Speeches & Floor Statements

Colloquy Remarks of U.S. Senator Lamar Alexander (R-Tenn.) with Republican Colleagues on President Obama's Budget Proposal

Posted on March 16, 2009

Madam President, President Obama's budget raises taxes by $1.4 trillion over 10 years. It is the largest tax increase in history, right in the middle of a recession--a recession we all hope we can get out of soon. I have with me today on the Senate floor my colleague Senator JON KYL, a member of the Finance Committee, who is, in our party, at least, and certainly within the entire Senate, one of the experts on taxation and jobs and progrowth Government policies. I say to Senator Kyl, I was looking through the history books a little bit this weekend. I noticed President Hoover, in 1932, raised taxes. He, in the Revenue Act of 1932, raised taxes across the board and raised the top tax rate from 25 percent to 63 percent. That was at a time when the unemployment rate was about 23 percent in this country. The effects of the 1932 tax increase were income tax revenues went down and the Federal deficit went up and unemployment stayed up all the way to 1940, when it was still 15 percent. But President Kennedy, of course a Democratic President, came along after a little bit of a sluggish period of time, and he cut taxes in a variety of ways and tax revenues went up. President Reagan came in a few years later, after a difficult time in the late 1970s, which I remember very well, and he reduced taxes and tax revenues went up. So I wonder what the lessons in history are. If we are in the middle of a recession and people are struggling for jobs--and in the Hoover and Kennedy and Reagan administrations we learned that tax increases often reduce revenues and impose costs--what is the lesson in history for the Obama budget? I believe there is another lesson, too, if we look back 40 years to October of 1969. It sounds very good to say we are going to tax the rich people. There are just a few of them; they are not you. We are going to take their money. You will be all right. That is exactly what happened in 1969. That was the last time we had a millionaires tax--that is what they called it--because they found 155 people who had paid no income taxes, so they passed the millionaires tax. We have another name for it today; it is called the alternative minimum tax. This year, if Congress did not act, it would have taxed 28 million Americans. It started out to catch 155 rich Americans and now could catch 28 million, including a lot of the middle class. One of the tax portions has to do with what Senator Gregg, the Senator from New Hampshire, who is our ranking Republican on the Budget Committee, calls the national sales tax on electricity, a tax that would be a so-called cap-and-trade system tax. It doesn't just get rich people. The point is, it will take, from every American family, at least $800 a year, which is the amount of the so-called tax cut the President--I have forgotten what he calls that in the budget. Madam President, I think he calls it the Making Work Pay credit. Madam President, it is not entirely clear how much a cap-and-trade system on the entire economy will raise. The President estimates in his budget $646 billion over 10 years. Some observers think that is low; that it might be $60, $80, $100, $120 billion or even more over 10 years. The cap-and-trade system--the way of limiting the use of carbon in the economy--is the subject of a very important debate we should be having in the Senate. For the whole 6 years I have been in the Senate, I have recommended a cap-and-trade system just for powerplants, not for the whole economy. I see the distinguished Senator from New Mexico on the floor who is chairman of the Energy Committee. He has had his own bill there. But our point would be in the middle of a recession, you don't put on top of the American people a new tax on electric bills and gasoline purchases. Just in December of last year, 10 percent of customers for Nashville Electric Service said they couldn't pay their electric bills, even with TVA's relatively low rates. So whatever the views are on cap-and-trade--and there are many views even within our conference: Our Presidential nominee, JOHN MCCAIN, supported cap-and-trade, and I support a limited one but not in the middle of a recession--the way to deal with a recession is not more taxes. Our responsibility as the minority party is often to hold the administration accountable, to point out the other side of things, and to oppose things we think are wrong. Our responsibility also is to say what we are for. This week during the debate and over the next couple weeks you will hear Republicans offering different ideas for a clean energy agenda, one that begins with conservation, on which most of us agree. You will hear ideas including building 100 new nuclear powerplants, that is carbon free. You will hear ideas about finding more natural gas, that is low carbon and using plug-in electric cars, which we can plug in at night and we wouldn't have to build any more powerplants. So we could move toward more American energy, as clean as possible and as fast as possible, but what we want to remember--and this doesn't seem to be remembered in the budget--is to do so at as low a cost as possible because people are hurting today because of unemployment and high costs and a lack of jobs. Well, the Senator from Arizona brings up a very good point, which is the limitation on deductions people might take. Now, again, that sounds pretty good because one may say: Well, that applies just to someone with a lot of money, but let's think about this for a minute. That means charitable deductions in the United States would not receive the same sort of treatment under President Obama's plan that they do today. So we take a college such as Maryville College in my hometown, which is a small Presbyterian college that doesn't have a very large endowment; a faith-based college. It is having a tough time in the economy anyway. Then we come along and we say to people to whom it might turn for charitable contributions: Sorry, we are going to take away the incentive that Americans have to make charitable contributions to the colleges, to the Boy Scouts, to the Girl Scouts, to the pro-life groups, to the pro-choice groups, to all sorts of associations in America that are having a hard time raising money for charitable activities, and we are going to make it that much harder. This country leads the world in terms of charitable contributions. Typically, about 2 percent of our income goes to charitable contributions. No other country in the world has that sort of tradition of giving, and in the middle of a recession we would limit charitable contributions to nonprofit organizations who are already struggling. Madam President, we have been asking the question: Why would someone who is interested in seeing an economic recovery propose these kinds of tax policies--to limit charitable deductions, limit the deduction on home mortgages, punish American companies doing business overseas, and put a mandatory energy tax on the American people? All of these are policies that don't seem to make any sense. As my colleague pointed out in the very beginning, they run opposite to the lessons we have learned historically. Why would this be done? It turns out that a very interesting op-ed in the Wall Street Journal last Thursday, March 12, may have the answer. It was written by Daniel Henninger. It is called ``The Obama Rosetta Stone.'' It is said that the Rosetta Stone is where you go to get the answer to the great mystery of life. The Rosetta Stone in the Obama budget Mr. Henninger finds is on page 5 of the budget. This, I think, provides the clue to why all of these negative policies are being introduced into the budget at this time. Let me quote from page 5 of the Federal budget. He is referring to the amount of income the top 1 percent of earners in our country makes: While middle-class families have been playing by the rules, living up to their responsibilities as neighbors and citizens, those at the commanding heights of our economy have not. Prudent investments in education, clean energy, health care and infrastructure were sacrificed for huge tax cuts for the wealthy and well-connected. There's nothing wrong with making money, but there is something wrong when we allow the playing field to be tilted so far in the favor of so few. .....It's a legacy of irresponsibility, and it is our duty to change it. I think what Mr. Henninger has found in the Obama budget is the rationale for these paradoxical tax provisions. It is not a matter of helping families or supporting small businesses to create more jobs or helping the economy grow out of the recession; rather, this is all being done to redistribute the wealth in the country because it is alleged that the people at the top end of our economy are making more money than they should. Madam President, I hope all of us in the Chamber understand that people are hurting, and we want to see jobs and see the economy moving again. I think our point is that the lessons of history show that raising taxes doesn't help create new jobs. Now is not the time to change inequities in the Tax Code. Now is the time to create new jobs and for people to have more money in their pockets. We would like to join with the President in focusing attention on fixing the banks and getting credit flowing again in the same way President Eisenhower did when he said: I will go to Korea and concentrate my attention on this job until it is honorably done. I yield the floor and suggest the absence of a quorum.