Opening Statement of Rep. Jim McCrery
Markup of the Alternative Minimum Tax
June 18, 2008
(Remarks as Prepared)

 Thank you, Mr. Chairman.

          Last week, the distinguished Chairman of the Senate Finance Committee said, “I think it’s important to recognize the reality that at the end of the day, the AMT patch will not be paid for.”

         A day later, he was even more explicit, asking that since, “we all know it’s not going to be paid for, so why go through all the motions?”

       Reading those comments, one might think this bill is “dead on arrival” in the Senate.

       But I think that gives too much credence to this particular doomed vehicle.  Even a distinguished Democratic Member of this panel noted earlier this month that “what’s likely to happen is we’ll pass a bill that’s paid for, the Senate will send it back without offsets and we’ll agree to it – just like last year.”     

Everybody in the room knows this bill is just for show and has no prospect of getting through the Senate. 

Given the short shelf life of this measure, we are not going to offer on our side as many amendments as something as deeply flawed as this would normally merit, but we will have two or three.

But please don’t mistake that for any erosion of our strong opposition to this measure.  I will briefly summarize our objections and expect others will pick up on these themes during the mark-up.

First and foremost, we should not have to raise taxes to prevent a tax increase.  This is something we have repeatedly stressed since the start of the 110th Congress and will continue to do so, particularly as we get closer to the bulk of the $3.6 trillion tax increase that are implicit in the Majority’s paygo baseline. 

Second, I think we all agree that something needs to be done about the deficit, we need to keep in mind that Washington doesn’t have a revenue problem, it has a spending problem. 

I have distributed to all Members a chart, which is a version of one that you have all seen before.  It has three lines.  The dashed line across the bottom shows the historical average of federal revenues as a share of GDP.

The top line shows that under the paygo baseline, revenues will vastly exceed historical averages and will approach 20.5% of GDP within the decade.

The middle line shows what those revenues would be if the AMT patch were permanently extended.  As you can see, for almost the entire ten-year window, federal revenues would exceed historical averages and would, by 2018, reach 19.9% of GDP, a figure exceeded only three times since 1968.  That’s with the patch in place.

Are there long-term budget challenges facing us? You bet there are.

But they are mostly the result of our inability to tackle fast-growing entitlement programs, not a lack of revenue.

Third, this bill is a pointed reminder that even if we can devise one set of revenue raisers for an extenders package that seem innocuous, even the creative mind of the Chairman and his talented staff will soon run out of “cute and cuddly” tax increases that impact only a few disfavored individuals or companies.

Today’s array of offsets, for example, is more objectionable than those used for the stand-alone extenders bill passed by the House last month. 

That bill, as my colleagues will recall, contained raisers related to the deferred compensation of managers of offshore hedge funds and a delay of pending worldwide interest allocation rules.  While I am not enamored of the latter, they are certainly not the most egregious offsets the Majority could have chosen.

But with those offsets already “taken,” now the Majority has shown its commitment to recycling by bringing back several previously rejected offsets, such as tax hikes on domestic oil and gas production, which will do nothing to lower prices at the pump and which will instead discourage domestic energy production.

The bill also includes a slightly modified version of a provision imposing higher taxes on multi-national firms that invest and create good jobs in the United States and would raise taxes on investment partnerships.  They also introduce some new ones here today, including a potentially burdensome reporting requirement on credit card companies.

Just as today’s offsets are more offensive than the ones used last month on the extenders bill, the ones we will see used the next time around are likely to be even worse.

As we consider the many faces of paygo – used here today to raise taxes to prevent a tax increase; waived last week to clear the way for more spending -- we see that it is little more than a mask the Majority wears to try to fool us into thinking they are for fiscal discipline, when really their agenda is more spending and more taxes.

I take comfort in this bill’s dim future and hope that we can work together soon to enact an AMT patch without offsets, something that is critically important and that has enjoyed strong, bipartisan support for many years.

I yield back my time.

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