Statements on Introduced Bills and Joint Resolutionsby Senator Sheldon Whitehouse
Posted on 2013-02-11
WHITEHOUSE. Mr. President, I am going to be joined fairly soon by
the distinguished chairman of the Armed Services Committee, Senator
Levin, to discuss the upcoming sequester and the impact the sequester
will have on this country if it is allowed to go forward. Chairman
Levin has been pretty clear about this, as have our national security
officials on the defense
side. It is equally harsh on the nondefense side. But most important,
it will be a real blow to the economy. The economists now are saying if
we let the sequester kick in as scheduled, it will cost us 1 million
jobs. One million Americans will lose their jobs because we let the
Other things--cuts to education; 70,000 young children kicked off of Head Start; 10,000 teacher jobs at risk; funding for up to 7,200 special education teachers and aides and staff could be cut. Food safety--2,100 fewer food inspectors. Research--several thousands of our researchers who are doing cutting-edge research in all sorts of areas from electronics to finding cures for diseases could lose their jobs. Up to 373,000 seriously mentally ill adults and seriously emotionally disturbed children could go untreated at a time when we are talking about the need for more treatment in the wake of the terrible tragedy in Newtown, CT. In law enforcement we could see a lowering of capacity equivalent to more than 1,000 Federal agents. Nutrition assistance-- 600,000 women and children would be dropped from the Department of Agriculture's nutrition programs. More than 100,000 formerly homeless people, including veterans, would be removed from their current housing and emergency shelter programs because they would no longer be funded under these cuts.
It is a deadly serious thing, the sequester that is coming at us. There are much better alternatives. What I am doing today is filing two pieces of legislation that would completely eliminate the sequester and pay for the elimination of the sequester, not by running up the debt or the deficit, but by repealing tax giveaways, giveaways in the Tax Code. One of the bills would put in enough tax giveaways that we could get rid of the sequester for about a year, which would allow the budget process we are embarked on now to conclude and then we would be ready to go with the new budget and go forward in the regular order that way, letting the budget process drive the decision.
The other way is simply to get rid of the sequester for the full 10 years, just get rid of it for once and for all; do it now and the other bill I proposed would do that. Both bills do this without raising taxes, by going after tax giveaways, and by avoiding these kinds of Draconian defense and nondefense cuts that have been now--I guess ``estimated'' is probably the right word but I think they are pretty confident would cost America a million jobs. A million American families would lose their paychecks because we did this.
The first point I want to make as I go about this is these tax expenditures are no small thing. Here is what we collect through the income tax every year from individuals: $1.09 trillion; round numbers, $1 trillion. Here is what we give away in tax deductions, loopholes, different expenditures and deductions: $1.02 trillion. So on the individual side what we pass through the Tax Code and back to people is almost as big as what we actually collect.
When you look at the corporate income tax revenue, the corporate income tax revenue is $181 billion in 2011. Here is what went back through to corporations in tax expenditures: $157 billion.
Another way to look at it is there is $2.1 trillion of tax liability in this country. One trillion dollars of it comes back to the government in the form of actual revenues and another trillion of it gets distributed through the gimmicks and loopholes and deductions and tricks and so forth in the Tax Code. On the corporate side there is a total of $338 billion in tax liability, of which only $181 billion actually appears as revenue to the government, and the other $157 billion gets distributed again because of tricks and gimmicks and loopholes and provisions in the Tax Code.
What some of our colleagues want us to do is say: Well, we raised tax rates once--just now. We raised them on only the wealthiest families in America. We only raised them back to where they were under President Clinton when the economy was booming, but we did that and we should look no further.
The problem with that analysis is that only looks at the revenue that is actually collected. It doesn't look at the loopholes. It doesn't look at the tax expenditures either on the individual side or on the corporate side.
It is also worth noting that if we add these two up and we get $2.1 trillion or, more likely on the corporate side, if we add these up and we get $338 billion, there is more money out there which that doesn't count. That is the money that never shows up for taxation in the first place because it has been hidden in offshore tax refuges. People have pretended their income is in funds in the Cayman Islands, and they have pretended their intellectual property is in a five-person office in Ireland. There are a lot of gimmicks by which a lot of the money never even gets into this calculation. When we look at the pain the sequester is going to cause, it makes a lot of sense to look at the tax expenditures, which amount to a total of $1.17 trillion, and use that to offset.
Another thing worth looking at, just to remember where we are, is that in the last 2 years on this question of reducing the deficit, we have reduced the deficit by $2.4 trillion, and $1.7 trillion of that came in spending cuts and $700 billion came in the form of new revenues. In terms of a balanced approach to deficit reduction that looks at both spending cuts and revenues, we are not balanced yet. We are nearly $1 trillion ahead on the spending cut side. So when Republicans say we are only going to look at spending cuts going forward, they are not just saying that all those goodies in the Tax Code that go to wealthy individuals and corporations as tax deductions, loopholes, and expenditures are off limits, they are also saying that we are going to make it even more unbalanced than it is now.
By the way, the way I get to $1.7 trillion is by taking $1.46 trillion, which is the actual cuts, and then adding the interest savings that are associated with it. And I take the same interest savings on the revenue side, so it is even, the way we have allocated the interest.
I see Chairman Levin is here, so I am going to yield to him when he returns.
Let's look at one more graph while we are here. As we saw here, a lot of this is corporate tax expenditures. Every year there is $157 billion in corporate tax expenditures, which calls to mind, how are we doing in terms of a fair balance between individuals and corporations in the American tax system? Well, we have done some research, and it turns out that corporations are providing less and less of our revenues.
When we go back to 1935, this chart shows that for every $1 of revenue the U.S. Government got from an individual, it got $1 from corporations. It was 1 to 1--individuals $1, corporations $1. By 1948 it became 2 to 1. For every $1 that a corporation contributed to our Nation's revenues, individuals had to kick in $2. In 1971 we had 3 to 1--$1 from corporate America, $3 from individuals, regular Americans. By 1984 that was up to 4 to 1--$1 from corporate, $4 from individuals. The ratio as of 2011 is 6 to 1, which means the amount of tax burden individuals in this country bear has climbed sixfold compared to corporations meeting their responsibilities. One of the reasons is that so many American corporations are hiding money offshore and away from the taxman. Now, whether these are the kinds of accounts we heard about during the Presidential campaign, such as in the Cayman Islands and so forth, or whether it is locating intellectual property in some faraway country and using internal transactions to move revenue to avoid the taxman over and over, Chairman Levin and his committee on investigations have looked into this and over and over again, and they have shown this is a really strong area in which an enormous amount of money can be raised.
The problem with doing it the other way--going after Americans again and asking them to kick in even more in spending cuts rather than going after the corporate high jinks in the Tax Code--is that leads us down this path of austerity that Republicans have championed. The problem with that austerity path is that when we get into a recession--as we have been in--we should try to cut our way out of it. The problem with that is it has not worked. We argued against that theory from the beginning because it seems wrong, it doesn't make logical sense, and it runs against a lot of principles of economics.
Over and over again, our colleagues said: No, no, no. We just need to cut [[Page S592]] our way out of this, and that will be our solution. When we get in trouble with the economy, we cut spending.
That has proven to be a disaster. Where they have gone to austerity in Spain, the unemployment rate is 26.6 percent, and GDP growth is negative. Their economy is actually shrinking. Greece has an unemployment rate of 26.8 percent, and their GDP growth is negative 6 percent. Their economy is shrinking even more rapidly. In Portugal, the unemployment rate is 16.3 percent, and the GDP growth is negative 3 percent. By comparison, the United States, although things are not right yet, is doing much better.
I see that the distinguished chairman of the Armed Services Committee is here on the Senate floor, so I will yield at this point.
The PRESIDING OFFICER. The Senator from Michigan.