Senator John Cornyn

October 31, 2008

One of the biggest challenges I faced as the governor of Massachusetts was the inclination of my Democratic legislature to raise taxes. That's not an easy thing to stop. My legislature was 85 percent Democrat, and that makes it tough for a Republican governor. I came in when we had a huge budget gap, and the economy was losing thousands of jobs a month. It turned out to be a $3 billion budget gap, but we solved it mostly by cutting back on the scale of government. The Democrats had tried to solve the problem the year before I came into office by raising taxes. It shouldn't surprise you to learn that raising taxes did not solve the problem. So, after I was elected, they gave me new budgetary powers to tackle the spending side of the budget. We had to make a lot of tough choices. We cut back on revenue sharing with our cities and towns, and we eliminated agencies and departments. There are so many examples of waste. Here's one that stands out: we had two parks departments, one that managed the urban parks and a different department that managed parks in other parts of the state. It didn't make a lot of sense, so we merged them. One newsman said I didn't just go after the sacred cows; I went after the whole herd. By the time I left office, we had fewer executive branch employees, we had restocked the rainy day fund from about $600 million when we arrived to more than $2 billion, we balanced the budget every single year without raising taxes and Wall Street responded to this new period of fiscal responsibility with a credit rating upgrade. Now, as Republicans, we have a tough job facing us on the national stage. We have spent dramatically - our deficit has ballooned to nearly half a trillion dollars. No wonder Americans are very upset and wondering where it is our country is heading. Let me tell you, spending can be controlled. We can control earmarks. We can control pork. We can put a cap on discretionary spending. We can restrain entitlement growth. One of my favorite stories is that after I was elected governor and we were searching for places of excess to cut, I was looking at the homeless budget and saw that we were spending millions of dollars a year on hotel rooms. And I said, "What's that?" And my staff explained that if a homeless person shows up at a shelter and it's full, we put them up in a hotel. And I said, "Boy, I bet the word gets around." It was costing us $20 million a year. So I announced a simple change of policy - from now on, when someone comes to the shelter and it's full, the person who's been there the longest gets to go to the hotel. By the end of the year, we were spending zero on hotel rooms. And the millions we saved we used to help people get on their feet, to get them into more permanent housing. So, eliminating waste and doing things smarter and more efficiently has to be our brand as Republicans. I'm grateful to Senator Cornyn for hosting this online discussion of fiscal issues because I think he understands better than most what is at stake in this election year. The Democrats, led by Barack Obama, are poised to bring real change to Washington, just not the change we want. They have an agenda to increase spending and raise taxes. They're going to talk about raising taxes on just the very wealthy. And there's no question they will stop the Bush tax cuts. But what will that mean for our national economy? Short term, it will mean higher federal spending on the very expensive programs they want to put in place. Long term, it means lower growth, more joblessness and falling incomes for all Americans. But it doesn't end there - they want higher taxes on Social Security, on corporations, on energy companies. Barack Obama is not hiding these plans from the public. He talks about them openly, although he's willing to forestall them until the economy is stronger. Remarkably, by offering to delay his tax program, Senator Obama is acknowledging the potential harm that will be caused if his platform is enacted. Let's look at the corporate tax for a minute here. It's something that people in the private sector talk about all the time. It's something I used to talk about with my business colleagues during my time in the private sector. It helped determine where we were going to invest, where we should build new property, plants and equipment, and where we were going to hire new people. It wasn't abstract theory to us. We shunned high tax states. Now consider this: the United States, next to Japan, has the highest corporate tax rate in the world, and this hurts our global competitiveness. Ireland has gone in a different direction. They realized that if you lower taxes enough, you create growth, and that translates into more jobs and more revenue to the government. As a nation, we need to come to a similar realization that we can't afford to have a tax rate on companies that is out of alignment with the other major economies of the world. We're going to have to bring our corporate tax rate down, as John McCain has proposed, or we're going to make it hard to get our economy moving again. I've gone on long enough here. As you all know, we've got a lot of challenges, but I am optimistic. We have an opportunity to make real change this election year with strong leadership on budget and tax issues. These types of discussions are helpful, and I want to thank Senator Cornyn for the opportunity to participate.