Summary

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ABCNEWS VideoSource
United States Senate 1000 - 1100
05/11/2006
ABC
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SENATE FLOOR DEBATE: The Senate will convene and proceed to consideration of the Conference Report to accompany H.R.4297, the Tax Relief Extension Reconciliation Act. 10:00:07.7 senate's hold harmless provision on alternative minimum tax. so i spand on -- expand on that motion for a moment and be somewhat repeating myself from my extemporaneous remarks but exactly five years ago today, 10:00:25.0 may 11, 2001, senator baucus and i announced the bipartisan bill that was historic for tax legislation and historic because taxes were as high as they have been in the history of the 10:00:42.0 country as a percent of gross national product. when newly elected, president bush released his budget for that first year in 2001. his tax relief plan did not contain a general hold harmless on the alternative minimum tax. 10:00:59.0 the house passed a bill that did not have hold harmless provisions for the alternative minimum tax. when senator baucus and i were negotiating the bipartisan plan, we agreed on that bedrock principle of hold harmless, the 10:01:15.4 hold harmless of a.m.t. so no new people would get hit with it. they got a tax increase over there. we shouldn't take them away over here. we agreed to make sure that the a.m.t. would not take tax relief 10:01:30.0 that we wfer pro-- were providing. this is how we came up with the concept that we referred to as hold harmless. to me it goes tie fundamental principle of transparency in government. 10:01:45.4 don't promise taxpayers relief that you know they are not going 10:01:48.2 to really get. some of my friends on this side of the aisle, meaning republicans, rightly complain about double talk on alternative minimum tax that we hear from members on the other side, or democratic members. 10:02:02.3 the senators from so-called blue states and you remember the blue, red map in presidential elections of 2000 and 2004. blue states generally went for democratic candidates for president. 10:02:18.3 red states go for republican candidates for president.n and i'm going to refer them to the blue states, which are those that generally vote democratic. now, senators from these stays are generally house -- states are generally hostile to the tax 10:02:34.3 relief that we have provided in 2001 and provided again in 2003 and seem to be sympathetic to tax hikes. they take this position despite the fact that their constituents in these blue states and 10:02:53.7 represented for the most part by democratic senators tend to bear the highest per capita federal tax burden. the hostility of these members seem to grow to a white-hot intensity when anybody above, 10:03:08.0 let's say $100,000 income, benefits from any tax relief package. it has always been a strange disconnect to those of us on this republican side of the aisle because that intensity and at times what appears to be 10:03:24.0 outright anger seems to grow as the states' shade of blue grows much darker. ironically, the per capita income, the living cost and the 10:03:39.4 federal tax burdens tend to rise as the shade of the state tends to get a darker blue. the implication appears to be that constituents in these blue states should be happy to bear this high tax burden as their senators fight against tax 10:03:55.8 relief for them. in fact, members from blue states seem to have no limit to the level of federal taxes that they believe the folks in their states should bear. taxes can never be too high goes the rational, as long as we keep 10:04:13.0 growing the public's dependence upon government. more federal programs. so when members on the republican side hear demagoguery on taxes emanating from members from blue states on a daily basis that we shouldn't have tax 10:04:30.0 cuts for high-income people, they ask, why do these folks then seem to change their mind when we're talking about the alternative minimum tax? as you tend to get as intense a 10:04:50.1 debate that we ought to be doing about the alternative minimum tax by the same senators complaining we're giving too much tax relief to high-income people in their various states. the a.m.t. happens to most 10:05:02.1 dramatically impact taxpayers between $100,000 and $500,000. how this is any different from other forms of tax relief -- how is this any different from other 10:05:17.9 forms of tax relief? so they're hot and heavy to have a.m.t. which helps their taxpayers in blue states, but they're not hot and heavy to have tax relief in the first instance when you vote to reduce tax rates. so if i go to some extent to talk about this contradiction, 10:05:36.3 it's a contradiction that affects and bothers a lot of people on the republican side of the aisle. it's an argument that we just don't understand. 10:05:50.8 frankly, it's a sentiment that i've had to overcome in my caucus, as i argue for the a.m.t., and for tax relief, and i've had to argue this contradiction particularly with 10:06:07.4 my house counterparts as we go to conference to negotiate differences between the house and senate and try to explain to them, you know, why we need to 10:06:22.1 do a whole harmless provision on a.m.t. because i had people from the other bodies that would say, well, you know, what's wrong 10:06:40.1 with having an alternative minimum tax hit people in blue states that are high income because their senators are arguing we shouldn't reduce the 10:06:47.9 tax rates in the first place. and, you know, it's a very difficult thing to argue that sort of contradiction. and so, you know, i think it would help me a lot if they'd get off this kick. but let's -- i'd like the take a 10:07:04.1 chart on the a.m.t. and explain some of what we're talking about. this chart will show how the alternative minimum tax hold harmless benefits that have always been the bedrock of our tax bill since '91 because it's 10:07:20.3 been something -- since 2001 since it's something that senator baucus agree on to be our tax policy, how the hold harmless benefits taxpayers everywhere but special important 10:07:35.6 in the blue states. we don't have a map with blue states versus red states, but the chart that you're looking at now, i need to explain, is based 10:07:53.4 upon 2003 return data because it's the most up-to-date data we have. but projecting out the numbers, we think that it would be entirely possible and 10:08:09.5 intellectually honest to just double the 2003 figures. so as a rule of thumb, i'm going to do that as i explain california being a blue state, two million taxpayers now. texas, not a blue state, a red 10:08:28.4 state, but one and two-tenths million. florida a blue state, 900,000 taxpayers affected if we don't do something with the alternative minimum tax as we have in this legislation. 10:08:43.0 illinois, a blue state, 848,000. new york, a blue state, 822,000. pennsylvania, 694,000. michigan, 640,000. 10:08:59.0 new jersey, 632,000. virginia, 568,000. massachusetts, 490,000. so i go to this length because i think senators, particularly on 10:09:16.5 the democratic side of the aisle that might think about voting against this bill that in all these states so many hundreds of thousands of people are going to be hit by the alternative minimum tax if you don't help us 10:09:34.5 get this bill passed, and that's -- that's people that were not hit in 2005 that will be hit when they file on 2006 income. so, madam president, the bottom 10:09:51.2 line is that blue states versus red states implication should decide this issue. as you can see, there are plenty of red states affected, as well as blue states. again, that shouldn't matter. we ought to do the right thing, and the right thing would be 10:10:07.6 passing this bill and continue the hold-harmless policy that senator baucus and i have led the senate through the 2001 and 2003 tax bills and also on the senate consideration of hold 10:10:25.4 harmless in this conference report. senator baucus and i understood that when we took resources in the finance committee package to make sure that at least five years -- for at least five years 10:10:40.4 the broad-based tax relief that we promised would not be undermined by the alternative minimum tax. now, moving on, this conference agreement also contains some loophole cloajers and tax -- 10:10:57.5 cloashers and tax-shelter revenue raisers. two reasons to raise revenue. the most important one is when we have tax shelters that allow people to cheat on their income tax and when we have loopholes that don't make sense, they 10:11:15.4 ought to be closed as a matter of fairness to all taxpayers, but they also raise some revenue, and we need some revenue in this bill to offset some provisions of this bill so we don't exceed the $70 billion reconciliation instructions of 10:11:34.6 the congress to us in the finance committee. the house bill, however, didn't contain any revenue raisers. so although we didn't come back with all the loophole closers, 10:11:49.2 especially clarification of something that needs to be done, economic substance doctrine defined and the house conferees very much oppose any change in that, we did make some headway on loophole closings and closing 10:12:06.3 tax shelter abuse. and let me go back to economic substance. my argument for it, it raises a lot of revenue, but we've had several courts that have 10:12:19.3 instructed congress, and courts can't make congress do anything we don't want to do, but they've instructed us that we ought to define economic substance. and by defining it, it brings in some revenue. and i don't understand why it 10:12:36.5 shouldn't be defined. i got my feeling that there's a lot of "k" street lobbyists and maybe a lot of lobbyists that aren't on "k" streets that 10:12:50.3 benefit from the loopholes that can come in stretching economic substance in the tax code. now, the two bills, the house and senate bill that went to conference, also shared some 10:13:06.3 similarities. both bills sought to extend and in some case modify certain provisions that expired at the end of 2005. provisions like research and development credit, increase small business expenses, cost 10:13:23.4 recovery for leasehold improvements, the saver's credit or better said the small saver's credit, the deduction for state and local sales tax in those states that don't have particularly valuable -- 10:13:39.2 particularly valuable to those states that don't have a state income tax. the qualified tuition deduction for college and teachers' classroom expense deduction, so your teachers that spend money out of their own pocket to bring 10:13:57.4 tools to the classroom can deduct this from their income tax. a true bicameral compromise would merge both bills in a way 10:14:10.5 that takes care of these common extenders just mentioned and many more that i didn't mention. secondly, it accommodates the centrepieces of each bill, which as i've explained so many times this morning, are the a.m.t. hold-harmless provisions on the one hand, and the extension of 10:14:27.4 the dividends and capital gains tax provisions as they now exist, not cutting capital gains and dividend taxes below what they are presently. and three, providing as much tax relief as possible by using 10:14:42.6 appropriate revenue-raising measures. we ended up with the cornerstones of each bill in this conference report and made progress on some of the revenue raisers, meaning loophole closings and tax shelter abuse 10:15:00.0 closings. the extenders for the most part, well, i guess almost entirely, will be addressed in another vehicle. they're not part of this conference report. now, congressman thomas and i 10:15:15.7 have agreed on that point. we also agreed to resolve key senate priorities in the extender vehicle. can i tell members exactly what's going to be in that vehicle? i can't because we are still negotiating. 10:15:30.8 what i can tell members is that we had good preliminary negotiations, and i feel that we have a solid foundation to make -- to come to a fair compromise on these issues. the final determination of those key senate priorities will be -- will depend upon the vehicle 10:15:49.3 that it would go with and other parts of the agreement when it is finalized. now, after laying out the basic structure of the conference agreement and the senate's key provisions, the alternative minimum tax hold harmless, i'd 10:16:05.8 like to talk about the parts of the agreement that the house needed. the dividend and capital gains provision in the house bill were met with strong opposition from the other side. a principle argument against 10:16:23.1 this policy made over and over again by the democrats is that it is simply a tax cut for high-income people, and so i use the word "tax cut," and that brings me to emphasize once again that if anybody says we're cutting taxes, we're maintaining 10:16:40.1 existing tax policy for an additional number of years, and 10:16:47.9 without doing that then, we would get an automatic increase in taxes basically undercutting what chairman greenspan has said about the goose that laid the 10:17:04.6 golden egg. this tax policy that we adopted in 2003 being responsible for the 18 quarters of economic growth that we've had. now, in support of their claim, democrats cite distorted 10:17:18.4 statistics that include taxpayers that don't receive dividends or capital gains. they fail to take into account the 0% rate for lower income taxpayers in 2008 and ignore the size of the overall income tax 10:17:35.3 liability that taxpayers bear.n by my under the previous order of 2005 data that i received from the joint committee on taxation, shows that lower-income taxpayers have more 10:17:51.2 at stake than higher-income taxpayers. let me explain because i used the term joint committee on taxation. this is not a republican or democrat operation. these are professional people that spend their lifetime -- 10:18:06.9 whatever time they're in public service -- on this committee becoming experts on the tax code, the economic implications of tax policy and whether it's good for bad -- good or bad for the economy, whether it brings 10:18:22.4 in more or less money for the federal treasury. these are not people speaking with a republican hat or democrat hat. i think them quite -- quoting their statistics ought to have a 10:18:39.2 great deal of credibility because they are professional people. i want to go back and say again this is 2005 data received from the joint committee on taxation showing that lower-income taxpayers actually have more at 10:18:53.9 stake than higher-income taxpayers. of course, i don't mean to say in absolute dollar amounts because i can't say that. but i can say in percentage advantage to various income classes that lower income 10:19:12.7 taxpayers have more at stake than higher income taxpayers. it's common sense then for me -- for my saying that because higher income taxpayers receive higher tax cuts measured in dollar terms quite simply 10:19:31.1 because they pay more taxes to begin with. but what i mean is that the extension of the lower rates on dividends and capital gains, not lowering them more but keeping them where they have been since 10:19:46.1 2003, will give lower income taxpayers greater tax saving as a percent of their total tax liability. it referred to a couple charts that summarize a tax saving as a 10:20:00.7 percentage of total income liability of average gross income levels. this is the chart here that we have up now. and that's the one i'm going to refer to. the chart illustrated the dividend tax saving as a 10:20:18.2 percentage of the total tax liability for those that benefit from the reduced rates. the savings percentages include 2008 savings when the tax rate for lower income taxpayers drops to 0% that we're going to 10:20:34.9 continue then for an additional period of time. that is the rate that we're talking about extending. based on my staff's analysis of the joint committee on taxation committa -- data, taxpayers will 10:20:51.8 adjusted gross income of less than $50,000 will seven 7.6% of their total income tax bill and seniors will say $17%. those making more than $200,000 10:21:06.5 will save a lot less of a percentage of their taxes paid at 2.2%. opponents of this policy want to persecute these taxpayers. and i would point to those over $200,000 and over by taking by 10:21:24.2 their 2.2% savings. but at the same time, they would punish these taxpayers, those under $50,000 at the lower-income level by taking 10:21:39.1 away their 7.6% savings. and they would punish these seniors in the same tax bracket 10:21:53.4 by taking away their 12.-- 17.1% savings. you can't help but wonder. we're all concerned about senior 10:22:03.9 citizens having a diseasent opportunity to have a good retirement when they worked and you have a chance to keep their tax saving what's they are right now, not raise them, not lower them anymore but raise their 10:22:19.4 taxes by 17.1%. this chart illustrated the relative savings from reduced -- from reduced capital gains, taxes across the alternative 10:22:35.4 minimum tax levels. now here again extending the lower tax rates will give a bigger percentage reduction in their tax bill to taxpayers making less than $50,000. opponents of this policy want to 10:22:53.6 persecute these taxpayers $200,000 and over by taking back their 7.6% savings. but that also has a negative impact upon lower income people, 10:23:11.6 people $50,000 and under by taking away their 2.2 -- 10.2% savings. and they would punish senior citizens by taking away their 10:23:28.4 13.2% savings. extending this tax policy, not cutting taxes, but extending existing tax policy will provide meaningful tax savings to taxpayers across the income 10:23:43.1 spectrum. lower income taxpayers will save more than higher income taxpayers when measured as a percentage of total tax liability. extending the lower rates will allow millions of americans to 10:23:57.5 keep more of their money to spend or add to their savings through reinvestment in the economy rather than give it to those of us in congress to spend for them. those on the other side describe the capital gains and the dividends provisions as applying 10:24:15.4 to only a few high-income taxpayers. the reality is reflected in the following chart that is now up there. the -- so take a look at capital gains. 10:24:30.8 i'm not going to go through every state but in the state of california, 829,616 families and individual taxpayers report capital gains. if you take a look at the dividend statistics in the state 10:24:50.2 of california 2,053,298 families of individual taxpayers report div denieds. 10:25:03.5 you know i'm not going to take time to go through every one of these but if you think that the economy growing at 4.8%, as chairman greenspan says, is because of the tax policies of 2003. 10:25:20.7 and we've got the economy growing, why would you want to hit these families with a big tax increase on capital gains in the millions. two million more families in 10:25:37.9 california is just one state to repeat. why would you want to hit them again? it seems to me in california would you want to keep the economy growing just like we want to keep the economy growing in aye. mr. president, we know that seven and a half million 10:25:53.5 families and individuals across the country with capital gains, and those are not all millionaires, obviously, we know 19 families and individuals across the country with 10:26:08.0 dividends are not millionaires. these numbers are based, again, on 2003 irs data. joint tax estimates over 2005 returns report dividend savings. 10:26:28.7 nearly six million of those returns will be filed by senior citizens and nearly 12 million will report capital gains tax savings with almost four million people who are seniors. these families and individuals 10:26:42.0 are not millionaires. yet, to listen to some on the 10:26:48.0 other side, all of these people are wealthy. that false assertion is going to be repeated time and time and time again. that false assertion in itself is their justification for 10:27:04.7 opposing this conference committee, putting in jeopardy what chairman greenspan said is the reason for economic recovery so putting in jeopardy economic recovery, and taxing all of 10:27:21.3 these people when this sunsets taxes will go up automatically because there won't be a vote of congress. it just doesn't make sense. to sum up my goal is to produce 10:27:39.2 a true bipartisan, bicameral compromise that would merge both bills. a true compromise of this nature should do three things ark come date the centerpiece of each bill, the a.m.t. relief in the 10:27:54.8 senate bill and the dividends and capital gains relief in the house bill. take care of common extenders and maximize tax relief by using appropriate revenue-raising measures. this bill contains the 10:28:10.0 cornerstone of each body's bill. this is conditioned upon an agreement between the ways and means and finance committee to process the extenders and other issues on later vehicles. i believe the conference agreement and collateral agreement on extenders is fair 10:28:27.3 outcome of the house and senate. and just to make everything relatively clear, i did not make up my mind to sign this conference report until six hours of negotiations with the house of representatives last friday. 10:28:42.2 even though we had an agreement on reconciliation, i wanted to make sure that there was some understanding on what we were going to have in the follow on bill that everything that couldn't be included in this conference report. 10:28:55.8 and as i said, it's somewhat under negotiation but i'm satisfied that we have enough of an agreement that i can come back and say that the things that the senate -- for the most part the things that the senate 10:29:13.7 are concerned about will be -- and that are very basic to our economic growth will be included in a bill that will come before the senate. i yield the floor. the presiding officer: who 10:29:32.3 yields time? the senator from montana. the senator from iowa. 10:29:51.3 mr. grassley: i have a unanimous consent request that ann freeman and elizabeth goff of the finance committee staff be given privileges of the floor for the duration of deliberation on h.r. 4297. 10:30:10.2 the presiding officer: without objection. mr. baucus: madam president, i ask consent that the following fellows, interns and details of staff of finance committee be allowed on the senate floor for the duration of the debate on the tax relief bill, h.r. 4297. mary baker, tom lutheran, 10:30:29.8 tiffany smith, robin burgess, crystal edwards, laura kelims, caroline olbrook, lauren hathaway. 10:30:46.5 the presiding officer: without objection. mr. baucus: i ask consent that the following deadline for second-degree amendments to s. 1955 occur at 3:00 p.m. today. the presiding officer: is there objection? without object. mr. baucus: madam president, i begin by commending my good 10:31:02.9 friend, the chairman of finance committee. he is a great american. people from iowa are very lucky to have him representing them. i know of no finer man in the senate and i know that senator 10:31:19.1 grassley sought to defend the senate's position in the finance committee. he is a proud man, too. he is going to do what is right in representing the senate's position. the conference before us today is much, much different from the 10:31:37.6 bill that passed the senate. so different i'm raises questions and may raise questions as to how much of the senate bill really got into the 10:31:46.2 conference. madam president, this past saturday lillian esplin died. she was the last american survivor of the 1912 sinking of the titanic. she was the last survivor with 10:32:01.7 actual memories of event. her life reminds us that people make choices and those choices can have significant consequences.n the bill before us today 10:32:15.8 reflects choices, and those choices will have significant consequences. shortly after midnight on that cold morning of april 15, 1912, passengers started evacuating that doomed ship. at first women and children went. 10:32:31.0 they were first. but it was not long were that rule gave way. soon it became career that the privileged went into the rescue boats first. about that time, the most extraordinary thing happened. some of those privileged and wealthy passengers decided to 10:32:48.9 give up their place in line. they decided to let others go first. benjamin guggenheim, the son of the closly wealthy magnate sipd brandy and smoked cigars on the deck of a chair while the ship 10:33:05.1 went down. today op this bill we see no such valor. we see no such sacrifice. rather in this bill ideological wants push their way to the front of the line ahead of america's needs. 10:33:23.0 at the end of last year, 16,000 american businesses lost their tax incentive to create high-paying research jobs for american-based workers. relief for them did not make it into this bill. at the end of last year, last 10:33:38.1 year, madam president, millions of schoolteachers lost a small but significant tax break for classroom supplies that they purchased out of pocket, but relief for them did not make it into this bill. ot the end of last year, 10:33:52.5 millions of middle-income american families with kids in college lost the ability to deduct tuition costs. relief for them did not make it into this bill. these provisions that some 10:34:09.1 people call popularly tax extenders were given second-class status. they did not make it into the lifeboat. and to what did these popular, already-expired tax provisions 10:34:25.0 give way? well, first-class passenger is a tax break for investors, for which one dollar will not be used until 2009. not one dollar will be used 10:34:46.4 until january 1, 2009, several years from now. but some will see this tax break for 2009 is desperately needed today. why, they say? well, to provide certainty. you the might just as well say that this tax bill does just 10:35:03.5 that, it just prevents the tax increases for nose wealthy -- for the most wealthy off in the future, 2009, because this bill chose to prevent a tax increase in 2009 rather than prevent tax increases in 2006. 10:35:17.9 for the millions of families, teachers and businesses and workers out there who lost their tax benefits on january 1 of this year, there is no tax increase prevention act. there is no tax increase prevention act for the so-called second-class citizens. 10:35:33.3 i don't call them second class at all. they're americans. they're teachers. they're people who work in research and development. they're families and kids trying to pay tuition costs. no, it's no relief for them. those provisions expired at the end of last year. 10:35:51.3 we're in 2006. they're not in this bill. middle-american provision aren't in this bill. no. rather what's in mill this bill is for 2009, a tax break for 2009 for the most wealthy. 10:36:04.8 some will also say, don't worry, other tax legislation may be, might be, should be coming soon. yes, and the check is in the mail. some will say that these 2009 cuts on capital gains and dividends benefit all americans. 10:36:23.6 you will see a blizzard of quotes to try substantiate that point, including the chart you recently saw from my good friend from iowa. that is not a joint tax committee chart. that's a chart based by the finance committee staff on joint tax committee statistics, and 10:36:38.3 that chart frankly, madam president, is -- it does not 10:36:44.6 accurately portray the facts. many commentators have pointed out the discrepancies in that chart. i'm not going to get in into a tit and at the, back and forth, and whose statistics are better, the other person's statistics. i'll just say this: it defies 10:37:01.8 common sense to argue that a tax break that takes effect in 2009 for the most wealthy americans somehow benefits middle-income and lower-income americans more than the most wealthy. that totally defies logic. if somebody can come up with a set of statistics to make that 10:37:17.0 point, but it's patently absurd. some will say these 2009 cuts benefit all americans, and you'll see statistics, but that's not the fact. i decided to go to the source. i represent montana and the more 10:37:34.9 than 900,000 residents of montana. i asked the department of revenue where the benefit of these tax cuts would go. of course, not everyone in montana has this type of investment income. so the department of revenue, my state in montana, told me that 10:37:54.9 just 400 households in montana will receive an average benefit of $14,000 from the capital gains tax cut in 2009. roughly 90% of the households in 10:38:07.6 montana would get almost zero benefit from the capital gains cut. 90% almost zero benefit. these numbers, it's very hard fur me to understand how this 2009 tax break is urgent while montana teachers and families with kids in college have lost 10:38:22.6 their tax break last december must wait for the next rescue boat, whenever it may or may not occur. of course, i'm very pleased that protection is in this bill for the alternative minimum tax. i am pleased that conferees 10:38:40.6 included the full senate-passed version. some may recall it was a struggle to get that in the senate-passed version last november. the original version and the version that came out of the committee was not a full hold harmless to the alternative minimum tax. 10:38:54.3 those verges would have left 600,000 families paying that tax. we fought to improve the senate bill to a true hold harmless, and we succeed in finally doing so before the bill left the senate. that version is retained today. this protection from alternative 10:39:11.6 minimum will protect almost 17 million families across our country, including 45,000 in montana. the montana tax collector tells me that the protection will help about a quarter of all households in montana with 10:39:26.4 incomes between $45,000 and $80,000. that group might otherwise have seen an average tax increase of $1,700. unfortunately, there is little else in this bill to be proud of. working families have been left behind. 10:39:40.3 congress has chosen ideological wants over americans' needs. the senate-passed bill did the tax business that congress needed to do this year. i'm proud of that bill. in contrast, the bill before us today leaves much work undone. as a result, the deficit will 10:39:58.1 probably be larger because the cron frees made the choices that they -- the conferees made the choices that they did. i'll have more to say about the fiscal effects of this bill, madam president. in the end, those effects may be the real iceberg. 10:40:11.7 the fiscal effects of this policy may be the real disaster. madam president, i urge my colleagues to reject the choices made by this conference. i urge my colleagues to vote against leaving those families and teachers and workers behind. i urge my colleagues to reject 10:40:27.3 this disastrous bill. one other point, madam president, is this: the conferees had a choice basically is while we do one thing we had to do -- i shouldn't say we because i wasn't on the conference. 10:40:42.3 i was not allowed to be a member of the conference, but while the conferees did do something that was good, that is make sure that taxpayers don't have to pay alternative minimum tax, they had another choice. the choice basically is this: do they enact a tax break that 10:41:01.5 doesn't take effect until 2009 for the most wealthy american taxpayers? , or -- or do they include provisions like a research and development tax credit, a work 10:41:15.2 opportunity tax credit, a child -- i mean the tuition tax deduction, the teachers' credit which expired last career? do they enact those and extend those for this year so people this year can still continue to 10:41:33.7 know that research and development is important? again, the choice is on the one hand enact a provision that doesn't take effect until 2009 for the most wealthy, or instead 10:41:45.7 of doing that because that can be postponed for a couple years, we're not yet until 2009, or extent provisions which expired last year where american business and industry and 10:41:59.0 innovators are desperately depending on the research and experimentation tax credit to help america be competitive in the world, and include provisions, parents paying for 10:42:14.7 college tuition count on, teachers count on for supplies and so forth, all these which expired last year. again the choice is 2009 break or help those -- help maintain those provisions which expired last year. that's basically all this comes 10:42:30.1 down to. this that is the choice there is before the conferees. and the conferees chose the former. they chose the 2009 extension that benefits the most wealthy 10:42:46.5 as the expense of american businesses, companies, universities so depending on the research and experimentation tax credit at the expense of teachers who so clearly today depend upon that extra help for classroom supplies. 10:43:03.2 at the expense of kids and families who so need that tuition deduction. that was the choice that was made and the choice, as i said, it was ideological wants of a few at the expense of america's 10:43:21.0 needs. that's basically what's before us today. that is why i think it makes sense not to pass this conference report. madam president, our country is in a battle. it's a competitive battle with the rest of the world, with 10:43:36.4 china, india, eastern european countries, so many countries that are so excited about their future. they're trying to increase their economic position. i take my hat off to them. they're trying very, very hard, and they're doing a great job. certainly businesses in china 10:43:51.8 and india are. we have to meet that challenge. we have to -- it's a great opportunity for us, madam president, but to meet that challenge, we have to start today thinking strategically, thinking longer term. what does that mean? that means much more attention 10:44:08.7 on education, a lot more attention on education. we have the best and the brightest in america that can design the products that we can utilize here, high-paying jobs here and export those products overseas. we also -- there's so much we have to do here. we have to stop thinking short 10:44:24.5 term in this country, in this congress, in this administration, and start laying the foundation for the long term. now, some will say, well, in 2009 we needed 2009 extended for two more years, the capital 10:44:39.3 gains tax cut because that's good for america, well, i might say, madam president, i have lots of arguments and statements by very reputable people that say that's not the case. let me just say a couple of them right here. let's take the federal reserve. 10:44:56.7 the truth is that the stock market -- talk about the stock market. let me say it this way, federal reserve economists recently compared key u.s. stocks which would benefit from the 2003 tax 10:45:11.4 cuts to other investments which would not. what did they conclude? what did federal reserve economists conclude? quote -- "question we failed to find much if any imprint of the dividend to the stock market." 10:45:28.4 that's the conclusion of the federal reserve economist. the congressional research service agrees. what do they say? quote -- "any stock market effects represent temporary ridfalls and are simply a manifest station of the tax cuts. 10:45:42.7 these wealth effects should not be considered an additional stimulus. recent studies find that dividends had increased substantially and have been used to a tax cut induces private savings. this evidence does not appear robust." there's just lots of comments, madam president, lots. 10:45:58.5 why is the economy doing pretty well today? the proponents of this bill, this conference report would like to say it's because of the tax cuts. madam president, the stock market went up dramatically more before those tax cuts went into effect, and since those tax cuts 10:46:15.2 went into effect, the stock market has not develop so well. i might also point out that the economy is doing well. why? read this morning's paper. read this morning's paper. there is a big long article asking why the economy is doing so well. what are the conclusions 10:46:30.2 basically? it's because of strong, arrogant demand. where? when, india, for commodity, for oil, for gas, for coal, for 10:46:45.4 uranium. that's what i think has kept basically demand strong. it's also frankly the major propellant for the economy today. 10:46:55.0 it's not the dividends capital gains tax cut. that's a ruse, madam president. i'm not going to go on on that point because i know subsequent speakers will have a blizzard of statistics that show that's the case. i'm not going to make those points here today, but it kind of gets to another point. 10:47:12.1 let me ask this: madam president, when the rooster crows, does that cause the sun to come up?n i don't think so. 10:47:31.5 does a cap gains cut cause the great economy we have? not necessarily. you have to ask yourself what is the real cause. i think the real cause is the underlying demand again from overseas, other countries which 10:47:45.9 are buying so many commodity and one reason why the price of oil is so high today. that's what causing the market to go up. that's what causing the economy to be strong. we have to ask ourselves, too, that's today. 10:48:00.6 what about tomorrow? what about two or three years from now? don't forget the tax breaks could blow a hole in the budget deficit and make the deficit much, much worse. we want to be strong tomorrow, madam president. 10:48:16.7 by tomorrow i mean next three months, next three years. we want job demand to be high and wages to be high. i say that will happen the more we today focus on the basics and the basics again are education, research and development so that 10:48:33.0 we start strategically to plan for our kids and grand kids. again, this conference report before us decides against that. this conference report says no, no forget the basics. forget teachers. 10:48:47.5 forget research and development even though those provisioned compared last year -- expired last year. we don't do anything about them this year. we're going to pass a provision that doesn't take effect for two years for the wealthy. that's not the choice, i think, 10:49:04.7 most americans want us to make. madam president, i yield the floor. before i yield the floor i notice senator bingaman, dodd to address the senate. i ask that whether they wish to 10:49:21.2 speak and if not, i'd yield ten minutes to senator bingaman to be followed by 15 minimums to -- minutes to senator dodd. i put in that request. the presiding officer: without objection. 10:49:35.5 mr. bingaman: thank you very much -- mr. baucus: madam president, just to minimize, ten minutes for singman followed by 15 minutes for senator dodd. 15, 1-5. the presiding officer: is there objection? 10:49:50.5 without objection. the senator from new mexico. mr. bingaman: thank you, madam president and thanks to my colleague, senator baucus for his statement and leadership and yielding me a few minutes to make a few points here. i know my colleague from connecticut is hear read to -- ready to make additional points. 10:50:08.3 i'll try to be brief with this. i want to point out some of the reasons i'm strongly opposed to this reconciliation bill. i don't think it's responsible for us to support another -- go forward with debt financing of 10:50:24.3 another tax cut for the wealthiest in the country while as i see it we are ignoring the need to reduce the deficit. we're ignoring many of the country's other needs, and we are not following through on earlier efforts we've made to 10:50:42.4 create an energy plan for the country. and i want to refer to that since i've been involved in some of the legislation that put that plan in place. a few weeks ago, maybe just a week ago now, time flies around 10:50:58.1 this place but the majority held a press conference announcing a variety of initiatives to deal with our energy problems. one of them, of course, was to have a $100 check to be sent to each taxpayer in the country. 10:51:13.2 the public reaction was pretty swift. it was pretty clear that the public thought it was a gimmick. they thought this was irresponsible particularly given the size of our deficit. and they essentially decided, the majority decided that that 10:51:29.7 was not part of their tax -- a part of their energy plan that they wanted to proceed with. now they are bringing to the floor, the senate floor, a tax 10:51:40.8 bill which ask virtually -- does virtually nothing for most of these people who previously were in line to get this $100 tax rebate. and i think that the question probably is coming back to some 10:51:56.8 of these people now that if we're really -- if we really can afford to give the kind of tax relief that is provided for in this bill to those who are better off in our country, those who are wealthier in our 10:52:12.8 country, maybe we should go ahead and send $100 to everyone, just sort of as a consolation prize so they too could participate in this tax-cutting effort. i think we ought to think of this in the context of what 10:52:30.0 we've been doing in the last few weekings around -- weeks around here. it's estimated in new mexico there are about 18% that will in fact receive any benefit at all from the reconciliation bill that we're considering here. if you look specifically at the 10:52:47.0 bottom 60% of working new mexico families, their average tax cut is $15. in contrast, the top 5% in my state would get 64% of this tax cut. 10:53:00.7 this is at a time when the price of gasoline is very high, when the price of educating a person -- a family's children is very high, when the price of health care is extremely high. and obviously there's a ring of unfairness about this -- the 10:53:19.2 allocation of these tax benefits which i think strikes everybody. i wanted to talk a minute about this -- these provisions related to energy. an important part of the emergency bill we -- energy bill we passed was to provide tax 10:53:36.8 incentives that would move us away from dependence on foreign oil. we pass aid variety of those. let -- passed a variety of those. let me put up a chart that lists them. 10:53:51.0 there's an r & d credit which has already expired. there's electricity from alternative fuels. there was an energy efficiency home tax credit where you get a credit if you wanted to put a solar heating system on your 10:54:10.2 house, for example, a credit for fuel cells, microturbines, clean renewable energy bonds, hybrid vehicle credit. we put a lot of those in the law. 10:54:23.3 unfortunately what we did because of the fiscal situation of the country we said they'll all expire at the end of the 2007. and that date is approaching. and frankly, the way we wrote it, we said you cannot get the tax credit that we are writing 10:54:43.2 here into law unless you have put your project, you built it and put it into service prior to the expiration of the tax credit. well the exieration of the tax credit is -- exieration of the -- exieration of the tax 10:55:01.4 credit -- we can't proceed with a windfarm. we can't proceed with the solar power installation because the tax credits are going way. we ought to be addressing that, madam president. instead, what we've done is we're sighing let's add a couple 10:55:16.2 years out to 2011 to these tax provisions that assist the most wealthy in our country. and i think that is misplaced pryers. 10:55:30.7 it's very important that this congress try to follow through on what we did last year. we have a very short attention span in the congress. two weeks ago everyone was rushing around holding press conferences about how we're going to solve our energy problems, but here we are now using up any ability that we've 10:55:49.7 got to extends the tax credits that were part of the solution to our energy problem down the road. so i think we need to think about that. i hope we do think about it. let me talk about one other 10:56:03.2 issue that i just think is so egregious it needs to be focused on before the vote on this bill. and that is a -- you know what brought this to my attention quite frankly was i was down get age cup of coffee this morning 10:56:19.6 on my way to the office and one of the people who works in one of our offices i said to her good morning. she said good morning, another beautiful day in the land of make believe. i thought that sounds right. and i started questioning as i 10:56:36.7 was going back to my office, 10:56:39.5 now, exactly why do we all agree that this is the land the mark believe this, congress, this capitol hill is the land of make believe. and then it came clear to me when i focused on this provision. 10:56:54.8 under current rules here in the senate, we can't consider this bill as a reconciliation bill under special procedures. if it in fact would make the deficit worse outside the budget window, that means after 2010, outside the five-year period, 10:57:14.2 it's clear to everyone who is willing to look at it that this bill does add to the deficit after 2022, but the folks who put this bill together have found a very ingenious offset which they claim will allow them 10:57:33.7 to extend the tax cuts for the wealthiest in our country without in fact adding to that deficit outside the budget window. you say what is that ingenious offset. it's a provision that lieus couples with -- allows couples 10:57:50.9 with incomes over $160,000 to convert their individual retirement accounts from regular conventional accounts into roth i.r.a.'s and pay whatever tax is due in accomplishing that which 10:58:05.3 would be some tax. and, of course, once they have made that conversion from the i.r.a. to the roth i.r.a. then they have paid the taxes due and any future earnings that is 10:58:20.6 protected from any future obligations. that's why when we wrote the roth i.r.a. into law we made provisions saying we'll only give this tax benefit to people whose incomes are not too hoe. if a couple has over $160,000 in 10:58:37.6 income they are not he will ij yebl for a roth i.r.a. that was what we determined. we said you can't confor the a regular i.r.a. into a roth i.r.a. if your income is too 10:58:52.8 high. in this bill we're saying that's not the case. if you are bill gates or warren buffett, whoever you are, if you have a regular i.r.a., you are welcome to convert it into a roth i.r.a., pay the taxes due 10:59:08.2 and from then on there's no tax due. so the purpose of this. now, why would we stick this in? this is another tax break for the wealthiest in our country. why would we stick it in? because it results in some 10:59:24.4 additional revenue coming into the federal treasury over the first three years in effect. while people are making these conversions and paying the tax that they have to make to make those conversions, the interests treasury 10:59:40.4 is earning money and we can use that money to offset the large deficit incoke crease that otherwise -- increase that otherwise would be occurring after this budgetary window so to speak. of course, after the federal treasury receives that receive 10:59:58.5 influence for three years -- revenue for three years, it starts losing revenue as a result of this provision. as our vice president would say, it loses revenue big time after that. we would lose $4.5 billion in
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