Executive Session

EXECUTIVE SESSION -- (Senate - June 28, 2006)

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Mr. WYDEN. Mr. President, I commend Chairman Grassley and Senator Baucus for moving quickly to have the Senate consider the nomination of Henry Paulson. I am convinced he is the right man at the right time. It is my intent to strongly support his nomination and vote for him later in the course of this afternoon.

My hope, in particular, as Henry Paulson moves to this vital position, is that he will move quickly to set in place a strategy for reforming our Tax Code. Suffice it to say, a lot has happened to our tax system since 1986, the last time the Tax Code was overhauled.

For example, since 1986, there have been more than 14,000 changes to the Tax Code. It comes to three changes for every working day for the last 20 years.

There are substantial questions with respect to fairness in the Tax Code. I am one who feels it is critically important that every American have the chance to build and accumulate wealth. That is pretty hard to do, given some of this country's tax policies.

For example, this spring, Warren Buffett, who is the second wealthiest person in the United States, told me he was going to be paying a lower tax rate than his receptionist. That is not right. I am not interested in soaking anybody. I am not interested in any kind of class warfare. But I want middle-class people to be able to get ahead as well.

For the first time in decades, we have seen corporate profits go up. We are glad to see that. We have seen productivity go up. We are glad to see that. But middle-class people are not seeing much growth in their wages. They are living paycheck to paycheck.

As Hank Paulson goes to the Treasury Department, I know he is interested in coming up with a fresh approach to the Tax Code, an approach that can allow us to simplify it, get a fair shake for middle-class folks and all Americans. I particularly commend our ranking minority member, Senator Baucus, because I think Senator Baucus, in talking about global competitiveness and what it is going to take to create high-skill, high-wage jobs for Americans in the global economy, has done some of the heavy lifting on this key issue by spending a lot of time over the last few years looking at these issues, talking to people on both sides of the aisle, with business leaders and the like. I commend Senator Baucus because he has laid some of the key groundwork to discuss tax reform as a result of his focus on global competitiveness.

I also thank Chairman Grassley for his discussions with me and with the committee. We have begun to look at corporate issues in this area. Senator Grassley, as he begins the effort to look at tax reform, particularly because of the bipartisan way in which he has led our committee, is a person ideally suited to work with Senators on both sides of the aisle and the administration, for us to build a strategy with a new Secretary of the Treasury, Mr. Paulson, to get this job done.

Suffice it to say there will be some very tough issues. Look, for example, at the issue of State and local jurisdictions and the differing tax treatment we have for these jurisdictions. A State that may have high taxes, such as New York, looks at this differently than a part of the country that does not have the same dependence on revenues from that source.

With the leadership of Chairman Grassley and Senator Baucus and a new Secretary of the Treasury who is going to look to bring people together, look at how we can modernize the Tax Code so we can make the kind of decisions that are necessary to give our citizens a better quality of life in a global economy. We are up to it.

We do not have a lot of time. The next 6 months, particularly the time between now and January, is key. That is why I have been so pleased Chairman Grassley and Senator Baucus have been interested in looking at these issues. As a result of their examination of these topics, we can lay the groundwork so the administration next January could work with Senators on both sides of the aisle, work with the other body and work with the Senate, and we can enact comprehensive tax reform.

There will be a host of other issues we will have to look at. Obviously, health care, the fastest rising expense in the American economy, is dramatically affected by the Tax Code. I happen to think there are some good ideas on both sides of the aisle with respect to tax treatment of health care expenditures in our economy. We are spending over $150 billion through the Tax Code on American health care. I don't think we are getting our money's worth. In too many instances, we are subsidizing inefficiency. This is certainly going to be a controversial area.

Democrats and Republicans, under the leadership of Chairman Grassley and Senator Baucus, and the new Secretary of the Treasury can dig into that issue.

The last point I mention, in the Commission that was set up that was chaired by Senator Mack and Senator Breaux, there are some good ideas the Congress can pick up on, working with the administration. Certainly, I don't agree with all the Commission has proposed, but let me give a couple of examples.

In legislation I have authored, the Fair Flat Tax Act, I have made it clear I want a Tax Code that is simpler, fairer and flatter. If you look at what the President's Commission has come in with, there is some opportunity for common ground. For example, in my Fair Flat Tax Act, there is a 1-page 1040 form, something a typical person can fill out in about half an hour. The administration's version, the one that came out with the advisory committee, is probably six, seven lines longer. I have a 30-line, 1040 form; theirs is six or seven lines longer. Big deal. For purposes of Government work, we can find common ground in a hurry in order to have a simpler Tax Code. That alone would be a real contribution for the American people.

On the question of making the Tax Code flatter, there are six brackets today in our Tax Code as it relates to the individual side of the code. My proposal involves three brackets. It is a progressive structure. Essentially, it is the same one that Ronald Reagan started with when he looked at tax reform. The President's advisory commission comes in with four brackets. Once again, big deal. We can find common ground as it relates to making the Tax Code flatter.

There are differences of opinion, certainly, in other areas. I have mentioned trying to get a fair shake for middle-class folks. We all understand what Henry Ford said about capitalism. Henry Ford was an industrialist. He said he wanted to do well, but for him to do well, his people had to have enough money to be able to buy cars.

Middle-class folks are getting hammered in a way today that makes it hard for them to make a lot of these purchases that are essential to them, which is why they wrack up so much debt. I think both political parties can find common ground on this tax issue.

For example, Henry Paulson yesterday talked about the value of low rates. I certainly agree with his interest there. Marginal rates are particularly important. It was something Ronald Reagan recognized in 1986. Senators on our side of the aisle, including Bill Bradley, said exactly the same thing. We can get the rates down. We can ensure fairness for middle-class folks.

What we are going to need is leadership. We are going to need it in a hurry. Chairman Grassley and Senator Baucus are going to do everything they can to find common ground on this issue. I am very pleased that Henry Paulson, who could certainly find other things to do in his life besides public service, is willing to step up and take on this effort. He will have to move very quickly to drive this tax reform debate. As I pledged to him in my private meeting and said again yesterday, I am interested in working with him and the administration in a bipartisan way. There is a lot of good faith and a lot of interest in this issue. It is a key consideration in how we are going to create high-skill, high-wage jobs for Americans in the future and enhance the quality of life for middle-class folks.

Henry Paulson is the right person at the right time. He is going to have a lot to do, and he is going to have to do it in a hurry. I intend to work with Chairman Grassley and Senator Baucus to ensure we have an opportunity, on a bipartisan basis, to tackle these big economic issues in the right way. Right at the top is tax reform.

I urge colleagues today to indicate their strong support for Henry Paulson, head of the Treasury Department.

I yield the floor.

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