Tuesday, March 31, 2009

U.S. Senator Johnny Isakson (R-GA)
Floor Statement on the Budget
Remarks as Delivered on the Senate Floor

Mr. President, we have heard all week long about this budget, President Obama's budget, and the mantra that it spends too much, it taxes too much, and it borrows too much. I agree with that. But I wish to bring up some other points about this budget that, quite frankly, are counterintuitive to what we have been told by the administration.

The President has said repeatedly in the last 2 weeks, in talking about the American recovery, that his vision for the American recovery is founded in this budget document. I wish to talk about some of the things that have been talked about in this budget document as they relate to the recovery we so desperately need in this country.

For example, I think everyone agrees--Democrats, Republicans, Independents--that what led us into this difficulty is the housing market. Sure, the subprime mortgages were a part of it, but it is the loss of equity that homeowners have all over this country, a decline in value, an escalating foreclosure rate, and a massive amount of short selling and foreclosing that is going on.

It would seem at a time when that is going on, when that is the major cause of the crisis with which we are confronted, you would have policies for home ownership so buyers would come back to the market, they would buy the homes that are distressed and troubled, stabilize the values, and begin to build the equity of the average American family. But this budget portends we would drop the tax deductibility for a first mortgage on a family home that they occupy. So you take away a tax preference that for history and for years the American Government has granted to homeowners to encourage home ownership and you take it away from them at the very time home ownership is under the greatest stress in its history. It is counterintuitive and it is wrong.

The Senator from Kansas made a reference to charity. I just came from a congressional awards reception downstairs where we gave golden awards to young people around this country for the volunteer service they have given to help their fellow man. That is a gift of charity itself.

At that reception were four major corporations that make charitable contributions to the Gold Medal Award Program to encourage these young people to volunteer their time. If you reduce the ability of corporations or high-income wage earners or high-income earners to deduct the charitable donation, you are actually motivating at a time of need less charity on behalf of your people and in turn putting more burden on the back of the Government.

We saw earlier today, with the vote on the Thune amendment, that there is one idea the entire Congress almost appears not to like about this budget, and that is part of this budget portends that we would pay for some of the increased spending by taxing utilities.

The Thune amendment made the statement that the Senate does not believe that is right, and 88 Members of the Senate voted for the Thune amendment. Obviously, that policy is misdirected.

And then we are at a time when values in equities have declined, when American investment is declining, when corporate America is finding great difficulties, and at a time when all those things are going on, this budget portends that we would raise the capital gains tax by 33 percent and, further, that we would raise the dividend tax at the highest marginal rate by three times what it is right now. Penalizing people for investing in stocks that pay dividends at a time when the market is depressed does not make sense to me.

Further, they are saying, for those who have assets or have a profit built in, they are going to raise that tax by 33 percent at a time when the economy is suffering. I think it is, at best, counterintuitive.

I do not like politicians who get up and talk about how bad something is without offering some solutions. We have a responsibility--every Member in this body--to offer some proposals. So if I think these policies driven by this budget proposal are going in the wrong direction, what is the right direction?

I have an amendment that will be offered at the appropriate time. It is amendment No. 762. It is an amendment that creates a placeholder, a deficit-neutral placeholder in this budget proposal for a $15,000 tax credit for any family who buys a home and occupies it as their residence in the next 12-month period following the passage of that amendment.

What will it do? Quite frankly, the Senate unanimously adopted that amendment a few weeks ago on the stimulus, only to find it taken out by the House of Representatives. Why do we need to stimulate home ownership right now? Because it is the single largest asset of the average American family. It is the basis on which most credit is extended to families. It is fundamentally the foundation of consumer confidence in the United States of America. And right now there isn't any, and there isn't any because the housing market basically collapsed, values have depreciated in some areas by as much as a third, and one in every five houses in America is actually underwater, meaning the debt exceeds the value.

This tax credit is not an original idea by me as a Member of the Senate. In fact, in 1974, when we had the last major housing crisis in America, the Congress--Democratically controlled and a Republican President, Gerald Ford--passed a $2,000 tax credit for the purchase of any standing vacant home in 1975. This country took a declining housing market, with a 3-year supply of houses on the market, back to stability and equilibrium in 12 months, all with the motivation of the tax credit.

I first offered this tax credit in January of last year when we began to see the downward spiral in our economy. It is scored at $34.2 billion. I was told last January that is too much. So we then spent $700 billion in October on the TARP, and the Federal Reserve has spent almost $14 trillion. We are considering spending more, and $34 billion to me does not sound like very much. In fact, economic estimates by experts--not by me--have estimated that the tax credit, if passed by the Congress, would create 700,000 home sales in the first 12 months and 587,000 jobs. I don't know about you, but both of those are awfully good numbers that we certainly would like to be seeing reported on Wall Street and on Main Street.

When I offer this amendment, what I will merely be asking the Senate to do is send a signal. Instead of discouraging home ownership, we want to encourage it because it is the foundation of our recovery. Instead of having a tax policy that is punitive to investment, we want to have a tax policy that is positive to investment, and understanding home ownership and the value of it is still the fundamental key, the economic stability of the American family.

It is my hope the Senate will adopt this amendment and send the message so we can come back after the recess, pass the tax credit, make it effective, and return investment to the housing market and stability to the U.S. economy. So instead of taxing too much, spending too much, and borrowing too much, it is time we encourage investment in the American dream, which always has been and remains the home in which people raise their families, live, and retire.