In Speech, Hatch Presses for Action to Prevent Largest Tax Increase in History
Responding to Leader Reid, Hatch Says, “This response seems to confirm what we already know. President Obama and his liberal allies would prefer to put off a discussion of this fiscal cliff. They do not want to address Taxmageddon.”
WASHINGTON – After spearheading a letter of 41 Senators last week to Senate Majority Leader Harry Reid (D-Nev.) urging him to start working now to prevent the largest tax hike in history, U.S. Senator Orrin Hatch (R-Utah), Ranking Member of the Senate Finance Committee, today again called on the President and Congress to protect American families and businesses from these tax increases that will threaten America’s weak economy. To watch Senator Hatch’s speech click HERE.
“The likelihood of Taxmageddon, and the uncertainty it creates, is an anchor around our economy. Americans young and old, unemployed and underemployed, want this anchor thrown off now,” said Hatch. “We cannot wait until next year or even a lame duck session. The economy is slowing. Job growth is lagging. Businesses are cutting back investments. The uncertainty caused by Taxmageddon is contributing to the lackluster economic recovery.”
Hatch, who received a response from Senator Reid today said, “This response seems to confirm what we already know. President Obama and his liberal allies would prefer to put off a discussion of this fiscal cliff. They do not want to address Taxmageddon. I am fairly certain that their preference would be to get to the other side of the election and then have tax hikes set in not only for their caricatured evil corporations and individuals but for the middle class as well.”
“American’s families and businesses are not going to invest in the future if the future holds a $310 billion tax increase next year alone. The best thing we could do to jump start our economy is to turn the wheel away from this fiscal cliff sooner rather than later,” Hatch concluded.
Below is the text of Hatch’s full speech delivered on the Senate floor today: Mr. President, we find ourselves in the midst of a presidential election.
In years past, it might have been expected that during a presidential election, politics would take precedence over policy.
That was not right then. But it is certainly not right now. Our nation faces serious problems — immediate problems — and we cannot wait to tackle them until after the election.
We are over $15.7 trillion in debt. We have a tax code that is unmanageable and a burden on conscientious taxpayers. And if the President and Congress fail to act, we have a tax increase coming next year that will dwarf any in our nation’s history. We cannot afford to wait another seven months to get our fiscal house in order. We need to act now.
President Obama at least claims to understand that we cannot wait to address this fiscal crisis. He remarked recently that the fact that this is an election year is not an excuse for inaction.
Unfortunately, other than talk, the President and his liberal allies have done nothing to address either our rising debt or the fiscal cliff that we are quickly approaching — both of which are significantly hindering our economic recovery and job growth.
Last week President Obama’s budget received zero votes in the United States Senate. For the second year in a row, every Republican and every Democrat who voted on the President’s budget voted against it. And remarkably, not one Democrat voted for the serious Republican budgets offered by my friend, Chairman Paul Ryan, and my friends and colleagues Senators Toomey, Paul, and Lee.
While he talks a big game, President Obama has shown little interest in lighting a meaningful path toward balancing the budget, reforming the tax code, and reducing the tax burden on working families and small businesses.
Instead, President Obama seems to have a single minded focus on his reelection. But while he attempts to scare up votes in swing states, Americans across the country are suffering due to President Obama’s failed economic policies.
The people of Utah, and people across the country, are growing restless. They look to Europe and see the consequences of out-of-control spending and taxes. Yet even with the example of Europe, the President and his friends resist meaningful spending cuts at every turn, and his liberal allies have done everything they can to mislead the public about the responsible intentions of Republicans to reduce wasteful government spending.
Just as critical for our economy is the President’s failure to do anything to address the tax relief that will expire at the end of this year. If the President allows the current tax relief to expire, the result will be at least a $4 trillion dollar tax increase on the American people.
You can call this a fiscal cliff. You can call it Taxmageddon as others have done. Whatever you call it, it will be a disaster for the middle class. And it will be a disaster for the small businesses that will be the engine of our economic recovery.
One thing we hear time and again from businesses is that uncertainty holds them back from investing, expanding, and hiring. A robust recovery will require permanent pro-growth tax policy. And given the continued jobs recession and weak economic growth, we need those policies now.
Economic growth slowed to 2.2 percent in the last quarter. For 39 consecutive months, the unemployment rate has remained above 8 percent. But that only tells part of the story.
12.5 million Americans are unemployed and, of those, more than 5.1 million workers have been looking for work for 27 weeks or more. 7.9 million Americans are working part time for economic reasons, and another 2.4 million have only a marginal attachment to the labor force. Close to 2 million college graduates are unemployed.
Growth slowed to a tepid 2.2 percent rate in the first quarter, and we already saw business cut back investment as business investment spending declined 2.1 percent in the quarter.
And yet the President and his Democrat allies seem content, even in this environment, to sit on the sidelines as Taxmageddon approaches and threatens even greater harm on our economy.
The coming tax increases will be, without any exaggeration, the largest tax increase in American history. And the possibility of these tax increases is creating enormous uncertainty.
The so-called business tax extenders expired at the end of 2011. Will there be an R&D credit after 2011? Will there be an exception from subpart F for active financing income after 2011?
Families and businesses do not know if the 2001 and 2003 tax relief will be extended beyond 2012. That creates tremendous uncertainty for anyone planning on buying a home, saving for college, investing in a new business, or hiring a new worker.
Will pass-through organizations be taxed at 35 percent or 39.6 percent? Will dividends be taxed at 15 percent? Or will dividends be taxed at 39.6 percent, as President Obama has proposed? Will there be a death tax that hits family businesses and farms with a maximum rate of 55 percent, or of 35 percent, or of something else? And what will happen with the AMT? Will it be patched? Will it be reformed? Will it be repealed? Will it just be replaced with higher taxes somewhere else?
The President and the Senate Democrat leadership have shown no willingness to answer these questions and provide the certainty that our economy craves. The adverse impact of these tax increases on economic growth is unquestioned. But don’t take my word for it.
It has been reported that Federal Reserve Chairman Ben Bernanke recently discussed with Senate Democrats the significance of Taxmageddon. In short, the coming tax increases will be so large that Chairman Bernanke apparently warned that monetary policy would not be capable of offsetting the resulting decline in economic growth. Just last month, the Fed’s policy setting committee repeatedly warned in minutes of their meeting that fiscal uncertainty has negative effects on consumer and business sentiment; on household spending on durable goods; on business capital expenditures; and on hiring.
And the former Director of President Obama’s Office of Management and Budget concluded that what he estimates to be a $500 billion tax increase would be so large that “the economy could be thrown back into a recession.”
According to Barclay’s Capital, this fiscal cliff could reduce our GDP by 3 percent. And, in addition to these looming tax hikes, budget cuts from the sequester, that followed from the Administration’s failure to arrive at a budget, are set to hit as well. According to the magazine The Economist, the Congressional Budget Office has found that the combined effects of the sequester and the expiring tax relief would add up to 3.6 percent of GDP in fiscal year 2013. Federal Reserve Governor Duke has reportedly indicated that the combined impact of expiring fiscal policies at the end of the year could amount to around 4 percent of the nation’s economy.
No economy can sustain such a hit without being hurled into recession. Yet instead of addressing this fiscal cliff — tax increases that will harm all of America’s families — the President seems content to pursue misguided micro-policies that target the so-called rich in the name of so-called fairness.
I would like to make two points about the President’s obsession with redistribution of wealth. First, the American people do not care. The American people do not want government bureaucrats in Washington figuring out who gets what. They don’t want politicians spreading the wealth around. They don’t want self-anointed arbiters of how much income is fair.
What they want is the opportunity that comes with economic growth. They don’t want a handout. They don’t want their industries vilified for engaging in free enterprise. They want a job. And nothing is more fair than giving every American the chance to make something of himself. That requires Washington getting out of the way, not getting more involved.
Second, the American people seem to understand that the President’s promise that he will only tax the rich is a sucker’s bet. With his health care law, he already repeatedly broke this campaign promise not to raise taxes on families making less than $250,000 a year.
And the people of Utah and the rest of the states know that the Democrats’ thirst for more spending will require much more than taxes on the wealthy. If President Obama and his Democrat allies get their way, all taxpayers are going to be looking at bigger tax bills.
President Clinton was honest on this point recently. He rejected President Obama’s politically convenient claim that he would only tax the rich, and called for across-the-board tax increases.
This is just me now, I’m not speaking for the White House — I think you could tax me at 100 percent and you wouldn’t balance the budget. We are all going to have to contribute to this, and if middle class people’s wages were going up again, and we had some growth to the economy, I don’t think they would object to going back to tax rates from when I was president.
There you have it. Tax increases on everybody. President Clinton can claim that he does not speak for the White House, but the American people are not fooled. They see where the President’s policies are leading. Our debt and deficits are unsustainable, but the President has shown no inclination to address them through spending reductions.
There is only one other option available to President Obama, and it is one that he and his party have shown to be their preferred policy for decades — higher taxes to pay for more spending. Utahns and Americans all over the country know that the failure to address Taxmageddon is a real threat.
We can’t put this discussion off any longer. It is time for the President to lead. To that end, last week I, along with 40 of my Republican colleagues, sent a letter to our colleague and friend from Nevada, the Democratic Leader, asking for him to address this fiscal cliff in short order. Today we received a response. I have to say I am disappointed.
While there is a great deal of political posturing about evil millionaires and big corporations, as well as repeated attacks on the Tea Party and the citizens who support its goals of smaller constitutional government, there is no acknowledgement of the fiscal cliff we are fast approaching.
This response seems to confirm what we already know. President Obama and his liberal allies would prefer to put off a discussion of this fiscal cliff. They do not want to address Taxmageddon. I am fairly certain that their preference would be to get to the other side of the election and then have tax hikes set in not only for their caricatured evil corporations and individuals but for the middle class as well.
But I am confident that the markets and the American people are not going to allow this to happen. We cannot afford to delay action that will prevent Taxmageddon and steer us away from the coming fiscal cliff.
The likelihood of Taxmageddon, and the uncertainty it creates, is an anchor around our economy. Americans young and old, unemployed and underemployed, want this anchor thrown off now.
We cannot wait until next year or even a lame duck session. The economy is slowing. Job growth is lagging. Businesses are cutting back investments. The uncertainty caused by Taxmageddon is contributing to the lackluster economic recovery.
American’s families and businesses are not going to invest in the future if the future holds a $310 billion tax increase next year alone. The best thing we could do to jump start our economy is to turn the wheel away from this fiscal cliff sooner rather than later.