY. I have to disappoint the Senator from Vermont by informing him that there is no secret plan to do any of the above. We are not in some process to spring something. If we wanted to make these changes in Medicare and Medicaid, this would be the vehicle because we have reconciliation protection.

Mr. TOOMEY. Mr. President, my friend the Senator from Michigan has offered an instruction that says the corporate tax rate must revert back to 35 percent in the event that real average household wages do not increase by at least $4,000 by 2020. In our bill, the corporate rate goes from 35 down to 20 percent in 2019. On the basis of 1 year of a competitive corporate rate, we are supposed to believe that corporations are going to change their behavior and make the kind of investment that follows from the incentives we have when they know, if this were adopted, that the rate goes back to 35 1 year later? No. This is designed to be a self-fulfilling prophecy to guarantee that there can be no growth, and then we go back to uncompetitive, very high corporate tax rates that is stipulated right here at 35 percent

Mr. TOOMEY. I will yield.

Mr. TOOMEY. I will take back my time. Let me explain how this works. The whole idea behind our bill is to create the incentives that will encourage the investment that hasn't been happening. The last 10 years, there has been a collapse, a collapse in the investment growth of capital stock, a collapse in productivity growth, and therefore stagnant wages. What I want to do, and what my colleagues want to do, is see that wage growth that we have been waiting for that didn't happen under the last administration. The only way we can encourage that investment is if the investors know the tax rate is going to be there permanently. If we tell them you are going to get 1 year of a low rate, who is going to invest in a new factory for 1 year? No. It will not work that way. The wage growth will come when investors around the world and domestically have the confidence they are going to be investing in a competitive regime. By the way, the average tax rate of the OECD--the countries that we compete with--is 22.4 percent. It is amazing that we are able to eke out even the feeble growth that we have at a 35-percent tax rate. Our bill takes it to 20 percent and allows us to compete, but you have to keep it there so that business will actually make those investment decisions, so that people will decide to launch those new businesses, and we will have the expansion of existing businesses. That is what our legislation does, and that is why I urge my colleagues to reject this motion to commit.