Tax Relief

Mr. CRAPO. Mr. President, I wish to speak on the conference report. I think it is important we put into perspective the debate we are having today. You heard a lot of talk, if you listened to this debate, about the potential danger of tax relief at a time like this in our economy. You heard a lot of talk about skyrocketing deficits and what is the responsibility or the cause of those deficits, and the circumstances around which this budget has been brought to the floor.

I wish to step back a bit and look at my personal experience in Congress as an example of what it is we are really looking at, what the perspective is with regard to this debate.

I ran for Congress in 1993. At that time, we had massive deficits, in the neighborhood of $200 billion, $300 billion, $400 billion, $500 billion, and had been having those deficits for years. I ran on a balanced budget platform. I argued for a lot of other issues, but one of the main issues I talked about was the need to balance our Federal budget. I got elected, got here to Washington, and have been involved in a debate over a budget each year since I served in Congress. Now I am in my 11th year.

In each year, what happens is, whoever is the leadership in Congress proposes a budget. The budget can be a 5-year budget, which is what we used to have, or a 10-year budget, such as the one before us. The important point to note about all these budgets is the year that counts, particularly with regard to spending, is the first year of the budget.

Yes, we are here talking about a 10-year budget, but next year we will be back in front of the Congress with a new budget, and the first year of that new budget will not necessarily be the same year, the same as the second year of this year's budget. In other words, we do not just adopt this 10-year budget and then go on from there and live with the budget constraints contained in each of those 10 years. We do a new budget every year. So what really counts is the first year of the budget. It is important for people listening to this debate to understand that dynamic in order to understand what is really being said by those who are arguing about what should be the policy of this budget.

It is true that with regard to tax relief, once tax relief is adopted, it is permanent until a Congress changes it, and it plays out for a period of years. But it is the spending side of the budget that gets changed, especially the discretionary spending side of the budget that gets changed and redone by Congress every year. You have to look very carefully at the spending proposal. What happens, frankly, is that those who want to see more Federal spending, those who want to see our economy basically nationalized, with the Federal Government controlling ever-increasing aspects of the economy and spending ever-increasing dollars, frontload the spending into that first year of the budget. Then they have very prudent spending patterns in the second through the tenth year of the budget or the second through the fifth year of the budget, knowing they can come back next year with a new first year and change the whole spending dynamic.

The debate we are in right now is just another aspect of the traditional debate we have been having in Washington for the last couple of decades between those who do not want to see tax relief and those who want to see tax relief, and between those who want to see the Federal spending increase versus those who want to hold spending down.

We have heard a lot of talk, as I have said, about budgets and deficits. There has been a lot of accusation made about who caused the deficit that we face. President Bush, as you know, when he first became President proposed major tax relief which this Congress adopted. It was adopted for a 10-year timespan and will expire at the end of 10 years from the day it was adopted in 2001, if it is not continued.

That tax relief has provided needed relief to the American people. That tax relief is today being attacked on this floor as a cause of the budget deficits when, in reality, I think most Americans are very well aware we have had dramatic increases in spending required by the attack on 9/11 by terrorists against our Nation and the significant increases in spending on homeland security, by the war in Iraq, and the increased spending for our national security that has been driven by the need to make sure we have the strongest military we can to protect and preserve our Nation against terrorists and rogue nations overseas.

We have seen spending increases in other categories that have been far beyond the growth of the economy. In the categories discussed by Senators on this floor today—education, health care, the environment—spending has gone through the roof for very good reasons: the defense of the war on terrorism, the defense of our homelands, the defense of our Nation. Nevertheless, spending has skyrocketed at the same time the economy has collapsed. So we see revenue going down at a time when spending is going up. That is what is causing these deficits. It was not President Bush's tax relief.

We can argue about whether giving tax relief is going to actually in a dynamic economy strengthen revenues or reduce revenues, and I would like to talk about that a little bit in a minute. The fact is, wherever one comes down on that debate, the true core of the causes of the deficits we are dealing with right now was not the tax relief; it was the increases in spending and the collapse of the economy we have seen not only in the United States but across this globe.

There has been a lot of talk about the fact we really have an obsession with tax cuts. There is definitely a strong commitment on the part of many of us to obtain tax relief because we believe strongly that it is through proper management of the tax collection side of our budget that we will provide the economic stimulus to our Nation that is needed. But if there is an obsession on the one side for tax relief, then it must also be said there is an obsession on the other side with spending.

Those very Senators who stand on the floor and talk about the fact we cannot support increased tax relief, we cannot have more tax relief, are the very same ones who when we debated this budget in the Senate they proposed over 80 amendments. There were over 80 amendments that we dealt with. If we tally up the increased spending that was proposed in the bevy of amendments when we considered this budget, it was almost an additional trillion dollars of spending that was proposed.

This budget is a lean budget, but it is one that meets the needs of this Nation in the critical areas that we must address. Again, we are having that age-old battle between whether we should keep taxes low and, in fact, even reduce them further or whether we should keep taxes high and stop tax cuts from being made and allow previous tax relief to expire and thereby let taxes go up so we can sustain higher levels of Federal spending in the budget. That is what this debate is about.

If we do nothing, if we let the current law stay as it is and have no tax relief and have no additional spending, we will still see deficits in the neighborhood of $200 billion in the budget year 2004 we are working on. So, again, I think it is important to set the parameters.

If we look at the proposals of the one side who are now objecting to the President's tax relief, they also have a stimulus package. Their stimulus package, however, does not contain so much tax relief. It contains mostly spending, on the theory, apparently, that we can spend ourselves into prosperity by having the Federal Government put a massive focus on spending to strengthen our economy.

We simply disagree with that. Notably, the spending in this stimulus package is frontloaded. Recall what I talked about with regard to how these budgets work. It is the first year of the budget that we really have to focus on on the spending side, and the frontloaded spending in the alternative stimulus package that is proposed results in a deficit, if it were to be adopted, that is even higher than the deficit that is contained with the President's tax relief proposal in this budget. According to the analysis, the deficit would be $382 billion, but it would not be because of tax relief. It would be because of spending. That is the key difference, again, in the debate we are having today.

There has been some discussion about the fact that we did not get a budget last year, and why we did not get a budget. The Senator from North Dakota asked some of us who voted against what he calls a 2-year budget that was proposed last year, why we voted against it. Well, I will tell my colleagues, it was the same old debate. That proposal, though it was not actually a full-blown budget, was one which extended the caps and it extended the point of order for the budget points of order that we need as protection in this budget and had some increased spending in some categories. The spending proposals were, once again, too high. They were far beyond what the President had proposed in his budget that was focused on building a path back toward balance.

The reason we voted against it was because we did not believe in the spending levels they had proposed. With regard to those important budget protections, the extended caps on the budget and the budget points of order and the like, we did later on adopt those and extend them into April of this year. It is those spending caps and budget points of order that this budget now proposes to put back into place.

There has also been some talk about whether the manner in which this budget is being brought forth with the reconciliation instructions, being different between the House and the Senate, is proper. Frankly, I have looked at it. As I see it, it is very straightforward. The reconciliation instructions provide for $550 billion of tax relief over the next 10 years. With regard to that proposed tax relief, it is very clear that with the current support in opposition to that proposal, the Senate cannot pass that kind of tax relief. So it is proposed in this budget reconciliation that the Senate committee cannot exceed $350 billion, as the Senate committee puts together the tax package contemplated by this budget, and the House committee cannot exceed the $550 billion. The reconciliation between those two numbers will occur when the tax committee in the House and the tax committee in the Senate write the actual detailed tax language and they seek, if those bills are passed, to conference those bills.

It is a very normal and standard approach, in my opinion, of bringing together the differences between the House and the Senate, letting that debate be resolved at a time when the House and the Senate have put the details to the tax packages.

As has been said many times, what we are adopting today is a budget. It creates a number for tax relief. It does not say what kind of tax relief will occur. There are proposals and I am going to talk about those proposals, but the budget that we are talking about allows the House and the Senate tax committees to write their own proposals. We do not know what they are likely to adopt—well, let me say we think we know what they are likely to focus on, but we do not know the details of how they will adopt it.

I will talk about the tax relief argument for a minute. It has been said again today, multiple times, that we are talking about tax relief for the wealthy. As I said, I have served in Congress now for over 10 years, and during each of those 10 years—the 6 years I served in the House and going on 5 years I have now served in the Senate—we have had debates over tax relief. We have had tax relief proposals of all different kinds, everything from proposals to reduce the income tax rates to proposals to eliminate the marriage tax penalty, to proposals for child tax credits, and so forth. Every single time that a proposal for tax relief has been made, since I have served in this Congress, it has been attacked as tax relief for the wealthy. Even the proposal to eliminate the marriage tax penalty was attacked as tax cuts for the wealthy.

Why? Because that is something that seems to work when people do not look at the details behind what kinds of tax relief are being proposed.

Well, what kind of tax relief is being proposed by the President? First, he is proposing that we accelerate the tax cuts that were put into place in 2001. That includes expansion of the 10-percent bracket, hardly a tax cut on the wealthy; acceleration of the 2006 rate schedule; acceleration of the 15-percent bracket; and an increase in the standard deduction for married filing jointly, hardly tax cuts for the wealthy; acceleration of the child credit increase, hardly tax relief for the wealthy; an increase in the AMT exemption amount. There is one where people from all different categories could get caught up in it but particularly I hear about this one from small business owners. I certainly hope all small business owners in America and others are not considered to be wealthy simply because they own their own business.

It also includes an increase in the expensing options for small businesses and other businesses, all businesses.

Mr. President, I have just been notified I can now make a unanimous consent request, and I will do so.