Pat Toomey

Mr. TOOMEY

Mr. TOOMEY. Mr. Speaker, I yield myself such time as I may consume. Mr. Speaker, I want to respond to one of the points just made by the gentleman from California. This is pretty close to being a direct quote as I heard him say it, and it was pertaining to this deficit. I think what the gentleman said was it does not matter if it is a decrease in revenue, which is to say a tax cut, or an increase in spending; either way, we have to offset it. I am here to say that that is just not right. It does matter. It makes a difference. It makes a big difference. I am going to finish my point, because I think it makes a big difference in terms of the economic growth of our economy, and that means the opportunity for Americans, and that means prosperity and ultimately the quality of life of the working people. Look at the data that we have. After we passed a tax cut package, look at what has happened. We have had a 2-decade high point in terms of GDP growth. The economy grew at 6 percent in the second half of last year; it is growing very strongly this year. This is the best economic growth numbers we have had in 20 years. Housing starts are at a record high. Homeownership, a record high number of Americans own their own home today. We have financial markets that have made huge gains, which generally have been a good predictor of economic growth. The manufacturing sector, which has undergone a very difficult time, has, by all accounts and all objective data, turned around, is showing growth, is actually hiring. Speaking of hiring, we have strong new job growth now. We waited a long time, because we know that job growth is always the last part to come in during an economic recovery. But it really looks like the job growth is happening now. Whether you are looking at the household survey or whether you are looking at the payroll survey, the job growth is strong. In March, we had 308,000 new jobs, and on Friday we are going to get a number for April; and it looks like we are going to have another strong month for job growth. What this means is we are approaching a period now of sustainable economic recovery. When new people are getting to work and being able to generate their own incomes, now the economy starts to be able to grow of its own. This has happened because we lowered the tax burden. If we go and pass this provision that you guys are advocating, it almost certainly means a big tax increase, and I am very concerned that this would cut off this economic recovery we have under way, and that is the last thing we should be doing. The problem that we have, we have got a problem here, no question about it. We have a deficit that is too big, there is no question about it. But the problem has come from years of excessive spending. It is not that we do not bring in enough revenue. In fact, as we all probably know, recent numbers suggest that revenue growth is growing and it is accelerating, which is not surprising, given the strong economy we have today, the strength that is developing; but it is spending that has been the problem. Now when we offered a PAYGO provision that would require that we offset any new spending proposals, you guys all voted against it. You guys said no, no, we do not want to just offset spending. The point I am trying to make here is that new spending and lowering the tax burden, and in fact maintaining existing tax law, because that is what we are talking about now, these are not equivalent.

Mr. TOOMEY. Reclaiming my time, we are getting a little bit far afield from the discussion.

Mr. TOOMEY. It increased it much less than your budget did. It got us back to a balance much sooner than your budget or any other budget, and you voted ``no.'' You voted ``no.''

Mr. TOOMEY. First of all, I think the gentleman will acknowledge that Republicans have not short-changed our troops; that we have advocated and passed legislation that would provide the necessary resources; and we had a budget resolution that took the non-security portions of our budget and we froze that. We said, these areas that are not critical to American security should grow at zero. Now, most if not all Members on the gentleman's side of the aisle, thought that that was somehow unreasonable, because we did not grow spending. So I do not think you can accuse us at this point of not dealing with this problem. Mr. Speaker, if the gentleman would yield me some time. Mr. Speaker, if not, I yield myself such time as I may consume. Mr. Speaker, I yield to the gentleman from Texas.

Mr. TOOMEY. Mr. Speaker, will the gentleman yield?

Mr. TOOMEY. Mr. Speaker, I yield myself such time as I may consume. Mr. Speaker, I just want to go back to this point because this is a very important point. We have created an environment, created a tax environment in which the economy can grow more rapidly and it is growing more rapidly. We have both CBO projections and the House budget resolution both forecast Federal receipts at $35 billion more this year than last year, despite the fact that we cut taxes last year; and now the monthly Treasury data that is coming in this year shows, and I do not think anybody is disputing this, that, in fact, we probably low- balled that. The revenue was coming in at an even faster clip than the amount by which we thought it would exceed last year. So the fact is we have got a deficit that is too big. We all acknowledge that. It is getting smaller. The revenue is coming in faster because the economy is growing. And if we get spending under control, we can solve this problem. But the right way to do it is not to raise taxes. I know the gentleman from Kansas (Mr. Moore) does not like the characterization of this. But the fact is we have got provisions in law that will result in a tax increase if we do not do something about it, and what your provision would do would prevent us from solving that problem that results in a tax increase. Mr. Speaker, I reserve the balance of my time.

Mr. TOOMEY. Mr. Speaker, will the gentleman yield?

Mr. TOOMEY. Mr. Speaker, I yield myself such time as I may consume. Mr. Speaker, I just want to make sure everybody is very clear as we have this discussion that if this proposed provision were to become binding, the net effect is almost certainly a very, very major tax increase. All we are talking about is, what I want to do here is let us make sure we can maintain existing tax law. What the gentleman from Kansas (Mr. Moore) is proposing is that under existing law, unfortunately, taxes are scheduled to go up. If we prevent that by making sure we maintain the existing rate structure, the existing tax law, we would have to come up with these huge offsets, which we certainly are not going to get the votes over there to do that with spending cuts, so we would have to raise taxes somewhere else. So the net effect is a huge tax increase. What are some of the things that are scheduled to expire, some of the problems that we would have if this were adopted? Well, we would find we would get the marriage penalty coming back in full force. We get the child tax credit that would be diminished dramatically. The increase in the size of the 10 percent bracket, that goes away. Small business expensing which has probably contributed significantly to this economic turn around. That goes away. Small businesses cannot expense items the way they can under current law. I think it is a bad idea when we have all the evidence suggesting we are well into a substantial and probably a sustainable economic recovery, why we would suddenly ratchet back up the taxes in the face of that and the fact that this has been a very successful tax policy, very successful in terms of turning this economy around and now in terms of getting people back to work, why we would want to undo all of that with a measure like this makes no sense to me. Mr. Speaker, I reserve the balance of my time.

Mr. TOOMEY. With a tax increase. That is not a good solution.

Mr. TOOMEY. Mr. Speaker, I reserve the balance of my time.

Mr. TOOMEY. Mr. Speaker, I reserve the balance of my time.

Mr. TOOMEY. Mr. Speaker, reclaiming my time, what happened was that immediately after that tax increase in 1993, economic growth was quite slow for some period of time; and then it accelerated, despite the tax increases. But my point is, and I do not think the gentleman is disputing me now, that over the last 6 months we have had a revenue growth compared to the same 6-month period a year before, and all evidence and all trends suggest that this is going to continue. And what I think it demonstrates is, once again, lowering marginal tax rates and encouraging strong economic growth more than offsets the reduction in revenue that comes from the nominal loss that comes from the rates themselves. Mr. Speaker, I reserve the balance of my time.

Mr. TOOMEY. Mr. Speaker, I have been the first one to say that excessive spending is a bipartisan problem.

Mr. TOOMEY. I yield to the gentleman from Maryland.

Mr. TOOMEY. Mr. Speaker, I yield myself such time as I may consume. The point I was making about the increase in revenue, and the gentleman from Maryland was disputing this, I think, my point is if you look at the last 6 months of this year, if you look back from October of 2003 through March of 2004 and you compare the same 6-month period to the year before, you will discover that we brought in more revenue to the Federal Treasury in this most recent 6-month period than we did in the last 6-month period. That is the point that the gentleman from Iowa (Chairman Nussle) and I have been making. Revenue coming into the Federal Government is, in fact, growing, and it is at an accelerating pace; and I strongly suspect that the next quarter is going to show an increase over the corresponding quarter from the previous year. That is precisely because of the strong economic growth.

Mr. TOOMEY. Mr. Speaker, if I could just respond to that.

Mr. TOOMEY. Mr. Speaker, I yield myself such time as I may consume. A couple of points I would like to make. One, to follow up on some comments made by the gentleman from Maryland, first of all, history has proven time and time again when we have cut taxes, we have ended up with increasing revenue. The gentleman from Maryland cited the Reagan administration. The fact is, within a decade of the big Reagan tax cuts, revenue collected by the Federal Government, tax revenue had about doubled. The problem was that expenditures tripled, and this reinforces my point that the problem here is spending. The problem is not that we are undertaxed. The second point that I want to make, the gentleman from Maryland was referring to declining revenues in the height of the economic slowdown. I do not think anybody disputes that if the economy is in a recession, when the economy is contracting, revenue decreases. That is true. That is what happens when you have, especially a combination of a contracting economy, and then you have the cost of a war, it is not surprising that you have a deficit under those circumstances. The final point I want to make, to suggest that this provision does not amount to the equivalent of a tax increase I think is just factually wrong. We all know that we have provisions in the current tax law that are expiring very soon; and if we do not allow those to become permanent, then we have a big tax increase coming. And if this provision were to be adopted and become binding on Congress, then it is almost assured that we are going to have a significant tax increase. Mr. Speaker, I reserve the balance of my time.

Mr. TOOMEY. Mr. Speaker, will the gentleman yield?

Mr. TOOMEY. Mr. Speaker, I reserve the balance of my time.

Mr. TOOMEY. Mr. Speaker, reclaiming my time, the gentleman is not recognizing we have had a growth in revenue, despite lower tax rates. This is what happens when the economy grows strongly. And the most important thing here, it is very important that we get the deficit under control and reduce the debt, but the most important thing is we have a strong economy, and everybody who wants a job is able to get a job and that wages are rising and people are having more and more opportunities. If we do that, and control spending, which we are trying to do which this budget, which, again, my colleagues on the other side of the aisle did not agree with, but it is a budget which for the first time I am aware of in a very long time, we took the nonsecurity parts of discretionary spending and decided to freeze it. We said we are going to freeze this, because I think that is what you need to do to get this spending under control so we can get this deficit under control. I think we are heading in the right direction if we can have the discipline on the spending side. We should not be advocating a provision, which the gentleman from Kansas is introducing, which almost guarantees a big tax increase right at the time when our economy seems to be recovering strongly. Mr. Speaker, I reserve the balance of my time.

Mr. TOOMEY. Mr. Speaker, I yield myself such time as I may consume. Mr. Speaker, I look forward to this discussion and disputing the central premise, I think, of the motion offered by the gentleman from Kansas, which seems to be that new spending is somehow equivalent to the American people with lowering the tax burden. I want to get into that in a little bit because these two ideas are not equivalent. They are certainly not equivalent in terms of their impact on the economy. New spending is contrary to maximizing economic growth, while tax cuts reduce it. Mr. Speaker, before I do that, I yield such time as he may consume to the gentleman from Iowa (Mr. Nussle), the distinguished chairman of the Committee on the Budget, for his thoughts on this.

Mr. TOOMEY. I yield to the gentleman from California.

Mr. TOOMEY. Mr. Speaker, if the gentleman will yield, how did the gentleman from Texas (Mr. Stenholm) vote on it?

Mr. TOOMEY. Mr. Speaker, we got just under half the Republican caucus on it, about 100, maybe 110.

Mr. TOOMEY. First of all, Mr. Speaker, I have introduced a budget that had lower spending and lower deficits even than the one that we passed, the Republican one. I do not know of any Democrat that voted for my alternative budget.