Consumer-First Energy Act of 2008 - Motion to Proceed

Floor Speech

CONSUMER-FIRST ENERGY ACT OF 2008--MOTION TO PROCEED -- (Senate - June 11, 2008)

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Mr. GRASSLEY. Madam President, I wish to speak on taxes, but I would like to comment a little on what I just heard from the Senator from Illinois. And he is absolutely right that I did vote to debate because I think a great deal can be accomplished through debate on this legislation. In regard to the overall bill and the motive behind it, it is good in the areas of antitrust and things of that nature, but taxing oil? The rule of economics 101 is that when you tax something, you get less of it. And the American people understand by now, with $4 gas, another rule of economics 101: If you are going to get prices down, you have to increase supply.

I would not be flippant about 13 billion barrels of oil in Alaska that we have not tapped. Yes, by the year 2030 it might be .6 percent of the world's supply, but when you are using 85 million barrels a day worldwide and when there are only about 86 or 87 million barrels of oil being pumped out of the ground worldwide, then you have to understand that a six-tenths of 1 percent increase in a world supply that is not very flexible is going to make a big difference because it is the nervousness that is in the supply of oil, and when it might be cut back because of natural disaster or terrorism activity or some German worker being kidnapped in Nigeria, which sometimes is an excuse for oil going up, more flexibility in the supply of oil is what is going to help us with steady prices and lower prices as we increase supply.

So even though I voted to bring the bill to debate yesterday, I want it fully understood that I am not a guy who believes taxing is going to increase supply. In fact, I believe more taxes is going to decrease supply.

I wish to have a debate with the Senator from Illinois and other people from the other side that what we need is supply. I could easily agree with the Senator from Illinois--maybe not about drilling in Alaska, but if he were willing to drill on the Outer Continental Shelf, willing to drill more in the Gulf of Mexico, and willing to drill more on public land. These are places we know there is an ample supply of oil we ought to make use of to keep the money in the United States instead of buying from the Arabs to give them American dollars to shoot back at us.

I think there are a lot of national security implications here that are as important as the price of gasoline for our suppliers. I said I would be willing to vote that way if we could get some understanding of drilling other places.

What I hear from the other side is: No, to Alaska; no, to the Outer Continental Shelf; no, to public lands; no, to the Gulf of Mexico. But I don't hear anybody crying--you often hear from people about the Outer Continental Shelf that you are going to ruin tourism if we do it. You are going to ruin the view of the ocean. But I don't hear anybody complaining that 50 miles off of Key West, it is OK for China to drill. But if you want to drill 50 miles off of Florida for the benefit of Americans, you would have an outcry. I don't understand it.

When I had my town meetings in Iowa during the Memorial Day recess, at every one of those meetings was brought up why don't we drill more where there is oil that is needed in the United States? Why don't we explore and make use of what we have? We can't fool the American public.

To some extent the debate we had yesterday was on a bill because if we didn't get to these issues of more exploring and more use of these resources, it would be a figleaf to cover the opinion or position of the other party that, no, we can't drill anymore.

Conserve? Yes, we ought to conserve. There is nothing the Senator from Illinois said about conserving that is not legitimate. But conserving is not the only answer to our problem. You have to have a three-legged stool of answers to our energy problems.

One of them is to drill where we know there are resources. Now, since God only made so much fossil fuel, that is short term. Then renewables is second, and conservation, the third. We need a public policy in all those areas. We have public policies for conservation--tax credit for fuel-cell cars, for refurbished homes to be more energy efficient, for energy-efficient appliances. We have tax incentives for renewable fuels. Of course we have had tax incentives for petroleum for a long period of time. We need those incentives. But to think renewables or conservation is a solution to this problem is very misleading.

Madam President, I want to talk a little bit about energy but also to talk more about taxes. That was an issue we debated yesterday. As I finished up last night, I spoke about the spike in gas prices. These increases in costs are hammering most Americans, including too many Iowans. Iowans have seen it firsthand in the gas stations in New Hartford. I say that because sometimes I get the impression from my own constituents that everybody thinks all 100 Senators have chauffeur-driven limousines to drive around in so we don't know what the cost is to put gas in a gas tank. It is not true here in Washington, DC, except for a few of the elected leaders, and it is not true in Iowa, where I drive a 2003 Taurus. We do take care of ourselves and we do know the price of gas. In fact, I can tell you if I had been smart enough to buy gas when I left the Des Moines airport Friday night, I could have gotten it for $3.69, and I waited to buy it Sunday night and it was $3.89, and I know it is $4 out here. The point is, we feel it.

By the way, I have some advice for some of the leaders who drive SUVs around here and have chauffeur-driven limousines while we are paying $4 in taxpayers' money for gasoline. It aggravates me to high heaven when I see the SUVs idling out here, maybe to keep the car warm in the wintertime or cool in the summertime, and I saw it when the temperature around here was 60 degrees. Shut these cars off and save. There is no reason for the Senate of the United States to set an example that we do not conserve or care about the taxpayers' money by having these SUVs idle when nobody is in them, when they are not going anyplace.

I read reports about the gas issue. I read reports about the stimulus rebate checks being eaten up at the pump with this high gasoline price. In addition to this hit from gas hikes, American families are facing a big hit from planned tax hikes. I wish to take a few minutes then to talk about the additional hit taxes make on the family budget.

You would think no one would increase taxes in times of economic distress. Record tax hikes in an era of higher gas prices would seem to be a recipe for economic disaster. So people who think taxes are not high enough, complaining about the upcoming recession--hopefully avoided but probably not--why would you want to make it worse by increasing taxes?

Some people do not seem to care. People on the other side, including Presidential candidates, proudly and passionately want to raise taxes. You see it in the debate. I am not telling you something you can't see on television. Candidates of the other political party are waiting to raise taxes. How do they want to increase taxes, you might ask? By increasing tax rates and taxing investment income.

If the other side prevails in the November elections, we will be on a path to a tax hike; taxes that will go up, as a percentage of gross domestic product, higher than they have been at any time since World War II. If they stay on that path, yet higher. Taxes should rise by almost 10 percent with virtually every American paying more. If you want to create jobs, you don't tax labor. The rules of economics 101--if you tax something, you get less of it. If you want labor, then don't increase taxes on labor.

I wish to ask folks, particularly in the media, to take a serious look. It is in the Congressional Budget Office reports. It is the effect of letting the bipartisan Tax Relief Act of 2001 expire, and maybe a more partisan tax bill of 2003 expire.

How much more taxes would we have to pay? A lot more, say people on the other side, especially those Americans who are defined by the other side as making a lot of money.

What is a lot of money? The Democrats say if you are a family making at least $250,000 a year, you make a lot of money and don't pay enough taxes. That puts you in the current 33-percent tax bracket.

Can Americans making less than $250,000 a year be sure they will not pay more taxes? What is to say that the other side will not tax Americans making $100,000 a year? Or even $50,000 a year? The bipartisan Tax Relief Act made sure that all Americans are paying less in taxes. In 2001 and 2003, Congress did the right thing and reduced the tax liability for all hard-working Americans.

This tax relief should not be labeled the Bush tax cuts. Yes, President Bush had a great deal of involvement and deserves some credit. But I want to remind people that Congress passed the 2001 and 2003 tax relief. In fact, that year the Finance Committee was divided 50 percent Republican, 50 percent Democrat, because the whole Senate was equal, the number of Republicans and Democrats. We completely, as a body, rewrote the suggestions that President Bush put before the Congress.

Max Baucus, the current chairman, was my partner in the 2001 bill. We overcame the White House's desire to write a ``Republican only'' bill and skip the committee process. So stop calling this tax relief the Bush tax cuts. This label is politically motivated to confuse the American taxpayers about what was truly a bipartisan tax relief measure.

This label is repeated over and over. The head of the Senate Democratic Campaign Committee beats his partisan drum with this phrase. He relies on polls to drive a partisan message. The label is likewise parroted over and over in the press reports. The Sunday political talk show hosts are even getting into the act. If I had a nickel for every time I heard the words ``Bush tax cuts,'' especially from the political pundits, I would singlehandedly be able to pay off the national debt.

Colleagues and friends in the media, I beg you--I have asked you to consider what I am saying--lay off the false label of Bush tax cuts. Instead, look at the substance. The substance of the 2001 and 2003 tax relief put more money into the pockets of hard-working Americans. This is how it came about, by lowering the tax rates, providing marriage penalty relief and by providing the child tax credit. I do not hear much press discussion about how much money hard-working Americans are going to have to pay if the 2001 and 2003 tax relief expires. I ask the media people: Take a look at the data. It is real. It means dollars and cents to virtually every American taxpayer. That cushion in the family budget will be critical to deal with the burden from the higher gas prices that have been involved in the debate today and yesterday.

Other data: If the 2001 and 2003 tax relief expires, a family of four with household income of $50,000 will pay $2,300 more in taxes. That is a lot of money for a family earning $50,000. Here is a chart that will show you exactly the impact when 2010 comes and these expire, as the candidates on the other side want to do. In 2011 that family of four is hitting a tax wall, the tax wall, or $2,300 a year. These families have hit the wall. If the other side prevails, they are going to have their noses bloodied by the tax brick wall that the middle-income family hits.

Here is more data. A single mother with two children earning $30,000 will pay $1,100 more in taxes, if the tax relief bill is passed. This single mom with two kids will actually be crushed financially by a brick wall of higher taxes.

There is a lot of talk about need for change in economic policy. It seems as if change, no matter what it means, is good on its face. Many in the media and the beltway punditry fawn over the soaring rhetoric of the eloquent Democratic candidate. Indeed, there is almost a cult of personality surrounding the charismatic junior Senator from Illinois. These folks in the media and beltway punditry need to cut through the fog and look at what the Democratic notion of changed economic policy will mean to folks beyond the beltway. Look at this change not from the perspective of high-paid, latte-liberal crowds in the bluest areas of the bluest States. Look at what this means in the offices, factories, and farms of the heartland. That is what I ask many in the media and the punditry to take a good look at.

Gas prices are also squeezing the country's main job creators and that hits small business and farms. Small business has a tax hike to worry about as well. This tax hike piles on top of higher energy costs that are slamming small business.

According to the Treasury Department, about 70 percent of taxpayers who are flowthrough business owners are in the top 5 percent of the taxpayers. So my friends on the other side of the aisle, along with their Presidential candidate, are effectively saying they want small business owners to pay at least 13 percent more in taxes.

Small business owners are not Bill Gates or Warren Buffet. Small business owners are hard-working Americans who live on Main Street. They are vital to our economic well-being. Small business employs a vast majority of America's workers. Yet small business owners have to pay more money to their Government. That is less money they can use to hire somebody.

The old law of economics 101: If you increase taxes, you get less of it; you tax labor more, you get less labor, you get less jobs. If that person is not hired, what happens? The individual is unemployed, has no income, has no health care. Instead, that worker stands in the unemployment line and collects unemployment.

Economics, like I said. All these tax hikes on small business would pile on top of the gas price hikes already crippling small business. Why should they pay more taxes? Is this change good because they can afford it? That is what the other side is saying. But it makes no sense.

What they are saying is, because these taxpayers can ``afford it,'' these taxpayers should be paying even a greater percentage of Federal Government taxes. But what does ``afford it'' mean? Do we not want all taxpayers, not just those make $250,000 or more, to pump their disposable incomes back into our economy?

Do we wish to steer taxpayers, including upper income taxpayers, toward lower return, tax-favored investments? Do we wish to steer their money away from reinvesting in small businesses or start-ups?

By the way, I wish to compliment one of Senator Obama's surrogates. I am referring to Gov. Tim Kaine of Virginia. On FOX News Sunday, Governor Kaine indicated Senator Obama would propose a zero-percent capital gains rate for small start-up companies. Under current law, that is a 7.5 percent rate.

Now, we Republicans could look at this proposal. But unfortunately for the American people, Governor Kaine said Senator Obama would substitute this rate with a 33-percent increase in capital gains on other investments.

So the substitution would be bad for other investors. So let's focus on the progrowth side of the proposal and consider dropping the rate of start-ups from 7.5 percent to zero.

The political talking point that we hear again and again, raise taxes on the country's top taxpayers to generate ``needed'' revenue, is communicated to the American public.

It is said enough times and repeated by the press so many times that many Americans believe it.

It is not the fault of that portion of the American public that believes it.

It is refreshing that a vast majority of Americans think the general idea of a tax increase is a bad idea, especially in these economic times.

But the notion that there are no downsides for taxpayers or for economic growth if income taxes go up by 10 percent is a notion that the other side believes. Many in the media seem to accept this notion without further examination.

If middle- and upper-income taxpayers see a bigger tax bill, do they believe that our economy will be better off?

It is clear lower tax rates have generated record tax revenues. I challenge some of the media who are skeptical about tax relief to take a look.

Here is a chart that illustrates that lower taxes have generated record tax revenues.

This chart illustrates that Federal tax revenues have been, and generally continue to be, coming into the Federal Treasury at or above the historical average of 18.2 percent of GDP.

Now what the heck does that mean?

It means that lowering the tax rates has not gutted Federal tax revenues.

So don't believe the Chicken Littles who say the sky will fall if we keep taxes low.

It means that keeping taxes low, even for Americans earning $250,000 a year has brought in record-breaking revenue.

It also means that the Government doesn't need to raise taxes in order to generate revenue.

Now I can't let my colleagues on the other side, and some of the skeptics in the press for that matter, say to the American public that if you earn less than $250,000 a year, you won't see higher taxes.

Why? There are millions of investors earning less than $250,000. They earn dividends and capital gains.

Let's take a closer look.

In 2003, Congress reduced the top tax rate on capital gains from 20 percent to 15 percent.

Congress also tied dividend income to the capital gains tax rate, that is, 15 percent.

For low-income taxpayers, the tax rate on capital gains and dividends is currently zero.

That's zero, with a capital Z.

Millions of low-income taxpayers receive dividends and capital gains.

All of these taxpayers were not making over $250,000.

I will shed light on this fact with a chart. Nationally, over 24 million tax returns reported dividend income.

In Iowa, for instance, over 299,000 families and individuals claimed dividend income on their returns.

Here is another chart dealing with capital gains.

Nationally, 9 million families and individuals claimed capital gains. Over 127,000 of them were folks from Iowa.

I have fought both Democrats and Republicans to ensure that our country is set on the right course.

That course is economic prosperity.

I would like to see a real discussion of the negative implications of changing current economic policy. With high gas prices squeezing taxpayers, it is more compelling than ever.

Let's clear away the fog about the expiring bipartisan tax relief. Broad-based tax increases aren't gauzy ``feel good'' economic policy changes. Let's examine the benefits of keeping taxes low.

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