Reed Speaks in Opposition to the GOP Tax Bill
Madam President, as Republicans in both Chambers rush to conclude their secret negotiations on the final details of their tax bill, I want to make clear to my colleagues what should be obvious about this legislation. We may not yet know the results of all of their horse-trading leading up to the final legislation, but the American people are watching this process. It is plain to see that, should this Republican bill become law, Republicans will have knowingly and deliberately made worse the most dangerous threats that we face to our economic and national security. Worse yet, they will have drained the public coffers that our children and our children's children will need to take up these challenges.
We all know what these challenges are. We face unprecedented income and wealth inequality that threatens to stifle the social mobility that is the hallmark of the American Dream. There is also declining productivity, which has kept middle-class wages stagnant, and bred economic anxiety for too many parents wondering if their children will attain a higher standard of living--much higher, they hope--than they have achieved. We have a surging deficit from decades of trickle-down economics and unpaid-for wars that, if left unaddressed, could apply huge pressure to our ability to keep our most basic promises to the American people, not to mention meeting our obligations as a world power.
To the families watching what is going on in Washington right now, the Republican end game appears to be to invite fiscal crisis due to irresponsible tax cuts for the wealthy and corporations, and then, because we have already given trillions of dollars away in tax cuts, to demand that Congress shred Social Security, Medicare, Medicaid, and other vital programs in order to pay our bills. We know this is the road that this bill sets us upon, and the American people certainly see this coming. So let no one who votes for this bill say that they did not know the consequences of their actions. This will not be remembered as tax reform, but rather as a serious mistake to be corrected in the future.
How do middle-class Americans know that Republicans did not write this bill for them? Because they have watched Republican economics rig the tax system in favor of the wealthy and corporations for years, even as wealth and income inequality have reached historic levels. They took the Republicans at their word when Republicans promised that the Bush tax cuts of 2001 and 2003, which skewed tax relief to the top 1 percent over the bottom 20 percent of Americans by more than 6 to 1, would eventually trickle down. That is what they thought, but on the eve of the great recession, aftertax income for the richest 1 percent had soared while middle-class wages continued to stagnate. We are still waiting for the Bush tax cuts to trickle down and to pay for themselves. They likely never will.
These Republican proposals make matters even worse by financing tax giveaways for big business and the rich on the backs of those just trying to get by. Economists, relying on the Federal Survey of Consumer Finances, recently determined that the top 1 percent of American households now hold about 40 percent of the Nation's wealth, which is a 50-year high. This legislation overwhelmingly benefits them while raising taxes on 48 percent of American taxpayers by 2027.
Many of the families whose taxes will go up have already been through tough economic times during the Great Recession. Productivity in the American workforce has been declining, and wages have grown at an even slower pace than that. These families don't need numbers from the Bureau of Labor Statistics to know our Nation's recovery was historically slow. But our middle-class weathered the Great Recession as Americans have always done. Now, because of the lopsidedness and deficit-busting features of the Republican tax bill, Moody's Analytics has warned that this ``fiscal policy mistake'' could very well take us prematurely into an economic bust. Middle-class families have just emerged from the last crisis of Republican economics, still battered and bruised, and they know that, if Republicans force a plan like this on the Nation again, it will be their children who are on the hook to pay for it.
Make no mistake, there are times when running a deficit is advisable or even economically necessary--particularly when times are tough and families need help to stay in the working class and get back on their feet. But regressive tax cuts just sit on our credit card with little to show for all that red ink, and the tab we are leaving the next generation is still running from 16 years ago.
Like many of my colleagues, I was here to take the tough votes and make the hard choices that led to the Clinton-era surplus. The failed experiments of supply-side economics turned that surplus into a CBO-projected deficit of over $10 trillion over the next decade. And even if we accept all of the rosy assumptions of dynamic scoring and take it on faith, yet again, that wealth will trickle down and that no recession will come in the next decade--all of which are assumptions on which I wouldn't wager anything--the Joint Committee on Taxation calculates that this bill would still increase the deficit by over $1 trillion. Facts do not go away simply because we ignore them, and if Republicans continue to ignore the budget hole their policies create, then this massive deficit and the budget pressures that follow it will be their legacy for future generations.
More importantly, however, I must ask: What national priorities will our colleagues on the other side deem too expensive after we have given 1 trillion more borrowed dollars to the wealthy? What choices will Republicans try to force on the American people when they decide there simply isn't enough for the Armed Forces, the jobless, the sick, and the elderly? Republican leadership is already vowing to take up "entitlement reform'' next year, which is Washington-speak for giving the top 1 percent everything they want and then forcing practically everyone else to choose who loses their Social Security, Medicare, or Medicaid to plug the budget hole. Therefore, before Republicans blow apart the Federal budget yet again, it is worth reviewing the massive costs the American people are already committed to pay.
First, as I have discussed before, this bill essentially guarantees that we will struggle to meet the needs of our national defense. Our war deficits from the past 16 years alone are projected to add over $1 trillion to the national debt by 2023 and over $8 trillion by 2056. We all know we must modernize the nuclear triad, which will cost $1.2 trillion in 2017 dollars over the next 30 years. A 355-ship Navy would cost, on average, $102 billion per year through 2047. Necessary additions to the end strengths of the Army, Air Force, and Marine Corps will cost an additional $18 billion, $6 billion, and $3.6 billion, respectively. Where will this money come from, since we have already given it away to the wealthiest Americans?
This chart shows what happens to the defense budget when large-scale tax reductions are put into effect, starting in the Reagan era of the 1980s. One of President Reagan's first initiatives was to build up defense. This chart shows the percentage of GDP devoted to defense spending. President Reagan promised to make America strong. To actualize his feeling and view of peace through strength, he built up the defense budget significantly--going from a little over 5 percent of GDP when he took office up to almost 7 percent. But in the mid-1980s, he also engineered tax cuts that lowered taxes on the wealthy in proportion to lower income Americans, and eventually, those tax cuts and the deficit caught up with defense spending. As we notice, through the later 1980s and all the way into the 1990s, except for one respite, we had a declining defense budget. In the first year of the George Herbert Walker Bush administration, there was another attempt to decrease defense spending. So the line went up a bit, but after that, of course, with deficits increasing, with other pressures mounting on the budget, defense spending plummeted.
Then, within the Clinton administration, there was a conscious effort to reduce defense spending. The so-called Cold War peace dividend took place. At the same time, though, because of the tough votes on tax reform that we took, we were building up a significant surplus.
We saw again here, with the beginning of the George W. Bush administration, an increase in defense spending. Once again, that was a product the desire of the President to lower taxes, which he did, but more importantly, was the unexpected and catastrophic attack on the United States on September 11, 2001. That, together with the later decisions to go into Iraq and maintain our presence in Afghanistan, led us to increase defense spending, but, once again--once again--a growing deficit with tax cuts, with no increases to pay for wartime operations, saw the defense budget peak and then begin to decline, and we are in that decline right now.
If history is any judge, when we pass these tax cuts, I think we will see a further decline as defense spending is squeezed by an already-acknowledged increased deficit and by the difficulty of cutting other programs to relieve budget pressures. We are not positioning ourselves well. As I previously mentioned, we are already looking ahead at necessary expenditures totaling trillions of dollars over the future, and if we don't make them, it will leave our Armed Forces, and indeed our position in the world, in a very precarious position.
The irony will be that many of my colleagues will come down here and vote one day soon on a huge tax reduction for the wealthiest, including a $1.5 trillion deficit increase, and on the next day say: ``We need more money for our military, that is the most important thing.'' If our military were the most important thing, we would be voting on a bill to provide that type of financial support and relief to the military today, and letting the tax cuts for the wealthy wait.
This is one of the remarkable periods in our history; probably the first time in our history, that we have conducted a war for 16 years, and have yet to ask the American people, in any significant way, to participate by paying their fair share for the national defense. In fact, throughout this period, with rare exceptions, we have cut taxes, and the cuts have basically benefited the wealthiest Americans. That is why all of this together has caused former Secretaries of Defense Leon Panetta, Ash Carter, and Chuck Hagel to indicate that this tax bill is ill-advised. Following 16 years of debt-financed war, providing even bigger deficit-busting tax cuts doesn't make any sense for our national security.
My previous comments, along with the comments of former Secretaries of Defense and others seem to have touched a nerve with Speaker Ryan because, when asked specifically, he took some umbrage at these comments. In an interview with NPR, he said he simply could not understand where our concerns were coming from. To put it bluntly, I am comfortable siding with three former Secretaries of Defense over the Speaker when it comes to budgeting for the men and women of our Armed Forces, for the reasons I outlined in my discussion of the history of defense spending and tax cuts over the last 30-plus years. Inevitably, the tax cuts to the wealthy and corporations, because of the way this bill is structured, will put pressure on defense spending. What I don't want to happen is to have people down here 2 months from now pounding the desks about how we are not responding to the needs of our troops, saying that we haven't made them the most important thing in our lives, or that we are neglecting our national defense. Frankly, they have ignored this whole topic by committing to give tax cuts and increase the deficit. That is the wrong priority, in my view.
As the chart clearly demonstrates, these tax cuts eventually catch up with us. They produced defense cuts--maybe not immediately, but we are not working on a situation like we had in 2001. When President George W. Bush instituted his tax cuts, we had a $5 trillion surplus on the books. That was because we took those tough votes in the 1990s to increase taxes and to build up a surplus.
We don't have that pad any longer. We are already $10 trillion in the hole, so the effect of these cuts will be much quicker and much more dramatic when it comes to the situation we will face not only in terms of supporting our military, but actually taking major steps to upgrade the platforms, the technology, the training, the readiness, and the quality of life of the Armed Forces. We don't have a $5 trillion surplus to dip into to pay off the wealthiest while we try to fix defense. We are in a situation where advocacy for this tax cut, in my view, totally and deliberately ignores the costs we are going to have to pay to protect ourselves. For the first time in our history, we have conducted almost 20 years of war, and we have asked our troops and their families to serve, but we haven't asked any other American to stand up, at least with their financial support, and help us deal with the crises we face across the globe.
It is not just our Armed Forces that will be squeezed and crowded out of the Federal budget because of these Republican proposals; the middle class and the working poor will also have to do a lot more with a lot less.
Many of my colleagues have already pointed out that the CBO has estimated that 13 million Americans will lose their health insurance because Republicans will repeal the individual mandate to pay for tax cuts. They can try to spin this as an expansion of choices, but the bottom line is that more people will be sick, and fewer of them will get the care they need.
Other middle-class American families can expect to lose access to critical tax advantages that allow them to remain self-sufficient during hard times. This approach promises to crush families on two fronts. It will force more families who are down on their luck to slip out of the working class, and then, because of massive deficits, the social safety net will be weakened when these families need it the most. This legislation will likely trigger a $25 billion cut to Medicare in 2018 alone, and with the Republicans' entitlement reform on the docket for next year--publically announced by Speaker Ryan--this may just be the tip of the iceberg. If we pass this tax bill, under our pay-go rules, we are in a position where we will be facing a $25 billion cut to Medicare just next year, in 2018.
Indeed, for many Americans, this vote is not about taxes, it is about Medicare--what they thought they had earned and are entitled to, what their children believe they need in order to withstand the obvious health problems as one ages.
This does not even begin to cover the struggles facing working-class Americans every day. We are in the midst of a historic decline in labor force participation that economists are struggling to explain, and many States that are experiencing deep declines in labor force participation are among those hardest hit by the opioid epidemic. A few weeks ago, President Trump declared a public health emergency on opioids. Where are the resources coming from to face that national emergency? There will not be that much left after this tax cut.
What we are beginning to see--this is not cause and effect, but it is a correlation--is that a lot of individuals are leaving the workforce because they feel displaced by new technology or because they are noncompetitive or for a number of reasons, and this seems to correlate very highly in those States with large losses with this opioid epidemic. In my home State of Rhode Island, this epidemic is real. It is taking the lives of individuals. On a national scale, it is something that has already been proclaimed a public health emergency by the President. Again, where will the money come from after these tax cuts? Will the problem just go away? I doubt it. The money is going away, but not the problem.
We have to ask ourselves: If we are in a national public health emergency, why aren't we standing up and providing the resources to help Americans face this problem? It goes back to the same logic: If we are in our 16th or 17th year of war, why aren't we standing up and saying that we better put up some money for the troops, their equipment, and their families?
No - what my colleagues are saying is: We had better cut taxes for the wealthiest Americans, for corporations. We have to create loopholes for passthrough entities that give advantages to private equity concerns, legal firms, accountants, and others.
As we look at these problems, millions of Americans are sitting around their dinner tables, and they don't believe we need to give trillion-dollar tax cuts to corporations that have international operations. They are more likely thinking about more mundane things closer to their lives, such as, what about the roads and bridges in my community? Why does this country have an investment backlog in transportation of $836 billion for highways and bridges and $122 billion for transit? Why aren't we doing the big infrastructure bill that the President indicated during the campaign--which is going to cost real money? Instead, we are giving real money away.
This makes a huge difference--because pursuing tax cuts first doesn't just neglect infrastructure, it neglects jobs. The jobs infrastructure projects create are middle-class jobs. These are not the private equity analysts. These are not the sophisticated financial engineers. These are the laborers, the structural engineers, and the men and women who pour the concrete. They are not going to get much out of this tax bill. At the family dinner table, they are probably wondering how they can afford to send their children to college.
How can they even continue to send their children to elementary and secondary schools that are in a horrendous state of repair? The Department of Education has estimated it would cost $197 billion to bring all public schools in the United States to good condition, and there is a $30 billion funding gap in annual capital construction and new facility funding. This is not just a Rhode Island problem; this is a problem in every State of the Union. Public school buildings are decrepit, and we are sending children to those schools. If this legislation passes, where will we find the money to help State and local communities deal with these issues so that children can go to schools that are modern, up-to-date places where they can learn?
Once you get past the elementary and secondary education levels, today everyone insists the jobs of the future all require more than a high school education. We have a generation that has racked up about $1.3 trillion in student loans and is facing a job market that provides few opportunities and not enough opportunities to pay them off. They are worried. People are worried that their children--many of whom are still living with them after college--will never be able to pay off these loans. Where is the multibillion-dollar package of assistance, aid, and loan forgiveness that will allow this generation of Americans to have the same benefits that my generation had? That is not the situation today. Everyone in this Chamber knows this because, when they go home, they hear from parents who are wondering when their child will ever get out from underneath the significant debt they have.
These are all real problems that working families face. There is another problem that is looming and will exacerbate these problems even more dramatically. According to the McKinsey Global Institute, up to 30 percent of the work done by 60 percent of occupations today is vulnerable to automation. By 2030, 75 million to 375 million--up to 14 percent--of the global workforce will need to change jobs. These advances in artificial intelligence could cause a huge erosion in human jobs.
What are families doing? What should we be doing? Frankly, we should be thinking of ways we can help people make the transition, and prepare them for what we know is coming. We know there is going to be a huge loss of jobs. We know that, when people drop out of the workforce, when companies get smaller, their pension obligations don't get that much smaller. We are also facing huge shortages in terms of pensions.
One of the ironies I suggest will happen--``irony'' is too gentle of a word--is that these corporations that are getting huge tax benefits are not going to raise wages. They are not going to turn it over to the people who work for them. They will buy back their stock, and some of these companies will buy back their stock even though their pension plans are not fully funded. That is not only an irony but an additional problem with the approach we are taking to this legislation.
The jobs in danger are not all entry-level positions. This is not about somebody who has a pick and a shovel and is displaced by a machine. We are talking about jobs, for example, in radiology. With computers and artificial intelligence today, doctors will admit they can read x-rays better than many technicians. They can do it in such a way that you don't need as many radiologists to review the records. They can be much more efficient. We are talking about jobs that are not core, entry-level jobs done by people who can easily do something else. We are talking about people who have master's degrees, who have years of training. This is going to come very quickly. What do they do? How do they compensate? Where do they get a job?
We know that this is going to happen, and we are weakening ourselves financially from being able to respond. Yet the legislation that is being proposed is oblivious to what we know is going to happen.
People will come here and say: ``We need more money for national defense.'' Why don't we do that now, instead of giving a big tax cut and raising the deficit?
In a few years or few months, people will say: ``This opioid crisis is out of control; it is even worse than it was when the President declared it an emergency.'' Let's do something.
We don't have the money. In a very few years, when people say, ``We are losing hundreds of thousands of good jobs; let's do something,'' the answer will be ``Sorry, we can't.''
By the way, we don't have much of a safety net for those people who are being displaced by these machines because we have eroded that too. We have huge challenges before us. The American people are watching us. They know these things. They are seeing in their workplace machines gradually replacing human beings. If you are a driver for UPS and you haven't figured out yet that these big companies are buying autonomous vehicles, they are using drones to deliver packages, et cetera--they understand what is coming. They see their children with huge debt living at home because they can't afford to buy a home, given their school loans. They sense the fragility of not only their own job but also the support for their parents on Medicare and Medicaid.
One of the things I thought was interesting when I heard we were going on to entitlement reform is the fact that the biggest amount of money spent in Medicaid go to nursing homes, and it goes to individuals who are not the poorest of poor. They are middle-class people, seniors, or people with long-term disabilities who have exhausted most of their funds. They have sold their house or mortgaged their house, et cetera, and they are the ones who are taking the bulk of the Medicaid money and funding. If we cut Medicaid, what we are going to do is tell a lot of middle-class people: You are out; you are out of this nursing home. Or we are going to tell their sons and daughters: You thought you had a problem paying off your children's tuition; you thought you had a problem at work because you haven't had a raise in several years. Guess what. Unless you come up with $1,000 extra a month, your mother is out of that nursing home.
That is the reality. That is what Americans around their kitchen tables and coffee shops are talking about. They are not talking about big tax cuts for the wealthiest corporations and individuals. It is no surprise that, if you look at any of the polling with respect to this tax bill, the American people are against it. My colleagues, particularly on the other side, are committed to getting something through that the American people don't want. They have said it. The polling has been extensive: We don't want this; we have real problems at home.
I am here to say that I believe this is a great mistake. I don't think any of us going forward should be in a position to say: Someone should have told me; someone should have told me that we need trillions of dollars to improve our defense above and beyond the current money we are spending. Somebody should have told me that hundreds of thousands--if not millions--of good jobs are going away because of artificial intelligence. Someone should have told me that young people are drowning under college debt, and we should fix that. Someone should have told me that we are in a situation where working conditions and the prospect of work is so fragile for so many people.
I think this is a great mistake. I hope my colleagues will reflect on what we are about to do and reject it.
I yield the floor.