Mr. WHITEHOUSE. Mr. President, I would like to add a few words this afternoon about the ongoing negotiations on the Federal budget and on our rapidly approaching debt ceiling.
I think we all agree that the situation we face is one of enormous importance and complexity. I believe every responsible person also agrees a failure to act would have awful repercussions that would jeopardize or worsen our fragile and tentative economic recovery. So I think the responsible view is, it is imperative we act and it is also clear to do so will require every side to make concessions.
I rise this afternoon, however, because it is my strong belief that any agreement we reach must be based on real savings and must not be made at the expense of our most vulnerable citizens. That is why I am so concerned about reports that Social Security and Medicare have been raised as possible sources of deficit reduction. Cuts to Social Security and to Medicare benefits should not be on the table. Social Security is not the cause of the deficit, never has been the cause of the deficit, and beneficiaries of Social Security should not be made to shoulder the burden of deficit reduction.
Social Security is funded through the contributions of our Nation's workers and businesses. It has an enormous surplus and is projected to be fully solvent for another quarter century. So while I would agree with steps to strengthen Social Security, any changes should be considered independent of our effort to reduce the deficit, and we should not cut Social Security benefits.
I helped cofound the Senate defending Social Security caucus for this very reason. The solvency of the Social Security program can be extended significantly just by applying payroll taxes to a greater portion of the earnings of millionaires and billionaires. What we have seen in this country is a huge shift of income going more and more to the uppermost economic reaches and less and less to the middle class. The middle class has actually lost income in the last decade. So the contributions to Social Security are lower because there is less income to draw it off of and the income that is above the $106,000 Social Security cap is where the explosion of income has been and they contribute not a nickel from that income to Social Security.
So there is a lot we can do to support Social Security, but what we should not do is give in to any of the calls to put our seniors' security at risk in the stock market by privatizing Social Security or increasing the retirement age so that a construction worker or a waitress who works on their feet all day long has to put in more years of service at that age--when their body, frankly, might not be up to it any longer--or to cut benefits through backdoor methods by lowering the cost-of-living adjustment.
The Rhode Island seniors I have heard from at my community dinners and senior centers around the State I have visited are very concerned what would happen if their benefits were cut.
Audrey, from Middletown, told me that after her husband died, she had many expenses but, as she said, ``no income except for his Social Security check which enabled me to go on living--simply but adequately without being a burden on my sons and losing my dignity as well.''
Two very important points Audrey makes. One is that Social Security is not just a benefit to Social Security recipients. It is a benefit to the children of Social Security recipients, on whom their parents might otherwise be a burden. It is an American value that senior citizens who have worked hard all their lives, who have played by the rules, who have built the America we now enjoy should be able to draw on so as not to lose their dignity at the end of their life.
That is a principle that is worth defending.
Ronald from Cumberland, RI, had been on Social Security for a number of years. He wrote to say: It seems that it's always the people who need the help the most who get cut from the Federal Government. Why is this? No Social Security cost of living adjustment for 2 years, yet prices for the basic needs still rise. In a country like the United States of America, this should not happen.
These people who are living on Social Security income are not living high off the hog, and they should not be the targets of our cost-cutting zeal.
The threat to the Medicare Program is just as real. Earlier this year, Republicans over in the House of Representatives passed a budget that would end the Medicare Program as we have come to know it for future generations. I can remember being at a senior center in North Providence, and a gentleman sitting at a table said to me: You know, I have helped build this country; I have fought in its wars; And I understand that the Republican proposal will protect Medicare for me; but I am not willing to let Medicare for my children be thrown under the bus. That would make me feel awful. It simply isn't right for me to stay on it and stand for the program to be taken apart and dismembered for everybody else.
That was a moving statement for me to hear, and we need to honor that.
Estimates suggest that the House Republicans' proposal would end up forcing a typical 65-year-old senior to pay, on average, $12,500 each year in out-of-pocket expenses starting in 2022. That is more than double what a senior is estimated to pay than if the current system of Medicare stayed in place.
In Rhode Island, the average senior only gets about $14,200 per year from Social Security to begin with. So if you are going to ask people who now have $14,200 a year, who aren't getting cost-of-living adjustments by 2022 to pay $12,500 for Medicare, that would be a massive exercise in poverty creation, and what Medicare and Social Security have done is lifted the burden of poverty from America's seniors. I think sometimes we are blind to what life might be like without them, when some of our colleagues so cavalierly suggest that we should do away with these programs, privatize them, or turn them over to the insurance industry.
The Republican budget would also reopen the Medicare prescription drug doughnut hole. We went through a lot of effort to close that doughnut hole in the Affordable Care Act. That doughnut hole will be gone in 10 years, thanks to the Affordable Care Act. The Republicans all voted against the Affordable Care Act. They all voted against closing the doughnut hole. And now in their budget on the other side they want to unwind that part of the bill and take away the protections we have provided for seniors in the doughnut hole. That would cost millions of dollars to seniors in Rhode Island starting next year if it were put into law. That is not something off in the future. That is right now, thousands of Rhode Island seniors having to cough up millions of dollars because of this Republican House budget plan. That is something I think we need to defend against. That is the wrong place to look.
It is especially the wrong place to look as we find our Republican colleagues fighting so hard to protect tax breaks for millionaires and billionaires. I have given the speech repeatedly already, so I won't dwell on it now. But when our Republican colleagues stand and say, We are against tax hikes, it is important for Americans to look behind the curtain and see who they are defending, because I will tell you, everybody in this Chamber, Republican and Democrat alike, believes that ordinary American families earning ordinary levels of income should be exempt from any tax hikes. That is not even on the table.
When our Republican colleagues talk about defending against tax hikes, they are talking about defending the oil industry from having subsidies they don't need and that taxpayers pay for taken away. They are talking about protecting the top 400 income earners in the country who, on average, pay Federal taxes, actually paid in--this isn't a theory, this isn't a rate; this is what they actually paid in, according to the IRS--18.2 percent. These are people who made on average more than $ 1/4 billion, with a B--$1 billion with a B, in 1 year. And God bless them. What a wonderful thing it is to make more than $ 1/4 billion in 1 year. But they pay taxes at lower rate than a truckdriver in Rhode Island does on average; the guy who wakes up every morning and gets into his clothes and puts on his boots and gets in the truck and goes out there and works all day, pays the same tax rate as the person earning over $ 1/4 billion.
They can talk about tax hikes until they are blue in the face. It won't take away the fact that is the way it actually works in this country, and they are defending that and going after Audrey and the folks on Medicare in Rhode Island and Ronald from Cumberland. That is not right, and we need to argue about that and fight back.
We can never overlook what Medicare and Social Security have contributed to our Nation's prosperity. It is not just the benefit for the Medicare beneficiary, it is not just the benefit for the Social Security recipient. It is the freedom we all feel knowing we will have a dignified old age; that we won't be at the mercy of Wall Street, that we won't be at the mercy of a private insurance company; that we will have the efficient and effective services that Medicare and Social Security deliver. We can know that now and enjoy that. We have more freedom as Americans now because we can make bolder choices in our lives knowing that we don't have to defend ourselves against that kind of poverty and that kind of misery in our old age. Our children can make bolder choices in their lives knowing that they don't have to safeguard against a parent's illness ruining their own financial futures, ruining their family's financial futures.
Imagine how awful it must feel for a parent in that circumstance, if in your old age you become grievously ill and the only resource you have is to essentially wipe out your children who feel a moral obligation to take care of your medical expenses and put themselves into poverty and misery as a result of your illness. What an awful human tragedy that is for the people involved. And we don't experience that tragedy in America. We don't experience it because Medicare and Social Security are there.
The challenge before us is a formidable one, but I truly believe we can reach an agreement on the deficit and the debt ceiling without compromising the security and the well-being of our seniors. I believe the Democratic Budget Committee's proposed budget is a good model for how we can actually do it, and I look forward to continuing this discussion. It is not necessary, in order to solve our immediate deficit problems and to get through this debt limit fight, to take our seniors and put Social Security and Medicare that they have relied on at risk; to take this country whose prosperity Social Security and Medicare do so much to support, and knock that down with a tax on Social Security and Medicare. It is not right, it is not necessary, and we should stand against it.
Mr. President, I yield the floor and suggest the absence of a quorum.
Mr. WHITEHOUSE. Mr. President, I am honored to follow my distinguished colleague from Maryland in this discussion about our priorities as we address the debt limit we are approaching. I think Leader Reid was wise to choose to cancel the scheduled Fourth of July recess so we could continue to work toward an agreement to prevent defaulting by the United States on our government debt and the financial consequences that would ensue here in America and around the world.
As we negotiate an end to this debt limit standoff, we also, obviously, have to address our looming budget deficits and our looming debt, which threaten to cripple our potential for economic growth in years to come. Where we are on this, of course, is that President Clinton put our budget on course to permanent surpluses. We would be a debt-free nation right now if the predictions the nonpartisan Congressional Budget Office had put in place when President Clinton left office had been kept. In fact, there were changes. President Bush and a Republican Congress squandered away those surpluses with unnecessary tax cuts and unwise spending increases. Our multitrillion-dollar deficits have resulted. We must now fix the budget and bring it back into balance.
So where are we in this standoff? Well, we need to cut spending. Democrats and Republicans agree on that. We need to protect ordinary families who enjoy ordinary levels of income from tax increases. Democrats and Republicans agree on that. The disagreement is whether we also need to raise some revenues in other areas to help balance the budget, areas such as oil and gas and ethanol subsidies, closing corporate tax loopholes, and putting an end to high-income tax-dodge schemes.
On that front, I rise in support of Leader Reid's resolution calling for a deficit reduction package that includes a ``more meaningful contribution'' from millionaires and billionaires.
The Republicans are threatening that they would rather let this government default on its obligations than to what they call ``raise revenues'' by requiring the wealthy to pay their fair share. Just last week, Senate Republican leader Mitch McConnell called on President Obama to take any raised revenues ``off the table'' and to balance the budget solely on spending cuts that affect the middle class and lower income families. In an opinion piece on cnn.com, Senator McConnell proclaimed that ``tax hikes can't pass the Congress.''
Well, let's pull the curtain back and take a little glimpse behind it as to whom the Republicans are fighting so hard to protect.
As shown in this picture I have in the Chamber, here is a building in New York City on Park Avenue, the Helmsley Building. Because this building is large enough to have its very own ZIP Code, we know from actual IRS information--not projections, not guesses, not conclusions drawn from rates; from actual paid-in IRS information--that the wealthy and successful individuals and corporations that call this building home paid a 14.7-percent total Federal tax rate in the last year they have done the calculation, 2007. That is lower than the actual tax rate, on average, of the New York City janitor or doorman or security guard who would work in this building. It is upside down. The people who serve the occupants of this building pay a higher tax rate than the occupants of this majestic building. The tax gimmicks that let those occupants pay a lower rate than the people who take care of the doors and the cleaning and the security for them--that is what the Republicans are fighting to protect.
This problem is not just a fluke in the Helmsley Building. Each year, the Internal Revenue Service publishes a report that adds up all the taxes paid by the 400 highest income earning Americans. I spoke earlier this year--several times, actually--on last year's report, which included data from 2007, like the same year as for the Helmsley Building. In that year, these super-high-income earners, making, on average, $ 1/3 billion, approximately--billion with a ``b''--paid a lower tax rate in 2007--the 400 of them did, on average--than an average hospital orderly who is a single payer pushing a cart down the halls of a Rhode Island hospital at night.
In May, the IRS published updated data on the top 400 income earners for 2008. Let's take a look at the status of the top 400 earners in that more recent year. Well, they are down from $ 1/3 billion, on average, to over $ 1/4 billion each. Certainly we can applaud that kind of success in America. That is definitely the American dream come true. But, on average, they paid an average tax rate of 18.2 percent. That is what they actually paid. That is what they put into the IRS. Once you get through all the tax dodges, all the different schemes, all the different deductions, all the different rates, when you actually put the pen to the paper at the bottom line, it is 18.2 percent.
We spent a lot of time around here debating whether the top income tax rate should be 35 percent or 39.6 percent. Folks, that is not what they are paying. The Tax Code is so filled with special provisions that tend to exclusively or disproportionately benefit the wealthy that the highest 400 income earners, earning more than $ 1/4 billion in 1 year, paid an average tax rate of 18.2 percent.
This means that the 400 highest earning individuals in the Nation, in 2008, paid the same effective tax rate as a truckdriver in Rhode Island. According to the Bureau of Labor Statistics, on average, an ordinary truckdriver earns $40,200, which is about the place in the Tax Code, on the way up, where you first hit paying 18.2 percent of your income in taxes.
So what the Republicans are asking as part of the debt limit compromise is that we cut employment and job training support now, at a time of record joblessness, while they continue to fight to make sure that people making a quarter of a billion dollars a year pay lower Federal tax rates than average middle-class families.
Here is another building that has a little story to tell. This is a building called Ugland House. It is over in the Cayman Islands. This building does not look like much. It is pretty nondescript. But over 18,000 corporations claim to be doing business out of this building--18,000 out of that little building. Clearly what is going on is that those corporations are hiding through shell companies, phony corporate identities that they and wealthy taxpayers use to hide assets and play tax games with the IRS.
This kind of mischief down in the Cayman Islands and elsewhere through these tax dodges is estimated to cost us as much as $100 billion every year. As part of a debt limit compromise, the Republicans are asking us to cut America's investments in science, cut America's investments in technology at the same time they are fighting to protect corporations that hide in offshore tax havens so that the honest American taxpayer has to pick up the burden for them. That is what they are fighting for when you pull back the curtain.
When all is said and done, everyone, Democrat and Republican, agrees that there needs to be cuts. And everyone, Republican and Democrat, agrees there should be no tax increases on ordinary middle-class families. Those concerns are not at issue. Where is the dispute? What is the blockade? Again, pull back the curtain and you will see that the Republicans are willing to let us as a nation default for the first time in our history on our debt, which would devastate our economy, all to defend tax rates for millionaires and billionaires that are lower than those paid by regular hardworking Americans; all to defend offshore tax havens that are used to evade taxes while ordinary families are expected to pay their taxes; all to defend corporate and special interest tax loopholes, earmarks for the wealthy and well-connected. That is where they have chosen to stand their ground. That is where they have chosen to pick a fight.
As our Nation rushes toward the August 2 deadline and the agreement deadline before August 2 when we must have something in place in order to get the President's signature on a bill by August 2--as we rush toward that, as the world's economy and America's economy are imperiled by the threat of our debt limit not being lifted, what are they fighting for? That is what they are fighting for, for the superprivileged, for the super well-connected, for the tax dodges they take advantage of, and for the lower rates the superrich pay compared to the rest of all of us. Those are the interests that Republicans are protecting when they reject any revenue increases to bring down our unsustainable deficit. They say it is tax increases they are against. Well, the answer to that should be Americans asking the question back: Tax increases for who? Because if it is tax increases for the guy who is making a quarter of a billion dollars, and is paying a lower tax rate than a truckdriver, that is okay with me. That is a tax dodge we can get rid of. If it is a tax increase for a company that is going to hide in this building in the Cayman Islands to shelter its incomes so that Rhode Island corporations and Oregon corporations, American corporations have to make up the difference--American taxpayers have to make up the difference, and they cannot hide their income down there any longer, that is a tax increase I can live with. I do not think that is what ordinary Americans have in mind when they say we do not want tax increases. They mean we do not want our rates to go up. But ordinary Americans know that our Tax Code is filled, riddled with gimmicks and tricks and loopholes and deductions that have been put in it over the years by lobbyists. They are earmarks, they just happen to be earmarks in the Tax Code. They spend America's money through the Tax Code just as much as if it were an appropriation.
But what is the big difference? The big difference is it takes being a very wealthy individual or a very big corporation to be able to take advantage of those tricks, to be able to hire a lobbyist who can build that trick into the Tax Code, and to have the revenues and the resources to be able to maneuver through the Tax Code in that way. Ordinary Americans do not do that.
You can ask pretty much anybody in Rhode Island, show them the thousands of pages of the Internal Revenue Code and ask them: Who has a special provision in it for you? Nobody does. They are regular Americans. They pay regular taxes. They do things the way they are supposed to be done. The gimmicks and the tricks are all at the upper end, and it is time to clean house, particularly now when we so badly need the revenues to balance our budget.
It is simply inexcusable that our tax system permits billionaires to pay lower tax rates than truckdrivers, that it allows the wealthy to avoid taxes by hiding assets in phony offshore corporations. Even if we had no budget deficit, just being fair, honoring the principle of equality would demand that we address these inexcusable discrepancies that favor the wealthy and the well-connected. Our budget crisis, however, brings real urgency to the problem. So as we continue to work to avoid a debt default by the United States of America and to bring down our budget deficits and to reduce our crippling national debt, I hope Senator McConnell and the Republican Conference will revisit the potential to significantly cut the deficit by addressing tax loopholes, tax gimmicks and, frankly, outright injustice to the ordinary American taxpayer that they are now defending here in the Senate.
I see the distinguished Senator from Alabama arriving.
I yield the floor.