Mr. President, I rise today to urge a fiscal compromise that will allow us to avoid the negative and very real consequences of the approaching fiscal cliff. Every day that passes without a deal only increases uncertainty in the markets and puts the brakes on potential economic activity. Failure to bring the national debt under control threatens our country's future.
In the weeks following the election, the message was clear from the people of this country. They want the people in this Capitol, they want people in Washington to come together to find reasonable, balanced solutions to our nation's problems.
We need to show the country that we are serious about working together to address our fiscal challenges--reducing the cost of borrowing and strengthening our financial outlook. The sooner we can agree on a long-term, balanced deficit reduction package, the better for our economy and the better for our country. It is time to put political differences aside to work on an agenda that strengthens our economy, promotes fiscal responsibility, and increases global competitiveness.
I have always said that we need to make things in America, that we need to invent again, and that we need to export to the world. We are starting to do that again. I see it all over our state, where fortunately our unemployment rate is better than a lot of other states. It is about 5.8 percent, but we can do even better. One of the keys to doing better is not only focusing on exports and on education--it is also bringing down this debt in a balanced way, in a way that will not suddenly jar our economy and put us over the edge but in a way that in the long term means the people of the world can look at it, that businesses can look at it and say, they are serious about this. They are doing this in a measured, balanced way, but they are going to get this done.
If we refuse to have an honest conversation, if we insist on using the debate only as a vehicle for political rhetoric, we will not just be doing ourselves a disservice, we will be cheating our children and grandchildren out of knowing the America we grew up in, the America in Minnesota, where one small-town business person can start a business and grow and grow and grow and employ their kids and their grandkids, where a farmer can build a farm that employs people throughout the town, where someone in New Mexico can get an idea for wind energy or solar energy and start a new business. That is what this America is about.
In 2011 we came together and put in place discretionary spending caps that will reduce our debt by over $1 trillion in the coming decade. We also agreed to find another $1 trillion in savings before December 31st of this year.
While significant spending cuts are a necessary part of a balanced solution, any plan to responsibly lower the deficit cannot come from cuts alone. Revenue must also be part of the solution. I have appreciated that several of our colleagues on the other side of the aisle have acknowledged this, that revenue must be part of the solution. Now we have to put words into action.
I think the most common refrain I hear from the business community at home when we discuss what it will take to spur investment and create jobs--what they talk about is certainty. They need certainty. They need certainty if they are a farmer. We need to include the Farm Bill in this package so they know what they need to get for their crop insurance. They need certainty if they are a businessperson and deciding whether they should invest in new equipment, and they need to know exactly what the tax consequences and other consequences of that investment will be.
So on the revenue side, in addition to the cuts I just discussed, what does that mean on the revenue side?
First, it means extending the tax cuts for middle-class Americans. In Minnesota, two million families and small businesses will see their Federal income taxes increase by an average of $1,600 unless the middle-class tax cuts are extended. This means a lot for a family trying to decide whether they can afford a student loan to send their kid to college this fall or a business owner looking to invest in their company. It means a lot.
Second, this means returning to the Clinton tax levels for people making over $250,000 a year. Let's go back to that time. Under those rates, the economy created nearly 23 million jobs. Small businesses generated jobs at twice the rate during the Clinton years than they did under the years of the Bush tax rates.
But we do not have to look as far back as the 1990s to see the impact of extending tax cuts for 98 percent of all Americans versus extending them for those making over $250,000. At a recent Joint Economic Committee hearing, I pointed out that extending tax cuts to households making under $250,000 would increase real GDP by 1.3 percent and increase employment by 1.6 million in the fourth quarter of 2013. By comparison, expanding the tax cut extension to include taxpayers making over $250,000 per year would only add an additional one-tenth of 1 percent to GDP. That is very little bang for the buck compared to what you get by extending them for the middle class. So that is one of the reasons why we are so focused on looking at this in terms of extending those tax cuts for people making under $250,000 and then going to the Clinton levels for people making over $250,000.
What is the other reason? The other reason is pretty obvious. That is what I started with. We have to bring our debt down. When you look at how much this would save just by going back to the Clinton levels for people making over $250,000, it would save nearly $700 billion over the next 10 years, and when interest payments are included, that number could easily exceed $1 trillion.
How many times have we heard economists say that we should look at the neighborhood of $4 trillion in reduction in debt over 10 years to give the world confidence in our country? So that is $1 trillion of it right there simply by going back to the Clinton tax levels for people making over $250,000.
You have another $2 trillion--$1 trillion of which we already agreed to--that you can do in spending cuts. I believe the other $1 trillion you can get by closing loopholes and making some changes that will not be on the backs of the middle class and seniors and veterans in this country--things such as the oil subsidies, such as looking at the home mortgage deduction, which is incredibly important, but perhaps we could limit it to $500,000 of the value of a home. So if you buy a $1 million home, that is great, you get a home deduction for up to $500,000 of the value of the home. Those are a couple of examples.
That is the last part we are most likely not going to get to in the next two weeks--closing loopholes and ending subsidies, but right now we have to look at the Bush tax cuts and what we can do to extend them for the middle class and then get $1 trillion in debt reduction, with a down payment on that debt reduction going into next year, as well as the spending cuts we need to make. The down payment on deficit reduction would send a strong signal that Washington is serious about getting our Nation's fiscal house in order.
Finally, in addition to the spending cuts and revenue measures I spelled out, in order to ensure that our country remains competitive, we must move toward tax reform. One of the ways we can ensure business growth and more jobs is to create incentives to invest here in the United States and spur innovation, and that is by simplifying the Tax Code, by closing some of these loopholes I discussed, and by reducing some of the business rates and paying for reducing those business rates by closing those loopholes and ending some of the tax subsidies.
We know that is not going to be an easy task, but I believe we are up to it because Americans are up to it. They are up to it every single day when they go to work, when they make it sometimes in a very difficult situation, with one, two, three jobs, having difficult profit margins. They make that decision every day, and the least we can do in this Chamber and in Washington, DC, and in the House of Representatives is to get this done.
It is time we get serious about advancing a deal that is both fair and achievable. If we are committed to our country and not to rigid ideologies, we will get this done. None of us want to see our economy crippled. We have finally seen it stabilize, and in states such as mine we are beginning to see it grow again.
We just found out we had a huge increase in November home sales in Minnesota. There are positive signs across our country. But the way we get this in the direction we want to go, which is moving forward in a strong way, not just a stable way, moving forward to make sure we bring down our debt in a balanced way--we do not want to see things go backwards; Democrats do not want that, and Republicans do not want that--it is time for us to work together to show the American people that Washington is not broken, that, instead, we are willing to put aside our politics to do what is right for America.
I yield the floor.