WASHINGTON, D.C. — In a speech at the U.S. Chamber of Commerce on Tuesday, Finance Committee Chairman Sen. Orrin Hatch outlined a growth-oriented committee agenda aimed at achieving a healthy economy by pursuing bipartisan, job-creating initiatives such as reforming the tax code and enacting trade promotion authority. The chairman highlighted his oversight agenda and his plan to strike away at Obamacare while detailing how the committee intends to address entitlement programs and pension reform.
“The Senate Finance Committee has a long tradition of effectiveness and bipartisanship,” Hatch said. “I’ve always been proud to serve on the committee for just that reason. So, I look forward to working with my colleagues on the committee – both Republicans and Democrats – to make this agenda a reality,”
The complete speech, as prepared for delivery, is below:
It’s an exciting time to be in Washington, at least if you’re a Republican. With the results of the last election, voters gave us an opportunity to do some great things for hardworking Americans.
Believe me, we’re not going to waste it.
I’m here today speaking as the Chairman of the Senate Finance Committee. The Finance Committee has the largest jurisdiction of any committee in Congress, legislating on issues that impact the lives and livelihoods of every American.
We have jurisdiction over the tax code and much of our nation’s health care system.
We have jurisdiction over our trade policy and our entitlement programs.
And there’s much more.
We have some great Senators on this committee – on both sides of the aisle. I’m very grateful to the Senate Majority Leader for entrusting me with the leadership of this important group of Senators.
Our country faces a number of significant challenges.
For example, despite some recent upticks, economic growth over the last several years has lagged behind historic levels.
Even though we’ve seen a decline in the unemployment rate, labor force participation is still dangerously low as more and more Americans are forced to work in low-paying, often part-time jobs or to leave the workforce altogether.
Although we’ve seen some deficit reduction over the past few years, our national debt is currently over $18 trillion – that’s Trillion, with a T – and is projected to only expand in the coming years.
And, we have a coming entitlement crisis that threatens to swallow up our government and take our economy down with it.
If we’re going to right this ship, we’re going to need a new agenda.
An agenda that puts a healthy economy and job creation first.
An agenda that gives hardworking taxpayers greater security and independence.
And, an agenda that will put our government on a better and more responsible fiscal footing.
That’s what I’m here to talk about today. As the Chairman of the Finance Committee, I want to do all I can to put our country on a better path and to ensure that all Americans have an opportunity to prosper. To get there, I’ve put together what I think is a very ambitious agenda for our committee that I want to lay out for all of you today.
Now, I’m fully aware that, for some people – particularly the cynics among us – the word ambitious is just another synonym for unrealistic. To them I can only offer my commitment to work tirelessly and relentlessly to make every part of this agenda a reality.
Keep in mind, this isn’t the first time I’ve chaired a committee – I’ve chaired two big committees before taking over Senate Finance. While there are surely some unique challenges to every committee, those who know me can attest that I know how to get things done.
To see what I intend to do, let’s talk specifics about what the Senate Finance Committee will be tackling in the 114th Congress.
My top priority for the new Congress will be to reform our nation’s broken tax code.
Tax reform is long overdue. I don’t think there’s a person in this audience who would disagree with that sentiment.
Comprehensive tax reform is essential if we’re going to get our economy moving again. Our current tax system is a roadblock that stands between us and sustained prosperity. I don’t believe reform should be considered optional – it is essential if we’re serious about building and maintaining a healthy economy.
Over the last few years, I’ve laid out seven principles that I believe should guide our tax reform efforts.
The first is growth in our economy. Growing our economy should be our highest priority as we undertake tax reform. Absent sustained and robust growth, our children and grandchildren face a dimmer future.
Another essential principle is fairness. The tax code should treat similarly situated taxpayers similarly. It should not pick winners and losers. A broader tax base with lower rates should be the basis of a fairer tax code.
Simplicity is also an important principle. Every year, Americans spend more than the gross domestic product of New Zealand just to comply with the tax code. Those billions of dollars could be put to better use elsewhere, creating more jobs and providing greater financial security for families and individuals.
Permanence is another principle. Businesses and hardworking taxpayers should be able to plan for the future without wondering whether the tax code is going to change from year to year.
Our tax code should also promote American competitiveness – another one of my principles. Under the current system, American employers face numerous competitive disadvantages relative to their foreign counterparts. We need to eliminate these impediments and put our own companies on a level playing field in the world marketplace.
We also need to promote savings and investment. Right now, our tax code, in many ways, discourages people from saving and investing, which harms growth, hinders financial independence, and reduces the quality of life for future generations. That needs to be changed in tax reform.
Finally, there is the principle of revenue neutrality. If we’re scouring our tax code looking for additional revenues to pay for government spending, we’re not engaging in tax reform, we’re raising taxes. Any attempt to use tax reform as an excuse to raise taxes on businesses or hardworking taxpayers is a needless distraction in my opinion. I don’t know any reasonable person who would publicly argue that the American people are undertaxed. We need to remember that as we work toward reform.
Sadly, it doesn’t appear that President Obama gets it.
We’ve seen reports that, in tonight’s State of the Union address, the President plans to call for tax hikes in the name of simplifying the tax code and helping the middle class. And, the tax hikes he’s proposing would be particularly damaging, undoing tax policies that have been successful in helping to expand the economy, promote savings, and create jobs. His proposal would send a bad signal to American businesses and their workers who want us to actually help promote the health of our economy.
Clearly, while President Obama may be using language typically associated with tax reform, his goals depart in many ways from the principles I’ve put forward.
Revenue neutrality is essential if we’re going to enact real reforms. I hope we can get the President to reverse course on this. Simplicity, too, is important, but it would take some creative advertising to argue that what the President will lay out tonight will simplify the tax system.
This plan that we’ll hear about tonight appears to be more about redistribution, with added complexity, and class warfare, directed at job-creating small businesses, than about tax reform, which is unfortunate, because we’re going to need real leadership from the White House – not just liberal talking points – if tax reform is going to be successful.
So, with my seven principles in mind, the question becomes: How do we get to reform?
I’m sure all of you are aware of the recent steps we’ve taken on tax reform in the Finance Committee.
Last week, Ranking Member Wyden and I appointed leaders to five tax reform working groups and tasked them with studying various areas of the code to find solutions and offer proposals for reform. This process, I believe, puts us on a path where bipartisan tax reform will be achievable.
The five working groups are:1) Individual Income Tax; 2) Business Income Tax; 3) Savings and Investment; 4) International Tax; and 5) Community Development and Infrastructure.
My hope is that the committee members in these five bipartisan working groups will use this opportunity to uncover real tax reform solutions and give us real ideas that aid us in reform. And, I believe that’s just what they’ll do. They’re all committed to this process and I believe it’s going to work.
I’ll speak once again to the cynics who may be out there doubting the intent of this process: This is not an exercise. This is not theater, nor is it just for show. This is a very real undertaking.
I don’t want to just release a framework or a proposal that doesn’t go anywhere. My only goal when it comes to tax reform is to make new law. The purpose of this endeavor with the working groups is produce bipartisan tax reform legislation that will be introduced and marked up in the Finance Committee later this year.
I’m sure all of you have your own thoughts on what the final product should look like. I look forward to hearing from you as this process moves forward.
In the tax space, we also have to work to fund the highway bill. As you all know, the latest iteration of highway funding expires in May. Whether we address that as a standalone or as part of tax reform, we’re going to work to find a long-term funding solution to pay for our highways.
I agree with Chairman Ryan that a gas tax increase is very unlikely. But, I believe we can find other solutions.
Infrastructure, properly defined, shouldn’t be partisan – it should be something that unites us. And, I’m committed to working with my colleagues on both sides of the aisle to find a solution on this issue.
Another high priority item on my Finance Committee agenda is the advancement our nation’s interests in international trade. This is another area that impacts almost every American.
More than 95 percent of the world’s population and 80 percent of its purchasing power resides outside of the U.S. If we want our businesses – large and small – to be able to compete on the world stage, they need to have access to these foreign markets.
There’s just no way around it: Trade is essential for a vibrant, growing economy, one that will create more jobs here at home and provide greater prosperity and opportunity for businesses and individuals.
The U.S. is currently engaged in two of the most ambitious trade negotiations in our nation’s history. The first is with likeminded countries in the Asia-Pacific region – the Trans-Pacific Partnership or TPP. The other is with our allies in the European Union – the Transatlantic Trade and Investment Partnership, or T-TIP.
My goal as Chairman of the Senate Finance Committee is to help ensure that these trade agreements meet high standards and provide the very best opportunities for American workers and the businesses who hire them. To do that, we need to renew Trade Promotion Authority, or TPA.
Every president since FDR has sought TPA in their efforts to negotiate and conclude high-standard trade agreements. In the last century, no major trade agreement has been concluded by an administration and enacted by Congress without TPA.
Put simply, TPA is essential if these ambitious trade agreements are going to succeed. And, they must succeed.
Some argue that TPA cedes too much authority to the President. Well, I would argue that the opposite is true.
The TPA legislation that I introduced last year with the two former chairmen – Dave Camp and Max Baucus – actually enhances Congress’s role in trade negotiations by giving specific direction to the administration as to what they need to deliver to get an agreement through Congress. Absent the passage of TPA legislation, there is no other way for Congress to effectively assert itself and its priorities into ongoing trade negotiations.
My plan, therefore, is to move carefully but quickly to introduce and mark up a TPA bill. I’m currently working with Ranking Member Wyden and Chairman Ryan to see if there are improvements that might be made to TPA so that we can introduce a bipartisan, bicameral bill in this Congress that we can move in short order.
If President Obama can be more forward-leaning with members of his party – starting with tonight’s State of the Union address – I believe we can get this done quickly. That is what I am committed to do.
While TPA remains our top trade priority, there are other important elements of our trade agenda that also deserve to be mentioned. This year, Congress has to move to renew the Generalized System of Preferences, reauthorize the Customs and Border Protection and the Immigration and Customs Enforcement agencies, and reauthorize the African Growth and Opportunity Act, all of which are important. My plan is to move sooner rather than later on all of these priorities as well.
Now, I’d like to take a few minutes to talk about healthcare policy.
There’s a lot to discuss when it comes to our nation’s health care system. Of course, hanging over every discussion we have is the so-called Affordable Care Act.
No one in this room should be surprised to learn that I oppose the Affordable Care Act and think that it should be repealed.
But, I’m also realistic. With President Obama in the White House, we’ll never get a full-repeal enacted into law.
But that doesn’t mean we should do nothing. While we may not yet be able to repeal Obamacare, we’re going to continue to strike away at it, piece by piece if we have to.
Just last week, I reintroduced bipartisan legislation to repeal Obamacare’s job-killing medical device tax. I also plan to reintroduce a bill to repeal the Employer Mandate, one of Obamacare’s other anti-job provisions.
The House of Representatives overwhelmingly passed the Hire More Heroes Act, a bipartisan measure that will help veterans find work by exempting them from the employer mandate on small businesses. We’ll definitely take that up in the Senate. In fact, my plan is that this will be the first bill we markup in the Finance Committee.
There are other bills in the pipeline, many of which expose different parts of the Affordable Care Act’s negative impact on jobs and the economy, including legislation to restore the 40-hour work week. I plan on having the Finance Committee work through these bills so that we can send them all to the President’s desk and have him try to explain to the American people why he’s right and they’re wrong.
But, let’s be clear: It’s not enough for the committee or the entire Congress to simply send messages on Obamacare. We need to work toward positive solutions of our own.
In the last Congress, I worked with Senators Burr and Coburn to develop a legitimate alternative to Obamacare – the Patient CARE Act. Our plan addresses the shortcomings of Obamacare head-on, expanding patient choice, curbing rising health costs, and injecting market forces into our healthcare system.
In this Congress, I’m going to work to bring others on board with our solution. I’ve reached out to experts and stakeholders for their thoughts and critiques on our plan and I hope they will continue to offer their guidance as we move forward.
It’s important that Republicans begin to unite behind an alternative to Obamacare because, as we all know, the Supreme Court is going to rule on the legitimacy of the Obamacare subsidies by the end of June. Of course, I have my own opinion about how the Court should rule in King v. Burwell, but I won’t speculate today on how the decision will turn out in the end. I’ll just say that we need to be prepared, because, should the Court invalidate subsidies for the federal exchanges, we’ll need to act to mitigate the additional damage Obamacare will inflict on the healthcare system.
Finally, in terms of health care, there are a few must-pass items on the Finance Committee’s plate.
One of those is the Children’s Health Insurance Program, which is set to expire in September. We’ve heard from a number of governors – from red states and blue states alike – that want to see this program extended. I am optimistic that we can work on a bipartisan, bicameral basis to extend CHIP in a responsible way.
In addition, there is Medicare’s Sustainable Growth Rate (SGR), which expires on March 1. Last year, I joined five of my colleagues in introducing a bipartisan, bicameral bill to repeal the broken SGR formula with an improved payment system that rewards quality, efficiency and innovation. Those efforts continue in this Congress and my goal in the Finance Committee is to address the SGR challenge once and for all.
While we’re on the subject of Medicare, I want to talk about our entitlement programs overall.
As I mentioned, we’re facing an unprecedented fiscal crisis in the coming years if we don’t act to shore up our unsustainable entitlement programs – Medicare, Medicaid, and Social Security.
The stakes here are enormous. With these programs, we’re talking about tens of trillions – you heard that right – in unfunded liabilities. Our nation’s permanent fiscal health, not to mention our economy and the future of the safety net, stands in the balance.
Everyone talks about entitlement reform, but few are willing to do anything about it. But, we cannot continue to kick the proverbial can down the road on this issue. We need to act and we need to do so sooner rather than later.
In the last Congress, I proposed five separate bipartisan reforms to our health care entitlements and shared them with anyone who would listen, and even some, including President Obama, who wouldn’t.
Four of these reforms focused on Medicare and included: raising the eligibility age, reforming the supplemental insurance system, simplifying cost-sharing, and introducing competitive bidding into the system. The fifth reform dealt with Medicaid by setting per capita limits on federal Medicaid spending.
Each of these ideas has, at some time in the recent past, enjoyed the support of members of both parties.
This is not a Republican wish-list of terrible things we’d like to do to Medicare and Medicaid. These are reasonable ideas that I put forward to begin the discussion on entitlement reform.
We also need to talk about Social Security, a program with $25 trillion—again, with a T—in unfunded obligations.
The Disability Insurance trust fund in Social Security is projected to be exhausted sometime in 2016, so there is an urgency to act. That’s not anyone creating a false crisis; it is a fact, and even Social Security’s Trustees, who include officials from President Obama’s administration, urge action and agree. In fact, in their words, not mine “legislative action is needed as soon as possible.”
I will be working to bring forward bicameral and bipartisan legislation to motivate dialogue and begin to confront Social Security’s financial challenges in this Congress. And that will require that my friends on the other side at the very least take up my offer to engage in dialogue, something that, thus far, they have been unwilling to do.
If we do not face the fact that our entitlement promises are unsustainable, and do nothing to place them on a sustainable path, then simple budget arithmetic means that taxes will have to rise significantly over time. Of course, our income tax system is ill suited to harvesting ever greater shares of the economy from private hands, so the inevitable result of failing to confront our unsustainable entitlements would be a future with yet more ways of the government grabbing resources—such as value-added taxes, or carbon taxes. I believe that a future with an all of the above strategy of taxing Americans is something we must avoid if we truly value the strength and dynamism of the American economy.
Another priority for me this year will be pension reform.
The purpose of pension reform is to help hardworking Americans achieve financial independence in retirement. And legislation I introduced in the last Congress, the Secure Annuities for Employee Retirement Act, called the “SAFE Retirement Act,” is designed to do just that.
The SAFE Retirement Act, which the Finance Committee will take up in this Congress, will increase opportunities for Americans to save for their retirement and help make sure that the money lasts a lifetime: no small feat in a world where people are living longer and longer lives.
My bill would do a number of things.
For example, it would create a Starter 401(k) plan designed for small or start-up businesses that are not in a position to contribute to a plan but still want to help their employees save. It also allows unrelated small employers to pool their assets in a single 401(k) plan to achieve better investment outcomes, lower costs, and easier administration.
In addition, the SAFE Retirement Act encourages the purchase of fixed annuity contracts for retirement.
My legislation also tackles one of the most pressing retirement problems facing the country: the problem of poorly funded state and local defined benefit pension plans, which are bankrupting state and local governments.
As some of you may know, the Urban Institute has established a comprehensive system for evaluating municipal pension plans across the country. The system grades various plans using seven separate criteria.
And, I am glad to say, the SAFE Retirement Plan is the only plan in the country to receive “A” grades under all seven criteria. In other words, they gave my plan the highest grade in the country.
I remain convinced that my plan represents the best solution to the growing pension crisis in America.
Finally, the SAFE Retirement Act ensures that hardworking Americans will continue to have affordable access to professional investment advice by restoring jurisdiction over the IRA fiduciary duty rule to the Treasury Department and requiring Treasury to consult with the Securities and Exchange Commission when prescribing rules relating to the professional standard of care owed by brokers and investment advisors to IRA owners. And it only makes sense to give Treasury the lead. After all, the fiduciary duty rule for IRAs is in the tax code.
I look forward to seeing the SAFE Retirement Act enacted into law.
Now, I’d like to talk briefly about the debt ceiling, which is going to come our way, likely sometime around mid-year. The debt limit is yet another major item that falls under the Finance Committee’s jurisdiction.
It is, at this point, uncertain how the next extension of the debt limit will be processed and what that will entail. But, rest assured, the Finance Committee will play a role in whatever outcome is reached.
Another area that falls under the Finance Committee’s jurisdiction is that of human resources and welfare. I have a full agenda there as well.
The federal government needs to be a better steward of taxpayers’ dollars and ensure that funded social interventions actually produce positive outcomes for vulnerable children and families. We should fund what we know works relative to the child welfare system and stop spending scarce taxpayer dollars on what actually hurts children.
There are a number of funding streams in the jurisdiction for the Senate Finance Committee that have languished for years without appropriate oversight and evaluation. As chairman, I will review programs like the Temporary Assistance for Needy Families program and the Social Services Block Grant to determine if they are producing positive results.
During the last Congress, I worked with Senator Bennet to introduce legislation to promote private and public partnerships to promote effective, cost-saving social interventions. Sometimes referred to as “Social Impact Bonds,” this approach to social service delivery could offer states and the federal government a viable pathway to innovate with promising strategies to achieve positive results and save taxpayer dollars.
I plan to continue our work in this area during the 114th Congress.
Last, but certainly not least, I want to talk about oversight. The Finance Committee has a long tradition of vigorous and effective oversight, whether it’s dealing with the administrative agencies under our jurisdiction, or, in some cases, entities in the private sector. I plan to make sure that tradition continues.
My goal as chairman will be to be very aggressive, but fair in our oversight efforts.
For too long, agencies under the committee’s jurisdiction have evaded oversight by simply ignoring congressional requests for information.
As the saying goes: That is a dog that just won’t hunt. The stonewalling will come to an end, one way or another.
For example, we need to look very closely at the implementation of Obamacare. From HHS, to the IRS and CMS, we need to see exactly how they’re spending taxpayer money and what burdens their actions are placing on taxpayers.
Most people don’t know this, but the administration spent nearly a billion dollars on state exchanges that were never implemented. And, now, the states with failed exchanges want the federal government to spend hundreds of millions more to help them get on the federal exchange. We need to know what happened and whether that money will ever be paid back.
We’ll also hold the administration accountable for their management of our entitlement programs and expose any management choices that have led to the loss of billions of taxpayer funds.
We’ll also need to ensure accountability from the administration on the often opaque programs and actions undertaken at the Treasury, the Social Security Administration, and other agencies. Those agencies are responsible for spending tens of billions of dollars on administrative costs alone, and for literally trillions of dollars of payments to, and tax receipts from, hardworking American workers and businesses. Those responsibilities have for too long been executed in the shadowy bureaucracies that exist at Treasury and Social Security. We have a responsibility to all Americans to ensure that they know how their resources are being utilized and to take decision making out of the shadows and into the light of day.
Oversight of the administration is one of the most important jobs of any committee. And, I’m going to make sure that our oversight efforts yield results that will improve the way our government functions.
Hanging over many of these agenda items is the question of whether Congress will use budget reconciliation as a means of getting some of the more high-profile items passed through both chambers. That’s certainly a question that has been raised, particularly with regard to healthcare and tax reform.
I know many of you have questions about this. So, let me just say that, when it comes to items that fall under the jurisdiction of the Finance Committee, my preference is to work toward bipartisan solutions. However, we should not – and in my opinion cannot – take any tool off the table. The stakes are just too high to limit ourselves like that. Should we decide to go that route, I’ll work with my colleagues on the Budget Committee to make sure whatever we do under the Finance Committee’s jurisdiction is effective.
Well, as you can see, we have a lot on our plate in the Finance Committee. Given the challenges we face as a country and the size of our jurisdiction, that’s the way it has to be.
But, I think it’s a good thing.
The Senate Finance Committee has a long tradition of effectiveness and bipartisanship. I’ve always been proud to serve on the committee for just that reason.
So, I look forward to working with my colleagues on the committee – both Republicans and Democrats – to make this agenda a reality. And, I look forward to working with all of you.
I want to go back to what I said about ambition.
While some call the ambitious foolhardy or unrealistic, I believe we must be ambitious if we’re going to do anything worthwhile.
We must be ambitious if we’re going to solve all of the problems we’ve discussed here today and help our country prosper.
And, we must be ambitious if we’re going to do good things for the American people.
Thank you, once again, for having me here today and for taking the time to listen.
God bless you all.
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