[Congressional Record Volume 141, Number 4 (Monday, January 9, 1995)]
[Senate]
[Pages S681-S682]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                      TAX EXPENDITURE CONTROL ACT

 Mr. BRADLEY. Mr. President, the bill that I have sent to the 
desk makes a very simply point. We can spend money just as easily 
through the Tax Code as we can through the appropriations process or 
through the creation of mandatory spending programs.
  I think we should be honest about the hundreds of billions of dollars 
that we spend each year through tax expenditures. Spending is spending, 
whether it comes in the form of a Government check or in the form of a 
special exception from the tax rates that apply to everyone else.
  Tax expenditures or tax loopholes allow some taxpayers to lower their 
taxes and leave the rest of us paying higher taxes than we otherwise 
would pay. By requiring that Congress establish specific targets for 
tax expenditures as part of the budget reconciliation process, this 
bill simply places tax expenditures under the same budgetary scrutiny 
as all other spending programs.
  Tax spending does not, as some would say, simply allow people to keep 
more of what they earned. Rather, it gives them a special exception 
from the rules that oblige everyone to share in the responsibility of 
the national defense and protecting the young, the aged, and the 
infirmed.
  Mr. President, we all have been heartened by the recent drops in 
projected budget deficits. Recent CBO figures show the deficit dropping 
to $166 billion in 1996, largely due to the success we had in passing 
the largest deficit reduction package during the 103d Congress.
  However, we cannot rest on that success. Although it was a good 
downpayment on deficit reduction, it is not enough. Even if we succeed 
in reducing the deficit further by cutting discretionary spending, we 
will not even begin to touch the national debt.
  We cannot afford to be timid, Mr. President. Our children's way of 
life is dependent upon our acting on the Federal deficit today and 
tomorrow and every year thereafter until we restore fiscal sanity to 
our budget. We cannot wait until we grow our way out of the debt. And 
we should not and cannot wait until deficits start drifting up in the 
latter half of this decade before we do something.
  The Congressional Budget Office tells us that the national debt held 
by the public will rise from approximately $3.5 trillion to roughly $6 
trillion in 2004. At that time, the national debt will equal almost 55 
percent of our gross domestic product. By 2004, interest payments on 
that debt will be approximately $334 billion, or over 3 percent of our 
gross domestic product. One recent report stated that these interest 
payments will cost each of today's children over $130,000 in extra 
taxes over the course of their lifetime. Our national debt is nothing 
less than a mortgage on our Nation's, and our children's future.
  Mr. President, let us not kid ourselves. Addressing our burgeoning 
debt will not be easy. If it was, we would have done it years ago. 
Balancing the budget is going to require sacrifice from every American. 
It also means that we are going to have to take a hard look at what we 
spend the taxpayers' money on. And that means all of our spending 
programs, tax expenditures included.
  Today, I am introducing legislation that requires Congress, in our 
budget resolution process, to simply establish targets for reducing tax 
expenditures, just as we do for other spending items. Those targets 
would be enforced through a separate line in our budget reconciliation 
instructions for reductions in tax expenditures. We already do this for 
other entitlement programs. There is no reason not to do so for tax 
expenditures. The Senate would pass a budget resolution asking the 
Finance Committee to reduce tax expenditures, for example, by $10 
billion a year or $20 billion or whatever the Senate decides is 
prudent. It would be up to the Finance Committee to meet those targets 
through the reconciliation process.
  This separate tax expenditure target would not replace our current 
revenue targets. Instead, it would simply ensure that the committee 
would take at least that specified amount from tax expenditures. Or, in 
other words, we would ensure that the committee would not raise the 
targeted amount from rate increases or excise tax increases.
  I expect to hear from those who will say that I am trying to increase 
taxes. I strongly disagree. I am simply trying to draw the Senate's 
attention to the very targeted spending we do through [[Page S682]] the 
Tax Code, spending that is not subject to the annual appropriations 
process; spending that is not subject to the Executive order capping 
the growth of mandatory spending; spending that is rarely ever debated 
on the floor of the Senate once it becomes part of the Tax Code. The 
preferential deductions or credits or depreciation schedules or timing 
rules that we provide through the Tax Code are simply entitlement 
programs under another guise. Many of them make sense, Mr. President. 
And I would be the first to admit that. Many, however, probably could 
not stand the light of day if we had to vote on them as direct spending 
programs.

  Given our critical need for deficit reduction, tax spending should 
not be treated any better or worse than other programs. It should not 
be protected any more than Social Security payments or crop price 
support payments or Medicare payments or welfare payments.
  What am I really talking about? I am talking about letting wealthy 
taxpayers rent their homes for 2 weeks a year without having to report 
any income. That is already in the Tax Code. I am talking about 
providing production subsidies in excess of the dollars invested for 
the production of lead, uranium and asbestos--three poisons on which we 
spend millions of dollars each year just trying to clean up. That is 
already in the code. I am talking about tax credits for clean-fuel 
vehicles, cancelation of indebtedness income for farmers or real estate 
developers, special amortization periods for timber companies' 
reforestation efforts, industrial development bonds for airports or 
docks, special treatment of capital construction funds for shipping 
companies, et cetera.
  Mr. President, before we see a long line of people coming down to 
defend these programs that I just mentioned, let me be clear that this 
bill does not pinpoint any specific expenditures. It simply requires 
that these programs be treated in a manner similar to other entitlement 
programs.
  The Joint Tax Committee estimates the revenue lost from these tax 
expenditures each year. While interaction effects make it difficult to 
pinpoint exact costs--how one tax expenditure interacts with another--
the Joint Tax Committee list will add up to over $425 billion in 1995. 
Unchecked, this list will grow by $60 billion to over $485 billion by 
1999. Perhaps more interesting, however, are the administration's 
estimates of what the ``outlay equivalents'' for these tax expenditures 
are each year, in other words what they would cost us if they were 
transformed into direct spending programs, as opposed to hidden 
spending programs in the Tax Code. The administration's estimate for 
outlay equivalents in 1994 added up to $550 billion; by 1998, this 
amount is expected to grow to over $660 billion. At a time when we are 
properly talking about other spending cuts, I do not believe that tax 
expenditures should be out of bounds.
  I am not suggesting that we eliminate all these programs. In fact, 
many of them I support. All I am suggesting is we put them under the 
same scrutiny that we put on other entitlement programs.
  If we are serious about deficit reduction--and for our Nation's 
future I sincerely hope that we are--then every segment of spending 
will have to be examined. We will not do it through discretionary 
spending cuts alone. Indeed, what is an area of the budget that is 
shrinking in terms of gross national product. We will not be able to do 
it through entitlement cuts alone. In order to achieve equitable, 
lasting deficit reduction, we will meet to consider tax expenditures as 
well.
  I urge all my colleagues to support this bill.
  I list Mr. Daschle and Mr. Kerry as original sponsors. I ask 
unanimous consent to have the text of the bill printed in the Record.
  The bill follows:

                                 S. 98

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Tax Expenditure Control Act 
     of 1995''.

     SEC. 2. TAX EXPENDITURES INCLUDED IN BUDGET RESOLUTION.

       Section 301 of the Congressional Budget Act of 1974 is 
     amended--
       (1) in subsection (a)(2) by inserting after ``Federal 
     revenues'', both places it appears, the following: ``and tax 
     expenditures (including income tax expenditures or other 
     equivalent base narrowing tax provisions applying to other 
     Federal taxes)''; and
       (2) in subsection (a)(4) by inserting after ``budget 
     outlays,'' the following: ``tax expenditures (including 
     income tax expenditures or other equivalent base narrowing 
     tax provisions applying to other Federal taxes),''.

     SEC. 3. TAX EXPENDITURE ANALYSIS IN REPORT ACCOMPANYING 
                   BUDGET RESOLUTION.

       Section 301(e)(1) of the Congressional Budget Act of 1974 
     is amended by inserting after ``revenues'' the following: 
     ``and tax expenditures''.

     SEC. 4. RECONCILIATION MAY INCLUDE TAX EXPENDITURE CHANGES.

       Section 310(a)(2) of the Congressional Budget Act of 1974 
     is amended by inserting after ``revenues'' the following: 
     ``and tax expenditures''.

     SEC. 5. CONGRESSIONAL BUDGET OFFICE REPORT.

       Section 202(f)(1) of the Congressional Budget Act of 1974 
     is amended in the matter following subparagraph (B) by 
     striking ``and budget outlays'' and inserting ``, budget 
     outlays, and tax expenditures''.

     SEC. 6. EFFECTIVE DATE.

       This Act and the amendments made by this Act shall take 
     effect on the date of enactment of this Act.

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