[Congressional Record Volume 141, Number 1 (Wednesday, January 4, 1995)]
[Senate]
[Pages S26-S27]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                       TAX CUT--WRONG THING TO DO

  Mr. FEINGOLD. Mr. President, as the bipartisan stampede for tax cuts 
begins here in the 104th Congress, I would like to raise a dissenting 
voice. Like every other elected official, I would really like to be 
able to support a tax cut for middle-class Americans. In fact, it would 
be great to be able to support a tax cut for all Americans. That is 
usually a very pleasant opportunity for an elected official to vote for 
that kind of tax cut.
  I think it is the wrong thing to do right now, when we have just 
begun to make headway on reducing the Federal deficit. This new tax cut 
fever is just the most recent example of how far we seem to be straying 
in the path toward economic stability. We started moving in the right 
direction with deficit reduction in 1993, but I think in 1994, we 
started to stray from the path a little. Now, there are just far too 
many signs that not only are we straying from the path, but that we are 
about to make a complete U-turn and head back toward soaring deficits, 
a mounting national debt, and putting off until tomorrow the fiscal 
housecleaning that is so desperately needed today. Let me just tick off 
very quickly some of the bad signs that we are about to move in the 
wrong direction.
  One is that the Republican Contract With America, frankly, lays out 
what I think is an irresponsible plan that proposes a balanced Federal 
budget and, at the same time, says we are going to have major tax cuts 
and a significant increase in military spending. This is a proposal 
that Nixon's economic adviser, Herbert Stein, labeled hypocritical. So 
that is one sign--the Republican contract.
  The second sign is that some folks are also saying we should use 
something called dynamic scoring techniques. I think this dynamic 
scoring technique is a bit of fiscal hocus-pocus. Business Week 
described it this way:

       * * * as the most dangerous thing to hit Washington since 
     politicians discovered how to print money.

  Dynamic scoring would abandon the tough pay-as-you-go budget rules 
that we have used in the past several years to bring down the Federal 
deficit. So I think that is a bad idea. In fact, we have seen voodoo 
economics in the past. I see this as voodoo mathematics.
  Just so it is clear this is not just a partisan statement by any 
means, there is a third sign that we are moving in the wrong direction, 
and that is that President Clinton himself has proposed a $25 billion 
increase in spending for a military budget that, in my view, is already 
bloated with obsolete, cold-war-era weapons systems.
  Another sign: Members of both parties in this Senate just voted to 
waive the budget rules for the GATT implementing legislation. There are 
many other merits to it, but the fact is the measure does not offset 
the cost of the loss of tariffs of some $40 billion over the next 10 
years. So much of the progress we made on reducing the deficit could be 
lost because of the failure to pay for the GATT agreement.
  The same goes, finally, for the proposal, the reaction to the Kerrey-
Danforth Commission. People essentially ignore the important message 
that all things have to be on the table. Both discretionary spending 
and entitlements have to be on the table. You cannot have it only 
defense spending, only discretionary spending, or only entitlements if 
we are going to attack the deficit.
  But perhaps the greatest risk to our efforts on the Federal deficit 
is the latest effort to try to come up with these tax cuts. That frenzy 
of tax cuts, particularly creating the tax breaks for special 
interests, gave us the biggest deficit in our history, a deficit that 
we have just begun to cut, with considerable pain and sacrifice for 
Americans. I do not think our economy can sustain another round of this 
political self-indulgence.
  [[Page S27]] Mr. President, if the Federal Reserve reacts as 
anticipated and pushes interest rates up again, the economy could very 
well go through the windshield, and right now the President's proposed 
tax credit for families with incomes up to $75,000 will cost $90 
billion over 10 years, and if you throw in the tax cuts he has 
proposed, the bill reaches $174 billion. The Republican proposal to 
give tax credits for families earning up to $200,000 will cost, Mr. 
President, $244 billion over 10 years, and altogether the Republican 
contract, I am told, would cost a whopping $712 billion over the next 
10 years.
  So, Mr. President, I think the conventional wisdom about tax cuts is 
something that has to be challenged. I realize not many people are 
doing it at this time. What I am noticing is that my constituents can 
smell a rat when someone suggests that a tax cut is just what the 
Nation needs right now.
  It was not that long ago that I had a chance, as a candidate for U.S. 
Senate, to oppose a middle-class tax cut in a campaign. My opponents in 
the general election spent a lot of time and money making sure 
everybody in the State knew I was against the middle-class tax cut. But 
the voters realized that what they would get back in lower taxes, a 
meaningful amount to many people, was simply not worth it because of 
the devastation it would cause to our Federal budget.
  Let me bring it right up to today. In my office, since the President 
made his speech, phone calls and letters have been running about 10 to 
1 in favor of reducing the deficit rather than using spending cuts to 
cut taxes.
  For example, a gentleman from Birnamwood, WI, wrote to me and said:

       By all means, cut Government spending but use that savings 
     to eliminate the deficit and pay down the debt that threatens 
     to overwhelm us.

  He said that is the only responsible thing to do.
  A woman from Cornucopia, WI, the most northern point in Wisconsin, 
wrote:

       I can't figure out why this is happening, this race to cut 
     taxes, when the majority of people, according to all I have 
     seen, heard, and read, don't care.

  She says:

       We wanted the deficit cut and we wanted our money spent 
     more wisely.

  A gentleman from Waupaca, a very Republican town in Wisconsin, wrote 
this to me. He said recently:

       I want you to know that I strongly support your position 
     against the proposed tax cuts. With an income of $50,000, I 
     guess I would benefit from most of the tax cut plans, but I 
     feel the benefit would be short lived and would be clearly 
     detrimental to the country. I hope that you will continue to 
     oppose these tax-cut plans that are clearly nothing more than 
     attempts to buy votes.

  My office, Mr. President, has received hundreds of calls and letters 
that are similar to these. And I think that view is shared not just in 
Wisconsin. A USA Today-CNN poll published on December 20, 1994, found 
that 70 percent of those polled said if Congress is able to cut 
spending, then reducing the deficit--reducing the deficit--is a higher 
priority than just giving out tax cuts.
  So, Mr. President, to conclude, it is a little frustrating to hear 
constituents who could certainly use the money urge Congress to make 
deficit reduction a higher priority than tax cuts and then see this 
institution rush to see who can give the bigger tax cut. I hope the 
media and the political commentators will look closely at the campaign 
rhetoric of those who just recently pledged to fight to reduce the 
Federal deficit and compare that rhetoric to today's eagerness to join 
the bandwagon on tax cuts.
  I thank the Chair, and I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. PRESSLER. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.

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