Bipartisan, Comprehensive Tax Reform Will Restore America’s Competitive Edge

(Note: This column was originally published in Tax Watch — Spring, 2012)

What does this mean? It means that instead of investing in new jobs and innovation, U.S. businesses are investing time, energy and resources to avoid paying taxes. It

means that instead of hiring people to build things, businesses are hiring lobbyists to secure more specialized tax breaks and loopholes to lower their tax burden. It means that the tax code is now so complicated that instead of making it easy for businesses to set up shop, the U.S. tax code requires every entrepreneur to have an accountant. And it means that instead of encouraging investment in the U.S., the U.S. tax code is encouraging U.S. companies to invest in other countries where taxes are lower.

The U.S. tax code is clearly in need of reform.

It’s been done before. In 1986, a Democratic House majority joined forces with President Ronald Reagan and a Republican-led Senate to overhaul the federal tax code. There was no precedent for that coalition, but there is one today.

Joining forces against special interests, Democrats and Republicans sent the president sweeping bipartisan legislation that eliminated numerous tax breaks and loopholes to streamline the code and hold down rates for everyone, without any additional government spending.

More than 6.3 million new jobs were created in just the two years that followed the ’86 reform. That is more than double the number of jobs created during the full eight years that followed the Bush tax cuts of 2001.

Senator Dan Coats, a Republican from Indiana, and I have offered reform legislation modeled on the 1986 effort that we believe can make U.S. businesses more competitive with their global counterparts and encourage investment in U.S. workers. We have been working together to advance the Bipartisan Tax Fairness and Simplification Act and with the budget crisis throwing into sharp relief the pitfalls associated with other remedies in Washington, we believe the time is ripe for the same kind of bipartisan, comprehensive tax reform we saw almost three decades ago.

What became clear from the 1986 effort was that lower marginal tax rates—the tax rate on the last dollar of income earned—did more for the economy as a whole than special tax provisions or sweetheart deals.

Our bill wipes out dozens of these giveaways and lowers the corporate tax rate for everyone, from a global high of 35 percent down to a competitive 24 percent. That will boost American businesses’ ability to compete, plain and simple.

The Wyden-Coats bill eliminates the tax break for shipping jobs overseas but gives U.S. corporations a one-time tax holiday to repatriate profits currently held offshore, helping them transition to the new tax system. In addition to the low flat corporate rate, this will help make the U.S. a more attractive place for both U.S. and foreign businesses to invest.

But tax reform can’t stop with the corporate tax code.

The vast majority of American businesses pay taxes under the rules of the individual code so corporate tax reform alone will do nothing for the thousands of sole proprietorships, partnerships, and LLCs that make up the backbone of the U.S. economy. We need comprehensive tax reform that simplifies the corporate and the individual code at the same time so that no U.S. business or taxpayer is left out.

Tax reform can create a simpler, more business-friendly tax code that increases tax revenue without raising tax rates. It can lower corporate tax rates to make American businesses more competitive, which will help businesses to create jobs that pay middle class wages. Tax reform can also make tax filing less taxing for everyone.

None of this is going to be easy. When the drum beat for reform picks up, every special interest and lobbying firm in the city will be working overtime to protect the tax breaks they hold dear. But if Congress is serious about creating jobs, there is no better place to start than tax reform.

IYCMI: Wyden Statement Introducing "Congressional Oversight Over Trade Negotiations Act"

U.S. Senator Ron Wyden, Chairman of the U.S. Senate Finance Subcommittee on International Trade Customs and Global Competitiveness, introduced legislation clarifying USTR’s obligation to share information on trade agreements with Members of Congress. Legislation is necessitated by administration’s refusal to share information with Congress broadly, and specifically with Wyden’s office.

Text of Statement of Introduction:

STATEMENT FOR THE RECORD
U.S. Senator Ron Wyden
On Introduction of the “Congressional Oversight Over Trade Negotiations Act”

M. President, right now, the Obama Administration is in the process of negotiating what might prove to be the most far-reaching economic agreement since the World Trade Organization was established nearly twenty years ago.

The goal of this agreement – known as the Trans Pacific Partnership (TPP) – is to economically bind together the economies of the Asia Pacific.  It involves countries ranging from Australia, Singapore, Vietnam, Peru, Chile and the United States and holds the potential to include many more countries, like Japan, Korea, Canada, and Mexico.  If successful, the agreement will set norms for the trade of goods and services and includes disciplines related to intellectual property, access to medicines, Internet governance, investment, government procurement, worker rights and environmental standards.    

If agreed to, TPP will set the tone for our nation’s economic future for years to come, impacting the way Congress intervenes and acts on behalf of the American people it represents.  

It may be the U.S. Trade Representative’s (USTR) current job to negotiate trade agreements on behalf of the United States, but Article 1 Section 8 of the U.S. Constitution gives Congress – not the USTR or any other member of the Executive Branch – the responsibility of regulating foreign commerce.  It was our Founding Fathers’ intention to ensure that the laws and policies that govern the American people take into account the interests of all the American people, not just a privileged few.

And yet, Mr. President, the majority of Congress is being kept in the dark as to the substance of the TPP negotiations, while representatives of U.S. corporations – like Halliburton, Chevron, PHRMA, Comcast, and the Motion Picture Association of America – are being consulted and made privy to details of the agreement.  As the Office of the USTR will tell you, the President gives it broad power to keep information about the trade policies it advances and negotiates, secret.  Let me tell you, the USTR is making full use of this authority.

As the Chairman of the Senate Finance Committee’s Subcommittee on International Trade, Customs, and Global Competitiveness, my office is responsible for conducting oversight over the USTR and trade negotiations.  To do that, I asked that my staff obtain the proper security credentials to view the information that USTR keeps confidential and secret.  This is material that fully describes what the USTR is seeking in the TPP talks on behalf of the American people and on behalf of Congress.  More than two months after receiving the proper security credentials, my staff is still barred from viewing the details of the proposals that USTR is advancing.   

M. President, we hear that the process by which TPP is being negotiated has been a model of transparency.  I disagree with that statement.  And not just because the Staff Director of the Senate subcommittee responsible for oversight of international trade continues to be denied access to substantive and detailed information that pertains to the TPP talks.  

M. President, Congress passed legislation in 2002 to form the Congressional Oversight Group, or COG, to foster more USTR consultation with Congress.  I was a senator in 2002.  I voted for that law and I can tell you the intention of that law was to ensure that USTR consulted with more Members of Congress not less.  

In trying to get to the bottom of why my staff is being denied information, it seems that some in the Executive Branch may be interpreting the law that established the COG to mean that only the few Members of Congress who belong to the COG can be given access to trade negotiation information, while every other Member of Congress, and their staff, must be denied such access. So, this is not just a question of whether or not cleared staff should have access to information about the TPP talks, this is a question of whether or not the administration believes that most Members of Congress can or should have a say in trade negotiations.

Again, having voted for that law, I strongly disagree with such an interpretation and find it offensive that some would suggest that a law meant to foster more consultation with Congress is intended to limit it.  But given that the TPP negotiations are currently underway and I – and the vast majority of my colleagues and their staff – continue to be denied a full understanding of what the USTR is seeking in the agreement, we do not have time to waste on a protracted legal battle over this issue.  Therefore, I am introducing legislation to clarify the intent of the COG statute.  

The legislation, I propose, is straightforward.  It gives all Members of Congress and staff with appropriate clearance access to the substance of trade negotiations.  Finally, Members of Congress who are responsible for conducting oversight over the enforcement of trade agreements will be provided information by the Executive Branch indicating whether our trading partners are living up to their trade obligations.  Put simply, this legislation would ensure that the representatives elected by the American people are afforded the same level of influence over our nation’s policies as the paid representatives of PHRMA, Halliburton and the Motion Picture Association.

My intent is to do everything I can to see that this legislation is advanced quickly and becomes law, so that elected Members of Congress can do what the Constitution requires and what their constituents expect.

I yield the floor.

Wyden Statement Introduction of Congressional Oversight Over Trade Negotiations Act

Wyden on Cyber-Security: Privacy should be the default not the exception

“Bad Internet policy is increasingly premised on false choices…there is no sound policy reason to sacrifice the privacy rights of law abiding American citizens in the name of cyber-security".   With the recent passage of CISPA in the House of Representatives and the Senate moving to consider another cyber-security bill, Senator Wyden took to the Senate floor to affirm his commitment to opposing any bill that asks Americans to make the false choice between secure networks and personal privacy.

WATCH:

Learn more about Wyden’s work on Internet & Technology policy: http://www.wyden.senate.gov/priorities/internet-and-technology

Wyden op-ed: To Save Medicare, Think Like The Patients

The Atlantic: Senator Ron Wyden has been an advocate for senior citizens for nearly four decades. Prior to joining Congress, Wyden served as the director of Oregon Legal Services for the Elderly, was a member of the Oregon State Board of Examiners of Nursing Home Administrators and a co-founder of the Oregon Gray Panthers. He penned an op-ed recalling the evolution of Medicare and the pressing need for meaningful reform to keep the promise of Medicare to millions of American seniors.

"Medicare" means different things to different people. Some say it's the best argument for a national single-payer health insurance system. Others will tell you that it's the federal budget's biggest villain, while election strategists call it a campaign defining issue. However, for the nation's 50 million Medicare beneficiaries, Medicare is neither an ideological argument nor a political talking point. For them, Medicare is their health insurance plan. 

Of course, it's more than just a health insurance plan. It is a lifeline for millions of our senior citizens. Before Congress created Medicare, in 1965, more than 50 percent of American seniors didn't have health insurance, mostly because the increased health risks associated with aging made health insurance unaffordable. At the time, it was not uncommon for the sick elderly to be treated like second-class citizens, and many aging Americans ended up destitute without necessary health care.

Medicare changed that. As a rock-solid guarantee of essential health services for every American over the age of 65, Medicare has been our country's most important social safety net. But as a health insurance plan, Medicare has never been perfect.

From its outset, Medicare only covered essential inpatient (Part A) and outpatient (Part B) services, which has long meant that seniors had to purchase supplemental private insurance to cover what Medicare does not. One of the reasons I ran for Congress in the early 1980s was to help regulate the market for supplemental Medicare insurance plans, because unscrupulous agents were exploiting holes in the Medicare law to sell seniors worthless policies. (In 1990, former Senator Tom Daschle and I passed the "Medigap" law to regulate the market for supplemental Medicare insurance.)

In 1997, Congress passed Medicare Part C to give Medicare beneficiaries the choice to receive their Medicare benefits through a private health insurance plan. This reform has become a lifeline for seniors in states like Oregon, where Medicare's low reimbursement rates have made it increasingly hard for seniors to find a doctor. Right now, 41 percent of Oregon's Medicare beneficiaries get their Medicare from a private insurance company.   

In 2003, Congress added Medicare Part D to give seniors a prescription drug benefit that had not previously been available through Medicare. And the Affordable Care Act (ACA), passed in 2010, included a number of provisions to enhance Medicare's preventative care services, while ensuring that more seniors have high-quality private sector options in addition to traditional Medicare.

Yet some seniors still find that Medicare fails to meet all of their health care needs. While the ACA included an annual out-of-pocket cap and removed lifetime limits for insured Americans under the age of 65, there remains no catastrophic benefit in the Medicare program, and Medicare continues to enforce a lifetime limit on the number of days Medicare beneficiaries can spend in the hospital.  

Medicare's copays and deductibles are also not insignificant for American seniors, 62 percent of whom currently live on a fixed-income of less than $30,000 a year. For example, while Americans under the age of 65 pay an average of 3 percent of their total income on health care, Americans over the age of 65 are currently spending 16 percent of their total income on their health needs.  

As a fee-for-service health insurance plan, Medicare, like much of our health care system, promotes quantity over quality, by reimbursing providers for the number of services they perform versus the quality of their care. States that have found ways to lower Medicare costs, like Oregon, continue to be punished with lower reimbursement rates for providers, for the very reason that they have established lower annual costs. Meanwhile, Congress's inability to come up with a long-term solution for Medicare's provider reimbursement problems means that more and more doctors are limiting the number of Medicare beneficiaries they are willing to treat--just at the time when, as of the beginning of this year, 10,000 Americans turn 65 every day, a rate that will continue for the next 20 years. The Congressional Budget Office projects that the Medicare Hospital Trust Fund will run out of money in ten years. If Congress does nothing before that time, we will be reneging on the promise of Medicare to millions of American seniors.

Yes, Medicare means many things to many people. But upholding the guarantees of Medicare requires each of us to start thinking like the 50 million Americans who rely on it for their health benefits. Those 50 million Americans don't care about talking points or ideological battles nearly as much as they care about being able to find a doctor and get the care they need when they need it. Unless Congress starts looking for meaningful solutions to ensure that every Medicare beneficiary will be able to find a doctor and get needed care, seniors are going to be the ones forced to endure increasingly higher premiums and arbitrary cuts to benefits--until Medicare doesn't guarantee much of anything.

Learn more about Wyden’s recent Medicare reform proposals: Medicare Better Health Rewards and Wyden-Ryan white paper.

Standing Up for Seniors, Wyden Outlines Medicare Reform Principles

As the Senate debated various budget proposals this week, Senator Wyden cut through the rhetoric fueled by ideology and stood up – once again – for America’s most vulnerable.

Citing his own experience working for Oregon’s elderly, Senator Wyden rallied to defend Meals on Wheels, the home-delivery food program that is a lifeline for so many of our seniors. In the state of Oregon, nearly 52,000 seniors rely on these hot, nutritious meals. The fact that these meals are delivered by thousands of generous volunteers provides these older folks regular contact with someone who cares.  Some of these budgets would have cut Meals on Wheels funding anywhere from 17-59%, a staggering amount considering the great impact the program has on the lives of tens of thousands – an even greater impact given the financial hardship of the Americans it serves. 

As Congress tackles the various challenges of increasing federal commitments, however, the future of Medicare is front and center.  Wyden spoke plainly stating, “We are going to have…for the next 20 years, 10,000 seniors turning 65 every single day….If nothing is done, the Medicare guarantee is in peril.”  Senator Wyden believes doing nothing is not an option and instead laid out principles that he feels must be included to achieve meaningful Medicare Reform, including:

1. Preserving Traditional Medicare
2. Protection for the sickest & most vulnerable (meaning, among other things, Medicaid may not be block-granted)
3. Strong, comprehensive consumer protections
4. Maintain Medicare’s purchasing power so that competition between government and private sector innovation can make each other better

Finally, as in every major reform Senator Wyden has spearheaded, any effort at Medicare Reform must be bipartisan. Protecting the Medicare Guarantee is too important to let partisan politics get in the way.

Watch highlights of Senator Wyden’s speech:

Learn more about Wyden’s bipartisan Medicare reform proposal with Representative Paul Ryan: www.wyden.senate.gov/bipartisan-health-options

Have you been targeted by a Pension Poacher? Tell us your Aid and Attendance story.

As a life-long advocate for seniors, and a passionate supporter of veterans, veteran’s rights, and veteran’s programs, there are few things that upset Senator Wyden more than individuals and groups who use the promise of Department of Veterans Affairs (VA) benefits to mislead and even steal from America’s elderly veterans.

Recently, he has been looking into the VA’s enhanced pension with Aid and Attendance, commonly referred to as “Aid and Attendance.”  While this program meets real needs of financially burdened vets who need help in their daily lives, Senator Wyden is deeply troubled by the emergence of predatory organizations that are providing false, misleading, or incomplete information to veterans.  Many of these companies have names and logos that seem to affiliate them with the VA and claim to want to help veterans, but in many cases are only interested in lining their own pockets.

Our office is gathering information on these deplorable practices, but we need your help.  Have you, a friend, or family member had an experience regarding Aid and Attendance?  In the comments section below, please tell us your story.  Senator Wyden may share some of these experiences in the Senate.

Share Your Story

Have you been targeted by a Pension Poacher? Tell us your Aid and Attendance story.

Decorated Marine Visits Capitol Hill to Promote Breast Cancer Research, Reunites with Senator Wyden

Earlier this week, Senator Wyden met with a group of Oregonians fighting to find a cure for breast cancer.  And one of them has a lot of experience as a warrior. 

Retired Marine Corporal Garrett Jones from Newberg, Oregon was in Washington as part of the National Breast Cancer Coalition’s advocacy to support efforts and funding to eradicate breast cancer. Senator Wyden first met Jones in 2007 after the heavily decorated Marine had lost his leg to an IED in Iraq.  While visiting him at Bethesda Naval hospital, Wyden became so impressed with his positive attitude that the two kept in touch and even went together to a Ducks football game later that year. 

After his recovery, Jones stayed in the marines and redeployed to the front lines in Afghanistan in 2008 with a prosthetic leg.  After retiring from the Marines in 2010, Jones used his GI Bill to go to Western Oregon University to study health care, and has just been accepted to the University of Washington medical school.

Wyden is a long-time advocate and supporter of research, screenings and care for breast cancer patients and their families. 

Wyden and Jones in 2007:

Wyden and Jones in this week:

#DontDoubleMyRate Must Get Done, Then On To #WhatsMyEducationWorth

This week the Senate took up the Stop the Student Loan Interest Rate Hike Act—popularly known on social media channels as #DontDoubleMyRate—legislation aimed at curbing the Stafford loan interest rates which are set to increase from 3.4% to 6.8% this summer.  In a speech on the floor of the Senate, Senator Wyden spoke out in support of the bill saying, “The Stop the Student Loan Interest Rate Hike [Act] is so important that it allows us to achieve two important objectives.  First, it puts us in a position to hold the line on student debt…The second part of the legislation in my view is by holding the line on debt, you increase the opportunity for young people to get more value out of their education.”

Keeping college costs down through student aid is absolutely critical. Senator Harkin has provided incredible leadership in this area by ushering into law legislation that gives low and middle-income Americans the chance to afford an education and pursue the American dream. We should take pride in the great progress we have made in ensuring access to college in recent history. More than 70% of our young people now start some kind of advanced training or education within two years of receiving their high school diplomas. And it is important that we prevent financial burdens that heap further debt on students and graduates when higher education is the second largest expense most individuals will face in their lifetime.

Ensuring continued access to higher education by passing the Stop the Student Loan Interest Rate Hike Act enables Congress to move on to the next critical step in higher education policy which is empowering students and families to get the maximum value out of their education dollars. This is especially important at time when unemployment is in the double digits for young people in Oregon and student debt is at an all time high. We need market solutions to bring down higher education costs and ensure value for the higher education dollar by connecting the dots between higher education, completion, and employment outcomes.  Access to higher education is critical, but too many students fall through the cracks before graduation and too many graduates are unable to secure employment. For many students, access means very little without a degree and job to show for it. But prospective students and their families often make the decision to enroll in a program with incomplete information because these accountability measures simply aren’t available. To tackle that problem, Senators Wyden and Marco Rubio (R-Florida), have co-sponsored the Student Right to Know Before You Go Act, to insert more transparency in higher education by showing how specific programs and institutions compare in regards to: cost and financial aid available, completion rates, debt, and employment and earnings outcomes. The Wyden/Rubio bill has even garnered the attention of notable education experts and media voices including Frank Bruni of the New York Times, Amy Laitinen of Education Sector, and, most recently, Mark Kantrowitz of Fastweb.com and FinAid.org and Mark Schneider of the American Institutes for Research.

Watch highlights of Senator Wyden’s speech:

Senator Wyden Meets Elvis!

Senator Wyden’s goal last week was not to find Elvis. It just sort of turned out that way.

The trip started in Portland with a meeting of Oregon’s agricultural leaders about the opportunities to increase the export of Oregon products to new markets in Asian-Pacific region and ended with town hall meetings in Grant, Wheeler, Gilliam and Sherman counties, numbers 629 to 632 if you’re keeping track.

Where things turned interesting was on the drive from a press conference in Bend about the benefits to Oregon of the new FAA bill to a town hall meeting No. 628 in the Harney County city of Burns.  After a stop in Brothers and needing to stretch his legs after the drive across Southeast Oregon, Senator Wyden stopped at the store in Riley, a small community east of Burns.

It was there he met Elvis … Elvis the Elk that is … who happens to be a rubber replica of an elk who years ago became friends with a local resident. The store’s owners, Pat and Dale Martin, were kind of enough to introduce Ron to Elvis. 

View additional pictures of Senator Wyden's visits from the May trip: http://www.wyden.senate.gov/news/photo-gallery/may-2012-oregon-events

The Fallacy of Blaming the Market as the Sole Cause of High Gas Prices

In his May 3, 2012 column, Robert Samuelson claims “We should exorcise the politically convenient notion that high oil prices result from the market maneuvers of greedy “speculators.” But it’s hard to do that without ignoring the facts.

In an effort to disprove the role that speculation is playing in driving gas prices, Mr. Samuelson points to the following recent testimony before the Senate Energy and Natural Resources Committee by Howard Gruenspecht, acting administrator of the nonpartisan U.S. Energy Information Administration:

“The increases in crude oil prices since the beginning of 2011 appear to be related to a tightening world supply-demand balance and concerns over geopolitical issues that have impacted, or have the potential to impact, supply flows from the Middle East and North Africa.”

But just two weeks after that hearing, the Wall Street Journal reported in an article entitled “Pressure on Oil Supply Eases” that “two years of oil market tightening reversed in the first quarter as supply exceeded demand and inventories grew.”  In fact, the tightening supply/demand balance had already reversed by the beginning of 2012.  As the article reported “Global oil inventories grew by as much as 1.2 million barrels a day in the first quarter.”  The most recent EIA National Defense Authorization Act report also confirms that a number of countries were actually producing at above average rates in the first quarter, including the U.S. Canada, Brazil, China, and Columbia substantially offsetting unplanned global production outages and reductions in exports from Iran.

When demand is declining and supply is increasing, it is textbook economics that prices are supposed to come down.

But that’s not what happened. As the graph accompanying the Wall Street Journal article makes clear, in the 1^st quarter of 2012, the price of oil skyrocketed by more than 20 percent.  And this occurred despite the fact that the supply/demand balance was actually loosening, not tightening.  Clearly, more was at work in oil markets at the beginning of the year than supply and demand alone.

Mr. Samuelson also attributes higher gas prices to “shrinking spare capacity” and cites the testimony of another witness at the hearing, Dr. Daniel Yergin, chairman of the consulting firm IHS CERA.  Here again, the facts are at odds with the testimony.   

Just days before the hearing, Saudi Arabia announced plans to increase spare capacity by 2.5 million barrels per day – at least doubling the estimate of 1.8 to 2.5 million barrels per day of spare capacity Dr. Yergin had provided in his testimony.

Mr. Samuelson does acknowledge that “outside investors (a.k.a. “speculators”) have dramatically shifted money into commodities — raw materials” and that “Commodity index funds,” which invest in a basket of commodities (oil, wheat, corn), have attracted hundreds of billions of dollars.

But he doesn’t seem to appreciate how fundamentally this has changed the commodities markets.  Four years ago, speculative traders held less than half of the futures contracts for crude oil.  Today, according to the Chairman of the Commodities Futures Trading Commission, these traders now account for 85% of the crude oil futures market.

Because of this fundamental change in the commodities market, industry experts from the CEO of Exxon Mobil to Goldman-Sachs, the firm that practically invented the commodity index fund, have estimated the impact on oil markets from speculation at upwards of $20 a barrel, which translates to more than 50 cents a gallon at the pump.

Delta’s recent announcement that it is buying an oil refinery in Pennsylvania to protect itself against the risks of price spikes and potential fuel shortages is further evidence that the crude oil commodity market is no longer filling its traditional role of hedging risks for commodity users.

Certainly, speculation is not the only cause of high oil and gasoline prices.  As Mr. Samuelson correctly points out, our dependence on a global market for oil is clearly a major factor.  But it is far from the only factor driving up current prices at the pump.   If speculation were not an issue, Mr. Samuelson’s prescription of “Use less, and produce more” should already have lowered prices significantly.  Because that’s what occurred during the first quarter of 2012 and prices still soared to the highest level ever for that time of the year. 

Courtesy of The Wall Street Journal: