[Congressional Record Volume 141, Number 63 (Wednesday, April 5, 1995)]
[House]
[Pages H4213-H4317]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




              CONTRACT WITH AMERICA TAX RELIEF ACT OF 1995

  The SPEAKER pro tempore. Pursuant to House Resolution 128 and rule 
XXIII, the Chair declares the House in the Committee of the Whole House 
on the State of the Union for the consideration of the bill, H.R. 1215.

                              {time}  1501


                     in the committee of the whole

  Accordingly, the House resolved itself into the Committee of the 
Whole House on the State of the Union for the consideration of the bill 
(H.R. 1215) to amend the Internal Revenue Code of 1986 to strengthen 
the American family and create jobs, with Mr. Boehner in the chair.
  The Clerk read the title of this bill.
  The CHAIRMAN. Pursuant to the rule, the bill is considered as having 
been read the first time.
  Under the rule, the gentleman from Texas [Mr. Archer] and the 
gentleman from Florida [Mr. Gibbons] will each be recognized for 1 
hour; the gentleman from Ohio [Mr. Kasich] and the gentleman from 
Minnesota [Mr. Sabo] will each be recognized for 30 minutes; and the 
gentleman from Virginia [Mr. Bliley] and the gentleman from Michigan 
[Mr. Dingell] will each be recognized for 30 minutes.
  The Chair recognizes the gentleman from Texas [Mr. Archer].
  Mr. ARCHER. Mr. Chairman, I yield myself such time as I may consume.
  (Mr. ARCHER asked and was given permission to revise and extend his 
remarks.)
  Mr. ARCHER. Mr. Chairman, I am proud to support this bill which may 
be the most concrete sign yet that the voters have ended 40 years of 
Democrat control over the House of Representatives. Just 2 years ago, 
the Democrat Congress passed the largest tax hike in history. Under the 
Democrats, tax increases were the answer to every question. In this 
bill, we proudly bring to a close the era of raising taxes on the 
working people of this country. When this bill is passed, the tax 
raising legacy of President Clinton and his party will officially be 
over.
  It gives me great pleasure to look the American people in the eye and 
say, the days of tax and spend are over. The days of smaller Government 
and less taxes are at hand.
  This is a bill to cut taxes. The tax cuts are fully paid for, as we 
promised they would be--and--in addition--we reduce the deficit by $30 
billion more than President Clinton's budget.
  The baseball strike is behind us, Mr. Chairman, and this bill is the 
first home run of the new season. We cut spending, we cut taxes, and we 
reduce the deficit. Washington, DC's old conventional wisdom said it 
couldn't be done. The mavins of the media were saying just this week, 
well, you don't have the votes, do you? Well, stand back because we're 
doing it--just as our Nation's Governors have done it in many States.
  We signed a contract with the American people pledging to reduce the 
size of Government and let the American people keep more of their hard-
earned dollars. With this bill, we are again keeping our promise.
  Our tax cuts can be summarized in three words: family, children, 
jobs. Our tax relief package will help America's families, and it will 
create better jobs for those families to head off to every morning.
  Over the next 5 years, the Federal Government will spend $9 trillion. 
Our cuts--$189 billion--represent just 2 percent of Federal spending. 
The Federal Government is too big, it spends too much, and it's about 
time we cut it down to size.
  These tax cuts coupled with our pledge to get to a balanced budget 
will mean that when we get there, the government will be 2 percent 
smaller yet.
  In our bill, 76 percent of the tax cuts go directly to families and 
the other 24 percent go towards job creation.
  We bring tax relief to 42-million families through a $500 per child 
tax credit, 20-million people benefit from marriage penalty relief, and 
7-million Americans will enjoy a new IRA known as the American Dream 
Savings Account. We provide adoption tax credits and we provide credits 
for those who take care of their ailing parents.
  We help 5 million seniors by repealing the punitive 85 percent 
Clinton tax hike on those who earn as little as $34,000; we increase 
the earnings limit so seniors--just like the energizer bunny--can go on 
working, and working and working--for as long as they choose; and we 
provide long-term care tax relief and accelerated death benefits.
  Finally, we provide fuel for the engine that pulls the train of 
economic growth by cutting capital gains taxes, repealing the 
alternative minimum tax, and by changing and improving expensing for 
small business.
  The Democrats, who never met a tax they didn't hike--will again go 
off the deep end complaining about tax cuts. I have a simple message 
for the Democrats. It is not your money. It is the taxpayers money. It 
does not belong to the Government. It belongs to the workers who earned 
it.
  When it comes to taxes, the two parties have very different views. 
Democrats think people work to support the Government. Republicans 
think people work to support themselves.
  Democrats think tax money is their money. Republicans think tax money 
belongs to the taxpayers.
  Democrats think tax rates should start at 100 percent and anything 
less than that is through the good graces of the Government. 
Republicans think tax rates should start at zero percent and anything 
more than that is through the good graces of the people.
  The bottom line is this. When the Democrats see someone in the middle 
of their American dream, they shake them, wake them, and tell them 
their dream can't come true. Their message is: If you make it in 
America we're gonna get 'ya.
  Republicans, on the other hand, want everyone to have an American 
dream come true. We want to open up opportunities; we want the magic of 
free enterprise to give every American the opportunity to become a rich 
American; and we want success to flourish in a million places, 
unhindered by the heavy hand of big government.
  Our tax cuts are fair, they are good for families, and they will 
create jobs. That is why they are the right thing to do and that is why 
I ask for the support of members today.
  The Contract With America promised lower taxes and less government. 
And that's the promise this bill keeps. Every one of you who votes for 
this bill today is confirming that you meant what you promised to the 
voters in September of last year.
  Mr. Chairman, I reserve the balance of my time.
  Mr. GIBBONS. Mr. Chairman, I yield myself 1\1/2\ minutes.
  Mr. Chairman, the gentleman from Texas [Mr. Archer] has just had a 
good time vilifying we Democrats. We believe there are times for tax 
cuts, we believe there are ways to tax-cut. We believe it is the wrong 
time to cut taxes now. This is the time to cut the deficit, not to cut 
taxes.
  Mr. Chairman, I was here in 1981 and I want to just reminisce for a 
second and recall some of the things that went on in 1981.
  In 1981, President Reagan was President, and his Office of Management 
and Budget Director Mr. Stockman appeared before the Committee on Ways 
and Means and he said this about the huge Reagan tax cut at that time:

       The combination of incentive-minded tax rate reductions and 
     firm budget controls is expected to lead to a balanced budget 
     by 1984.
  [[Page H4214]] Does anybody remember that that is when we began the 
huge deficit? Not to be outdone on that same day, President Reagan's 
Secretary of the Treasury Don Regan said this:

       If I know anything about the investing process at all, and 
     I spent most of my adult career in that, I think we have a 
     tremendous boom facing us as a result of what we are going to 
     do today after we pass this tax bill.

  Can anybody remember what happened? We had the biggest depression 
right after that, after that tax bill passed, that we had had since the 
1930's. It is deja vu all over again. The same rhetoric, the same 
people.
  Mr. ARCHER. Mr. Chairman, I yield 2 minutes to the gentleman from 
Ohio [Mr. Portman], a member of the committee.
  Mr. PORTMAN. Mr. Chairman, after hearing the debate this afternoon, I 
think it is important that we back up a little bit and highlight the 
fundamental purpose of this tax relief bill. We are trying to 
strengthen the American family and yes, we are trying to encourage 
economic growth. That is what we are going to do with this legislation 
if we are able to enact it.
  As the gentleman from Texas [Mr. Archer] told us moments ago, this 
new Congress refuses to be stuck in the old thinking, refuses to cling 
to the tax-and-spend policies of the past. Instead, it is simple. We 
believe in helping families and we believe in growing the economy 
through economic growth, not in growing big government.
  History is a good guide here. In 1948, the average American family of 
4 paid just 3 percent of their income to the Federal Government. My 
1992 that Federal tax bill had increased to about 25 percent of family 
earnings. In 1993 Congress added to that by passing the largest tax 
increase in American history.
  Common sense tells us that Congress has gone in the wrong direction. 
I would hope we would all agree on both sides of the aisle that it is 
fundamentally important for us to have economic growth, increase jobs 
and increase our global competitiveness. That is what this bill is all 
about. By eliminating the marriage penalty, by providing tax credits, 
by expanding IRA's, it encourages savings, savings we desperately need 
in this country and it encourages economic growth. Because it lowers 
the capital gains tax, relieves corporations from the obsolete burden 
of the alternative minimum tax, and permits small businesses to take 
tax deductions for needed investment, it will create jobs.
  These and other changes will all enhance U.S. competitiveness, which 
we have to have in order to survive in the global economy of the 21st 
century.

                              {time}  1515

  For those who argue that cutting taxes is incompatible with our goal 
of balancing the budget, let me be emphatic: This bill is paid for, 
more than paid for, with spending cuts. I could not do it without this 
commitment. As the gentleman from Ohio, John Kasich, said earlier 
today, this is actually the first step toward a balanced budget. This 
is the down payment.
  Mr. GIBBONS. Mr. Chairman, I yield 4\1/2\ minutes to the gentleman 
from Michigan [Mr. Levin], a member of the Committee on Ways and Means.
  (Mr. LEVIN asked and was given permission to revise and extend his 
remarks.)
  Mr. LEVIN. Mr. Chairman, this bill is not mainstream. This bill is 
extreme. This bill will not respond to the dreams of Americans. It is 
going to turn out to be a nightmare if it were to pass.
  I was not here in 1981. I came here in 1983. I came here when 
Michigan was in a deep recession. I came here when unemployment rates 
were climbing to 17 percent in my State, 17 percent. There has been a 
lot of partisanship in this debate and a lot of rhetoric. I am not 
saying the 1981 act was the sole responsible cause of that recession. 
But it was part and parcel of it.
  And here we go again. Here we go again. The basic thrust of this 
proposal is you cut taxes mainly for the privileged few, not only, but 
mainly, and everybody is going to benefit, and the deficit will 
disappear. That was the assumption in 1981 and now it is the assumption 
in 1995.
  But what happened? The deficit skyrocketed. We know that, despite tax 
increases while I was here, that President Reagan supported to try to 
counteract what he did in 1981. The gentleman from Florida [Mr. 
Gibbons] was here then for that experience. The gentleman from Texas 
[Mr. Gonzalez] I see, and he was
 here, was forced to vote for tax increases because of the 
irresponsibility in 1981.

  Do not say it helped the middle class. This chart shows what happened 
to incomes from 1973 to 1993, and it was not only because of the 
mistakes of 1981, but that was an important part of it.
  What happened? This chart shows it all, it shows it all. Income 
stagnation for the middle class, income loss for low-income families, 
and who benefited? In those 20 years, 30 percent increases for the 
upper fifth percentile. I represent some of the upper fifth percentile.
  I also represent those who are in the fourth quintile, and the third, 
and second, and the first. And I am not going to vote to help those in 
the upper fifth at the sacrifice of those in the lower fifth period, 
period.
  It is bad, bad public policy.
  So why are you doing it? You say the taxes are paid for. The 
gentleman from Florida [Mr. Gibbons] referred to what was presented in 
1982, and I read it. This is what was presented as the budget proposal 
for the fiscal year 1982. What will the surplus or the deficit be? Just 
00.5. When you round it off, zero. That is what was said, and all your 
bill says is the same pledge has to be made.
  It is not even a fig leaf, it is nothing.
  So why are you doing it? I think in part because extremism does not 
learn by experience.
  Second, because the moderates in your party on the Republican side 
have essentially lost their way and there is no such left. This may 
satisfy the contract, but it sure changes America.
  This may be this crown jewel, rubies and sapphires for the privileged 
few. For the rest of America it is costume jewelry at best. Let us 
reject it. If we do not, I predict it will be dead on arrival in the 
U.S. Senate, but let us do our job here and vote no.
  Mr. ARCHER. Mr. Chairman, I yield myself 1 minute just to respond to 
the gentleman from Michigan.
  It is the same old story that we have heard. Figures do not lie, but, 
figures here can be so distorted. In 1981 there was a tax reduction. 
There were not the precise spending cuts that the gentleman from Ohio 
[Mr. Kasich] has insisted on and are in this bill. This will be 
precisely paid for, as confirmed by CBO figures. Not only that, but 
over and above the tax cuts it will reduce the deficit by $30 billion 
more than the Democrat President's budget proposal, by CBO numbers.
  So the gentleman just is not on track with his figures.
  Mr. GIBBONS. Mr. Chairman, I yield 5 minutes to the gentleman from 
California [Mr. Matsui], a member of the Committee on Ways and Means.
  Mr. MATSUI. Mr. Chairman, I thank the gentleman from Florida, the 
ranking member of the Ways and Means Committee, for yielding me this 
time.
  I think what both the gentleman from Florida and the gentleman from 
Michigan said was absolutely correct. I was here in 1981, and I would 
implore the Members of this House and this body to pick up the book by 
David Stockman, the Director of the Office of Management and Budget for 
President Reagan.
  David Stockman, when he left the Office of Management and Budget 
wrote a book called ``The Triumph of Politics,'' and he said in that 
book essentially that they knew that they would not achieve a balanced 
budget by 1984, 3 years after they passed this massive tax cut; and, 
you know, Ronald Reagan said we are going to have a tax cut, we are 
going to increase defense and cut spending and balance the budget in 36 
months.
  That was smoke and mirrors, and everyone now admits it was smoke and 
mirrors, and we are playing the same smoke and mirrors game again.
  There is no way in 7 years we are going to achieve a balanced budget 
from a $350 billion annual deficit today and give tax cuts in excess of 
$188 billion, and
 that is what we are talking about, $188 billion over the next 5 years; 
and over the next 10 years, even with the Republicans' own actuarial 
studies, it will cost $640 billion over the next decade. There is no 
way you are going to be able to achieve that result 
[[Page H4215]] with these tax cuts and balance the Federal budget at 
the same time.
  The reason the Republicans feel comfortable and the reason this is 
probably going to pass today is they know the United States is not 
going to accept it because it is so extreme. Even Senator Packwood said 
this is nonsense, they are not going to accept this. And so they have 
nothing to worry about, they are playing a little figment of 
imagination on the American public, and they are going to be able to go 
back home and say they passed these wonderful tax cuts that they know 
will never become law. Let me tell my colleagues, talking about this 
being paid for, they have $188 billion over 5 years. We do not even pay 
for it over 5 years. One of the first things is they have $10.5 billion 
in spending cuts on pensions. They could not even pass pension 
reduction out of their committee. That is why that bill did not come to 
the floor. The committee that has jurisdiction over this issue could 
not get a majority vote to pass it out. So that is a figment. There is 
$10 billion that they should subtract; they are unwilling to do that.
  Then the $100 billion that they have of the $188, what happened there 
is the gentleman from Ohio [Mr. Kasich] the chairman of the Budget 
Committee, says he has got some illustrative cuts. Illustrative cuts. 
They are not in place yet. These are illustrative budget cuts he is 
talking about.
  We will not see those maybe until the fall and who knows, let us see 
how courageous they will be in the fall of this year when they are 
going to have to cut over the next decade 100 billion dollars' worth of 
spending. That is the issue. And you know this is not a middle-class 
tax cut. I tell you, this is unbelievable, to consider this a middle-
class tax cut.
  We have Treasury Department numbers here. A family that makes between 
$30,000 and $50,000 a year, a family that makes between $30,000 and 
$50,000 a year under this proposal will get about a buck and one-half a 
day, about $560 a year. On the other hand, on the other hand, and 
listen to this, those that make over $200,000 a year, the middle class, 
will get $11,266 a year as a tax cut under this proposal. That is not a 
tax cut for working families, that is not a tax cut for middle-class 
families. And what is really frightening I think to the average citizen 
when they find this, if in fact this ever becomes law, is if we had 
huge deficits as a result of this misguided decision today, you will 
see interest rates go up, and what would you rather have, a $560 a year 
or buck-and-a-half a day tax break or would you rather have lower 
interest rates so you can buy a home or maybe your child can buy a 
home?
  That is where your savings is, but interest rates will go up. I 
guarantee interest rates will go up if this ever becomes law.
  But they know it will not become law. This is a little figment we are 
playing on the American public, but the reality is we should vote this 
down just to show we in this Congress, the House of Representatives 
have discipline, unlike what we are seeing on the other side of the 
aisle.
  I urge a ``no'' vote on this particular bill.
  Mr. ARCHER. Mr. Chairman, I yield myself 30 seconds.
  There they go again, there they go again. Figures do not lie, but. 
Those were Treasury figures. They do not cite the Joint Committee 
figures that the congressional activities depend upon. The Treasury 
figures are so distorted that they are not credible. They were exposed 
as being noncredible in our committee when the Treasury witness was 
before us. Imputing rental incomes to somebody that owns their own home 
and saying that is income to you, this is ridiculous. These figures are 
just not credible.
  Mr. Chairman, I yield 2 minutes to the gentleman from Minnesota [Mr. 
Ramstad], a member of the committee.
  Mr. RAMSTAD. Mr. Chairman, I thank the distinguished chairman for 
yielding me this time.
  Mr. Chairman, for the first time in many American voters' memories 
politicians are keeping their promises. The new House majority promised 
tax relief, and we are keeping our promise.
  The new majority promised to pay for our tax cuts and lower the 
deficit, and we are keeping our promise.
  The new majority promised to create jobs. And we are keeping our 
promise.
  One leading economist told the Committee on Ways and Means that 1.74 
million new jobs will be created over the next 5 years from the capital 
gains tax cut. Economist after economist told the Committee on Ways and 
Means why we should reduce the capital gains tax.
  As Allen Sinai put it, the capital gains tax reductions will 
``stimulate economic activity, increase jobs, capital spending and 
capital formation, improve national savings, increase entrepreneurship 
and raise economic output.''
  But, Mr. Chairman, even more impressive than all of these leading 
economists was the young 17-year-old in my district who came up to me 
recently after my remarks to his high school assembly. This young man, 
this young 17-year-old explained to me that he liked what I said about 
capital gains taxes. And I was a little bit more surprised, not used to 
this kind of a feedback from a 17-year-old high school student. I 
looked at this young man and I said, ``Do you mind if I ask you a 
question? Do you have any capital gains?'' He looked back at me and his 
eyes got about this big and he said, ``No, not now, Mr. Ramstad, but 
someday I hope to.''
  Mr. Chairman, that is the kind of incentive we need to restore for 
all American taxpayers. Vote yes on H.R. 1327.
  Mr. GIBBONS. Mr. Chairman, I yield myself 30 seconds, and hope the 
gentleman will not leave the floor. I hope that young 17-year-old gets 
a capital gains tax cut, but he would be better off playing the 
lottery. Only 8 percent of the American taxpayers ever win anything on 
the capital gains tax cut.
  Mr. Chairman, I yield 3 minutes to the gentleman from Virginia [Mr. 
Payne], a member of the Committee on Ways and Means.
  Mr. PAYNE of Virginia. Well, Mr. Chairman, here we go again.
  Fifteen years after George Bush warned the Nation about voodoo 
economics, my friends on the other side of the aisle are at it again. 
They are trying to tell the American people that a 5-year, $188 billion 
tax cut is an important stop along the road to a balanced budget.
  This time the American people know better. They know, as I do, that 
this tax cut bill is fiscally and economically irresponsible. They know 
that you can't get something for nothing.
  The American people know their history. They saw the national debt 
climb from less than $1 trillion in 1980 to more than $4.7 trillion 
today.
  Americans know that tax cuts did not balance the budget in 1981. And 
they know that tax cuts will not balance the budget now.
  Our constituents understand what uncontrolled deficit spending means 
for the family budget. This year, the typical American family of four 
will spend $3,100 just to pay interest on the national debt. This is 
not their total tax bill. Nor is it their share of the total national 
debt. It is simply the amount of money they will spend to pay off the 
investors, many of whom are located overseas, who have purchased 
Treasury bills and other debt instruments of the U.S. Government.
  The best way to help American families is to cut the deficit and to 
bring down the crippling interest payments that our constituents have 
to pay each year. This is the tax cut the American people want.
  Mr. Chairman, just 2 months ago, Democrats and Republicans came 
together on this floor and made history when we passed a balanced 
budget amendment to the Constitution. We did so out of a shared belief 
that we cannot continue to saddle American families with a national 
debt that saps our productive capacity, stifles investment, and causes 
so much of our wealth to be used just to service the national debt.
  In that debate, we heard a lot of very sincere speeches about fiscal 
discipline, about the need to make tough choices, and about our shared 
obligation not to burden our children and grandchildren with an ever 
increasing national debt.
  So what happened?
  Here we are just 2 months later, and the tough choice that we are 
being asked to make is for a tax cut that will cost $188 billion over 5 
years, and that will explode in cost after the year 2000.
  Mr. Chairman, this bill is not my idea of fiscal discipline.
  [[Page H4216]] It is not the kind of tough choice that a $4.7 
trillion national debt cries out for.
  And it will do nothing to save our children and grandchildren from 
the crushing weight of the national debt.
  All this bill does is to repeat the age-old Washington mistake of 
borrowing from our children to pay for what seems popular right now.
  For the sake of deficit reduction, and for the sake of a stronger 
economic future for all Americans families, I urge my colleagues to 
reject this poorly timed, irresponsible legislation.
                              {time}  1530
  Mr. ARCHER. Mr. Chairman, I yield 2 minutes to the gentleman from New 
Jersey [Mr. Zimmer], a member of the committee.
  Mr. ZIMMER. Mr. Chairman, I thank the gentleman for yielding.
  It is a sad reality that the average American family is earning no 
more today than it earned 20 years ago. This reality has led to 
frustration, it has led to pessimism, it has led to anger among middle-
income Americans who are beginning to wonder whether, for the first 
time in our history, their children will not have a better life than 
they have had.
  We Republicans are deeply concerned about the future of working 
Americans, but unlike the minority, we are willing to attack the cause 
of this problem. We understand that wages have stagnated in large part 
because we have a Tax Code that penalizes people who invest, people who 
save, people who take risks to create new jobs, good jobs. We tax 
capital gains at a rate that is higher than our competitors, and we tax 
capital gains that are attributable solely to inflation.
  Even though it is quite obvious that a capital gains tax cut will 
help working Americans increase their standard of living, most 
Democrats hate it, because they are afraid that somebody who is rich 
might also benefit. To them, I would like to quote a Democratic 
Senator, Joseph Lieberman, from Connecticut, who said:

       The argument of some Democrats against a cut in the capital 
     gains tax--that the rich will benefit more than the rest of 
     us--misses the point and is politically divisive. Lower- and 
     middle-income people won't realize most of the tax savings 
     for the obvious reason that they have less capital, but they 
     could get something better: a job, if they have none, or a 
     better job, if they are underemployed. After all, the whole 
     idea of a capital gains tax cut is to induce people who have 
     capital to move it into new investments that will make 
     America more productive and competitive and benefit all of us 
     with greater economic opportunity and security.

  So said a wise Democrat, Senator Lieberman.
  Mr. GIBBONS. Mr. Chairman, I yield 5 minutes to the gentleman from 
Maryland [Mr. Cardin], a member of the Committee on Ways and Means.
  Mr. CARDIN. Mr. Chairman, I thank the gentleman for yielding me this 
time.
  I oppose this tax cut at this time.
  Yes, there are some good provisions in the tax cut proposal that help 
American families. I support some capital gains relief and AMT relief, 
but there are some very bad things in this bill as well, including the 
neutral cost recovery system, the raid on the Medicare trust fund, and 
the relief tilted toward the wealthiest Americans. But the fatal flaw 
in the tax bill before us is that we must make deficit reduction our 
first priority. Whatever tax cut we pass, we have to borrow money in 
order to give the taxes back to our constituents, and that borrowing of 
additional money will cost our constituents more money.
  The Republican bill that is before us will cost the American taxpayer 
an additional $17.7 billion in debt service over the next 5 years in 
order to pay for the $188 billion of tax relief. The net impact on the 
deficit will be an increase in the national debt of $206 billion over 
the next 5 years as a result of the bill that is before us.
  So let us look at the results during the first 100 days. If you take 
a look at the specific spending cuts that have been passed in the House 
so far and what is in the bill before us, if we assume that the welfare 
reform bill will pass the Senate without change, which is very 
unlikely, if we assume that the rescission bill will stay at $12 
billion net savings, and that will not change, and that will hold 
during the entire 5 years, if you assume that the other provisions in 
this bill will be enacted, and if you take the specific tax cuts that 
are proposed in this bill, you find that what we are doing is 
increasing the deficit over this period of time.
  The spending cuts which are in blue are far less than the tax cuts. 
Let me just give you 2 illustrative years. In 1998 the tax cut will 
cost the Treasury $35.6 billion, the spending cuts $29.2 billion, a net 
increase in the debt of $6.4 billion. But go to the year 2002. See what 
happens when you get a little bit further out, because of the way the 
tax provisions are worded. The tax cut will cost $87.7 billion, the 
spending cuts are $51.5 billion, for a net, a net increase in the 
deficit in the year 2002 at $36.2 billion. We have a major deficit 
problem. CBO has projected the deficit by the blue columns that you see 
here; it is scheduled to increase if we do not take action on deficit 
reduction. If we pass just the bills that have been passed so far in 
this Congress, in this House, if that is what we do, we are going to 
find the deficit larger rather than smaller during this period of time.
  I do not think that is the record that we want to use. Many of these 
tax-cut provisions will get worse as time goes on.
  Let me just give you one example. The neutral cost recovery system 
that gives businesses extraordinary writeoffs raises $16 billion during 
the first 5 years, but costs $136 billion during the next 5 years when 
we do not score it, so we take advantage of revenue even though it is 
going to cost us billions of dollars and create a major problem for the 
future.
  The contingency will not work. It is a gimmick, a sham. There is no 
question about it. The tax cuts are permanent. The spending cuts are 
only 1 years. We can come back and change, and do not think we will 
not.
  Look at the history. Look at the Emergency Deficit and control Act of 
1985; when that was passed, the deficit was $212 billion. In 1985 we 
were supposed to have a balanced budget. That was supposed to give us a 
balanced budget by the year 1991 with the sequestration, with 
enforcement.
  What was the deficit in 1991? It grew from $212 billion to $269 
billion.
  We have the specific tax cuts. We do not have the specific spending 
cuts. That is why a bipartisan group today opposed this bill under the 
Concord coalition. That is why a group of business leaders told me 
yesterday to oppose this bill, do deficit reduction first.
  The best present we can give our children and the future generations 
and the businesses and the growth in our economy is to cut the deficit.
  Vote against this bill. Vote for deficit reduction. Vote for the 
future of our Nation.
  Mr. ARCHER. Mr. Chairman, I yield myself 30 seconds.
  Here we go again. Figures do not lie, but--the gentleman talks about 
deficit reduction. There is no Democrat plan before this House for 
deficit reduction that I know of. This is the only one, and CBO scores 
us at $30 billion more in deficit reduction than the President's 
budget.
  I hope that the Democrats in their substitute and motion to recommit 
with instructions will show us a CBO score deficit reduction that is 
greater than is in this package.
  Mr. Chairman, I yield 2 minutes to the gentleman from Illinois [Mr. 
Crane], the ranking Republican of the Committee on Ways and Means.
  (Mr. CRANE asked and was given permission to revise and extend his 
remarks.)
  Mr. CRANE. Mr. Chairman, I want to express appreciation to my 
distinguished chairman and to our colleagues who are in the process of 
making real significant, historic strides in turning around the 
direction that this country has been on in virtually all of the 25 
years I have been here. We had a tax cut in 1981, the biggest tax cut 
in our history at that time, approximately, about $200 billion, and the 
fact of the matter is that that was the last time we had a tax cut.
  We have done nothing in the intervening years but raise taxes, and 
paying taxes to the average middle-income family today accounts for 40 
to 50 percent of their budget when you include taxes at all levels, 
Federal, State, and local. The tax burden has become oppressive. It has 
had a dampening effect 
[[Page H4217]] on the economy. I know of no economist who has ever 
attempted to advance the argument that by raising taxes you are 
promoting economic growth. Quite the contrary. You lower taxes and you 
promote growth.
  The other thing that was significant about that tax cut in 1981 is 
that it more than doubled revenues to the Treasury in the decade of the 
1980's. That one single tax reduction more than doubled revenues. It 
was the fastest revenue increase in our national experience, and it had 
a very positive effect in other ways, too, which created almost 20 
million new jobs.
  We have an opportunity here though to address more than just tax 
relief. it is the question of distribution of taxes.
  According to the Joint Committee on Taxation, if you look at income 
brackets after the tax cut, those people in the highest income brackets 
will be paying a marginally larger component part of the total tax 
burden, and those people in the lowest income brackets will be paying a 
marginally lower percentage of the total tax burden.
  I urge my colleagues to support this legislation and get this country 
moving in a forward direction.
  Mr. Chairman, the last time I was on the floor of the House of 
Representatives to debate and vote on a substantial tax cut for the 
American taxpayer was in 1981. Since that time, Congress has raised 
taxes more times than I care to remember. In 1993, President Clinton 
and a Democrat Congress topped all the previous tax bills by enacting 
the single largest tax increase in the history of the world--literally. 
According to the Joint Committee on Taxation, the 1993 tax bill robbed 
the American taxpayers of a total of $240 billion over a 5-year period. 
Not surprising, not one Republican in either the House or the Senate 
voted for Clinton's tax bill.
  For the American taxpayer, the 1993 tax bill may have been the last 
straw. And thanks to the American voter, the make-up of Congress was 
radically altered in the 1994 elections. For the first time in 40 
years, the Republicans gained control of the House of Representatives. 
Republicans campaigned on the Contract With America and promised to 
change business as usual. We have kept our promises and we certainly 
have changed this House of Representatives. One of the key components 
of the contract is to give back to the American taxpayers some of their 
hard-earned dollars that Democratic Congresses have taken from them 
over the years.
  The bill we have before us today would cut taxes by a total of $190 
billion over 5 years. Some have called this excessive. In fact, it is 
rather modest, particularly when one considers that the $190 billion 
figure falls $50 billion short of cutting the amount of taxes raised in 
the 1993 tax bill alone--to say nothing of all the other tax increases 
we have seen in the last 12 years. Unfortunately, my colleagues need to 
be reminded of an important point--tax dollars do not, by right, belong 
to our Government. Some of my colleagues in this House seem to think 
that tax dollars are owned by Congress.
  Let me remind my colleagues that tax dollars are owned by hardworking 
taxpayers, and Congress has a responsibility to ensure that any money 
it takes from the taxpayers is spent wisely. Unfortunately, we cannot 
say that Congress has spent tax dollars wisely over the last 40 years. 
Indeed, Congress has squandered billions upon billions of dollars. In 
my view, the only way to force the Federal Government to become 
efficient, to force it to return to the essentials, and to force it to 
eliminate the excesses that exist, is to restrict the flow of tax 
dollars to Congress--it is time to turn off the spigot. Only then will 
we be able to force Congress to live within its means. Only then will 
we be able to force Congress to stop spending money and stop mortgaging 
the future of our children.
                           what the bill does

  If you listened to the opponents of this bill you'd think we were 
increasing taxes. Of course, what this bill does is substantially 
reduce taxes for both individuals and businesses. The opponents of this 
bill have been screaming in righteous indignation over even the thought 
of reducing taxes. When you look at the actual contents of this tax 
legislation you begin to wonder where the opponents of this tax bill 
are coming from.
  This bill does a great many good and necessary things for the 
overburdened individual and business taxpayers.
  First of all, this bill helps American families. I have seen 
estimates that indicate that 40 to 50 percent of the typical American 
family budget goes toward paying taxes--Federal, State, and local. 
Specifically, 25 percent of the family budget goes toward paying 
Federal taxes. That is absolutely outrageous and it is no wonder that 
families are getting sick and tired of the tax burden they are 
shouldering, particularly when they see how their money is being spent 
by Congress. Families have been hit hard over the last few decades by 
taxes. The exemption amount for dependents, had it been indexed for 
inflation from the date it was created, should be worth over $8,000 
today, instead of the $2,450 allowed in 1994. This bill attempts to 
modestly help families by providing a $500 per child credit. In 
addition, the bill creates the American Dream savings accounts which 
will provide families the opportunity to create an IRA with tax free 
withdrawals for retirement, education expenses, medical expenses, and 
first time home purchases. The legislation provides a credit for 
adoption expenses and reduces the marriage penalty. As a long time 
proponent of all of these efforts, and as the lead sponsor of the 
American Dream Restoration Act which contained nearly all of these 
three proposals, I can assure my colleagues I feel strongly about this 
portion of the bill. All these things are long overdue and will help 
families considerably.
  The bill helps seniors as well. While Democrats have often tried to 
portray themselves as the protectors of senior citizens, in reality you 
will find that Democrat tax policies have hit senior citizens very 
hard. Our seniors have worked hard all their lives and they have paid 
taxes all their lives. Many live on fixed incomes and can ill-afford 
the continual tax hikes that have been heaped upon them by an arrogant 
Congress these past 40 years. Seniors deserve a break. This legislation 
offers them some hope. The bill repeals the increase in income taxes on 
Social Security benefits which President Clinton had pushed for in the 
1993 tax bill. In addition, the legislation raises the amount seniors 
can earn before their Social Security benefits are reduced. This is 
referred to as the Social Security Earnings Limitation issue. Both of 
these measures will put more money in the pockets of seniors. In 
addition, the bill provides for a tax credit to taxpayers who provide 
custodial care of certain elderly family members staying in the 
taxpayer's home.
  Finally, the bill gives the American business community a break. 
Although it is fundamental economics, I believe some of my colleagues 
need to be reminded of some basic tenets of the marketplace: First, 
businesses create jobs, and second, without employers you do not have 
employees. Anything we can do to ease the burden on business community, 
increase their ability to compete, and encourage investments in new 
business ventures will help create new jobs in this country. The best 
way out of poverty is opportunity--a job. This legislation reduces the 
tax burden on American businesses by eliminating the excessive, 
complicated, and inefficient section of the Internal Revenue Code 
referred to as the alternative minimum tax. Scrapping this insane 
system will go a long way toward putting American businesses on a 
competitive footing with businesses overseas. In addition, we reduce 
the rate on capital gains and index capital assets for inflation. I 
could write a book about the importance of this provision of the bill. 
I have been advocating reducing the rate on capital gains for years, 
and I have seen the benefits of doing so based on past experience. By 
reducing the capital gains rate we will not only encourage more capital 
to be invested but we also encourage capital to move freely. This will 
result in job creation. Moreover, the increased number of transactions 
will actually mean more revenue to the Treasury.
  In short, this bill will create long term dynamic economic growth 
that will benefit all Americans.


                        the class warfare debate

  In the debate over this legislation, there are those in Congress who 
wish to divide our country and its people. These people wish to create 
class antagonism, and choose demagoguery over logic and reason. These 
people want to engage in class warfare. These are the social engineers 
of our society who still don't understand that socialism died of 
natural causes. These people think they have the perfect formula for 
deciding what the proper tax burden ought to be for various income 
groups. They believe that it is Government's responsibility to 
redistribute income. They apparently do not understand some of the 
basic concepts upon which this country was founded--freedom, 
opportunity, hard work, etc.
  These people argue that the tax bill before us today caters to the 
rich--that it does not properly distribute the tax burden. Let me 
present some hard facts for these social engineers. According to the 
Tax Foundation, in 1982, the top 1 percent of income earners paid 19 
percent of the taxes. In 1992, this group paid 27.4 percent of the 
taxes. In 1982, the top 10 percent of income earners paid 48.6 percent 
of the taxes, while in 1992, that figure rose to 57.5 percent. For both 
1982 and 1992 the top 50 percent of taxpayers paid over 90 percent of 
the taxes. All this was before the 1993 tax bill which was specifically 
designed to take $114 billion from high-income individuals. Isn't this 
progressive enough? In fact, the tax bill we have before us today does 
nothing to change these percentages. Indeed, figures from the Joint 
Committee on Taxation 
[[Page H4218]] actually indicate that the top 1 percent and top 10 
percent will pay a slightly higher proportion of the total tax burden 
after this bill is passed than they would if it were not passed. That 
ought to make the social engineers happy and they ought not be 
complaining.
  Of course my point is that all this talk of tax/income distribution 
tables and class warfare is foolishness. This bill gives money back to 
the taxpayers. It does not discriminate. It is designed to encourage 
savings and investment. It is about reducing the size of Government.


                               conclusion

  Mr. Chairman, I could speak on this subject for a long time. However, 
let me simply say that this legislation is a most critical part of our 
Contract With America. Yes, we have brought this legislation to the 
floor of the House as we promised. But let us do even better than that. 
Let us pass this legislation with the goal of enacting into law real 
tax relief before the year is over.
  Mr. GIBBONS. Mr. Chairman, I yield 6 minutes to the gentleman from 
Washington [Mr. McDermott], a member of the Committee on Ways and 
Means.
  (Mr. McDERMOTT asked and was given permission to revise and extend 
his remarks.)
  Mr. McDERMOTT. Mr. Chairman, although both sides of the aisle 
strongly disagree on the merits of this bill, I think both parties will 
agree that in the last few days we have seen a truckload of statistics, 
charts, graphs, and surveys arguing for or against this tax cut plan.
  However, there is one thing that both sides agree upon--that the 
Republican tax cut plan will increase the deficit by $189 billion. 
Worse still, the Republican majority is proposing that we pay for over 
half of this deficit increase with an I.O.U. for $100 billion. Not real 
money, but a promise to pay in the future.
  No one knows what will happen in the future when the appropriators 
actually identify where the cuts will come from to achieve the $100 
billion in savings.
  We have before us a so-called illustrative list of proposed cuts by 
Budget Committee Chairman Kasich. I am sure that I am not the only 
Member of Congress who is dubious at best, about anyone's ability to 
mandate spending cuts.
  If the Republican majority so firmly believes in this tax cut plan, 
why have they not come up with the specific spending cuts which they 
promised to identify for the American people? When President Clinton 
lowered spending caps 2 years ago, he did it to cut spending, not to 
give the money to the wealthy.
  We have been down this road before. In 1981, Congress passed 
President Reagan's tax cut bill without any accompanying spending cuts. 
As a result, the deficit soared and we face the budget mess we are in 
today.
  How many Members on the other side of the aisle remember that in 1981 
the Reagan administration projected a balanced budget by 1984? Sound 
familiar? As Yogi Berra would say, ``It's deja-vu all over again.''
  The Republican leadership is asking for a giant leap of faith. They 
are implicitly forcing Members to sign a second contract, not with the 
American people, but with the Republican leadership to vote for a 
budget reconciliation bill that has not been written and currently does 
not exist.
  Unlike the recent rescissions bill which spared projects in key 
Republican districts, everything--including Social Security--will have 
to be on the table to find the $100 billion in real cuts.
  In September you will be asked to vote for a budget reconciliation 
bill that drastically cuts programs and services in your district to 
pay for this wasteful tax cut bill. Many of you will have a lot of 
explaining to do.
  The agreement by the Republican leadership to link the tax cuts to a 
balanced budget plan is toothless and misleading. This phony agreement 
allows the leadership to get their tax bill enacted without having to 
commit to any guaranteed deficit reduction.
  There is absolutely nothing in the agreement that even remotely looks 
like an enforcement mechanism. This agreement makes it all too clear 
that it is more important to the Republican leadership to keep their 
political opiate--a promise of tax cuts--no matter how damaging the 
long-term consequences.
  The unfairness of who gets what of this bill are too numerous for me 
to recite. No matter how you analyze this bill, families with higher 
incomes receive a disproportionate share of the total benefits from 
these tax cuts.
  Chairman Archer knows this. That is why he is trying to change the 
focus of the debate from who receives the majority of the tax bill's 
benefits to what percentage of total income taxes are paid by the rich. 
Good try, Mr. Chairman, but it will not work.
  The real issue today is not the total proportion of income taxes the 
richest 10 percent of the population pay, but how much of a tax benefit 
high income families receive under the contract when compared to 
current tax law.
  Under the Republican bill, the rich get richer so it is logical that 
they will pay additional taxes on the extra money they earn. In 
contrast, a working class family that is not able to take advantage of 
all of the new tax breaks contained in this bill will simply not 
benefit nearly as much.
  The majority of these tax cuts will not benefit working class 
Americans. Under the Republican theory of ``trickle-down-economics,'' 
working families will not even get wet.
  For example, the richest 1 percent of Americans who make more than 
$267,000 will pay 18.23 percent of the tax burden under the contract, 
up 2 percent. But what Chairman Archer does not say is that those same 
families--the top 1 percent--will an average tax savings of more than 
$11,000 per year under the contract.
  In contrast, the majority of American taxpayers whose incomes are 
less than $44,434 will pay 16.1 percent of the tax burden under the 
contract, a drop of 0.2 percent. But, these families only see an 
average tax savings of $760 or less.
  That's right, the rich will get $11,000 in tax savings from this tax 
plan and the majority of Americans will get $760 or less in savings. Is 
this what the Speaker means when he talks about the ``opportunity 
society'' for the American people?
  By voting for this bill with its fairy tale $100 billion I.O.U., the 
Republican rank-and-file have given up any remaining shred of 
independence they so briefly entertained last week.
  They might as well give their voting cards to the Speaker and allow 
him to vote yes for them on passage of the budget reconciliation bill 
in September because after today they have no choice.
  In September the voters back home will be wondering why they sent you 
here. Did they want you to vote your conscience or to play the childish 
game of ``follow the leader?'' Unfortunately, we have so few Members 
who do the former and far too many who do the latter.

                              {time}  1545

  Mr. ARCHER. Mr. Chairman, I yield 3 minutes to the gentlewoman from 
Connecticut [Mrs. Johnson], the chairman of the Subcommittee on 
Oversight of the Committee on Ways and Means.
  Mrs. JOHNSON of Connecticut. I thank the chairman for yielding this 
time to me.
  Mr. Chairman, I rise in strong support of this bill. It is a fine and 
necessary tax bill. First, it will make our economy grow more rapidly. 
Small business, the creator of most jobs, will gain the right to 
expense $30,000 worth of equipment, We all know that any small business 
can expand more rapidly if it can afford the equipment to produce its 
product. Expensing has long been the No. 1 demand of the small-business 
community to accelerate the pace at which it will be able to grow.
  Estate tax law reform, home office deduction reinstatement, capital 
gains, all will help small business grow, prosper and create the jobs 
that America needs.
  Second, this bill helps big businesses that compete in a very tough 
international market where you can not pass on new costs through higher 
prices. In Connecticut, one company invested $4 billion over the last 
few years in capital investment in manufacturing facilities in this 
Nation and paid higher taxes than other manufacturers who invested not 
$1 because of the alternative minimum tax. That is wrong. That is bad 
policy. That is anti-jobs. That is anti a strong economy.
  [[Page H4219]] Not only will this bill help build economic strength 
and create jobs, but it also helps families and seniors, and it takes a 
giant step toward health care reform. Young families are carrying a 
heavier burden in our society today than they have at any time in our 
history. Surely we can agree to give them this $500 tax credit per 
child.
  Seniors have been disadvantaged by the tax hike we imposed on them a 
couple of years ago. This bill repeals that; it gives them tax relief, 
raises the earnings limit, so that those with low pensions can work 
without penalizing them $1 for every $3 they earn.
  It also creates the long-term care partnership that protects our 
seniors and families from the catastrophic costs of long-term care and 
home care.
  Is this a perfect bill? Absolutely not. I disagree with the Neutral 
Cost Recovery section. I want the $200,000 threshold lowered because I 
think it is better policy, fairer to all Americans. I think the 
solution in this bill to the underfunded Federal pension plans may not 
be the best, but there is no problem in this bill that is not entirely 
solvable as we move along.
  And this bill is critical. Mark my words, it is critical to achieving 
a balanced budget. If we are going to achieve a balanced budget by the 
year 2002, that spending plan must not only enable us to provide the 
services we need in those years but also the tax policy we need to 
create jobs, to create economic strength and to assure a fair 
distribution of burden among the families and the seniors of America.
  I urge your support of this bill.
  Mr. GIBBONS. Mr. Chairman, may I inquire as to how much time remains 
on each side?
  The CHAIRMAN. The gentleman from Texas [Mr. Archer] has 41 minutes 
remaining, and the gentleman from Florida [Mr. Gibbons] has 34\1/2\ 
minutes remaining.
  Mr. ARCHER. Mr. Chairman, I yield 2 minutes to the gentlewoman from 
Washington [Ms. Dunn], a respected member of the committee.
  Ms. DUNN of Washington. I thank the gentleman for yielding this time 
to me.
  Mr. Chairman, my State of Washington is home to thousands of 
entrepreneurs, and home to Microsoft--now an economic giant but once 
launched by a pair of young entrepreneurs. We also have timber--an 
industry that once was robust and thriving, but now is facing difficult 
times.
  For too long, our Nation's entrepreneurs have been penalized by the 
tax policy of the United States. Since 1986, when the business capital 
gains rate was raised to 35 percent, venture capital financing has 
dropped by two-thirds--from $4.19 to $1.41 billion--and the number of 
firms receiving venture capital financing has declined every single 
year.
  Mr. Chairman, we must correct the current tax policy regarding 
capital formation. It we don't, we will be directly responsible when 
the next Microsoft never takes it off the ground.
  Failure to act could bankrupt 1,200 small timber businesses, who 
typically own 50 acres and have an income of less than $50,000. For 
them, the capital gains reduction is a life or death matter. These 
small timber firms alone represent more than 5,000 jobs threatened by 
high capital gains rates.
  Mr. Chairman, cutting taxes on capital is about jobs. Support capital 
formation, support entrepreneurs, support family businesses, and 
support more jobs for Americans.
  Mrs. JOHNSON of Connecticut. Mr. Chairman, I yield 2 minutes to the 
gentleman from Louisiana [Mr. McCrery].
  Mr McCRERY. I thank the gentlewoman for yielding this time to me.
  Mr. Chairman, the quote that I am given by my constituents back home 
is that, ``The Federal Government is too big and spends too much.'' I 
do not hear, when I go back home, ``I pay too little in taxes.'' Every 
Republican and many Democrats who were here 2 years ago voted against 
the Clinton tax increase. If 2 years ago you were against the tax 
increase, why would you not be now for giving back to the people about 
two-thirds of that tax increase? Instead of trying to create class 
warfare in America, let us talk about what is or is not sound tax 
policy.
  For example, the House recently passed a historic welfare reform 
bill. Those who oppose welfare reform rightly asked the question: 
``Where will the jobs come from for people who lose their welfare 
benefits?''
  Well, this bill begins to address that question. There are a number 
provisions in this tax reduction bill which will encourage productive 
investment and creation of private sector jobs. Chief among them is the 
reduction in the capital gains tax rate. By reducing the tax on capital 
gains, we reduce the cost of capital; by reducing the cost of capital, 
we encourage investment, which increases productivity, which allows 
economic growth without inflation and which, most importantly for 
Americans who want to work, creates jobs.
  This tax cut bill gives us a chance to go back in time 2 years and do 
now what Americans wanted us to do then: Cut spending first.
  If you voted against the tax increase 2 years ago, then you ought to 
vote today to repeal most of it. Now is your chance to make right what 
you said was wrong 2 years ago.
  Mrs. JOHNSON of Connecticut. Mr. Chairman, I yield 2 minutes to the 
gentleman from California [Mr. Herger].
  Mr. HERGER. I thank the gentlewoman for yielding this time to me.
  Mr. Chairman, this legislation is a crucial step in a tidal wave of 
reform. Americans are fed up with paying more in taxes than they pay 
for their families' food, clothing and shelter Americans are fed up 
with seeing small business drown beneath a suffocating mass of 
Government regulation, and American taxpayers do not want the Federal 
Government to be the fastest growing employer in the Nation.
  Mr. Chairman, in 1993, the Democrats voted
   for the largest tax increase in history, and they continue to 
support high taxes today.

  This legislation pays for all of our tax cuts, and still lowers the 
deficit by $30 billion. In addition, this bill provides $189 billion in 
tax relief. Tax relief for families with children, tax relief for young 
couples beginning to save for their first home, and tax relief for 
senior citizens living on fixed incomes.
  Moreover, Mr. Chairman, much of this relief merely gives back to 
citizens that which was taken away by President Clinton in the 1993 tax 
bill. The average Californian will save $1,761 a year in taxes if this 
bill is enacted into law--76 percent of these benefits going to 
American families.
  Mr. Chairman, it is time that Washington realizes that income belongs 
to the worker, not to the Government. Congress must allow American 
workers to keep more of what they earn--we must also restore the free 
market incentive which drives our American dream, that same incentive 
which leads citizens to take risks and create jobs.
  Vote ``yes'' on this bill.
  Mr. GIBBONS. Mr. Chairman, I yield 1 minute to the gentleman from 
Colorado [Mr. Skaggs].
  Mr. SKAGGS. Four trillion eight hundred seventy-three billion, four 
hundred eighty-one million dollars. That is the Federal debt. And we 
should be doing all we can to keep it from growing. The tax cut we are 
debating this afternoon will explode the debt by over a hundred billion 
dollars a year in the year 2005. Enormous tax relief for those who need 
it least. For hard-working middle class American families earning less 
than $75,000 a year, a pittance, 35 bucks a month. For a family over 
200,000, a thousand dollars a month. Whose sense of equity is not 
offended by that?
  Two months ago we were debating a balanced budget amendment. There 
were pious and sober speeches about the deficit and its burden on our 
kids. The same people today are supporting this budget buster. Where 
has their resolve gone?
  Four trillion, eight hundred seventy-three billion, four hundred 
eighty-one million dollars.
  With a debt like that we should not even be considering this bill.
  Vote against a repeat of voodoo economics. Vote down this bill.
  Four-trillion, eight-hundred seventy-three billion, four-hundred 
eighty-one million dollars.
  That is the size of the United States Federal debt. It's shameful. 
And we should be doing all we can to keep it from growing. Which is 
why, as much as I would like to cut taxes, I believe this is the wrong 
time for any tax cut, and certainly this tax cut.
  But the tax cut we are debating today would, over the long term, 
increase that debt tremendously--by almost $100 billion a year in 2005. 
And it would do so by giving most of 
[[Page H4220]] the tax cuts to the wealthiest people in America. 
Speaker Gingrich calls this bill the ``crown jewel'' of his party's so-
called Contract With America. I suppose that's an apt label, for this 
bill surely would finance nice trip to Cartier's for folks who are 
already in furs.
  The bill is, plain and simple, irresponsible. It will give enormous 
tax relief to those in our society who need it least. It will be paid 
for, however, at the expense of students and the elderly, and hard-
working families for whom critical programs are decimated. And it will 
be at the expense of generations to come, who'll be burdened with an 
explosion of the deficit that's reminiscent of the early eighties.
  Most Americans, those who are struggling to get by, would get only a 
pittance in tax breaks, an average of $35 a month to families making 
under $75,000 a year. Whose sense of equity isn't offended when you 
compare that to almost $1,000 a month in tax relief for those making 
over $200,000 a year?
  This bill also gives huge tax benefits to big corporations and 
investors. Not enough attention has been paid to this aspect of the 
bill, probably because these tax breaks are written in a way that hides 
their true cost. Over the first 5 years, the big business tax breaks 
add up to $24 billion. In the next 5 years their cost balloons to $221 
billion. Like an iceberg, nine-tenths of the cost hides under the 
surface of the 5-year budget horizon.
  What are these tax breaks? Things like the repeal of the corporate 
minimum tax. This wasn't an original part of the so-called contract, 
but was slipped in after a successful lobbying campaign by a coalition 
of large corporations.
  Never mind that the corporate minimum tax was supported by President 
Ronald Reagan. In 1985, the Reagan Treasury Department said, ``The 
prospect of high-income corporations paying little or no tax threatens 
public confidence in the tax system.''
  And avoiding taxes they were. Prior to the corporate minimum tax, 
most of the country's largest and most profitable corporations often 
paid no Federal income taxes. How can anyone justify increasing the 
deficit, as this bill does, just to give the biggest corporation a pass 
on paying any taxes?
  You will hear from many people today that this bill is paid for. Do 
not believe them. It's paid for only over the first 5 years, when the 
tax breaks are expected to cost $188 billion. What they won't tell you 
is that this bill was very cleverly written so that the costs are held 
down over the first 5 years, but nearly triple after that. The Treasury 
Department estimates that the full 10-year cost of these tax cuts will 
be $630 billion. That full amount isn't paid for. Any way you count it, 
this bill add hundreds of billions of dollars to the Federal debt. We 
can't afford it.
  With the huge cost of this bill, and with the lion's share of 
benefits going to the rich, some of the more moderate members of the 
Republican party have been hesitant to support it. But there was no 
opportunity for Democrats to work with them to create a bipartisan, 
more balanced bill, because their leadership had to have it their way--
leadership apparently concerned more with the symbolism and show of the 
contract than with substance, a leadership that reveals the emptiness 
of its commitment to deficit reduction.
  But the moderate Republicans were right. They remember what
   happened the last time the Congress embraced an economic policy like 
this. It was 1981, and it was called ``Reaganomics'' or ``trickle-
down'': huge tax cuts to the privileged few, more for defense, and an 
explosion of the deficit.

  It took 12 years for the Congress and the President to correct the 
horrible mistake. That correction was made in 1993, with the approval 
of the largest deficit reduction package in history. Because of the 
measures we took, the Federal budget deficit this year--fiscal year 
1995--will be $126 billion less than President Bush predicted it would 
be under his policies. That's a 40 percent reduction, and the size of 
the deficit compared to the overall economy has been cut nearly in 
half, to the lowest percentage since 1979. That's a good start. But 
there's much more to be done.
  A little over 2 months ago, the House of Representatives voted to 
propose an amendment to the Constitution to require a balanced budget, 
that Congress and the President balance the budget. Many of the 
amendments' supporters gave pious speeches filled with concern about 
the size of the deficit and Federal debt. They spoke eloquently about 
the importance of ensuring that our children aren't saddled with a 
mountain of debt.
  But today many of these same people will be voting to pass this 
budget-buster, this give-away to the rich. Where has their resolve 
gone? Where is their concern over the mountain of debt that's left over 
from the 1980's? Why don't they want to fix the deficit problem first 
and give tax cuts next? And why would they support such an ill-
conceived preference for the wealthiest taxpayers?
  If this were the time for a tax cut, there would be a better 
alternative to this trickle-down, contract tax break bill. It's a more 
modest proposal that's being offered by Congressman Gephardt. The 
benefits are targeted at the people who really need a tax break, 
working families trying to send their children to school, working 
families trying to save money for retirement, people making under 
$100,000 a year. And if I thought we could afford to cut taxes now, 
this is the type of bill I'd vote for.
  But I will vote against that, too. Reluctantly. Because I have a very 
large number that I can't get out of my head.
  Four-trillion, eight-hundred seventy-three billion, four-hundred 
eighty-one millions dollars.
  With a debt like that hanging over our heads, we shouldn't even be 
considering a tax break for the wealthy. The focus should be on deficit 
reduction. Vote against trickle-down economics. Vote against a free 
ride for large corporations. Vote down this bill.
  Mrs. JOHNSON of Connecticut. Mr. Chairman, I yield 2 minutes to the 
gentlewoman from Kansas [Mrs Meyers], the chairman of the Committee on 
Small Business.
  (Mrs. MEYERS of Kansas asked and was given permission to revise and 
extend her remarks.)
  Mrs. MEYERS of Kansas. I rise in strong support of this bill.
  In the rhetoric about this tax bill opponents claim we are giving tax 
breaks to the rich. These critics are wrong, and they are not focusing 
on some issues in the bill that are good for small business. These 
provisions are not the major sexy prominent ones in this debate, but 
they are important to hard-working men and women who are creating 75 
percent of the new jobs in this country, doing it through small 
business.
  The Committee on Small Business met five times earlier this year to 
look at specifically those provisions in the contract of most interest 
to small business. Four of these issues: one, increasing the estate tax 
exemption from $600,000 to $750,000 and indexing that amount for 
inflation; two, increasing the expensing allowance for investment in 
new equipment; three, reducing capital gains taxes; and, four, 
clarifying the home office deduction are vital to small business. These 
provisions spur investment in small business and attract life giving 
capital.
  The increase in the estate tax credit will allow more family 
businesses to pass from one generation to the next rather than be sold 
to pay the taxes. The home office deduction, restoring the home office 
deduction, is very important to millions of self-employed individuals 
in this country. Many of these self-employeds are those who turn the 
devastation of losing a job by being downsized out of a large company 
into an opportunity to start their own business and continue to support 
their families. Increasing the expensing allowance, particularly 
important to small business because of cash flow, will encourage small 
businesses to purchase equipment that can increase productivity and 
increase new jobs.
  More persons gainfully employed means more tax revenues generated, 
fewer people on welfare and a more productive society. If the 6 million 
small businesses in this country which have more than one employee 
could each hire just one more person, unemployment in this country 
would be wiped out.
  I urge support of this bill.
  Mr. GIBBONS. Mr. Chairman, I yield 4 minutes to the gentleman from 
Georgia [Mr. Lewis], a member of the Committee on Ways and Means.
  Mr. LEWIS of Georgia. Mr. Chairman, I rise against this ill-
conceived, ill-considered, and ill-timed tax proposal.
  I have heard Speaker Gingrich refer to this tax proposal as the crown 
jewel of the Republican contract. I could not agree more. Like the 
crown jewels, this bill is for royalty, it is for the truly wealthy 
among us. If you are middle class, if you are poor, you can look but 
you better not touch.
  Just look at who gets the jewels. The truly wealthy, those 1 percent 
of Americans with the highest incomes, get over $20,000--$20,000. Many 
working families do not earn that much in a year.
  A middle-class family gets less than $50 a month. The working poor do 
not even get $10 a month.
  Where do the Republicans get the money to pay for their royal jewels? 
They rob poor Peter to pay Paul. The Republicans cut student loans, 
school lunches, summer jobs--they cut money for roads, schools, 
housing, and public 
[[Page H4221]] transportation. All to give the truly wealthy a $20,000 
tax cut.
  Instead of calling this greedy tax bill a crown jewel, we should call 
it fool's gold--because for 90 percent of America, that is what it is. 
For the price of wealthy America's tax cut, millions of children could 
continue to get school lunches. Countless students could receive their 
student loans. Hundreds of thousands of our elderly poor would continue 
to receive heating assistance, to keep them from freezing in the 
winter. And millions of teenagers would still have summer jobs, to keep 
them off the streets and teach them needed skills.
  Why do we not invest in these people--the children, the workers, the 
students--our future? Because the Republicans want to give wealthy 
America a tax cut--a tax cut the rest of us cannot afford.
  We have been down this dusty road before--George Bush called it 
voodoo economics. It is a road that led us to the record deficits we 
still struggle to overcome. It is a road that mortgaged our children's 
future. It is a road that we should never ever travel down again.
  It is time to stand up for what we believe in. I ask my colleagues on 
the other side of the aisle to look within yourselves to muster the 
courage, the raw courage, to be true to your beliefs.
  This is a bad bill. You know in your heart, in your heart of hearts, 
it is a bad bill. It takes from those who need, and gives to those who 
do not. We must stop pandering, we must stop offering tax cuts for 
political gain. As for me and my house, I will do what is right. I will 
say no to the false glow of tax cuts.
  I say to my colleagues, the time is always right to do right. It is 
not--it never will be--time to return to the failed policies of the 
1980's. To return to growing deficits, joblessness, and hopelessness. 
We can not go back. We must not go back. We will not go back.
  I urge my colleagues to say no to the crown jewel of the Republican 
contract--to the tired and failed policies of the 1980's. Say no to 
fool's gold, say yes to America's gold--our children, their education, 
and our future.
  Mrs. JOHNSON of Connecticut. Mr. Chairman, I yield 2 minutes to the 
gentleman from Pennsylvania [Mr. English].
  Mr. ENGLISH of Pennsylvania. Mr. Chairman, I have listened with 
interest today to this debate, and I found it on the other side to be 
disappointing. We have heard from a number of people on the other side 
that this is the wrong time to cut taxes, but I can tell you in my 
district in northwestern Pennsylvania we need tax relief, and we need 
jobs.
  This bill helps small business, it helps manufacturing, and it 
improves the job prospects of working families. According to the 
McGraw-Hill study it would create 1.7 million jobs, and that is one of 
the strongest arguments for passing it today.
  It helps with small business expensing. It helps the most dynamic 
sector of our economy by encouraging investment in equipment. It 
provides help to cash-starved firms that need to make investments to 
stay internationally competitive, and it allows workers to achieve a 
degree of productivity that ultimately will protect their jobs. It 
repeals the alternative minimum tax which is a relic of tax policy past 
that kills jobs. It imposes high taxes on firms that are actually 
losing money, and it hurts cyclical industries like manufacturing, 
disproportionately. It reduces their competitiveness by kicking them 
when they are down, penalizing companies that need to invest to 
recover. This provision is no longer needed in the tax law because we 
have repealed those provisions in the tax law that previously had 
created abuses that it was intended to correct. We repealed safe harbor 
leasing in 1982. We repealed the investment tax credit in 1986, and we 
have made fundamental changes in accounting and depreciation.
  This bill would also make necessary reductions in the capital gains 
tax to unlock resources for investment. This tax change would free up 
capital for small business and entrepreneurs, providing the economy 
with seed corn, with new investment to build the economy of the future.
  We need this bill, Mr. Chairman, and when we hear criticisms from the 
other side let us remember they voted for the largest tax increase in 
American history, and they support higher taxes today, and they have 
offered us no alternative.
  Mr. GIBBONS. Mr. Chairman, I yield 5 minutes to the distinguished 
gentleman from New York [Mr. Rangel], a member of the Committee on Ways 
and Means.
  (Mr. RANGEL asked and was given permission to revise and extend his 
remarks.)
  Mr. RANGEL. I say to my colleagues, congratulations, your contract 
obviously is going through. I never thought I would see the day when I 
would look and the other body would be trying to clean up this garbage 
that we are sending over there. But God is good. It may happen.
  Someone said that we should really support this capital gains because 
it means jobs, jobs, jobs. Well, welcome to my district. Around this 
country we got congressional districts with 30, 40, 50, 60 percent 
unemployed, people without homes, without jobs, without hope. For God's 
sake, what water are you drinking so that I can come tell them that we 
are going to find the wealthiest Americans that have no problems and 
living in the luxury of this country, some of them we are even going to 
allow, to permit them to renounce their citizenship and pay no taxes, 
but we are going to allow them to get a 50 percent reduction on capital 
gains, not for themselves, not to get richer, no. We are doing this for 
jobs.
  But at the same time we are doing this, the poor kids around this 
country that like to believe that a part of this American dream belongs 
to them, you are cutting out education, job training and opportunities 
for them. Indeed if they are minority, and they ever get to become an 
adult, and are seeking a job that has been locking them out, then we 
say if there is any chance that any affirmative action will be there 
for you, we will shatter it. If the kid did get an education, and did 
get some of the capital gains and wanted to play the capital gains game 
with you, we would say, ``Well, we don't like it, it's too big a deal, 
and it's a minority preference, so let's knock out that deal, knock out 
all preferential dealings with the FCC, unless, of course, we know 
someone that was involved with one of these deals.''
  I say this:
  You are having a ball, you are enjoying the fruits of victory, you 
are having a party. But America is going to wake up with this hangover 
because you cannot push this fraud on the American people in a hundred 
days. One day the people are going to wake up and find out that what 
you have tried to do is to dismantle the so-called New Deal that you 
hate so much to destroy the opportunity for the Federal Government to 
provide a safety net for people and to have anytime you're talking 
about welfare in this Congress that we would know that we are talking 
about just oil depletion allowance or rapid depreciation or investment 
tax credit. That kind of welfare continues to go on.

                              {time}  1615

  But the welfare of the American people that says that no child in 
this country should go without medicine, without food, should be 
hungry, whether or not the mother is married, these things now will be 
shuttled off to the Governors. Why? Because for 40 years we did not 
perfect the system of how we take care of the poor.
  No, you are not getting rid of it to reform it; you are getting rid 
of it because you hate the word ``entitlements.'' You are saying if you 
are poor, if you are sick, if you are blind, if you are crippled, if 
you are disabled, that the Federal Government has no responsibility for 
you.
  Those are the days of Roosevelt. Wine and roses. This is the day of 
capitalism. Give it to the rich. They know better how to create jobs. 
And if the Governors do not do it right, and they do not have to, if 
the governors do not allocate the money, and there are no mandates, if 
the governors run out of money and they cannot tax it, that is no big 
deal. Government never said you were promised anything. They die. They 
have poor in other countries. Why not this great Republic? And if the 
cities and the local governments cannot do it, you are speaking to 
them 
[[Page H4222]] where to go. Send your kids to the orphanage. Get them 
adopted. Go to Boys Town.
  What has happened to the sense of feeling for our people, giving 
everyone opportunity? Let everyone dream that yes, they can cut 
coupons, but before they get to that, give them a chance to have a job. 
Do not be able to say that you are so mean-spirited that you think that 
just by cutting out people and dealing with the wealthiest of the 
people here, that you are doing the right thing. Because today we know 
that with the mistakes that we are making, if that other body does not 
correct it, we will have gone back 40 and 50 years in this great 
Republic. Do not let it happen just because you have discipline. Have 
common sense to go with it.
  Mrs. JOHNSON of Connecticut. Mr. Chairman, I yield 1 minute to the 
gentleman from North Carolina [Mr. Ballenger].
  (Mr. BALLENGER asked and was given permission to revise and extend 
his remarks.
  Mr. BALLENGER. Mr. Chairman, I rise today in support of H.R. 1215. 
Today is a good day to be in the House of Representatives. Republicans 
made a promise to the American people embodied in the Contract With 
America and today's vote on the Tax Relief and Deficit Reduction Act of 
1995 is the culmination of fulfilling that promise. We have the 
opportunity to vote on tax cuts totaling $189 billion over 5 years--
simply put, we can give back money to the very people who earned it in 
the first place.
  Cutting taxes will result in an expanded economy and increased job 
opportunities. But don't take my word for it. Here are concrete 
examples from four State Governors who have cut taxes in their states. 
Gov. William Weld, in a letter to the Speaker, states that 
Massachusetts has ``cut taxes nine times over the past four years'' 
resulting in tax revenues growing by over $2.2 billion during that 
period of time. Gov. John Engler of Michigan says that ``fifteen tax 
cuts in four years have turbocharged the state's economy to the best 
performance in a generation. While taxpayers are saving more than $1 
billion annually, state revenues have continued to rise.'' Wisconsin 
Gov. Tommy Thompson cites tax cuts of more than ``1.5 billion over the 
past eight years'' resulting in an economy that created ``new jobs at 
nearly double the national rate and more new manufacturing jobs than 
any other state. The lesson from Wisconsin is clear: tax cuts help 
create jobs and opportunity for families and individuals.''
  Gov. Christine Todd Whitman of New Jersey is working on a 30 percent 
cut in State income taxes over three years and is well ahead of 
schedule.
  I ask you, what is wrong with letting taxpayers keep more of their 
money to spend as they see fit, perhaps provide for their children's or 
grandchildren's college education, pay for a family vacation, invest in 
an Individual Retirement Account, or just pursuing their own version of 
the American Dream? Let us do for America what these Governors have 
done for their states.
  Mrs. JOHNSON of Connecticut. Mr. Chairman, I yield 1 minute to the 
gentleman from Florida [Mr. Weldon].
  Mr. WELDON of Florida. Mr. Chairman, I rise in support for family tax 
relief. The rhetoric coming from the other side of the aisle does not 
match up with the facts.
  A case in point: I received a phone call last week from Christine, a 
constituent in my district. She is a single mom with a 7-year-old son 
who called to urge my vote in support of the capital gains tax relief. 
It seems that she is selling a home and that she needs the additional 
income from our tax relief to help her provide for herself and her son.
  Now, Christine is not rich. Yet existing capital gains tax laws 
severely penalize her. This bill means that Christine will keep more of 
her money.
  In addition to tax relief provided by the capital gains reduction, 
this bill's child tax credit will let her keep another $500 of her 
income.
  Mr. Chairman, it makes for good rhetoric and heightened class 
warfore, but his does not add up. Support this bill. This is a good 
bill.
  Mrs. JOHNSON of Connecticut. Mr. Chairman, I yield 1 minute to the 
gentleman from Michigan [Mr. Smith].
  Mr. SMITH of Michigan. Mr. Chairman, I thank the gentlewoman for 
yielding.
  Mr. Chairman, I am so excited that we are reducing part of the taxes, 
reducing $190 billion of taxes, to help offset the $250 billion tax 
increase that we had a year and a half ago, and we are doing it in such 
a way as to expand and encourage jobs in this country.
  Let me just briefly show you this chart of how the United States 
charges our businesses that buy that machinery and equipment.
  Our marginal tax rate is 28 percent compared to France, 18 percent; 
Germany is exempt. We are penalizing our businesses that buy those 
tools and put the best tools in the hands of our workers. If we give 
American workers those kinds of tools and those kinds of facilities, we 
can out produce anybody in the world.
  Mr. Chairman, that is what makes jobs. We produce a product that 
people in this country and all over the world want to buy, and we 
produce it at a competitive price. To do that, we have got to give our 
workers the best possible tools.
  Mrs. JOHNSON of Connecticut. Mr. Chairman, I yield 2 minutes to the 
gentleman from Georgia [Mr. Collins].
  Mr. COLLINS of Georgia. Mr. Chairman, I thank the gentlewoman for 
yielding.
  Mr. Chairman, this tax relief bill will give something like $4.5 
billion of tax relief to the people of Georgia, and I am proud to be 
standing here in support of it. Four and one-half billion dollars of 
tax relief for Georgians.
  For the last several months we have heard opponents claim that the 
Contract With America is against children. They claim the welfare bill 
and this tax bill are antifamily and antichild.
  Well, Mr. Chairman, our opponents are wrong, and they know it. The 
truth is that every legislative component of the Contract With America 
is designed to benefit all Americans, individuals, families, and 
especially children.
  The Contract With America, and specifically this tax 
relief legislation, is 100 percent proresponsibility, pro- 
family, and prochildren.
  This legislation contains a new American dream savings account that 
reduces tax penalties on those that save money and use those savings 
for education, medical costs, and home purchases. It is profamily and 
prochildren.
  This legislation reduces the marriage penalty, making it profamily 
and prochildren. It provides $5,000 tax credit to help thousands of 
families overcome the financial obstacles of adoption. It is profamily 
and prochildren. It provides an increase in the exemption allowed for 
State taxes so that farms and small businesses started by families can 
be passed from one parent to child without destroying those assets. It 
is profamily and it is prochildren.
  It provides 50-percent capital gains deduction for individuals. This 
means that the tax penalty on a family's home or property is reduced so 
an individual or family can afford to sell that home or property 
without losing so much to the Federal Government, creating more 
financial security for that family and their children. It is profamily 
and prochildren.
  It gives a $500 tax credit to families with children under the age of 
18. It is profamily and prochildren, and I urge its passage.
  Mr. GIBBONS. Mr. Chairman, before the gentleman leaves the floor, I 
yield myself 30 seconds.
  Mr. Chairman, if this is so profamily and prochildren, why in the 
world did the Republicans introduce two bills that give it to all the 
children, but then finally in this bill they brought to the floor start 
cutting children in families of under 50,000, and under 25,000 all the 
way out of this family and correction credit. If it is so profamily, 
why did they do that?
  Mr. Chairman, I yield such time as he may consume to the gentleman 
from Indiana [Mr. Visclosky].
  (Mr. VISCLOSKY asked and was given permission to revise and extend 
his remarks.)
  Mr. VISCLOSKY. Mr. Chairman, I rise today in opposition to the 
Republican tax-cut bill, H.R. 1215, because it would undermine deficit 
reduction efforts. I have always supported a balanced budget, and the 
responsibility to achieve this is not one that I take lightly. Over the 
years, I have frequently taken the political 
[[Page H4223]] road less traveled in the name of deficit reduction. 
Last month, I was one of only six Democrats to support the rescissions 
bill because I believe we need to start making tough spending decisions 
now. In January, I supported a constitutional amendment to balance the 
budget for the first time because I finally lost faith that the 
President and Congress have the resolve to balance the budget without 
being required to do so.
  The bill we are considering today has confirmed my worst fears. We 
are cutting the taxes of the American people for the low, low price of 
$188 billion over 5 years. It is absolute folly to cut taxes for those 
making $200,000 to increase the deficit for those making $20,000 along 
with everyone else. The total cost of these tax cuts by the year 2002 
will be $630 billion. The Republicans on the Budget Committee are now 
scrambling to come up with spending cuts--just to pay for the tax cuts. 
What ever happened to deficit reduction? What ever happened to 
balancing the budget? Why don't we just focus on eliminating the 
biggest drain on taxpayer dollars, the interest on the national debt. 
These proposed tax cuts aren't going give taxpayers a break, they are 
going to increase their long-term burden.
  Nations, like families, have to plan for the future. As a nation, we 
have failed to plan. We have borrowed to achieve a false sense of 
security today, leaving the bills for our children to pay tomorrow. In 
1994, alone, we spent $203 billion more than we had. This means that 
$783 was borrowed from every single person in America. Over the past 20 
years, the average budget deficit has grown from $36 billion in the 
1970's, to $156 billion in the 1980's, to the unprecedented $248 
billion hole we have dug for ourselves so far in the 1990's. This 
irresponsible spending has resulted in a money pit so deep that this 
year's interest payment--$235 billion--will be larger than this year's 
deficit--$176 billion.
  By providing $188 billion in tax cuts instead of deficit reduction, 
the Republican Party is charging every American--including every 
child--$43.51 in interest payments for every year over the rest of 
their lives.
  The Republicans claim that the agreement they quickly slapped 
together to get enough votes to pass their tax bill will put us on a 
glide path to a balanced budget by 2002. However, no specific targets 
are set out in the agreement, and the language does not require the tax 
cuts to be rescinded if deficit reduction targets are missed. The bill 
requires only the development of a deficit reduction plan. Without 
setting enforceable targets, this bill will throw us into the same 
money pit as Gramm-Rudman I and II. If we pass H.R. 1215, we won't be 
on a glide path to a balanced budget, we will be on a slippery slope to 
more exploding debt, higher interest rates, and a shrinking economy for 
all Americans.
  It is disastrous that the Republicans would increase the debt of the 
average American family in order to benefit creditors, whose special 
interest lobbyists carry increased clout in the new, reformed Congress. 
Under current trends, the interest on the national debt is estimated to 
consume an average of 15 percent of total Federal outlays and more than 
the 3 percent of the gross domestic product. This year alone, interest 
payments on the Federal debt will cost almost $940 per person--almost 
twice the $500 per child tax credit offered in this bill.
  I urge opposition to H.R. 1215. If we want to give the American 
people a break, we should get serious about balancing the budget. A 
$188 billion package of tax cuts is definitely a step in the wrong 
direction.
  Mr. GIBBONS. Mr. Chairman, I yield 1 minute to the gentleman from 
Texas [Mr. Doggett].
  Mr. DOGGETT. Mr. Chairman, would it not be great if the Pollyannas 
and the supply-side ideologues were correct that the road ahead for 
America is paved with candy? I like candy as much as the next guy. I 
like tax cuts. They want to give a $500 tax credit per child? Why not 
$5,000 per child? Because somebody has got to pay for it, and we went 
down the candy road with them once before. It was sweet for the 
politicians that promised all the tax breaks. It was very sweet for the 
privileged few in this country.
  But it turned out to be a toll road. And guess who had to pay the 
toll? Our children, to the tune of trillions of dollars of national 
debt because of this supply-side nonsense.
  Now we have got a Federal deficit as far as the eye can see in the 
$200-billion-a-year range. The only way we are ever going to deal with 
it is by making tough choices, and tax cuts are not tough choices. They 
are the oldest gimmick in the book. In fact, as Ross Perot has said, 
they are a way for politicians to buy your votes, using your own money. 
In this case it is our children's money, and it is wrong.
  Mr. ARCHER. Mr. Chairman, I yield myself 30 seconds.
  Mr. Chairman, simply to respond to the gentleman, the gentleman knows 
this is not supply-side economics. This bill is paid for and more than 
offset with in excess of $30 billion of deficit reduction by CBO 
estimates. Remember CBO? That is where the President stood right here 
on this floor and said they are the accurate estimators. We are going 
to follow them.
  Mr. Chairman, I yield 1 minute to the gentleman from Arizona [Mr. 
Salmon].
  Mr. SALMON. Mr. Chairman, I thank the gentleman for yielding.
  Mr. Chairman, before I begin to talk about my strong support of H.R. 
1215, I cannot help but respond to a comment that was made about the 
safety net that supposedly we are cutting out. I might add this safety 
net is lined with flypaper. It is very, very difficult to get out of. 
In fact, it is a net, I am not sure it is a safety net.
  Mr. Chairman, with the tax provisions in the Contract with America we 
are going to be passing I believe today, this bill is so important to 
the American people because it provides tax relief to virtually all 
Americans. It will create incentives for savings and investment. Not 
only will passage of this bill provide more tax fairness, but it will 
also stimulate growth in America's private sector.
  I would like to speak specifically about the American Dream 
Restoration portion of H.R. 1215. I was a sponsor of this part of the 
bill along with the gentleman from Illinois [Mr. Crane] and the 
gentleman from Iowa [Mr. Nussle] when it was introduced as part of the 
contract.
  This part of the bill ease the marriage penalty that punishes men and 
women for getting married by making them pay more in taxes than if they 
had remained single. It creates a new IRA that will allow Americans to 
save for the purchase of a home, for education, for medical expenses, 
and for retirement. It will also provide working families with a $500 
child tax credit.
  Mr. Chairman, let us move away from the greatest American nightmare 
and move back to the American dream.
  Mr. GIBBONS. Mr. Chairman, I yield 1 minute to the gentleman from 
Massachusetts [Mr. Olver].
  Mr. OLVER. Mr. Chairman, I thank the gentleman for yielding.
  Mr. Chairman, under this bill, the rich get richer, and the poor get 
more numerous. But that is what you would expect from Republican fiscal 
policies. This bill hides the fact that more than half of all the tax 
cuts under the legislation goes to two handfuls of our wealthiest 
Americans, two handfuls in percentages, of course. Under this bill, the 
benefits do not go to the middle class, which has been the constantly 
repeated lie along the way.
  I just want to talk about one provision. Take one provision. 
President Reagan signed in 1986 a provision that made the biggest 
corporations in America pay at least a minimum tax. Now this is going 
to be repealed, taking $15 billion and giving it to the largest 
corporations, Anheuser-Busch, Coors, Boeing, du Pont, General Dynamics, 
PepsiCo and Texaco and Westinghouse and Xerox. That money is being 
taken from people who will become poorer because of this legislation.
  Mr. ARCHER. Mr. Chairman, I yield 1 minute to the gentleman from 
California [Mr. Kim].
  (Mr. KIM asked and was given permission to revise and extend his 
remarks.)

                              {time}  1630

  Mr. KIM. Mr. Chairman, I thank the gentleman for yielding time to me. 
I rise today in support of this bill.
  I am getting tired of listening to this rhetoric about this bill is 
making rich people richer. Let me tell you about this marriage penalty 
tax that we passed last year under this omnibus budget bill we passed, 
which was the largest tax increase in our history.
  Under that law many married couples face a larger tax burden than 
they would if they stay single.
  Let me give you some specific examples. Two individuals making 
$75,000 each will pay an extra $2,000 marriage penalty tax to the IRS, 
if they get married. Let me give you another example, which is more a 
horrifying example. Two individuals making $15,000 each 
[[Page H4224]] with two kids for combined income of $30,000 would pay 
an extra $4,000 to the IRS. That is a marriage tax penalty.
  That is enough to buy food for the kids for 6 months. In total, 
listen to this, a married couple would pay an extra $20 billion in 
penalty taxes to the Government next year. Nobody ever mentioned this.
  This is ridiculous. We should be encouraging people to get married, 
not penalizing them by taxing.
  I have a personal concern. I am married 33 years. This bill will fix 
that, will repeal this horrifying marriage tax penalty.
  Mr. Chairman, I rise today to talk about one of the most important 
aspects of H.R. 1215: Tax relief for families.
  Over the last several decades, one of the groups hit hardest by the 
increasing Federal tax burden has been the American family. The 
situation for families is grim: At the same time that economic 
conditions have made it harder and harder for families to make ends 
meet, the Government has taken a larger and larger bite out of family 
income.
  For example, while the cost of raising children has gone up 
steadily--it now costs an average of $5,000 per year to raise a child--
the tax break the Government gives families has declined rapidly. In 
fact, over the last 50 years, the value of the dependent exemption has 
decreased by more than 36 percent. The result is that families are now 
forced to spend less on their kids and more to support wasteful 
Government programs.
  It is clear, then, that it is time to give a helping hand to American 
families. And we do not have to have some massive government 
bureaucracy--some Department of Families--to do it. In fact, the best 
way to help American families is very simple: Just let families keep 
more of their own money.
  And that is exactly what H.R. 1215 does--it gets the Federal 
Government off the backs, and out of the pocketbooks--of American 
families.
  The bill does this in four main ways:
  First, H.R. 1215 repeals the so-called marriage penalty. Under 
current law, many married couples face a larger tax burden than they 
would if they stayed single.
  For example, a married couple without kids making a combined income 
of $150,000 a year would pay an extra $1,912 in taxes due to the 
marriage penalty. A married couple with two kids making a combined 
income of $30,000 per year would pay $4,369 extra than if they were 
single. That's enough to buy food and clothes for their kids for 6 
months.
  Nationwide, the extra tax burden placed on married couples is 
substantial: Because of this inequity in the law, married couples will 
pay a total of $20 billion in extra taxes in 1996.
  This situation is ridiculous. We should not penalize people for being 
married, especially when marriage seems to be becoming a thing of the 
past.
  H.R. 1215 rectifies this situation. The bill makes married couples 
eligible for a tax rebate if their tax liability goes up as a result of 
being married. In doing so, this legislation eliminates the marriage 
penalty and restores tax fairness for married couples.
  Second, the bill establishes a $500 tax credit for the home care of a 
parent, grandparent, or great-grandparent who is ill or infirmed.
  I think we all have experienced the emotional and financial strain of 
caring for our elderly relatives who can no longer care for themselves. 
And yet, doing so is one of the fundamental obligations of the family.
  H.R. 1215 would give families a helping hand in meeting this 
obligation. The bill would give families who care for elderly relatives 
at home a $500 tax credit to help offset the cost of that care. In 
doing so, H.R. 1215 would allow an additional 400,000 families to care 
for their elders at home--and keep their extended families together 
longer.
  Third, this legislation would allow families to claim a credit of up 
to $5,000 for the costs of adopting a child. This needed tax relief 
will help reduce the financial barriers to adoption, the costs of which 
average between $10,000 and $12,000 per child.
  It is estimated that this tax break would benefit more than 65,000 
families nationwide--and will help thousands of children become part of 
healthy, productive families. At a time when it has become nearly 
impossible to find adoptive parents for thousands of children, I 
believe that this tax credit is essential. In a sense, this tax credit 
helps families in the most fundamental way possible: It helps families 
become families.
  Finally, and most importantly, H.R. 1215 establishes a $500 per-child 
tax credit.
  The $500 per-child tax credit will provide substantial tax relief for 
American families. In fact, this tax credit will reduce taxes on 
families with children by $105 billion over the next 5 years. This tax 
relief would be distributed to more than 30 million families across the 
country.
  But let us put it in everyday terms: If H.R. 1215 passes, a family 
with two children could receive a $1,000 discount on their yearly tax 
bill. That's enough to buy food for several months, or clothes for a 
whole year.
  Having raised three children myself, I know from firsthand experience 
how expensive it is to raise children. I can think of no better way to 
help American families than by giving them more money to spend on their 
kids.
  And let me say a word to my colleagues who claim that, somehow, this 
tax credit is a giveaway to the rich:
  I think that those who make this claim do not truly understand the 
value and importance of children. A child's worth does not change just 
because his or her parents make more money. The fact is that the $500 
per-child tax credit is about helping children--all children. It is not 
about engaging in class warfare to score political points.
  Even worse, those who engage in this class warfare argument have 
their facts wrong:
  In reality, 75 percent of the tax benefits from the $500 per-child 
tax credit will go to families making less than $75,000 per year. 90 
percent of the benefits go to families making under $100,000 per year. 
In other words, average, working families will receive nearly all of 
the benefits from the $500 per-child tax credit.
  In sum, the tax relief bill we are debating here today is one of the 
most pro-family pieces of legislation Congress has seen in years. By 
eliminating the marriage penalty, helping families absorb the costs of 
adoption and caring for an elderly relative, and by giving parents more 
money to care for their children, H.R. 1215 will do much to help 
families make ends meet.
  In a sense, H.R. 1215 is based on a revolutionary idea that hasn't 
been tried by Congress before: Let families keep more of their own 
money. In doing so, we can do more to help children and families than 
we have ever done in the past--without hiring a single new government 
bureaucrat or establishing a new government program.
  So let us vote to give American families a helping hand. I urge my 
colleagues to support H.R. 1215.
  Mr. GIBBONS. Mr. Chairman, I yield 1 minute to the gentlewoman from 
Connecticut [Ms. DeLauro].
  (Ms. DeLAURO asked and was given permission to revise and extend her 
remarks.)
  Ms. DeLAURO. Mr. Chairman, I rise in strong opposition to this tax 
give-away to the rich. We do need tax relief, but it should be targeted 
at middle-class families who have been working harder for less for far 
too long in this country.
  The bill now before us does nothing to help working Americans. 
Households earning $200,000 are big winners. They receive an average 
tax cut of $11,266. Corporations are big winners. The alternative 
minimum tax is eliminated, but households earning under $30,000 would 
receive a paltry $124. Even this small break for ordinary people would 
be more than taken away through spending cuts.
  Whatever break seniors get, they will pay back with as much as $400 
billion in cuts in Medicare. And whatever breaks middle-class families 
get, they will pay back in higher college education costs because of 
$13 billion in cuts in student loans.
  Do not be fooled. The American public should not be fooled. The rich 
and the powerful are the only winners in this very bad bill.
  Mr. ARCHER. Mr. Chairman, I yield 2 minutes to the gentleman from 
Texas, Mr. Sam Johnson, a respected member of the committee.
  Mr. SAM JOHNSON of Texas. Mr. Chairman, I rise in support of 
America's families, who are all struggling to make ends meet.
  For too long Washington has increased taxes and slowly eroded the 
ability of families to afford the basic necessities of life. It is 
absurd that the American families now pay more in taxes for food, 
clothing, and houses combined. High taxes are for what? Politicians can 
spend more; that is, for big government.
  It is time to end this selfish Washington knows best attitude. This 
money does not belong to government. It belongs to you, the people.
  This bill would provide tax relief to 35 million American families. 
Congress must realize that the people of America can handle their own 
money better than any Washington bureaucrat. Republicans know better 
that lower taxes mean more money in the hands of people who make the 
economy grow.
  This means families have more money to spend, to invest, or save for 
the future.
   [[Page H4225]] Democrats have been raising taxes for so long, they 
truly do not know any other way to run the government. Some of our 
Democrat speakers even believe that the tax-and-spend policy has 
succeeded. But we all know what a failure it was. Taxes are destructive 
to families, to businesses, and to the economy.
  Contrary to liberal belief, taxes do not discriminate by income. They 
hurt every family in America. It is unbelievable that Democrats still 
believe that people are not taxed enough. But then again, these are the 
same Democrats that passed the largest tax increase in history. They 
want to raise taxes again.
  Listen to their rhetoric. It supports big government. It supports big 
spending. It supports more taxes, and they want your family to pay for 
their over spending.
  Let us take a giant step forward today for our families, our 
children, and our Nation and vote for this bill and vote for tax 
relief.
  Mr. GIBBONS. Mr. Chairman, I yield myself 30 seconds to respond to 
the last gentleman.
  When I came to Congress, the Eisenhower administration had just left 
here. And the tax rate at the top was 94 percent. And all through the 
tax rate was much higher than it is today.
  We Democrats, who have controlled the Congress ever since then, have 
reduced those rates from 94 percent down into the 30 percents. So the 
gentleman is just dead wrong when he says we did not reduce taxes in 
the Democratic administration. He does not know what he is talking 
about.
  Mr. Chairman, I yield 3 minutes to the gentlewoman from Connecticut 
[Mrs. Kennelly], a member of the Committee on Ways and Means.
  Mrs. KENNELLY. Mr. Chairman, I rise in opposition to H.R. 1215. It is 
he wrong bill at the time, no matter how attractive the various pieces.
  We know the macroeconomic reasons for being against this bill today. 
As Mr. Kiskanen of the Cato Institute has said: ``There's not a single 
part of this bill that I consider an improvement over the current 
system.'' He goes on to say that the bill would encourage additional 
investment in new equipment but does nothing to stimulate additional 
savings to finance it.
  Robert Shapiro, another respected economist, says he doubts the 
Congress will find the $90 billion to pay for it. Henry Aaron is 
concerned about the widening gap between the haves and the have nots. 
Others worry about where the money to pay for the bill will be found. 
The bill is very specific on cuts in revenue--but oh so vague, about 
$700 billion, in cuts in discretionary spending.
  Although the bill is called the American Dream Restoration Act, it 
will not be a pleasant dream for some, for instance, the blind. 
Although the contract includes a provision raising the Social Security 
earnings test to $30,000 a year for seniors, it breaks the current link 
in the earnings test between the blind and senior citizens. This link 
has been successful over the past 18 years in giving blind individuals 
the
 opportunity to be more productive members of society, and to support 
their families.

  I had asked the Rules Committee to allow consideration of my 
amendment to provide the same earnings test for seniors and the blind 
by the year 2000. This amendment was not controversial. In fact, 161 
Members are cosponsors of a complementary resolution that the link be 
maintained. This amendment would have been paid for with surplus funds 
on the Social Security pay-go scorecard. Unfortunately, the Rules 
Committee did not make my amendment in order.
  I also want to focus on a little known fact: The contract would 
significantly reduce State revenues. A recent study of 15 States by the 
Institute on Taxation and Economic Policy indicates that just two 
provisions of this bill--depreciation and capital gains--will cost 
those States over $41 billion over 10 years. Why? Because 37 States use 
Federal adjusted gross income [AGI] as the starting point for computing 
State taxes. In other words, Federal AGI is the tax base in these 
States and as the contract reduces Federal AGI, it also reduces State 
revenues.
  It is possible for States to avoid this loss of revenue by passing 
laws denying the Federal tax cuts for State tax purposes. This however, 
would require taxpayers to keep two different sets of books--an 
administrative nightmare.
  My own State of Connecticut stands to see State receipts reduced by 
$1.64 billion--about $500 for every man, woman, and child in the State. 
This bill gives $500 per child, but they will get lost at the State and 
local level.
  Mr. Chairman, it is one thing for us to debate how best to raise 
Federal revenue and how best to spend it. It is quite another for us to 
make these very fundamental revenue decisions for the State Governors. 
Especially at a time when we hear so much about the desirability of 
shifting decision-making back to the States, it seems high-handed, even 
unreasonable, to arrogate these decisions to ourselves.
  Remember, these are just two provisions. How much will the other 
provisions cost Connecticut or your States? Passing the contract would 
create budget deficits in 37 States. This is just another unfunded 
mandate.
  Oppose the bill.
  Mr. ARCHER. Mr. Chairman, I yield 3 minutes to the gentleman from 
Kentucky [Mr. Bunning], the chairman of the Subcommittee on Social 
Security of the Committee on Ways and Means.
  (Mr. BUNNING of Kentucky asked and was given permission to revise and 
extend his remarks.)
  Mr. BUNNING of Kentucky. Mr. Chairman, I thank the gentleman for 
yielding time to me.
   Mr. Chairman, I rise in strong support of the tax cut bill that is 
before the House today.
  In the last couple of weeks, there has been a lot of hot air and 
bluster about this bill. It has been interesting to hear the people on 
the other side of the aisle rant and rave about the unfairness of this 
tax bill.
  It reminds me of my predecessor, Gene Snyder, who frequently referred 
to the howling wolves of liberalism. Today they are not howling, they 
are just whining.
  Last night, during special orders, I heard one Member go so far as to 
call this tax bill, immoral.
  Anyone who calls this bill unfair or immoral is not reading the same 
bill I have been reading.
  I will tell you what is immoral and unfair. Immoral is a policy that 
penalizes senior citizens for saving for their own retirement. This 
bill fixes that existing policy.
  Unfair is a policy that penalizes senior citizens for working. This 
bill fixes that existing policy.
  Unfair is a policy that discourages people from buying insurance to 
take care of themselves in their later years. This bill fixes that.
  This bill fixes all of these misguided policies.
  This bill--which includes the Senior Citizens Equity Act which I 
sponsored--repeals the 1993 Clinton tax increase on Social Security 
benefits which so unfairly penalized people who managed to save and 
invest enough during their working years to supplement their retirement 
incomes.
  This bill raises the Social Security earnings limit so that seniors 
who have to work or choose to work after retirement can make more than 
$11,280 a year and not be penalized. This bill will allow them to make 
thirty thousand dollars with no penalty. That is fairness.
  This bill makes it easier for people to buy long term health care 
insurance so they can take care of themselves in their failing years. 
That is not unfair. It is sound public policy.
  This bill makes it easier for people who are terminally ill to cash 
in their life insurance policies--tax free--to help them pay for their 
own medical bills. That is compassion and common sense.
  This tax cut bill gives families a tax credit to help them take care 
of elderly parents and grandparents. That is policy that
 encourages individual responsibility.

  This bill gives a tax credit to help defray the costs incurred by 
families who want to adopt a child. This bill will make it possible for 
more families to bring children into loving homes. That is compassion.
  There is nothing immoral or unfair about any of these things. This is 
sound public policy. This tax bill encourages individual 
responsibility. It encourages people to work and save and to pay their 
own way.

[[Page H4226]]

  Mr. Chairman, this is a good bill. The unfairness argument does not 
stick. It is time to do what is right and pass this measure and give 
the American taxpayer a break.
  Mr. GIBBONS. Mr. Chairman, I yield 1 minute to the gentlewoman from 
Georgia [Ms. McKinney].
  Ms. McKINNEY. Mr. Chairman, the voo-doo policies of the 1980's should 
have taught us something about Reaganomics. Yet, here we go again, 
Republicans are going to cut taxes for the wealthy and pay for them 
with cuts to student loans and heating assistance for the elderly poor.
  If you make $200,000 a year, Republicans feel your child is
   worth $500 dollars. But if you make $12,000 a year, your child is 
worth zero. We suspected this all along, but with this bill the 
Republicans have brought our worst nightmare to us live and in color. 
They go too far.

  With this bill, the rich are going to make out like bandits, and at 
the same time, the Republicans are adding another $750 billion to the 
deficit over the next 10 years. Mr. Chairman, Republicans are so fond 
of saying that a rising tide lifts all boats. But what they really mean 
is that a rising tide lifts all yachts, while the working class homes 
on shore, get washed away.
  Mr. ARCHER. Mr. Chairman, I yield 2 minutes to the gentleman from 
Nebraska [Mr. Christensen], a member of the committee.
  (Mr. CHRISTENSEN asked and was given permission to revise and extend 
his remarks.)
  Mr. CHRISTENSEN. Mr. Chairman, there is one issue that has been 
neglected in the debate over our tax bill: the issue of how this tax 
bill helps our nation's seniors.
  Remember President Clinton's punitive tax hike on seniors? Remember 
when the Democrats decided that seniors living on fixed incomes as low 
as $34,000 were ``wealthy''? Well, our bill injects some sanity back 
into this debate by repealing the Clinton tax increase on seniors. It 
lets seniors keep more of their own money rather than forcing them to 
hand it over to the Federal Government to be squandered by spendthrift 
bureaucrats.
  Our tax bill also helps seniors by reforming the social security 
earnings limit. Under current law, seniors between the ages of 65 to 69 
can only earn $11,280 before the government begins confiscating $1 for 
every $3 they earn. When you include the FICA withholding tax and the 
federal income tax, low-income seniors face an effective marginal tax 
rate of 55.65 percent! That is a tax rate traditionally left to 
millionaires.
  Unlike the Democrats, who once claimed that they wanted to see the 
earnings limit raised, we are doing what we said we would do by raising 
the earnings limit to $30,000.
  These provisions, plus our long term care incentives, $500 Eldercare 
Tax Credit and the increase in the estate and gift tax exclusion, show 
that it is the Republicans that are looking out for the best interests 
of our nation's seniors.
  In my State of Nebraska, over 34,000 seniors will benefit directly 
from our senior citizen tax reforms.
  Not to mention how many thousands of other Nebraska seniors will 
benefit from our American Dream Savings Accounts, Spousal IRA's and 
capital gains reductions.
  Let us not forget that it was the Democrats who passed the largest 
tax increase in American history. They oppose H.R. 1215 because they 
want to raise taxes again.
  Here is a bill that helps out our nation's seniors, cuts taxes on all 
Americans, pays for those cuts and lowers the deficit by 30 billion 
dollars. Sounds like win-win public policy to me.
                              {time}  1645

  Mr. GIBBONS. Mr. Chairman, I yield myself 15 seconds to answer the 
gentleman's charge about the 15-percent increase on Social Security.
  I will remind the gentleman that President Reagan--President Reagan 
raised the taxes on 50 percent of the income of Social Security 
recipients, versus 15 that the current President raised.
  Mr. Chairman, I yield 1 minute to the gentlewoman from Florida [Mrs. 
Meek].
  Mrs. MEEK of Florida. Mr. Chairman, I thank the gentleman for 
yielding this time to me.
  Mr. Chairman, first of all, I oppose very strongly the Republican 
fairness and deficit reduction bill. It is an oxymoron, because there 
is no fairness in this bill. Neither does it reduce the deficit.
  The Republican majority's bill, which is said to reduce the deficit, 
is not doing it. You are just moving old wine around in new bottles, 
that is what you are doing, taking money from here and putting it over 
there. It is an old shell game. Each one of us who has been around long 
enough will know that.
  I am a senior citizen. You are helping senior citizens one way and 
taking it away in another. Look what is happening with health care for 
senior citizens. No matter how much money we are giving them, if there 
is no health delivery system, we are still not helping them.
  A lot of things they are doing here is made up of smoke and mirrors 
all put together in a consortium of fooling the American public that 
they are really doing something for them, when they are really not. 
What they are doing, we have a spectrum here, where we have on one side 
the very poor, in the middle we have the middle class, and then we have 
the upper class.
  Do Members know who is getting all the money? The upper class. The 
poor middle class people in the middle are being left out. These cuts 
in vital programs are going to fund these tax cuts, things they are 
taking away from average Americans.
  I must say, this 5-year budget plan that is supposed to reduce the 
deficit is not going to reduce the deficit, so do not go away from here 
thinking it is going to do that.
  Mr. ARCHER. Mr. Chairman, I yield 2\3/4\ minutes to the gentleman 
from Florida [Mr. Shaw], chairman of the Subcommittee on Human 
Resources of the Committee on Ways and Means.
  Mr. SHAW. Mr. Chairman, I thank the gentleman for yielding time to 
me.
  Mr. Chairman, I rise in support of helping this country's senior 
citizens continue to live their American dream. And I mean all senior 
citizens, Mr. Chairman, not just wealthy senior citizens. Since 1993, 
the Clinton tax hike on Social Security benefits has meant that a 
senior citizen who lives on a fixed income as low as $34,000 must pay 
income taxes on 85 percent of his or her benefits. This was a 70-
percent income tax hike on Social Security benefits. Today, we are 
going to repeal this ill-conceived tax hike and reassure our senior 
citizens that this Congress has not forgotten the hard work they 
contributed to their country.
  We are also not going to forget that many citizens over the age 65 
have no intention of settling into retirement, or that others are in 
the situation where they must continue to work beyond age 65 because 
their fixed Social Security income does not provide adequate financial 
security. For these people we are offering to increase the amount 
senior citizens can earn before being taxed on the benefits they have 
already earned. The current earnings limit of only $211,280 punishes 
senior citizens by hitting them with an additional effective tax of 33 
percent. This is not fair, and this is why we owe it to our senior 
citizens to gradually increase the earnings limit to $30,000 per year 
over a 5-year period.
  Finally, Mr. Chairman, I support helping millions of Americans plan 
now to avoid potential financial hardships, later in life, by 
encouraging private solutions to long-term health care. One of the 
biggest fears of senior citizens is that they may lose most of what 
they own if they are confronted with a long-termillness. This fear will 
be felt by younger Americans when they reach the age of retirement. By 
allowing accelerated death benefits to be paid tax-free from life 
insurance policies, by providing employers with incentives to offer 
long-term care coverage, and by allowing tax-free withdrawals from 
IRA's and other pension plans in order to buy long-term care coverage 
will provide financial security to all Americans who worry about being 
able to take care of their long-term care needs.
  Mr. Chairman, my main concern is for the well-being of this country's 
senior citizens. The provisions of H.R. 1215 speak of today will help 
empower 
[[Page H4227]] today's senior citizens, as well as tomorrow's. I 
encourage a vote of ``yes'' for this bill.
  Mr. GIBBONS. Mr. Chairman, I yield 1 minute to the gentleman from 
Indiana [Mr. Roemer].
  (Mr. ROEMER asked and was given permission to revise and extend his 
remarks.)
  Mr. ROEMER. Mr. Chairman, last week we debated the Personal 
Responsibility Act. Today we are debating the Tax Irresponsibility Act. 
This bill is irresponsible for two reasons. First of all, this bill 
will cost over a 10-year period $700 billion; not million, billion 
dollars. Now, there is no free lunch, as we learned in the 1980's, and 
there is no free breakfast, lunch, and dinner. We have to pay for this.
  The Republicans have it half right, in that they pay for some of 
these new tax breaks, but then they respend the money. They do not put 
it to the deficit.
  Second, let us talk about fairness; not class warfare, but tax 
fairness. This bill repeals the corporate minimum tax. That simply 
states if you are a profitable company, you should pay some taxes. This 
bill gets rid of that and says to schoolchildren: ``We are going to 
take 50 cents from you out of that $1.10 lunch, and you are going to 
help pay for that tax break for the corporation.''
  Let us get back to the days, in a bipartisan way, when the gentleman 
from Ohio, John Kasich, and Tim Penny worked together to reduce the 
deficit in a fair manner.
  Mr. ARCHER. Mr. Chairman I yield 1 minute to the gentleman from 
Arkansas [Mr. Hutchinson].
  Mr. HUTCHINSON. Mr. Chairman, I am glad to rise in support of the tax 
relief bill. It lowers capital gains, raises the earnings limit on 
Social Security, provides an adoption tax credit, an elder tax credit, 
IRA equity, a $500 tax credit for children.
  In short, it is a family-friendly tax relief bill. After all, the 
family is the fundamental unit of society. It is the guardian of our 
social fabric. It is the means by which our values are conveyed. Yet it 
is besieged, embattled. It is under attack by its own government. We 
could not have come up with a more anti-family public policy if we had 
sat down and devised such a plan.
  It is not too much to expect that government be the friend, not the 
foe, of the family, so one critical step in turning this around is the 
passage of the $500 per child tax credit. It would shift power and 
money from Washington bureaucrats and return it to the moms and dads of 
middle America.
  Families do not want more entitlements, they want empowerment. The 
American family is tired of high-sounding rhetoric and empty speeches 
about family values while policymakers insult them by saying ``We can't 
afford it now,'' as if it is our money. We cannot afford not to do it 
now. Our national security is intertwined with family security. Strong 
and secure families mean a strong and secure society.
  We need to reject the class warfare rhetoric and pass this bill.
  Mr. GIBBONS. Mr. Chairman, I yield 3 minutes to the gentleman from 
Massachusetts [Mr. Neal], a Member of the Committee on Ways and Means.
  Mr. NEAL. Mr. Chairman, the Tax Fairness and Deficit Reduction Act is 
neither, and it is certainly not the right approach for tax cuts. This 
legislation reduces by $188 billion the Federal Treasury over 5 years. 
Indeed, Treasury has estimated that the provisions are going to cost 
$700 billion over 10 years.
  The Republicans say this unnecessary legislation will be financed by 
spending cuts. Discretionary spending cuts total $100 billion, but 
these cuts are neither specified nor are they guaranteed. It is still 
unclear which programs will be cut or eliminated. The legislation is 
not responsible. Our attention should be focused on deficit reduction, 
and this is not the time to be making tax cuts to the wealthy.
  Those earning over $200,000 are not considered the middle class in my 
congressional district. I am not opposed to tax cuts for the middle 
class, but they should be targeted and geared toward investments. 
Several of the tax provisions in the Contract With America are indeed 
budget gimmicks. These provisions are glitter and sparkle, and there is 
no real long-term investment.
  Let me say, there are some provisions even I could have supported, 
including the spousal individual retirement account, and expanding the 
IRA, and would have raised the ceiling on earnings for Social Security 
recipients, and happen to believe there ought to be some sort of 
capital gains relief, but I cannot support the larger package that is 
going to have such a dramatic impact on our deficit.
  We should work for a package on both sides of the aisle that could be 
universally supported. Why could we not today vote on small provisions 
which are fully paid for? Why is this vote before us today all or 
nothing?
  These tax provisions are not equitable. The wealthy few will receive 
more of the benefits, and the Treasury Department tells us that only 8 
percent of the population realizes capital gains earnings in any given 
year. Most of the benefits in this proposal go to people who already 
make up to 6 percent of the wealthiest taxpayers in America.
  If we are going to enact tax cuts, we ought to pay for them. It is 
still unclear which programs will be eliminated, and surely deeper cuts 
will have to be made in order to pay for these provisions and their 
cost increases.
  We ought to focus on the middle class today. If we look beyond the 
bluster, we see the flaws in this proposal. Education is the most 
important investment we can make. In Massachusetts, 137,000 students 
are going to pay more for their student loans when we get done at the 
end of this day. This ought not to happen.
  The Democratic alternative is sounder. The School Act is a simple, 
realistic approach. Our legislation provides tax cuts which will help 
the real middle class and help to pay for higher education. Four 
proposals make up the School Safety Act. They are deductions for 
education costs, student loan deductibility, guaranteed education 
planned savings bonds, and expanded individual retirement accounts. All 
of these proposals are geared towards education.
  None of these tax cuts will be enacted unless we stay on a target 
toward a balanced budget, but today these Republican cuts are going to 
end up creating more spending cuts. The public will be cheated in the 
end.
  Mr. Chairman, this legislation is ill-considered and ill-timed.
  Mr. ARCHER. Mr. Chairman, I yield 2 minutes to the gentleman from 
Nevada [Mr. Ensign], a member of the committee.
  (Mr. ENSIGN asked and was given permission to revise and extend his 
remarks.)
  Mr. ENSIGN. Mr. Chairman, we have heard ``How are we going to pay for 
these tax cuts.'' Let me remind the Members here that the Government 
does not pay for tax cuts. We allow the American people to keep their 
own tax dollars that they have earned.
  Taxpayers have to pay for government spending, so when we talk about 
how are we going to pay for tax cuts, we are just going to allow the 
American people to keep more of what they earned.
  In reference to a little while ago, we heard about Ronald Reagan 
raising taxes up to 50 percent on Social Security recipients back in 
1983. Let me remind the Members also of which party was in control of 
the Committee on Ways and Means and which party was in control of the 
Congress at that time. It was the Democrats.
  I have a lot of seniors in my district. Those seniors have been 
telling me that they thought that the 1993 raise on their Social 
Security benefits, tax raise on their Social Security benefits, was 
unfair. I agree with them. They have earned this money. The tax raise 
in 1983 went to bail out Social Security.

                              {time}  1700

  The tax raise in 1993 did not go to bail out Social Security. What we 
need to do is we need to be fair to our seniors. We need to raise as 
this bill does the earnings limit up to $30,000. I had people working 
for me that would come to me and say, ``You know, I just can't work 
anymore because I'll go over my earnings limit and that will hurt me as 
far as my Social Security money is concerned.'' It used to break my 
heart. These people wanted to be productive and we would not be able to 
allow that because of the tax system that we have 
[[Page H4228]] set up. We need to give working seniors a break and this 
bill does that.
  Lastly, this bill also encourages people to get long-term health care 
insurance. I am proud to support that. It is something we need in this 
country.
  Mr. GIBBONS. Mr. Chairman, I yield 2 minutes to the gentleman from 
Mississippi [Mr. Taylor].
  Mr. TAYLOR of Mississippi. Mr. Chairman, I want to begin by 
complimenting everyone on the civility that has been shown thus far.
  I remind my Republican colleagues that our Nation is over $4 trillion 
in debt. This Nation this year will borrow over $200 billion just to 
make ends meet. That money has to be repaid.
  In the 2 minutes that I address this body, the American people will 
spend $1 million just on interest on the national debt. For those of 
you who have a Visa card or any other charge card, you know what 
interest is. It is money that is wasted. Sometimes it is a bargain to 
spend money ahead of time and pay it back later but it is never a 
bargain for your Nation to borrow money.
  Last year on June 6 I happened to stand on the bluffs of Normandy 
amongst 10,000 crosses, a cross for every person that lives in my 
hometown almost. Those people, like my colleague Sam Gibbons, many of 
them jumped out of airplanes in the dark the night before. Many of them 
died. They jumped for $90 a month. No one ever asked those people would 
they do it for a tax break. Do you love your country only if you get a 
tax break, if you get more back than you gave to it? They did it 
because they loved their country.
  This Nation has done wonderful things and it troubles me when I see 
my Republican friends belittle the wonderful things this country has 
done. This country saved the world from Adolf Hitler. This country 
saved the world from communism. But there is a bill that had to be paid 
with that. The defense bill of the 1980's that I think was wonderful 
has to be paid. It was over $300 billion a year.
  It makes no sense at all to turn around and say that we just saved a 
couple of billion dollars last week, so let's give it away. Because you 
are not giving it away, you are borrowing more money. If you want to 
threaten the very thing that Sam Johnson sat in a POW camp for for 5 
years in Vietnam, or the very thing that Sam Gibbons jumped out of an 
airplane in the middle of the night for, if you want to threaten the 
democracy of this great Nation, the world's greatest Nation, don't pay 
your bills. Let this Nation collapse like Mexico. Let this Nation 
collapse like Yugoslavia. If you love your country, be willing to pay 
for it.
  Mr. ARCHER. Mr. Chairman, I yield 1 minute to the gentleman from 
Texas [Mr. Thornberry].
  Mr. THORNBERRY. Mr. Chairman, one of the reasons I believe that the 
control of this body changed in the last election is that the American 
people were fed up with those who talk one way and then come to 
Washington and vote another. There are those who still try to come 
across as the protectors of senior citizens and 9 times out of 10 those 
are the same people who voted to impose new taxes on senior citizens in 
1993.
  This bill starts to undo some of the damage that has been done to 
senior citizens in the past. In addition to repealing those new taxes, 
it goes further and says that senior citizens ought to be able to earn 
a living, or earn some money, and be productive citizens beyond age 65. 
The tax incentives for long-term care and also allowing life insurance 
to come out earlier are important benefits for senior citizens.
  I think when seniors look beyond the empty rhetoric and look at the 
concrete steps that will benefit them and benefit the things that they 
need to see happen in their later years, they will see this is real 
happen in their later years, they will see this is real concrete action 
that will make a big difference in their lives.
  Mr. ARCHER. Mr. Chairman, I yield 2 minutes to the gentleman from 
Iowa [Mr. Nussle], a member of the Committee on Ways and Means.
  (Mr. NUSSLE asked and was given permission to revise and extend his 
remarks.)
  Mr. NUSSLE. I thank the gentleman, my chairman, for yielding me the 
time.
  Mr. Chairman, I have had an opportunity and I spent most of the 
afternoon listening to the debate. I must say it has been pretty clear 
to me there are two philosophies at work here. The one philosophy is 
the one I believe I brought to Congress and I believe many of my 
Republican friends brought to Congress. That is, that individuals and 
families make better decisions about their daily lives than Government 
can for them. They spend their money better. They make better decisions 
about their family, about their future, about deciding what their 
American dream is all about and how they are going to reach it. Yet 
there is another philosophy here in Congress and here in Washington, 
and, that is, that bureaucrats and Congressmen make better decisions 
about people's daily lives than they can for themselves and that the 
only kind of compassion we can have in this country is one that comes 
out of a word processor, one that is printed on paper, one that is paid 
for by a Government check, and that is basically the two competing 
philosophies.
  So, yeah, there's a lot of whining, there's a lot of crying about the 
future because the future is changing, because Americans are saying, 
``We've had enough with Government check compassion. What we want is we 
want to take back our future.''
  If there were $500 sitting right here on this podium and we had to 
decide in this body here today who would spend that money the most 
wisely, would it be Government bureaucrats and Congressmen or would it 
be families. I can tell you what the vote would be. The Republicans 
would say, ``Please, let families take back their future, let them 
decide how to best spend that money.''
  Yet the vote on the other side would be very clear as well. They 
would say, ``We don't trust families. We think that it's the 
Government's money. It's not even the family's money. We're giving the 
tax cut.''
  Who ever heard of giving a tax cut when it is the family's money to 
begin with? All of us that balance our checkbooks around our kitchen 
tables, particularly my friends back in Iowa, know who the money 
belongs to, knows that it is their money that they earned, that they 
worked for, that they want to make decisions about, whether it is for 
their farm or their family, their future, a college education. They are 
the ones that know how to manage that money.
  Today we will decide the future of those two philosophies. I know 
Republicans are going to trust families.
  Mr. GIBBONS. Mr. Chairman, I yield 2 minutes to the gentleman from 
North Carolina [Mr. Hefner].
  (Mr. HEFNER asked and was given permission to revise and extend his 
remarks.)
  Mr. HEFNER. Mr. Chairman, I say to the gentleman from Iowa, I would 
not risk laying $500 on either one of these things here.
  Let me put in perspective, if I can, first of all about Social 
Security. We have heard a lot about Social Security. Democrats have 
always supported supporting Social Security. Let me just remind folks 
that are talking about the Reagan administration, the very first budget 
that was sent to this House under the Reagan administration, under 
David Stockman, called for eliminating the $123 minimum Social Security 
for the oldest, most vulnerable citizens in our society.
  The folks that have been on the talk shows and been making the 
debates here today have been talking about where these moneys are 
coming from. And to the credit of the gentleman from the Committee on 
Ways and Means, he made no bones about it. These rescission savings and 
all of these savings that have been counted, that have been cut out of 
the lunch program and all the other programs, make no bones about it, 
they are going to be used to pay for this tax cut.
  Let's make perfectly clear, and the gentleman makes no bones about 
it, you are going to use the rescission money and on the domestic side 
you are going to use the cuts, and they are cuts, in the feeding 
programs for our children, they are real cuts, and they are going to be 
used to pay for this tax cut for the super-wealthy.
  Senior citizens. I am a senior citizen. I can get a discount in every 
Shoney's across this country. But let me tell you about senior 
citizens. I have been seeing the buttons about senior-friendly. Let me 
tell you what is going to happen to you in May. You are talking 
[[Page H4229]] about senior citizens. In May when the chairman of the 
Committee on the Budget puts together this budget to get toward this 
balanced budget, they are going to go in and they are going to 
absolutely do some devastating cuts in Medicare for our senior 
citizens. Then we are going to see how senior-friendly this whole 
package is. It has been all the way to take the money from the most 
vulnerable people in our society and target it to the people that do 
not need it, that Social Security, and every Member that has spoken in 
favor of this tax package today is going to get a tax cut. Every single 
one of them.
  This package is like the lady that had the ugly baby that was so 
ugly, she had to tie a pork chop around its neck to get the dog to play 
with it. That is how bad this bill is.
  Mr. ARCHER. Mr. Chairman, I yield 2 minutes to the gentleman from New 
Jersey [Mr. Saxton], the chairman of the Joint Economic Committee.
  Mr. SAXTON. I thank the gentleman from Texas for yielding me this 
time.
  Mr. Chairman, one of the things that we hear repeatedly from the 
opposition side of the aisle is that somehow this Republican tax plan 
is going to hurt those who are already less well off than others, the 
poorer folks in the United States. We have heard it over and over again 
and it did not just start today. It has been going on for some time. I 
call those of you who use that line revisionists, revising the history 
of the 1980's just as some people in this country would revise the 
history of World War II, kind of the same thing.
  Let me give an example. A speaker earlier today talked about what 
happened to the bottom fifth of the wage earners in our country during 
the 1980's and they said that they were less well off in 1990 than they 
were in 1980. That is true. But you do not say why. As a matter of 
fact, in 1979 when our President was not a Republican, the bottom fifth 
on average earned a level at about $9,800. During the next several 
years, ending in 1982, that level of income for the bottom fifth of our 
wage earners plummeted so that by 1982, it was way down here at about 
$8,400. Then Republican tax policy changes took place in 1981, 1982, 
and 1983. Look at what happened to the average wage level of the bottom 
fifth of our wage earners. It went up dramatically. Not quite to 
$9,800, but almost. It grew rapidly.
  Then we go off this chart in 1990, we had a tax increase, and in 1993 
we had another tax increase. If this chart were up-to-date, you would 
see this yellow line shoot back down again because we increased taxes, 
hurt the economy, and had the most dramatic effect on our low-wage 
earners.
  We are not out to hurt them. We are out to help them with this tax 
plan.
  Mr. GIBBONS. Mr. Chairman, I yield 1 minute to the gentleman from 
Maryland [Mr. Wynn].
  Mr. WYNN. I thank the gentleman for yielding me the time.
  Mr. Chairman, I appreciate the opportunity to speak on this bill 
because I am a little confused. As I said earlier this morning, I 
thought we were in the business of cutting taxes with this bill only to 
find out that we are actually increasing taxes on 2 million Americans. 
I am disturbed because those 2 million Americans are Federal employees, 
FBI agents, cancer researchers, people that help move our Social 
Security checks, people who work very hard, who have experienced 
downsizing, and who are now confronted with the notion that in order to 
get a $500 per child tax deduction, they are going to pay an extra $750 
to get that. They are paying that in the form of an increased 
contribution for their retirement. There is nothing wrong with the 
Federal retiree system now. It is not overly generous. In the private 
sector they would not have to pay anything at all. It is not insolvent. 
We have had research to indicate that it is in fine shape.
  Why are they doing this? They are doing it to raise money and they 
are raising money to give a tax break to the wealthiest citizens in 
America. This debate does not have anything to do about whether ma and 
pa ought to get a tax break. The problem with this tax proposal is all 
the money is going to the very wealthy. The top 1 percent of Americans 
will get 10 percent of the benefits under this bill. The top 20 percent 
will get 50 percent of the benefits under this bill. It does not seem 
right to me.
  Mr. ARCHER. Mr. Chairman, if I might, with the indulgence of the 
gentleman from Florida, yield myself such time as I may consume in 
order to respond to the gentleman.
  Mr. Chairman, I do not know where his figures come from that the top 
1 percent gets 10 percent, because what the reality is, with the Joint 
Committee figures which are the official figures on which we live in 
the Congress, not the cooked-up Treasury figures, it shows that the top 
1 percent pay a bigger portion of the total taxes collected under this 
bill than they do under current law.
                              {time}  1715

  The top 10 percent pay the bigger percent of the taxes collected than 
under the current law.
  Mr. Chairman, I reserve the balance of my time.
  Mr. GIBBONS. Mr. Chairman, this debate is not over and there is much 
more to come, but this is the conclusion of the Ways and Means 
Committee portion of the debate.
  Mr. Chairman, I yield 1 minute to my colleague, the gentleman from 
Tennessee [Mr. Ford].
  (Mr. FORD asked and was given permission to revise and extend his 
remarks.)
  Mr. FORD. Mr. Chairman, I thank my colleague from Florida for 
yielding me this time.
  Mr. Chairman, I rise in strong opposition to the bill.
  We know that this tax cut that we have before us today is not going 
to reduce the deficit at all. We know what the Republicans are doing is 
trying to really give to the well-to-do of this country a tax break 
that will not really respond to the evils and to the problems that we 
are faced with in this country, and I rise in strong opposition to it.
  Mr. GIBBONS. Mr. Chairman, I yield myself the balance of our time.
  Mr. Chairman, there is much more to come, as you know. I want to sum 
up what I think is the case against this bill right now.
  We Democrats are for tax cuts. But we are for tax cuts at the right 
time when the economy needs them, not when the national economy is 
running such a huge deficit as it is today.
  Our first priority today should be cutting the deficit.
  Why should it be the first priority? Since 1991 we have had a rising 
employment rate, which yields us the lowest unemployment rate we have 
had in 5\1/2\ years. We are at full employment now.
  I know there are some isolated pockets in the country that are not in 
full employment but the country as a whole is at full employment.
  We are at full factory capacity utilization. We are at the highest 
factory capacity utilization we have had in 15\1/2\ years. The Federal 
Reserve acknowledges that, and that is the reason the Federal Reserve 
has raised the interest rate seven times in the last 14 months, 7 times 
in the last 14 months. And if this tax bill goes through, the Federal 
Reserve will offset it by raising the tax rate again as soon as this 
bill takes effect.
  So, this is just the wrong time to do this. We should be reducing the 
budget deficit. If we cannot reduce the budget deficit in full 
employment and full factory capacity utilization, we can never reduce 
the budget deficit.
  There is another reason why we should vote against this bill and that 
is the equities of the bill. The bill is badly balanced against those 
people who really could use a tax cut if it were the right time to cut 
taxes. And the first chart I have here shows what has happened to 
Americans in the last 20 years. And for those who do not have their 
glasses on and cannot see real well, the figure on my left is the 
higher one-fifth of our population. Their family income has increased 
29\1/2\ percent, almost 30 percent in the last 20 years. But on the 
other end of the chart, the low end, the lowest fifth of our 
population, their family income has gone down by almost 15 percent in 
the last 20 years. And Members can see what has happened to the folks 
in the middle. In other words, three-fifths of the Americans have not 
participated in the growth of the American economy at all. In fact, 
they have lost ground. And two-fifths, mainly the upper fifth have 
gained ground in all of this.
  [[Page H4230]] Not all of that is tax policy driven, but a large 
percentage of it is tax policy driven.
  The next chart is showing how difficult it is going to be to balance 
the budget and, very briefly, to balance the budget with the contract 
will require tax cuts of a trillion or require spending cuts of $5.8 
trillion. That is not paid for in this bill. Anybody that says it is 
paid for in this bill is not on the same planet with the rest of us.
  The next chart I would like to show Members is how the revenue losses 
explode under this bill. Much ado has been made about how this is all 
paid for. But in the first 5 years, which is all my colleagues on the 
Republican side conveniently want to talk about, even though the Senate 
looks at all of this over a 10-year period, the losses are not very 
great, but in the second 5-year period they just explode. This whole 
chart is practically red after the second 5 years and that is 700 
billion dollars' worth of revenue loss.
  The next chart I want to show is the middle class are shortchanged by 
the Republican tax bill. The middle-class people, which are all of 
these people down here in these income ranges, from under $30,000 to 
$100,000, they get these low figures in all of this. I want my 
Republican colleagues to see this because this is real important to 
them. This is what the middle class get. But this is what the upper 
income people get. The upper income people get 51\1/2\ percent of the 
tax cut in this bill.
  Those are not my figures. Those are figures from the Department of 
the Treasury. I do not believe the Joint Tax Committee, and I see the 
staff director here on the floor and former staff director of the Joint 
Tax Committee who will dispute those, so the equities of this bill are 
wrong.
  The timing of it is wrong. It is time to send this bill back to 
committee, and tell us to do it right.
  The CHAIRMAN. The time of the gentleman from Florida [Mr. Gibbons] 
has expired. The gentleman from Texas [Mr. Archer] has 5 minutes 
remaining.
  Mr. ARCHER. Mr. Chairman, I yield such time as she may consume to the 
gentlewoman from New Jersey. [Mrs. Roukema.]
  (Mrs. ROUKEMA asked and was given permission to revise and extend her 
remarks.)
  Mrs. ROUKEMA. Mr. Chairman, I rise in strong support of the bill. It 
puts critical incentives back into our economy to create those good 
jobs and save and invest in America.
  Mr. Chairman, I rise in support of H.R. 1215, the legislation before 
the House of Representatives today, for three reasons: it cuts taxes 
for hard-working American families; it cuts government spending; and it 
puts some critically needed tax incentives into the law so that we can 
begin to implement a ``Save and Invest in America Plan'', which our 
country desperately needs in order to maintain our role as a world 
leader in the 21st Century.
  While I am pleased to see that several items that I have long 
advocated as part of my save and invest in America plan are included in 
this package--including expanded Individual Retirement Accounts, a 50 
percent exclusion on capital gains, indexing capital gains for 
inflation, increased ability of small businesses to deduct up to 
$35,000 in capital equipment investments--I had hoped that we would 
consider this important legislation under a more open procedure than 
the rule that governs debate on H.R. 1215 today.
  Specifically, I had hoped that the House could consider an amendment 
that would allow the $500 tax credit for children to be limited to 
families with adjusted gross incomes up to $95,000 a year, instead of 
the $200,000 limit currently in H.R. 1215.
  In addition to the fact that this amendment would more precisely 
target the tax relief in this bill toward middle-class families across 
our Nation, it would have also meant that H.R. 1215 would have provided 
for an additional $7 billion in additional deficit reductions over 5 
years.
  The second item I just mentioned is important because I happen to 
believe that the single most pressing problem facing the 104th Congress 
is our broken Federal budget.
  In the current budget year, the Federal Government expects to collect 
a total of $1.3 trillion or revenue. Regrettably, that isn't enough 
money to fund the Federal Government's activities under the Clinton 
administration's current fiscal policies, because they expect to spend 
$1.5 trillion this year, leaving behind a $200 billion budget deficit!
  At the same time, the Federal Government will spend $235 billion for 
interest payments on the $4.6 trillion debt! These interest payments 
don't help defend our country, provide health care to the elderly or 
impoverished, or fund environmental or educational programs.
  If we fail to balance the budget, and this trend continues, in 2 
short years we'll be spending more on interest on the debt--$270 
billion--than we will on our national defense--$260 billion.
  In this regard, the so-called deficit reduction glidepath agreement 
incorporated into H.R. 1215 by the rule is clearly insufficient. It 
takes a tentative step in the right direction--by requiring the Federal 
budget to be balanced in order for tax cuts to be effective--but it 
contains no enforcement mechanism that insures the deficit will be 
eliminated in the next 7 years.
  Worse yet is that current projections for the loss in Federal 
revenues from the tax provisions in H.R. 1215 increase sharply in the 
future.
  In fact, the Treasury Department is estimating that the tax 
provisions in this bill will lose about $190 billion in revenues in its 
first 5 years. However, the Treasury estimates that the tax provisions 
of this bill will lose an additional $440 billion in revenues over the 
subsequent 5 years.
  Such a dramatic reduction in revenues will place extraordinary 
pressure on the Congress and President to offset this loss by cutting 
Federal spending even deeper.
  For far too long in the past, the Congress and President have been 
simply unwilling to make the tough choices about budgetary priorities 
that the American people expect us to make, and as a direct result, we 
have faced $250 billion deficits for years and years, with no end in 
sight, a the same time that our debt has escalated from $1 trillion to 
more that $4 trillion.
  Simply put: we must rise to this challenge and fix our budget.
  The time has come for this unconscionable practice to end. And, this 
Congress should not let a historic opportunity to pass a better America 
on to future generations slip through our fingers.
  For the last several years, I have spent a lot of time talking to the 
people of northern New Jersey that I represent about changing the 
unacceptable status quo by offering solid, responsible blueprints for 
our Nation's future--or, what I refer to as a save and invest in 
America plan.
  Saving and investing in America will return money to the pockets of 
working Americans and encourage U.S. business to invest in new plants 
and equipment to become more competitive in the ongoing global economic 
wars. Saving and investing in America is about improving our economy, 
creating good jobs at good wages, and strengthening the American 
family.
  While the fact of the matter is that the legislation before us today 
incorporates some of these ideas, I had hoped that this package could 
have reduced the budget deficit even further than it does.
  I anticipate when the Senate acts on a tax bill, the Senate-passed 
legislation will address my concerns about the dramatic loss of Federal 
revenue after 2002, such that when the final version of this 
legislation comes before Congress, the new Republican majority in the 
House can proudly claim that it has done right by America and really, 
truly put the Federal Government on the road to a balanced budget by 
2002. If so, I look forward to enthusiastically supporting passage and 
enactment of just that kind of legislation.
  There are several other items included in H.R. 1215 that I support as 
well, including: its 5-year phase-out of President Clinton's Social 
Security tax increase, a credit for married couples that eliminates the 
tax code's so-called marriage penalty, tax incentives for the purchase 
of long-term health insurance and deductions for long-term care 
premiums, and a phased-in, 5-year increase in the Social Security 
earnings limit to $30,000 for senior citizens.
  In conclusion, I support House passage of this legislation, and urge 
my colleagues in the House of Representatives to do likewise.
  Mr. ARCHER. Mr. Chairman, I yield such time as he may consume to the 
gentleman from Nebraska [Mr. Barrett].
  (Mr. BARRETT of Nebraska asked and was given permission to revise and 
extend his remarks.)
  Mr. BARRETT of Nebraska. Mr. Chairman, I rise in support of H.R. 
1215.
  For 92 days Congress has undergone tremendous transformation; from 
body of delay to one of action. Today we begin the climb for the summit 
of restoring tax fairness for families, businesses, farmers, and senior 
citizens; and we do so by making real cuts in spending.
  I rise to call particular attention to provisions of H.R. 1215 that 
will help keep the family farm and the family business ``in the 
family'' by raising the estate tax credit from $600,000 to $750,000 and 
adjusting it annually for inflation.
  [[Page H4231]] Roughly half of the Nation's 2 million farmers are age 
55 or older, and as the next generation of producers begin to take 
their place, these provisions will be instrumental in the all important 
effort of retaining the institution of family farming.
  The estate tax provisions are but one of many good provisions of this 
sweeping package of tax cuts and spending reductions. I will support 
H.R. 1215 onfinal passage; it's far too important we move this last 
item in our contract forward. It is unfortunate, however, that we won't 
have the opportunity to make H.R. 1215 that much better.
  Yes, I was 1 of the 100 or so Republicans that signed that letter. 
And I rise today to say that I am concerned about the provisions of 
this bill applying the $500 per child tax credit to those earning up to 
$200,000 annually. I commend my colleagues who had the courage and 
energy to take the lead on this issue.
  We did promise the American people a tax cut. We also promised them 
deficit reduction. And certainly we could have worked for a better 
balance in this bill. By better targeting the $500 tax credit to 
families earning up to $95,000 annually, we would be cutting taxes and 
providing $12 to $14 billion more toward deficit reduction.
  Lately, I and many others have been advised by our friends and 
colleagues that we shouldn't ``buy'' into the ``class warfare'' 
argument that is being waged by the other side, and that we should 
stick to what was in the Contract With America.
  When I signed the Contract With America, I promised my constituents 
that I would support fair and open debate on items in the contract. I 
didn't promise to hand over my voting card and go home. They expect me 
to carefully weigh the pros and cons of the legislation and make 
improvements where I can.
  That is certainly what I wished could have happened in this case. 
Instead, we're being told to eat our spinach and be happy. I never 
liked spinach when I was growing up, and I certainly don't like it now.
  Nevertheless, on the side of deficit reduction, this bill is still 
serious business. It locks into place $124 billion in spending cuts.
  The committee report accompanying the bill suggests how to achieve 
these savings, and I would not be representing my congressional 
district, if I did not raise objections to some of those proposals.
  For example, recommended is another hit on rural health care and 
rural schools. The actual cuts to be made will be determined in the 
coming months by the appropriators and authorizing committees. I will 
be fighting to keep our share of the pie in rural America.
  My constituents understand that fiscal responsibility and our goal of 
a balanced Federal budget will require sacrifice. And they are willing 
to do their share, but shutting down rural America will not be to 
anyone's benefit in the end. Someone has to put the food in our urban 
grocery stores.
  This bill is the good news--tax cuts. This bill is also the reality--
there is bitter medicine to swallow in the months and year ahead if we 
are to restore the government to fiscal health.
  Mr. Chairman, I urge my colleagues to support H.R. 1215. it is not 
perfect and certainly is not painless, but it is necessary.
  Mr. ARCHER. Mr. Chairman, I yield myself the balance of my time.
  Mr. Chairman, it is very interesting when the Democrats present 
charts and numbers. Again, statistics as I have said earlier, do not 
lie, but. Their numbers almost exclusively are based on the Treasury 
Department's analysis, and the Treasury Department is an arm of you 
know who. The Treasury Department's analysis of distribution tables has 
been thoroughly discredited. The Joint Committee no longer uses that 
formula. They abandoned it prior to the time that we Republicans ever 
took over the control of this House. They abandoned the fictitious 
imputation of income to everyone who owns their own home as if it were 
being rented. They abandoned the arbitrary assignment of unreported and 
under-reported income because the Treasury thinks they know that each 
of us is not accurate in what we report. Therefore, that has got to be 
added on.
  This system of distribution tables in the hearings before the 
Committee on Ways and Means was thoroughly discredited. But that is the 
basis of all of their comments. And yet the Joint Committee, which is 
the commercial nonpartisan arm of the House and the Senate of this 
Congress, has issued their burden table which shows that under this tax 
bill the top 1 percent and the top 10 percent will pay more as a 
percentage of total taxes collected than the middle income or the lower 
classes will pay compared to current law.
  That is what the people of this country should understand.
  When we get to the deficit numbers, I have not seen before this 
Congress anything that has been proposed by the Democrats that will 
reduce the deficit. They talk about reducing the deficit, but it is 
words only. When it got to welfare reform, what did their proposal do? 
It increased welfare spending by $2 billion. Ours reduced welfare 
spending by $66 billion. There is a direct comparison. The Democrats 
are full of promises that if we only spend more money up front, 
somewhere down the line we are going to get a dividend, but it just 
does not happen that way.
  I think the American people are well aware that the party that stands 
for letting people keep more of their money, downsizing the Federal 
Government is the Republican Party.
  I once had a Democrat colleague on the Committee on Ways and means 
whom I respected a great deal, a liberal Democrat, genuine, honest, 
sincere, followed his conscience, and he said to me one day, ``Bill, I 
agree with you, we should have a balanced budget constitutional 
amendment.'' And I was rather surprised. But then he continued, ``The 
only difference is you think the budget should be balanced at 15 
percent of the GDP; I think it should be balanced at 50 percent of the 
GDP.''
  We want to get taxes down now equal to 2 percent of what the spending 
will be over the next 5 years so that when we get to a balanced budget 
we will have a Federal Government that will be 2 percent smaller and 
taking less out of the GDP. That is the Republican position. And we are 
determined to balance this budget.
  On capital gains, it is very interesting to note the Democrats say 
this is really for the rich only, and yet 75 percent of all of the 
capital gains filings were for families that had under $75,000 of 
income.
  My friend, the ranking Democrat on the Committee on Ways and Means 
said, oh well, it is like the lottery, only 7 percent or 8 percent of 
the people ever have a capital gain. He should look at the Joint 
Committee study here which was done in 1990, which covers only 5 years, 
from 1979 to 1993, and 15 million Americans had capital gains. That was 
16 percent of the taxpayers who filed during that 5-year period. That 
is only 5 years. If you look at a lifetime, I will guarantee that the 
percentage of Americans that will have some type of capital gain will 
be a very, very large one.
  Yes, some people start their business early in life and do not show a 
capital gain until later when they sell their business. It may be many 
years. The Treasury figures show them as accruing giant gains each 
year, and of course when they do finally sell in a one time in a 
lifetime sale, they are declared to be rich.
  This bill is fair, and it gets the deficit down and it should be 
adopted.
  The CHAIRMAN. All time for the Committee on Ways and Means' portion 
of general debate has expired.
  During this portion of the debate, the gentleman from Ohio [Mr. 
Kasich] will be recognized for 30 minutes, and the gentleman from 
Minnesota [Mr. Sabo] will be recognized for 30 minutes.
  The Chair recognizes the gentleman from Ohio [Mr. Kasich].
  Mr. KASICH. Mr. Chairman, I yield 1 minute to the distinguished 
gentleman from New Hampshire [Mr. Bass].
  Mr. BASS. Mr. Chairman, I rise in support of the pending legislation, 
and I do so as a member of the House Budget Committee. I am proud to be 
a member of this committee for the first time that came up with 180 
billion real dollars in spending reduction.

                              {time}  1730

  And not only that, under the guidance of our chairman, it has come up 
with a plan which is incorporated into the rule which was passed today 
that will tie the tax relief to the passage of a balanced budget 
resolution which will be produced by this committee sometime in the 
next 2 months. We will not have a tax relief unless we have a balanced 
budget. I think that is responsible of this Congress, and for those who 
are concerned about tax cuts versus spending reductions, be assured 
that we will have a balanced budget by the year 2002, and we will have 
tax relief as well.
  Mr. SABO. Mr. Chairman, I yield 1 minute to the gentleman from 
Pennsylvania [Mr. Coyne], a distinguished 
[[Page H4232]] member of the Committee on the Budget.
  Mr. COYNE. Mr. Chairman, I rise today in strong opposition to the 
Republican tax bill. This tax giveaway to the wealthiest individuals in 
the U.S. is made possible only by taking a meat axe to programs serving 
children, seniors, and the poor.
  Speaker Gingrich has called this Republican tax cut for Americans 
with incomes up to $200,000 the crown jewel of the Contract on America. 
The tragic fact is, however, that this crown jewel is being paid for by 
cutting programs like school lunches, infant nutrition programs, 
disabled children, LIHEAP, and student loans? The only good thing to 
say about this proposal is that at least the Republican majority is 
being clear about its priorities.
  This Republican tax bill is not a middle-class tax relief bill. The 
vast majority of tax cuts in this bill go to the richest individuals in 
our society. Households earning $200,000 would receive an average tax 
cut of $11,266. By contrast, more than 44 million American households 
with incomes below $30,000 would receive only $124. The vast majority 
of middle-class Americans will receive a meager portion of the 
Republican majority's tax giveaway. They will, however, be the ones to 
pay for this tax cut through cuts in funding for education, children's 
programs, job training, crime prevention, cancer research, and a host 
of other essential domestic programs.
  While middle-class Americans get peanuts under this bill, the capital 
gains reductions in this bill will benefit overwhelmingly upper income 
individuals. Over three-quarters of the tax benefits from the 
Republican capital gains proposal will go to individuals with incomes 
of $100,000 or more. This is no ``Mom and Pop'' small business 
investment incentive. Over half the taxpayers who realize capital gains 
each year have incomes over $200,000. This select group of the 
wealthiest individuals in our society--those with incomes above 
$200,000--would receive a $7,800 capital gains tax cut in 1996.
  The Republican tax bill also reopens a tax loophole for the biggest 
corporations in the United States by repealing the Alternative Minimum 
Tax [AMT]. The AMT was enacted in 1986 when Congress became aware of 
how U.S. corporations with millions in profits could avoid paying any 
taxes. Reopening this tax loophole was not in the Contract With America 
but it was added in the House Ways and Means Committee to benefit the 
biggest corporations in America. The Republican message to corporate 
America is ``Let the good times roll.''
  While giving the lion's share of tax cuts to the top 3 percent in 
America, this bill denies millions of hard working Americans an ability 
to benefit fully from the $500 per child tax credit in this bill. In 
the original contract, a young couple with one child and a family 
income of $15,000 would receive a child tax credit of $500. Under the 
Republican tax bill being considered today, that family of three would 
receive a tax credit of only $90. The Republican majority leadership 
rejected attempts to restore the full family tax credit to moderate-
income Americans by phasing out this provision for Americans with 
incomes above $95,000. Instead, Americans with incomes up to $200,000 
will benefit fully under this child tax credit provision while millions 
of middle-class Americans will never receive a full $500 per child tax 
credit.
  It is also an outrage that Federal workers across America have been 
singled out for a tax increase to pay for this tax giveaway. A Federal 
worker in Pittsburgh earning $20,000 will pay $500 more a year in 
pension taxes under the Republican bill. The people we depend on to run 
our prisons, enforce our laws, and serve the needs of all Americans 
have been hit with a tax increase under the Republican tax bill.
  Finally, the Republican majority's talk about ensuring that this tax 
cut does not add to the Federal deficit is a sham. Instead of making 
tax cuts contingent on deficit reduction, the Republican bill only 
requires an annual report to Congress on progress toward reducing the 
deficit. Instead of voting on specific cuts to pay for this bill, we 
have a promise of an additional $100 billion in unspecified spending 
cuts to be made sometime in the future. The Federal deficit will grow 
even larger if the Republican majority fails to enact their $17 billion 
cut in school lunches, child nutrition, LIHEAP and seniors programs 
that are targeted to pay for this tax giveaway.
  The key to deficit reduction is to stop this tax giveaway. When you 
are in a hole, the first rule is stop digging. How can we expect to 
control growth in the Federal debt being passed on to future 
generations of Americans when the Republican tax bill adds billions 
more to the Federal deficit? The Republican response is to cut taxes 
today and we can pay for our giveaway tomorrow. That is the same 
message Republicans sold the country in the early 1980's and the result 
was a Federal debt that grew from less than $900 billion in 1980 to 
more than $4.8 trillion in 1995.
  Mr. Chairman, the Republican tax bill is no American Dream 
Restoration Act. This bill can only be paid for by taking billions away 
from programs serving middle-class Americans in exchange for a few 
pennies in tax reductions. At the same time, the wealthiest in our 
society will have their pockets filled with this Republican tax 
giveaway. I urge my colleagues to defeat this tax bill.
  Mr. KASICH. Mr. Chairman, I yield 2 minutes to the distinguished 
gentleman from Michigan [Mr. Hoekstra], a member of the Committee on 
the Budget.
  Mr. HOEKSTRA. Mr. Chairman, I think it is time for us to reflect back 
on where we have been for the last 2 years and also then to look 
forward to where we are going to be at the end of this Congress.
  Over the last 2 years, back in 1993, we had a real what we thought 
was a genuine effort to reduce the budget, passed the largest tax 
increase in American history. Two years later the President has come 
back after that large tax increase and has taken a walk on getting us 
to a balanced budget, continuing and perpetuating $200 billion deficits 
for the next 5 years, taking us to an accumulated debt of over $6 
trillion.
  I encourage everyone to take a look at where the Republicans will be 
after we finish our 2 years with this opportunity to set America in a 
new direction.
  We have taken a first step where we have passed a rescission package 
where we actually pay for emergency spending. This is the second step 
in that process. Today we are going to be delivering over $190 billion 
in tax reform, tax relief. We are going to be delivering another $30 
billion in deficit reduction.
  Within the next 2 months we will also for the first time in this 
House of Representatives deliver a plan to get us to zero, a balanced 
budget within the year 2002.
  So what we have done is we have paid for emergency spending, we are 
providing tax relief, and we are going to continue to slow the growth 
of Federal spending so that we actually do get to a balanced budget. 
That is a record that we will be proud of. That is a record of 
accomplishment. And that will be a record of equity, fair distribution 
between the American people and slowing the growth of the Federal 
Government.
  Mr. SABO. Mr. Chairman, I yield such time as she may consume to the 
gentlewoman from Maryland [Mrs. Morella].
  Mrs. MORELLA. Mr. Chairman, I rise in opposition to the bill.
  Mr. Chairman, this vote is not about tax cuts. It is about 
priorities. It is about intergenerational equity. It is about whether 
we, as a nation, can in good conscience reward ourselves with tax cuts 
today, while laying upon our children the burden of massive, bloated 
deficits stretching as far as the eye can see. That is not right, Mr. 
Chairman.
  While I commend my colleagues, Representatives Castle, Upton, and 
Martini, for their concerted efforts to link tax cuts to deficit 
reduction, I do not believe that the commitment they have secured goes 
far enough. No commitment, however well intentioned, can ensure that 
Congress will meet its deficit reduction goals. Recent budget 
agreements have certainly taught us that. Yet we know that the pressure 
to maintain these very expensive tax cuts will only increase with time, 
regardless of whether or not we are on the deficit reduction glidepath 
specified in this agreement. That is a very, very slippery slope to 
embark upon, Mr. Chairman.
  I, too, support many of the individual tax provisions contained 
within this package, but the rule does not permit us to consider these 
tax provisions individually. On the contrary, we are being asked to 
cast one vote on a massive tax bill whose price tag--nearly $700 
billion in the next decade--is staggering. As a result, in this case, 
the whole is less than the sum of its parts.
  Finally, Mr. Chairman, I would like to voice my strong objections to 
the leadership's unwillingness to permit amendments that would direct 
the child tax credit to middle-income families, rather than to those 
earning up to $250,000. The lack of a reasonable cap on the child 
credit is particularly troubling considering that this legislation 
actually raises taxes on over 2 million Federal employees to finance 
everyone else's tax cut, an egregious 
[[Page H4233]] inequity that I have already discussed on this floor 
several times today.
  I urge my colleagues to keep their contract with future generations 
and to put deficit reduction, tax fairness, and equity for our Nation's 
civil servants first. Vote against this package.
  Mr. KASICH. Mr. Chairman, I yield 1 minute to the very distinguished 
gentleman from New York [Mr. Lazio], a member of the Committee on the 
Budget.
  Mr. LAZIO of New York. Mr. Chairman, I rise today in support of H.R. 
1215, The Tax Fairness and Deficit Reduction Act of 1995.
  As the father of two young daughters, I am well aware that families 
desperately need tax relief. My constituents on Long Island are 
shouldered with some of the highest taxes in the Nation, which are 
literally robbing middle-income taxpayers of the ability to take care 
of their families.
  The National Taxpayers Union estimates that in 1991 a family of four 
that makes $53,000 paid 50 percent of their earnings in Federal, State, 
local and other indirect taxes. So, the Government takes home a larger 
share than the worker. Disturbingly, parents now spend about 20 percent 
less time with their kids today than 40 years ago. Why? Because the tax 
exemption for children has eroded due to inflation. In 1948 the child 
exemption amounted to 42 percent of an average family's income. Today 
it is only worth only about 12 percent. Consequently, both parents 
today usually have to work just to make ends meet.
  The $500-dollar-per-child tax credit contained in the bill will help 
ease that burden. Every dollar workers do not have to send to 
Washington can instead be used to raise their families. Overall, Long 
Island families will save nearly $65 million from this tax credit. 
Importantly, 75 percent of it will go to families with incomes of less 
than $75,000.
  Additionally, H.R. 1215 recognizes the particular financial burdens 
placed on seniors and would allow them to keep more of their earned 
Social Security benefits without being penalized for working. It also 
repeals President Clinton's tax increase on Social Security benefits 
and, provides tax incentives to encourage people to purchase long-term 
care coverage. In all, seniors in New York would reap over $2 billion 
in tax savings from this bill.
  Forty-two million families and 5 million seniors will see their taxes 
cut under this bill, and New Yorkers will save nearly $16 billion over 
the next 5 years. Best of all, these tax cuts will be matched by 
spending cuts.
  Mr. SABO. Mr. Chairman, I yield 2 minutes to the gentlewoman from New 
York [Ms. Slaughter].
  Ms. SLAUGHTER. Mr. Chairman, I rise today in strong support of 
deficit reduction and in opposition to a bill that will add at least 
$700 billion to the deficit. The legislation before us today will give 
millions of dollars to the wealthiest in our society at the expense of 
our children, senior citizens, the disabled and working American 
families. The arguments we have heard to day in support of H.R. 1215, 
are all to familiar. It was only 15 years ago when the Reagan 
revolution came here to Washington to ask for deep tax cuts of the 
wealth, and for corporations.
  In the early 1980's our debt stood at $1 trillion, by the end of that 
same decade the debt was close to $4 trillion. We have all listened to 
the Republican criticism of the President's fiscal year 1996 budget 
concerning deficit reduction. However, it should be pointed out that if 
the President did not have to finance the 1980 debt ``gift'', his 
budget would have been balanced. That's better than a glide path. The 
same misguided policies and economics that allowed our debt to triple 
in less than 10 years, are driving this huge tax give away.
  We have heard that this hugh massive irresponsible tax give away, 
will spur economic growth. I think my colleagues on the other side of 
the aisle need a refresher course. Fifteen months after the 1981 tax 
cuts, the unemployment rate soared to 10.8 percent, it highest point 
since the end of the great depression.
  I would question the wisdom of turning our backs on deficit 
reduction. As a member of the House Budget Committee, I have heard 
testimony from numerous economists who have cautioned us in proceeding 
down a dangerous path. Even the Chairman of the Federal Reserve, a 
vocal proponent of a capital gains tax cut, recommended caution and 
reminded us that the most important thing we could do for long-term 
economic growth is to reduce the deficit. Adding an additional $700 
billion would do little to reduce the deficit and reduce long-term 
interest rates which directly impact short term investments.
  We do have a choice before us today.
  We can support real relief for working families without jeopardizing 
deficit reduction or we can support relief for multinational 
corporations and wealthy citizens. The Democratic substitute includes 
necessary triggers to prevent any tax relief from adding to the 
deficit, unlike the Republican bill which simply calls on CBO to tell 
us that the deficit targets were not met and that automatic cuts in 
entitlements and discretionary accounts are necessary. It does not 
force the cuts nor does it give any specific cuts. The Democratic 
alternative repeals the tax relief provisions in the event that the 
deficit climbs above established targets.
  Included in the Democratic alternative are real investments in our 
future economic strength while ensuring that all of the benefits are 
targeted to taxpayers with adjusted gross income and less than 
$100,000.
  The substitute provides for a deduction for educational expenses of 
up to $10,000; a restoration of the deduction for student loan 
interest; an expansion of the current IRA Program to make more 
Americans eligible and to allow for penalty-free withdrawals for 
education and an enhancement of the Savings Bond Program to increase 
the rate of return to help families save for education without 
suffering any tax penalty. The Democrats are investing in our children 
and our economic future. What kind of country will we become when 
education opportunities only exist for the very wealthy? When students 
graduating from college cannot afford to purchase a home or a car 
because of staggering college loan payments? We are forcing today's 
college students into major debt before they turn 25. For our 
generation a mortgage represented a family's major debt, today it is a 
college education. What impact does this have on our economy and our 
ability to compete in global economy. If we do only one thing to help 
families and improve economic opportunities for all Americans, it would 
be investing in education.
  The Democratic substitute ensures fiscal responsibility while 
providing necessary relief to working families. What price are we 
willing to pay to help major corporations and the top 10 percent of 
earners. Are we willing to cut school lunches? Cut student loans and 
Pell Grants? Cut Medicare and long-term care for the disabled and 
senior citizens? Eliminating or drastically reducing COLA's for Federal 
and military retirees? Are we willing to allow major cuts in breast 
cancer research. If you answer no to any of these choices, you must 
defeat H.R. 1215. included in this legislation is a call to cut $100 
billion over 5 years from domestic and military spending.
  I ask my colleagues to seriously consider the ramifications of 
today's dangerous vote. Do not be fooled by the rhetoric of yesterday. 
We have a choice--we can vote for the Democratic alternative and vote 
for families and economic stability or we can vote for the Republican 
bill and send the deficit through the roof. We simply cannot justify 
this type of reckless borrowing to give tax breaks to the wealthy at 
the expense of real working families and the most vulnerable in our 
society.
  Mr. SABO. Mr. Chairman, I yield 2 minutes to the gentleman from North 
Dakota [Mr. Pomeroy].
  Mr. POMEROY. Mr. Chairman, one of my favorite Jack London stories is 
about the young Eskimo hunter who was highly successful. When they 
found out his secret, all were amazed, because his secret was to wrap 
tightly coiled shards of steel into frozen meat, and as the polar bears 
would devour the meat and thus would begin to digest it in the polar 
bear's stomach, the shards of steel would strike forward and literally 
tear the guts out of the polar bear, leaving a remarkably successful 
hunt for the young Eskimo hunter.
  The tax bill before us is constructed not unlike that little hunting 
trick. It offers a $200 billion deficit impact in the first 5-year 
measurement window for this bill. The House only considers the first 5-
year cost of the proposal.
  Some in the majority side think we can afford the $200 billion. I 
happen not to agree.
  But no one is talking about the full cost of this bill, the 10-year 
cost of this bill, and that is vital to consider in light of what 
happens once we get past this bill's measurement window.
  You can see here in this chart that once we get past the 5-years, the 
cost of this measure explodes, and like the 
[[Page H4234]] trick used by our young Eskimo friend, this tears the 
guts not out of a polar bear but out of the Federal Treasury when the 
full costs of the tax proposal before us are experienced to this 
Treasury. It will devastate our ability to reach a balanced budget.
  It will devastate programs vital to kids, vital to students, vital to 
seniors. It is very, very bad policy, and I urge its rejection.
  Mr. KASICH. Mr. Chairman, I yield 4 minutes to the gentleman from 
Pennsylvania [Mr. Walker], the very distinguished chairman of the 
Committee on Science and a member of the Committee on the Budget.
  Mr. WALKER. Mr. Chairman, I thank the gentleman for yielding. I would 
like to thank him for his leadership on this bill.
  I certainly rise in support of the Kasich amendment and applaud the 
hard work done by the Speaker of the House, by the chairman of the 
Committee on the Budget, by Chairmen Archer and Bliley to put together 
this historic measure. Included in this bill is a measure that the 
gentleman from Minnesota has mentioned on a couple of occasions which I 
believe is a rather historic provision and is something the American 
people have found very, very much in line with their beliefs of how we 
ought to begin this process of balancing the budget, namely, to get 
them involved, and this particular provision is called the Taxpayer 
Debt Buydown Act.
  This is an effective, innovative plan to cut the runaway Federal 
budget deficit and reduce the $3.6 trillion in public debt. It is a 
bold way of bringing the American taxpayer directly into the budget 
process. It is a plan that will give the taxpayers the power they need 
to participate in controlling Federal spending, a referendum every 
April 15 on Federal expenditures.
  The proposal would amend the IRS code to allow taxpayers the 
opportunity to voluntarily designate up to 10 percent of their income 
tax liability for the purpose of debt reduction. All moneys designated 
would be placed in a public debt reduction trust fund established by 
the Department of the Treasury and used to retire the public debt other 
than obligations held by the Social Security trust fund, the civil 
service and the military retirement funds.
  On October 1 the Treasury Department would be required to estimate 
the amount designated through the checkoff. Congress would then have 
until September 30 of the next year to make the necessary cuts in 
spending. To coordinate this measure, in the efforts to balance the 
budget, the checkoff would count only if the amount is greater than the 
cuts Congress has already implemented. For example, if Congress passes 
a reconciliation bill this year and designates cuts of $50 billion in 
1998 and the checkoff in 1998 totals $40 billion, well then, we will 
have met our obligation, and there would be no designation of 
additional money needed. However, if the American people wanted us to 
cut $60 billion and we only designated 50, we would, in fact, under 
this have to find another $10 billion in cuts. Therefore, it works in 
conjunction with and compliments the push for a balanced budget.
  It is also a backup. If Congress fails to enact the balanced budget, 
the 10 percent will be the only option for cutting spending. If 
Congress failed to enact spending reductions to meet the amount 
designated by the taxpayers, an across-the-board sequester would occur 
on all accounts except Social Security retirement benefits, interest on 
the debt, deposit insurance accounts, and contractual obligations of 
the Federal Government. If Congress enacted only half of the necessary 
cuts, a sequester would ensure the other half.
  All spending cuts would be permanent. The cuts would be permanently 
reducing the spending baseline.
  Although nothing in the legislation would prohibit Congress from 
increasing taxes, tax increases could not be used as a substitute for 
spending reductions that would be designated by the taxpayers.
                              {time}  1745

  OMB and CBO both say this idea works. It would balance the budget in 
7 years and zero out the debt by fiscal year 2010 if everybody 
participated. If the public debt is not reduced in the same time 
period, projections show it will increase to over $9.5 trillion. So 
this is a very real way of beginning to deal with the problem.
  Some recent criticisms have centered on one issue. The gentleman from 
Minnesota suggested that this would create a plutocracy where the rich 
would control the U.S. budget. Well, those with incomes over $100,000 
would pay 39.2 percent of all individual income tax, or the top 1 
percent of income taxpayers pay 27 percent of all income tax. You 
cannot have it both ways. You cannot on the one hand say we are going 
to tax people because of their wealth and then suggest when there is 
opportunity to have them participate in some of the things to begin 
reducing the deficit, that they cannot participate equal to what they 
are contributing to the entire problem. So that is what this does. No 
one is treated unequally. Anybody who pays taxes gets a chance to have 
their say in whether or not the debt and deficit should come down. I 
think this is a highly positive kind of approach, and people are 
finding it is a highly positive kind of approach. I congratulate. I 
congratulate the gentleman from Ohio [Mr. Kasich] for including it in 
this proposal, and I look forward to voting for the bill and seeing to 
it that it passes.
  Mr. SABO. Mr. Chairman, I yield myself 15 seconds.
  The gentleman describes a provision inserted in the bill with no 
hearings, no consideration. It changes fundamentally our government 
from a representative democracy to a system of government where $1 
equal 1 vote, $1 million equals a million votes.
  Mr. Chairman, I yield 2 minutes to the gentlewoman from California 
[Ms. Woolsey].
  Ms. WOOLSEY. I thank the gentleman for yielding this time to me.
  Mr. Chairman, we are hearing a lot of inside-the-beltway talk in this 
debate, and it must be confusing to the American people.
  In beltway language, this is a bill to eliminate the alternative 
minimum tax by reducing discretionary spending caps in violation of the 
Budget Enforcement Act.
  But let me tell you what this bill is really all about. It means that 
Newt's Republicans are creating tax loopholes for special interests, 
and paying for it by taking food out of the mouths of children, taking 
money out of the pockets of middle-income college students, and taking 
homes away from low-income seniors.
  In Budget Committee, when these painful cuts were being thrust upon 
us, I offered an amendment to protect child nutrition. But, marching in 
lock step, the Republicans said ``no.'' Newt's Republicans sent a clear 
message to America's children: We are willing to take away your school 
lunch so we can give lobbyists and special interests a free lunch.
  But, Mr. Chairman, young children are not the only ones who will pay 
for these tax loopholes. We will also be taking money out of the 
pockets of middle-class college students and their families. At two 
schools in my district alone, almost one-thousand students will lose 
their campus-based aid so that special interests can stuff their 
wallets.
  Unfortunately, there is another victim in this plot to prop up the 
special interests--our seniors. While kids are being kicked out of 
schools, seniors are in danger of losing their housing. More than 200 
seniors in Santa Rosa and Marin are already in danger of being thrown 
out in the street.
  Like school lunches and student loans, affordable housing will become 
an impossibility for many of America's seniors.
  Mr. Chairman, Newt's Republicans are going too far, and they are 
going too fast. The people of this country don't want this 
partisanship, they want real solutions--solutions that will improve 
their lives, not take away their opportunities.
  I beg my colleagues on the other side of the aisle, in the interest 
of our children, our seniors, and middle-class America, let us slow 
down and think about who we are hurting before we pass this tragic 
legislation.
  Mr. KASICH. Mr. Chairman, I yield 3 minutes to the distinguished 
chairman of the Committee on Government Reform and Oversight, the 
gentleman from Pennsylvania [Mr. Clinger].
  (Mr. CLINGER asked and was given permission to revise and extend his 
remarks.)
  [[Page H4235]] Mr. CLINGER. I thank the gentleman for yielding this 
time to me.
  Mr. Chairman, I rise in support of H.R. 1215, the Tax Fairness and 
Deficit Reduction Act of 1995.
  This bill keeps the promise made in the Contract With America to put 
us on a path toward fiscal responsibility with reduced spending to the 
tune of $90.7 billion over 5 years--that is a whopping $90.7 billion in 
deficit reduction--accomplished by imposing sorely needed restraints on 
discretionary spending.
  A very difficult part of getting our fiscal house in order is going 
to involve reforming our Federal retirement system. I have heard some 
Members argue that there is nothing wrong with the current system. But 
let me state emphatically--our Federal retirement system is broken and 
in dire need of repair. We currently have an unfunded liability of $540 
billion and that bill is long long overdue.
  On top of that, we have a system where the retirement benefits paid 
out every year far exceed the cash coming in to pay for those benefits. 
And who do we look to pay the difference? Obviously the American 
taxpayer. Last year, $26.5 billion had to be drawn from the Treasury to 
help pay the pension benefits for Federal retirees. If we do not do 
something now, that number is going to continue to grow larger and 
larger.
  A very short history: The Federal Retirement System was originally 
set up so that employee and employer contributions were equal, and 
those payments were projected to cover the cost of the system. When 
Congress increased benefits, Congress also increased employee 
contributions to cover these costs. The last adjustment to employee 
contributions, however, was made in 1969--26 years ago.
  Since then, salaries and benefits have continued to increase for 
Federal workers and retirees, but without, without any corresponding 
mechanism to pay for them. The result is that the Federal Government--
the American taxpayer, in effect--has shouldered an ever-increasing 
share of the cost of Federal retirement. That share is now about 70 
percent of the cost of the retirement system.
  So it is time past due to address the inequities of the system and 
put our Federal retirement program on a sound fiscal footing.
  The increased contribution from Federal employees--amounting to about 
$2 billion a year--will go directly into the Federal Retirement System 
to maintain the system's benefit structure. And because additional 
employee contributions reduce the need for Federal borrowing to pay 
current benefits, the deficit also is reduced.
  The Budget Committee has taken a difficult step in addressing the 
inequities in cost between Federal employer and employees. But just as 
important, the legislation addressed the inequities between pensions 
here in the legislative branch and those in the executive branch. H.R. 
1215 would bring congressional accrual rates for Members and staff in 
line with regular Civil Service accrual rates.
  Mr. Chairman, in closing, I want to say I strongly support the 
package of Federal retirement reforms in this legislation and urge my 
colleagues to do the same. These particular provisions represent a 
giant step in facing reality that the present dysfunctional system is a 
significant contributor to the overall budget deficit.
  I commend the chairman of the Budget Committee, the gentleman from 
Ohio [Mr. Kasich], for his efforts in this area, and again urge my 
colleagues to pass this legislation.
  Mr. SABO. Mr. Chairman, I yield 2 minutes to the distinguished 
gentleman from Utah [Mr. Orton].
  (Mr. ORTON asked and was given permission to revise and extend his 
remarks.)
  Mr. ORTON. I thank the chairman for yielding.
  Mr. Chairman, I came here today prepared to give a speech to you 
outlining the good parts and the bad parts of this bill and to tell you 
why I am in opposition to it. But I would like to submit my statement 
for the record and talk to my colleagues for just a minute about what 
is really important.
  Mr. Chairman, a week ago my life changed forever as my wife gave 
birth to our first-born son, and today I just came from the doctor's 
office where we took him for his one-week checkup. While there, they 
had to take a blood test from his blood; they stuck his ankle and also 
had to give him an immunization. As he laid there crying and looking up 
at me through tears in his eyes, I would have done anything in the 
world to take that pain from him. But I could not take his blood test 
for him, and I could not take that immunization. It made me think as I 
came here to the floor today what are we going to say to my son 20 
years from now or your sons and daughters or grandchildren if we fail 
to get our fiscal house in order? If we pass onto those children and 
future generations of this country the deficit, the debt that we have 
piled upon them, it will impact their lives forever.
  But there is something we can do about that. What I am going to do 
about that today is to vote against this bill because this bill does 
not balance the budget. This bill says before we start even climbing 
out of the $5 trillion hole we are, we are going to dig $700 billion 
deeper. That does not make sense.
  So I would urge my colleagues let us balance the budget first, let us 
not dig deeper into the hole before we try to climb out. Let us be able 
to look our children and grandchildren in the eye in the future and 
tell them we did do what we could do for this country.
  I urge my colleagues to vote ``no.''
  Mr. Chairman, I rise in opposition to the so-called ``Tax Fairness 
and Deficit Reduction Act of 1995.''
  I believe the American public has sent us a clear message: Cut 
spending first. In order to balance the budget over the next seven 
years, we will have to make over $1 trillion in spending cuts. This 
will be extremely painful and difficult to achieve. To dig ourselves 
another $630 billion in debt before we even start to climb out of the 
deficit hole makes absolutely no sense.
  I am certainly not alone in this analysis. The chairmen of the Senate 
Budget and Finance Committees both agree that we should not be cutting 
taxes at this point. The Senate Budget Committee's preliminary plan to 
balance the budget includes not a single tax cut included in this tax 
bill we are debating today in the House.
  So why is this vote taking place. The answer is politics, pure and 
simple. The tax bill is in the grand old political tradition, a 
Christmas tree, with something for everyone. As members struggle to 
justify why they are voting for final passage, their only line of 
defense seems to be ``It's in the Contract.'' Many supporters of those 
who will vote for this bill are privately conceding that we should not 
be cutting taxes by $630 billion over 10 years, and are counting on the 
Senate to bail us out.
  This is not the responsible thing to do. The clear danger here is 
that we will commit the same mistakes of the 1980's that lead us to 
ruinous budget deficits and a national debt approaching $5 trillion. In 
1981, we passed tax cuts first, with the promise of future spending 
cuts. Those cuts never materialized. We cannot make this same mistake 
again. The spending cuts should come first. Then, if we can find 
additional spending cuts, we can then cut taxes.
  For that reason, I have worked with Representatives Browder, Castle, 
Upton, and Martini over the last few weeks to develop and offer a 
bipartisan amendment to make all of the tax cuts in the bill dependant 
on spending cuts necessary to both
 balance the budget and pay for the tax cuts. Specifically, our 
amendment would have delayed the effective date of the tax cuts in the 
bill until Congress passed and the President signed into law 
legislation which cuts spending enough to balance the budget by 2002, 
and also pay for the tax cuts. As an enforcement mechanism, the tax 
cuts in the bill would later be revoked if we failed to meet interim 
deficit targets leading to a balanced budget by the year 2002.

  This amendment is completely consistent with what the House 
leadership has announced it would do--to both balance the budget and 
pay for tax cuts. Now, I am pleased to see that leadership has retained 
a portion of the provision in our amendment which delays implementation 
of the tax cuts until there is a certification that the reconciliation 
bill containing the tax cuts both balances the budget by 2002 and pays 
for the tax cut. I take this to be an ironclad commitment that the 
House leadership will not bring a reconciliation vote to the floor this 
summer containing tax cuts unless such a certification is made. And, I 
strongly urge every member of the House to vote against any future 
reconciliation bill which violates this commitment.
  However, I am concerned that leadership watered down the Browder/
Castle/Orton/ 
[[Page H4236]] Upton/Martini amendment with respect to enforcement of 
annual glidepath targets. In my opinion, leadership's failure to retain 
this provision calls into question their commitment to making deficit 
reduction our top fiscal priority. And it makes it harder to vote for a 
bill which cuts taxes at the expense of deficit reduction.
  Mr. Chairman, the issue is simple. With over $200 billion deficits as 
far as the eye can see, it is irresponsible to start off with tax cuts 
when we should be starting off with spending cuts. The issue is not 
whether these tax cuts are paid for with spending cuts. The issue is 
whether we are going to cut spending in a amount necessary to both 
balance the budget and pay for any tax cuts we might approve. Put 
simply, the issue is whether we are going to cut spending first.
  I recognize that families with children could use tax relief at this 
time. However, I would appeal to every family in my home state of Utah 
and in the nation to ask themselves what is best for their children. Do 
we want to leave a legacy to our children of a staggering debt, high 
interest rates, and a declining standard of living? Do we want to 
continue a path of consuming today at a huge cost tomorrow? Is that 
really a family-friendly thing to do?
  We know the answer is no. Every parent recognizes the need to save 
for their children's higher education and for their own retirement. We 
should be equally responsible with our federal finances. It is fun to 
cut taxes? The answer is clearly yes. Is is responsible to cut taxes 
before we cut spending, exacerbating our $200 billion a year federal 
deficits? The answer is clearly no. Let's put the nation's interest 
above political interest. Vote no on the rule and vote no on final 
passage.
  Mr. KASICH. Mr. Chairman, I yield 1 minute to the gentleman from 
Florida [Mr. Miller], a member of the Committee on Appropriations, and 
a distinguished member of the Committee on the Budget.
  Mr. MILLER of Florida. I thank the gentleman for yielding this time 
to me.
  Mr. Chairman, the gentleman from Utah who just spoke said there are 
182,000 children in the gentleman's district who would benefit from 
this tax cut and that would amount to $91 million in tax savings for 
the gentleman's constituents.
  Mr. Chairman, I am proud to be here today in support of the Tax 
Fairness and Deficit Reduction Act. Not only does this legislation 
provide necessary tax relief for the hard-working families of America, 
it pays for those tax cuts and reduces the deficit by $30 billion.
  In our quest to remove the burden of bloated government from the 
backs of our kids and our grandkids, all I hear from the other side of 
the aisle is empty rhetoric about class warfare.
  The fact is we started with ourselves: for the first time in 40 
years, we have a deficit reduction package that cuts benefits for 
Members of Congress. This legislation reforms the overly generous 
pension benefits given to Members of Congress by the overly-taxed 
American people.
  Never in the past 40 years did the Democrats reduce their benefits 
and actually give the money back to the hard-working, tax-paying 
citizens of this country.
  Republican leadership is different. We are leading by example. I urge 
my colleagues to support this legislation.
  Mr. SABO. Mr. Chairman, I yield 2 minutes to the distinguished 
gentleman from South Carolina [Mr. Spratt].
  (Mr. SPRATT asked and was given permission to revise and extend his 
remarks.)
  Mr. SPRATT. I thank the gentleman for yielding this time to me.
  Mr. Chairman, I have listened to Members from across the aisle insist 
the tax cuts in tax bill are paid for. In truth, they are not paid for. 
That is why this tax bill is so reckless. I have time to talk about 
just one reason why the revenue losses entailed by this bill are not 
replenished or offset by spending cuts. That is that the lower spending 
cap, $100 billion, for reduction in discretionary spending, is 
spurious, just more smoke and mirrors.
  Now, I know that the chairman of the Budget Committee sent us an 
illustrative list of spending cuts that total $100 billion. None of 
these cuts has been voted on yet. It would be miraculous, in my 
opinion, if even half of them were ever approved. And if we take this 
tax list sent to us by the chairman at its face value we ought to know 
that there is one peculiar discrepancy to it. That is that it is 
silent, altogether silent on defense spending, which constitutes half 
of all discretionary spending.
  The chairman also said lately that he would like to freeze defense 
spending at the current level of outlays, which is $270 billion.
  Now, let us bring defense, the other half of discretionary spending 
into the picture and see what happens. I have a chart here that is not 
about class warfare, it is about budget reality, which deals with that 
particular half of spending.
  If we take the lower caps, $100 billion reduction in the spending 
caps called for by this bill with constant defense outlays of $270 
billion, that is an outlay freeze on defense, we see from this tax 
chart that we will have to cut $41 billion out of budget authority from 
nondefense programs for fiscal 1996, which is next month. As you can 
see from those charts, those cuts in nondefense budget authority will 
rise to $66 billion in fiscal year 1998, a 23.5-percent reduction off 
current levels of spending for those programs. That is 23.5 percent off 
of NASA, Drug Enforcement Agency, programs for the elderly, you name 
it, everything in discretionary spending. Altogether, over 5 fiscal 
years the cuts in nondefense spending will add up to $187 billion, 
which is $87 billion more than the chairman of the Budget Committee has 
laid out in his illustrative list.
  Now, there are lots of things in this tax bill I would like to vote 
for and support. This would deal a death blow to deficit reduction, and 
that is why I am voting against it and urge others to do the same.

                              {time}  1800

  Mr. KASICH. Mr. Chairman, I yield 2 minutes to the gentleman from New 
Jersey [Mr. Saxton].
  Mr. SAXTON. Mr. Chairman, I thank the gentleman from Ohio [Mr. 
Kasich], the chairman of the Committee on the Budget, for yielding this 
time to me.
  Let me just say that there are two things that this economic program 
that the contract embodies are trying to carry out. One is to slow the 
growth of outlays that the Federal Government does on an annual basis. 
This chart shows where we have come in terms of outlays over the years 
from a low of total Government spending in 1930 of 12 percent to the 
1990 level of spending of 42 percent, and it is the chairman of the 
Committee on the Budget and his committee members who are going to be 
responsible for bringing down this rate of growth under our plan.
  The second part of our plan is to create more revenue, to get 
revenues growing so that, as we bring down the rate of growth and 
spending, the revenue line will catch up with that level of spending 
that is necessary, and in so doing eliminate the budget deficits and, 
eventually, the debt.
  In order to do that, John Kennedy told us in 1963 that, if we do 
good, smart tax policy, it will create an economic expansion, we will 
have more people working, earning more money and hence paying more 
taxes, and that is what today's debate is essentially about.
  Now we know that there are some folks on the other side of the aisle 
who do not want lower taxes because it means we have to spend less 
because we will have a smaller government, and so they try to come up 
with some red herrings to scare some of the Members who might be 
hesitant to vote for it.
  The next chart shows what one of those arguments is about. They say 
that the capital gains tax reduction that we are proposing to put in 
place does big favors for the rich people when in fact 38.4 percent of 
the people who pay capital gains tax have an income of under $50,000, 
and, as a matter of fact, the next 22 percent have income over 
$100,000, and so in fact the large majority of the capital gains that 
are paid are paid by low income and middle income people.
  The other thing that the opposition would like us to believe is that 
the $500 per child tax credit somehow favors rich people when in fact 
87 percent of the people who will benefit from this program earn less 
than $75,000 a year. As a matter of fact, the last speaker, the 
gentleman from South Carolina [Mr. Spratt], has 123,000 children in his 
district which are middle income people, and has district, if we do not 
pass this plan, will therefore lose $307 million to the families and 
his middle class taxpayers.
  [[Page H4237]] Mr. SABO. Mr. Chairman, I yield 2 minutes to the 
gentlewoman from Hawaii [Mrs. Mink].
  (Mrs. MINK of Hawaii asked and was given permission to revise and 
extend her remarks.)
  Mrs. MINK of Hawaii. Mr. Chairman, I thank the gentleman, and I 
appreciate the time to offer my thoughts about what we are about to do.
  Two weeks ago we had some very dramatic debate in this House 
concerning the welfare program. At the end of that we saw major cuts 
being made on some of the most substantial programs that help needy 
families throughout America, and the cost of the program in terms of 
reductions made against the poor in America came to something over $60 
billion. I say to my colleagues, you study this tax cut program today, 
you'll see that the $60 billion that we took away from poor needy 
families is going to pay for the tax cuts for the super rich in this 
country.
  I stand here today, not as an expert on the tax cuts and the 
implications that are going to fall upon this Nation in 5 or 10 years, 
but I stand here today and ask the question, Is it ever fair for the 
Congress of the United States to pass tax cuts for the super rich and 
to pay for it out of the needs, and wants and feelings of the poorest 
in this country? We cut school lunches. We are going to cut the student 
aid programs in our colleges. We took away some of the WIC Program. We 
took away the base of guarantee of the welfare structure by taking away 
the entitlements. On and on, Mr. Chairman, the sacrifices that are 
being called upon to pay for this tax cut are coming from the average 
citizens of this country.
  Now there are some good things in here, and I suppose many people are 
going to be tempted to vote for this bill because of these various good 
items in it, some of it having to do with the senior citizens. But I 
ask the senior citizens: In the end we're going to have to pay for 
these tax cuts of $189 billion, and watch out, senior citizens. It is 
going to come from your programs, your benefits, and your Medicare 
Program. I guarantee you that.
  Mr. KASICH. Mr. Chairman, I yield 2 minutes to the distinguished 
gentleman from Delaware [Mr. Castle], the former Governor of the State.
  Mr. CASTLE. Mr. Chairman, I believe the premise of this bill is 
correct: The American people should be able to keep more of the money 
they have earned. It is just not right for the Federal Government to 
take an ever increasing share of the incomes of working Americans. Do 
the American people want a tax cut? Yes, they certainly do. But their 
top priority--and many of my constituents in Delaware have told me 
this--is for Congress to cut spending and balance the budget first, and 
then cut taxes. The bill now contains this very important safeguard.
  I am pleased to say that the Republican leadership, Chairman Archer 
and Chairman Kasich agreed to an amendment offered by Mr. Upton, Mr.  
Martini, and myself that requires that the tax cuts can only become law 
when Congress has approved budget legislation that will put the 
Government on course to a balanced budget by the year 2002.
  This will hold Congress' feet to the fire to ensure that the budget 
legislation passed this year will make all of the necessary spending 
cuts and program changes to reduce the deficit every year for the next 
7 years so that the deficit will be zero in 2002.
  It provides a strong incentive to put a tough budget plan in place 
now, so that the tax cuts can begin as scheduled next year.
  In subsequent years, if the budget committees and CBO report that we 
are no longer on course to a balanced budget, Congress must then 
consider a budget resolution that will put us back on course.
  In addition, the legislation will also require the President to 
submit a balanced budget each year. As my colleagues know, President 
Clinton has submitted a budget that will produce $200 billion deficits 
for each of the next 5 years, adding almost a trillion dollars to the 
national debt. This amendment will require the President to submit a 
balanced budget or offer one as an alternative plan if he chooses to 
propose continued deficit spending.
  Mr. Chairman, I strongly believe that no tax cuts should go into 
effect until this Congress faces up to the challenge of reducing 
Government spending. This amendment ensures that this will happen. Many 
of us have tried to work on a bipartisan basis on this issue and we 
will work with Chairman Kasich as we move on to the deficit reduction 
legislation that must pass before the tax cuts can take effect. We want 
to cut taxes--let us make sure the spending cuts happen first.
  Mr. SABO. Mr. Chairman, I yield 2 minutes to the distinguished 
gentleman from Texas [Mr. Stenholm].
  (Mr. STENHOLM asked and was given permission to revise and extend his 
remarks.)
  Mr. STENHOLM. Mr. Chairman, one of my colleagues was quoted in this 
morning's paper saying, ``How can anyone today vote against cutting 
taxes?''
  It should be very easy for all of us when we are doing it with 
borrowed money.
  Another colleague stood in the well too long ago and said, ``Imagine 
$500 laying on this table. Shall we have a family spend it, or shall we 
have the government spend it?'' Obviously the family, with one small 
problem. It has already been spent, and to spend that 500 again they 
have got to borrow it again.
  We all know the quote about those who refuse to study history being 
doomed to repeat its mistakes. Well, I not only studied the 
congressional history of the early 1980's--I helped to make it. I did 
it in good faith. I did it with the encouragement of my constituents. 
But I am determined not to repeat its mistakes again in 1995.
  Contrary to my usual optimism, it is hard for me not to agree with 
the quote:
  ``What experience and history teach in this--that people and 
governments never have learned anything from history, or acted on 
principles deduced from it.''
  Think what we are doing, friends. We have a debt which will break $5 
trillion by the end of the year. We have annual deficits which are 
scheduled to continue rising in the foreseeable future. We have a 
Medicare program which will be insolvent just around the corner, and a 
Social Security program which will go from having a surplus to running 
deficits within the next generation.
  Our dollar hit a new low today; how can we even be thinking about 
cutting taxes right now?
  I feel particularly sick about seeing history repeat itself in terms 
of back-loaded costs, disingenuous baselines, and a ``spend now/pay 
later'' attitude which is in the current resolution which is before us 
today, and I also get very upset and disturbed by the frequent comment 
on the floor that Democrats have not put a serious deficit reduction 
plan up for a vote. I have noted that every Member that has stood up 
and made that comment today who was here last year when we had the 
opportunity voted against the entitlement cap when we put it on the 
floor and had a serious effort, every single one that criticized that 
were here in the last Congress.
  Vote ``no.'' Let us stop making the hole deeper.
  Mr. KASICH. Mr. Chairman, I yield 1 minute to the distinguished 
gentleman from New York [Mr. Forbes].
  Mr. FORBES. Mr. Chairman, I might point out that my distinguished 
colleague who has preceded me, there are 114,000 children in the 
gentleman's district whose parents are eligible for the $500 per child 
tax credit. This bill would allow middle class families in his district 
to keep a total of $57 million of their hard-earned money.
  Mr. Chairman, we are responding to the will of the American people in 
enacting the tax fairness and deficit reduction bill. The Clinton 
administration and their defenders raise taxes on the elderly, they 
raise taxes on families, they raise taxes on small business men and 
women, the Main Street merchant, the hard-working Americans, and my 
folks on Long Island, already carrying a heavy enough burden, they 
asked for this relief.
  It is unfortunate that the mouthpiece for the Clinton administration 
at the Small Business Administration's Office of Advocacy has come out 
against this measure of relief for small business men and women while 
the NFIB, the Chambers of Commerce and all small business groups favor 
the enactment of this tax fairness and deficit reduction measure. I 
urge its passage.
  [[Page H4238]] Mr. SABO. Mr. Chairman, I yield 2 minutes to the 
distinguished gentleman from Texas [Mr. Doggett].
  Mr. DOGGETT. Mr. Chairman, let me start by saying how many thousands 
there are that would benefit from the tax credit in my district; 85 
percent of them would still benefit from it if for the 105 Members on 
the Republican side who signed the letter saying that we ought to 
change that tax cut had had the courage to stand by their convictions, 
but we do not have that choice today. We only have the choice presented 
of extending a tax break to those in the $200,000 range, and this bill, 
as the gentleman from Texas [Mr. Stenholm] said, really is about 
borrowing from all the children in our district in order to pay for 
this politically motivated tax cut. It is not the American Dream 
Restoration Act. Its real title is ``Stealing Our Children's Future 
Act.''
  This bill makes the deficit greater in the year 2000 than if we did 
not do anything. Put another way, if this Congress would just shut the 
doors and go home, we would be a lot better off as far as the deficit 
is concerned.
  The American people know that this deficit reduction program is not 
satisfied in this bill, that in fact what we have is a deficit-
mushrooming bill, and, when they have been asked, whether it is in the 
field hearings of the Budget Committee around the country or in the 
polls like the one the Wall Street Journal recently conducted, well 
over half of them have said, ``Use the money to pay off the debt.'' 
Less than a fourth have spoken up in favor of tax reduction.
  There has been plenty of talk today about the misuse of statistics. 
Well, let us take the Republican numbers. They tell us that this tax 
cut will only cost a mere $189 billion over 5 years. Well, if we had 
that $189 billion, we would have that much less deficit, but of course 
it is not $189 billion. It is $630 billion over the next 10 years that 
we are going to be adding to this deficit, and the claim that it is 
being paid for is as frivolous as this letter that has been circulated 
by the chairman of the Committee on the Budget. Surely there is great 
competition in this Congress for the silliest Dear Colleague letter, 
but this one that suggests we will pay for it with $100 billion by 
eliminating duplication and waste of $24 billion is right up at the 
top. There is not any line item in the budget for eliminating 
duplication and waste.
  It includes things like eliminating the school-to-work program.
  Mr. KASICH. Mr. Chairman, I yield 2 minutes to the very distinguished 
gentleman from the State of Michigan [Mr. Upton].

                              {time}  1815

  Mr. UPTON. Mr. Chairman, I thank the gentleman from the Buckeye 
State.
  Mr. Chairman, deficits do matter They really do. Before I was in the 
Congress, I worked for a President by the name of Ronald Reagan. I 
watched a Congress then that promised that they would make $2 or $3 in 
spending cuts for every dollar that they cut in taxes. And you know 
what? It never happened. It did not happen. It was a promise that was 
not delivered on.
  In fact, the deficit ballooned by $4 trillion during those years. In 
1990, as a Member of Congress, I was asked to go down to the White 
House to spend a little time with President Bush and talk about his 
1990 tax/budget bill. I told him then that I could not support it. I 
could not support it because his advisers where taking him to the 
cleaners. In fact, as I reviewed the numbers this last weekend, his 
budget predicted a surplus of $63 billion in the year 1995. They were 
$300 billion off.
  Mr. Chairman, the Castle-Upton-Martini language that was adopted on 
this House floor on the last vote recognized three very important 
principles: No. 1, none of the tax cuts would kick in unless we passed 
reconciliation later this year that in fact will lead to a balanced 
budget by the year 2002. The second point was that each and every year 
if we get off that track, we will have a mechanism to put us back on 
the track, so that in fact we can achieve a balanced budget by the year 
2002, and not end up with something that happened with the Bush budget 
back in 1990. And, No. 3, that the President will submit a budget that 
will balance the budget by the year 2002.
  The Castle-Upton-Martini language acts as an insurance policy. It 
insists that we here are going to eat our vegetables even if they are 
Brussels sprouts before we have our dessert. This legislation passed 
will in essence make sure that we do not repeat the mistakes of the 
past.
  Mr. Chairman, I urge my colleagues to support this bill.
  Mr. SABO. Mr. Chairman, I yield 2 minutes to the distinguished 
gentleman from California [Mr. Tucker].
  Mr. TUCKER. Mr. Chairman, I thank the distinguished gentleman from 
Minnesota for yielding.
  Mr. Chairman, so what is wrong with a $19 billion tax cut for 
individuals and for businesses? Well, on the surface, nothing. Except 
two crucial questions: Who and what? Who benefits from these tax cuts, 
and what will be the cost of these cuts?
  First, the wealthiest 1 percent will get 20 percent of the benefits. 
The wealthiest 5 percent will get 36 percent of the benefits. And the 
wealthiest 10 percent will get almost half of the benefits, 47 percent. 
Taxpayers making up to $200,000 will get $11,000, while those making 
less than $30,000 will receive a paltry $124.
  This bill pays for these tax cuts to the rich and corporations by 
cutting discretionary spending by $100 billion, which has already been 
cut significantly. We are talking about housing, and we are talking 
about applying cuts already made in programs like school lunches. The 
cost of this tax cut over 10 years is $700 billion. This hurts deficit 
reduction.
  This bill should be changed to target families making up to $100,000, 
the real middle-class. The tax breaks should be for higher education, 
expenses, and interest on student loans and expanding the number of 
taxpayers who can deduct contributions to IRA's. The most important 
thing is all tax cuts should be delayed until OMB certifies that 
legislation has been enacted that will provide that the budget will be 
balanced in fiscal year 2002, and that this bill should automatically 
be repealed if specific targets are not reached each year.
  Mr. Chairman, this bill should not be supported, and I urge my 
colleagues on both sides of the aisle to do what the bill proposes to 
do, and that is to give tax fairness.
  Mr. SABO. Mr. Chairman, I yield 2 minutes to the distinguished 
gentleman from Virginia [Mr. Moran].
  Mr. MORAN. Mr. Chairman, my friend from Michigan mentioned that he 
worked for the Reagan administration during the 1980's. I worked for 
the Nixon administration for quite some time. But during the 1980's I 
was a stockbroker. I sold tax shelters, tax shelters because they paid 
the highest commission. And most people that came into the office, 
whatever they invested, we could show them how to avoid paying any 
Federal income taxes.
  I have some familiarity with the way tax shelters work, and I am not 
particularly proud of the fact that we financed so many see-through 
buildings, so many investments that had no real economic value, but the 
people did not care, the investors did not care, because they were not 
investing for the substantive value of the asset; they were investing 
because of the tax benefits.
  Mr. Chairman, if this bill passes, we will never have enacted tax 
shelters that are more open to abuse in the history of this Congress. 
There are two tax shelter areas here that will yield billions of 
dollars in tax savings and yield no economic value to our economy. The 
neutral cost recovery system, for example, if you are going to borrow 
money in the first place to purchase an asset, put it in use for less 
than 10 years, you will get back your value, because you will 
depreciate it, plus it will be indexed, plus you are going to get 3.5 
percent annual increment.
  Now, Mr. Chairman, what happens is we do not index interest costs for 
inflation, so no one in their right mind will put actual cash down. 
They will borrow. But there will be a built-in tax credit, a built-in 
tax shelter.
  It is too complex to be able to describe it in a way that anyone in 
the audience is going to fully understand. I just have to tell you, Mr. 
Chairman, that we will rue the day that we pass these kind of tax 
shelters.
  [[Page H4239]] The other problem is in the tax capital gains area. I 
did not even get into the tax shelter and capital gains.
  Mr. Chairman, we have to learn from the past. We are going to repeat 
what happened in the 1981 Tax Act if we are not careful here. I wish 
Members would read the entire tax bill before us.
  Mr. KASICH. Mr. Chairman, I yield such time as he may consume to the 
gentleman from Colorado [Mr. Allard].
  (Mr. ALLARD asked and was given permission to revise and extend his 
remarks.)
  Mr. ALLARD. Mr. Chairman, I thank the gentleman for yielding time.
  Mr. Chairman, I would just comment, if this bill would pass, the 
average Colorado family would pay $1,534 in fewer taxes.
  Mr. Chairman, I join in strong support of the Contract With America 
tax relief package. It is time to give American families back some of 
their hard earned money. Two years ago, President Clinton raised our 
taxes, today the Republicans fulfill their contract and cut taxes. We 
are keeping our word.
  The American people want lower taxes, and less government spending. 
This package delivers. Every nickel of this tax cut is paid for with 
spending cuts, and an additional $90 billion in spending cuts are 
applied to deficit reduction. In May, we will return with a budget 
resolution that builds on this legislation and puts the government on a 
glide-path to a balanced budget by 2002. This will necessitate us 
capping the rate of growth in spending at 2 percent a year. The 
difference is that now the Federal Government grows at over 5 percent a 
year.
  I would like to take the time to comment on one provisions in this 
tax bill that I am particularly pleased with. That is the home office 
tax deduction.
  In the last Congress I introduced home office deduction legislation 
which was cosponsored by 79 colleagues. This Congress I have introduced 
H.R. 40, which has been cosponsored by 82 of our colleagues. This 
legislation is designed to restore the home office tax deduction, which 
was narrowed a great deal by a 1993 Supreme Court decision.
  With April 15, fast approaching the last thing most Americans want to 
think about is taxes. In fact, the average American must now work the 
first 125 days of the year to pay all Federal, State, and local taxes.
  The bulk of the family tax bill consists of income taxes, payroll 
taxes, and property taxes. However, one factor which adds to the 
growing tax bill of many self-employed and small business owners are 
the new rules governing the home office tax deduction.
  Increasingly, it is the little guy who gets squeezed by the tax 
system. While large corporations can rent space and deduct office and 
virtually all other expenses, many taxpayers who work out of their home 
are no longer able to deduct their office expenses.
  Traditionally, the tax code has permitted individuals who operate 
businesses within their homes to deduct a portion of the expenses 
related to that home. However, over the past 20 years Congress, the 
courts, and the IRS have reduced the scope and usefulness of the 
deduction.
  The most serious blow came 2 years ago when a Supreme Court decision 
and subsequent IRS action eliminated the home office deduction for 
many. Under the Supreme Court's new interpretation of principal place 
of business a taxpayer who maintains a home office, but also performs 
important business related work outside the home is not likely to pass 
IRS scrutiny.
  This change effectively denies the deduction to taxpayers who work 
out of their home but also spend time on the road. Those impacted 
include sales representatives, caterers, teachers, computer repairers, 
doctors, veterinarians, house painters, consultants, personal trainers 
and many more. Even though these taxpayers may have no office other 
than their home, the work they perform will often deny them a 
deduction.
  According to the IRS, 1.6 million taxpayers claimed a home office tax 
deduction in 1991. While not all of these taxpayers were affected by 
the change, many will. Clearly, any taxpayers who operate a business 
out of their home must review their tax situation.
  There are many reasons why a broad home office tax deduction is 
important. The deduction is pro-family. It helps taxpayers pursue 
careers that enable them to spend more time with their children. The 
deduction helps cut down on commuting and saves energy. The deduction 
recognizes the advances of technology--computer and telecommunication 
advances mean that more and more individuals will be able to work for 
themselves and maintain a home office.
  The deduction is a boost to women and minorities who are increasingly 
starting their own businesses. In fact, over 32 percent of all 
proprietorships are now owned by women entrepreneurs, and Commerce 
Department data reveals that 55 percent of these women business owners 
operate their firms from home. Minorities are making similar advances. 
There are now well over 1 million minority-owned small businesses and a 
good number of these are operated out of the home.
  Finally, the home office tax deduction helps our economy. It benefits 
small businesses and entrepreneurs who develop new ideas, and create 
jobs. Many of America's most important businesses originated out of a 
home office.
  Small business is increasingly the engine which drives our economy. 
With large firms downsizing, entrepreneurs must pick up the slack. The 
importance of this trend is demonstrated by the job shift that occurred 
during the slow recovery from the most recent recession. During the 
period of October 1991 to September 1992 large businesses cut 400,000 
jobs while small business created 178,000 new jobs. During the boom 
years of the 1980s, the vast majority of the 20 million new jobs 
created were in the small business sector.
  It is critical that recent assaults on the home office tax deduction 
be reversed. That is why I introduced legislation to fully restore the 
deduction. I was pleased when similar language was included in the 
Contract With America, and now in this tax bill. With passage of this 
bill today, we move one giant step closer to restoring the home office 
tax deduction.
  Mr. KASICH. Mr. Chairman, I yield 1\1/2\ minutes to the very 
distinguished gentleman from Arizona [Mr. Shadegg], a member of the 
Committee on the Budget.
  Mr. SHADEGG. Mr. Chairman, I thank the gentleman for yielding.
  Mr. Chairman, I might begin by noting my predecessor on the opposite 
side of the aisle who expressed his opposition to this legislation 
decided to vote 2 years ago to raise taxes on his constituents by $1 
billion, and now opposes a $500 tax credit that would go right to the 
parents of the 100,000 children in his district. That is the kind of 
rhetoric which characterizes this debate
  Mr. Chairman, I rise in support of this bill. I also listened to my 
colleague, the gentleman from Utah [Mr. Orton] a few minutes ago who 
recently had a son and said it would change his life forever. He asked 
how would we explain this bill to children. I explain it to children 
because we are giving their parents a tax credit. His decision to vote 
against this bill is wrong. It is dead wrong.
  As I mentioned, 2 years ago my colleagues on the other side voted to 
raise taxes. Now they said they cannot cut taxes. It is a consistent 
pattern on the other side. They believe in raising taxes over and over 
again.
  If we care about children, we must balance the budget, and this bill 
begins that process. It enacts $100 billion in spending cuts. Not phony 
spending cuts from a baseline going way up, but real dollar spending 
cuts. If you care about children, we have got to also cut spending, 
because the tax burden on America's families today drives spouses into 
the workplace. Spouses who should be at home and who would like to be 
at home taking care of their children are forced to go to work. If you 
listen to their message, it is because of the profligate spending of my 
colleagues on the opposite side who have controlled this Congress for 
40 years and who built a $4.3 trillion deficit, who say we overspent 
then, so we cannot cut taxes now. Well, I say baloney. It is time to 
give the American people a break. It is not our money, it is their 
money. I urge Members to support this bill
  Mr. SABO. Mr. Chairman, I yield 3 minutes to the distinguished 
gentleman from Maryland [Mr. Mfume].
  Mr. MFUME. Mr. Chairman, Ringling Brothers and Barnum & Bailey came 
to town today with an elaborate show of elephants and clowns on the 
Capitol Grounds.
  But that does not come close to the high wire act being performed 
today on the floor of the House by daredevils and acrobats who are 
attempting, through sleight of hand, blue smoke and mirrors, to pull a 
rabbit out of their hats while dangling the American taxpayer in mid-
air and calling this tax bill deficit reduction.
  Federal workers in particular know that this is the new ``greatest 
show on earth.''
  When a Federal employee accepts a position with the U.S. Government, 
he or she is, in many respects, agreeing to a contract. The employee 
agrees to provide their knowledge, time, energy, 
[[Page H4240]] and a good part of their life, to the Nation we all 
love.
  The Government, in return, agrees to compensate them for their time 
and provide for them in their retirement.
  What we are effectively doing to current Federal workers is changing 
the rules in the middle of the game. We are telling the 2 million of 
them that we still expect the same quality and quantity of work, but 
for less compensation.
  We are telling them that despite the fact that they have helped to 
keep this Nation going, we are not fulfilling our part of the bargain.
  It is generally accepted that this legislation is unfair to Federal 
employees; Members on both sides of the aisle have said as much.
  Yet the Republican Party has circumvented the committee system and 
included the Federal employee pension provision in this legislation. 
What a dangerous, shameful and dastardly deed.
  For the average Federal employee earning $40,000 a year this proposal 
will impose an additional $1,000 in taxes, disguised as an increase in 
the contribution to their pension.
  More than half of the benefits from the tax package before us will go 
to families with incomes between $100,000 and $200,000 a year. Two 
hundred thousand dollars, is that middle-class?
  And please do not tell me that the money Federal employees are losing 
will go towards deficit reduction; because the fact of the matter is 
that this legislation actually adds to the deficit.
  If it becomes law, Congress will be forced to find $1.6 trillion in 
extra budget cuts or revenue increases over the next 7 years in order 
to balance the budget.
  Federal employees are not extravagant millionaires. They are the hard 
working men and women.
  The 2 million Federal employees, who have worked hard for years, 
deserve better treatment than this.
  They deserve our thanks. They deserve the cost of living increases 
which are usually denied or delayed. They deserve to be free from 
unwarranted furloughs, and they deserve to know that they can go to 
sleep at night without worrying about what Congress or the Republican 
party will do next to renege on their promises to them.
  Mr. Chairman, while Federal employees are the biggest losers under 
this bill, I don't want to belittle for a minute the negative impact 
this bill will have on our nation and its deficit.
  This legislation will increase the deficit. It rewards the wealthy 
and punishes the middle-class and working Americans who will feel the 
brunt of the spending cuts. And, it demoralizes the Federal employees 
who are necessary to make this Government run.
  In the end the difference between last year's Republicans and this 
year's Republicans is Tweedle Dee and Tweedle Dum. The party that gave 
us Voodoo economics is now about to give us Robin Hood in reverse. So 
listen closely my friends, that giant sucking sound that you will hear 
in a couple of months will have nothing to do with NAFTA, but 
everything to do with AFTA [Angry, Forgotten, Taxed Americans] who will 
say to the architects of the Contract on America ``Et Tu, Brutus,'' I 
can't believe what you say because I see what you do.
  Vote no on this misguided piece of legislation and end the charade 
against the truth, perpetrated in the name of deficit reduction.
  Mr. KASICH. Mr. Chairman, I yield 1 minute to the very distinguished 
gentleman from Oklahoma [Mr. Largent], a member of the Committee on the 
Budget.
  Mr. LARGENT. Mr. Chairman, I thank the gentleman for yielding.
  Mr. Chairman, in this war of words and charts and ideas, we have 
heard a lot about the tax consequences and the tax burden on the 
average family. I would just like to begin by saying that those 
families that are represented by hard-working parents trying to make 
ends meet for their children are anything but average. They are 
exceptional. In fact, they are outstanding, and that is why we need to 
pass this tax reduction and this spending reduction bill today.
  The $500 tax credit is all about allowing those families, those 
parents, to keep their hard-earned money to make the ends meet for 
their children. Studies reveal that in 1960 families, parents, spent an 
average of 30 hours a week in personal time with their children. In 
1990, 30 years later, those same parents spent an average of 17 hours 
in personal time with their children.
  I think those numbers correlate with the decline in the moral values 
that we see in our youth culture today. Parents are not spending the 
same amount of time with their children. Why, you might ask and should 
ask? In 1950 the average family gave 2 percent of their hard-earned 
money to the Federal Government; in 1993, that figure was 24.5 percent. 
Why are parents not able to spend as much time with their children 
passing on those values? Because they are having to work to send their 
money to Washington, DC. That is wrong.
  Mr. Chairman, this tax bill that gives relief to hard working parents 
to help raise their children is the right thing to do.

                              {time}  1830

  Mr. SABO. Mr. Chairman, I yield 1 minute to the distinguished 
gentleman from Minnesota [Mr. Vento].
  (Mr. VENTO asked and was given permission to revise and extend his 
remarks.)
  Mr. VENTO. Mr. Chairman, our colleague just aptly mentioned, we had 
the circus on the grounds here, and I thought probably a lot of the 
Republicans are going to run away with the circus because of everything 
they want: Clowns, elephants, and they could play they could play their 
pea and shall game in which they are shifting taxes.
  Why are we talking about families? They are not receiving it, because 
they are not getting the family tax cut. It is not this bill. Forty-
five percent of the benefits in the tax cuts in this bill go to 
corporations in 10 years. The fact is, the remaining part that goes to 
individuals, the lion's share of that, goes to the wealthy.
  You are not doing what you said you were going to do. It is the same 
story through and through in this bill. You deny you are proposing the 
policy, deny you are passing the policy, and deny the policy after it 
is enacted.
  Mr. Chairman, it does not take any courage to stand up here and vote 
for tax giveaways and then put the burden on someone else to do the 
cutting. Taking away kids lunches, doing things of this nature. That 
does not take courage.
  It took guts 2 years ago to stand here and say, we have to pay if we 
are going to deal with the deficit. It is tough work. But you are not 
willing to do that. You just want to go down the easy road in terms of 
this and pass this tax cut and leave the mess for the American people.
  I think this bill ought to be defeated, Mr. Chairman.
  Mr. Chairman, today we had the Ringling Brothers Circus on the 
Capitol Grounds. I would have thought that some of our Republican 
colleagues, would have run away and joined the circus; it has 
everything they like: elephants, clowns, and they could have been hired 
to do their bait and switch trick on middle-income family tax cuts; the 
old pea and shell game, in which middle-income families get peanuts and 
in 10 years 45 percent--over $300 billion--of the tax benefits go to 
corporate America--big business continuing to shift the tax burden onto 
individuals and families.
  Middle-income America gets the shaft when the wealthy families 
receive over 53 percent of the individual tax breaks--the lion's 
share--the Republican tax measure. This might get applause as a trick, 
but this pea and shell, Republican shift and shaft of middle-income 
families merits a no vote in the Congress today and tomorrow!
  Mr. Chairman, I want to join with many of my colleagues in opposing 
this ill-conceived, poorly timed legislation. For big business and the 
very rich this bill may very well be the crown jewel of the Republican 
political agenda, but for the working families who I represent this 
Republican legislation is a rhinestone, a phony gemstone. This is a tax 
shift bill, placing, over the next 10 years, more burden on individuals 
and less on the big business corporations. In fact corporations receive 
nearly 50 percent of the total tax cuts and today the corporations and 
big business pay half as much as they did in 1965. This tax shafts the 
middle-income families who are promised tax breaks. This Republican 
bill gives those breaks to the affluent--the top income 12 percent get 
52 percent of this GOP bill tax breaks. The Republican bill is simply a 
tax shift and a tax shaft for American working families. The rich get 
richer and working families get Republican tax cut rhetoric.
  [[Page H4241]] There are clear winners and losers under the 
Republican bill: Family households earning over $200,000 will receive 
an average tax cut of $11,266 per year while working families earning 
between $30,000 and $50,000 will receive an average annual cut of $569. 
Touted as a family friendly bill, the centerpiece of this legislation, 
the $500 child tax credit, does not help those families with 34 percent 
of our children. Over 24 million children are denied this tax credit, 
since their families' income would not be high enough for the credit to 
apply. While many children will not benefit from this tax bill, these 
children will pay the price--today and tomorrow--the loss of school 
lunches, reductions in college loans and a 10 year, $630 billion 
reduction in revenues to add to the Federal deficit. Welcome to the 
Republican idea of fairness, the shift and shaft tax Contract on 
America.
  Many of my Republican colleagues talk about this legislation as the 
reflection of the people's voice in November. I do agree that the 
American people are angry. But they weren't angry about the rich not 
paying their fair share. The American people weren't angry that the 
inheritance exemption is only $600,000. The American people certainly 
are not mad because corporations now must pay an alternative minimum 
tax.
  But the American people will be yet more angry when they read the 
fine print of this Republican contract. They will be angry when they 
learn that the American family rhetoric has been the vehicle to deliver 
tax breaks that primarily benefit the top 10 percent of Americans. 
Their anger will be compounded when they understand that the price of 
their $500 tax credit will be megatax breaks for big business including 
a major loophole that will allow some corporate giants to get off 
without paying one cent in taxes, while the middle class gets the bill 
for the Republicans reneging on their children's education from school 
lunches to college grants and loans.
  Mr. Chairman, the advocates point to the $189 billion in tax breaks 
over the first 5 years, but this measure is back loaded because in 10 
years revenue is reduced $630 billion.
  The majority G.O.P. haven't put forth many of the cuts and reductions 
to achieve such savings and to offset and pay for this revenue loss, 
those limited cuts that have been advanced are grossly unfair, 
unworkable, mean-spirited--but none the less most of the Republican 
cuts are masked in budget ceilings not specific and certainly not 
achieved.
  The Republicans said they would cut spending first but they have 
reneged on that today.
  Mr. Chairman, it doesn't take much talent and certainly little 
courage to pass massive tax cuts spreading around the tax giveaways to 
every special interest group on the map. No it doesn't take much 
thought to give away the store Republican style and that is what this 
tax bill does: provides instant gratification and a long-term economic 
bellyache.
  The anti-Federal Government rhetoric has led to a tax cut policy that 
will disable the Federal Government, render the national government 
unable to responsibly respond to the needs of our Nation. This tax 
policy path coupled with even the limited reductions in spending 
advanced this session demonstrate a retreat and abandonment of our 
responsibilities and the people we represent. Our Nation that has 
achieved unparalleled economic and social status--not without problems 
or difficulty
 but certainly not following an easy Republican policy path.

  The hundred days are ending and I want to welcome the American people 
to the virtual reality of the Republican Newt Congress. It's a world 
where you deny your proposing the policy, deny your passing the policy, 
and deny the policy after it's enacted. The facts are they will: Take 
the kid's lunch and education; make American workers' jobs pay less at 
a greater risk to their health and safety; cut the retirement and 
Medicare benefits for seniors who started the so-called ``class 
warfare''--well the GOP claimed that this tax measure was a middle 
income tax benefit--what has been pointed out repeatedly is that this 
measure tax breaks go to big corporations and the affluent families.
  I urge my colleagues to reject this unfair policy and to just say no 
to the Republican tax shift and shaft policy of more tax breaks for the 
rich and special interests at the expense of the middle class. This is 
one main course entree too many in the force fed Republican political 
hundred day march.
  Mr. KASICH. Mr. Chairman, I yield 1 minute to the very distinguished 
gentleman from Michigan [Mr. Smith].
  (Mr. SMITH of Michigan asked and was given permission to revise and 
extend his remarks.)
  Mr. SMITH of Michigan. Mr. Chairman, this bill does two things. It 
cuts spending and it cuts taxes. I think we need to ask ourselves the 
question, what is going to make our communities in this country a 
better place to live and work and raise our kids?
  No. 1, it is to leave some of that hard-earned money in the pockets 
of the people that made it rather than give it to the Federal 
Government. A lot of discussion about who gets the advantages. If you 
happen to be a family that makes less than $25,000, you get a 100 
percent tax break. You pay zero. If you are making $30,000, you get 48 
percent of your taxes reduced. You see the declining balance? If you 
make over $200,000, you only get a 2-percent reduction in your taxes.
  The other thing is spending cuts. We have built over the last 40 
years a $5 trillion debt that we are passing onto our kids and our 
grandkids. This starts to cut spending.
  I know some of those programs are good. So it is easy for the other 
side to say, do not cut this program, do not cut this program. Well, if 
we care about spending, if we care about our future, if we care about 
the $339 billion interest that we are going to be paying this year, one 
quarter of all revenues coming into the government, we have got to cut 
spending.
  This bill does it.
  Mr. SABO. Mr. Chairman, I yield 1 minute to the distinguished 
gentleman from Pennsylvania [Mr. Fattah].
  Mr. FATTAH. Mr. Chairman, I thank the distinguished ranking member 
for yielding time to me.
  I think it was Franklin Delano Roosevelt who said that paying taxes, 
after all, was the price we pay for living in a civilized society.
  Some on the other side are trying to convince the American people 
that they can have a free lunch, that we can educate our children, 
provide for our seniors, deal with the critical needs facing our 
nation, but we do not have to pay for it.
  The reality is that we do have to pay and we will pay one way or the 
other. The choices that we make provide for us the opportunity to reap 
the reward, if we make the right choice, or to suffer the consequences, 
if we make the wrong choice.
  They are trying to appeal to the what they, I guess, consider the 
selfish greed of Americans who want to hold onto their dollars. It is 
as if dad would come home and say, rather than paying for tuition and 
books for my children, I will keep a few dollars in my wallet. Rather 
than to provide for my parents who have made life possible for me, I 
will keep a few more dollars in my pockets. Rather than to feed the 
children in the household, I will keep some more dollars in my pocket.
  This group of cowboys that are here now, this wagon train of theirs 
is one that disposes of the young and the old and the disabled in hopes 
that somehow they can have a more fruitful and more purposeful life. 
That is not true, and we are going to find out again that we cannot 
have a free lunch in this country.
  Mr. KASICH. Mr. Chairman, I yield 1 minute to the very distinguished 
gentleman from California [Mr. Baker].
  (Mr. BAKER of California asked and was given permission to revise and 
extend his remarks.)
  Mr. BAKER of California. Mr. Chairman, the previous speaker has 
85,000 children in his district, just to keep count. And he will get, 
if this bill passes, to keep $42 million in his district of their hard-
earned money.
  You have seen enough numbers and enough charts. Let us cut to the 
chase. The reason we need capital gains tax relief, the reason we need 
alternative minimum tax relief, the reason we need the IRA tax relief 
is because you do not have the courage to cut $213 billion from this 
budget.
  Last year we had a 1-percent cut in the budget. The Democratic side 
of the aisle cheered when it was defeated by 1 percent by seven votes. 
You cheered when the Penny-Kasich bipartisan cut was defeated.
  This year we had a $17 billion rescission program. That is 8 percent 
of the budget deficit this year. You could not make the trip. You gave 
us the rhetoric about the children and hurting the elderly and the same 
argument you are hearing today.
  I will tell you why we are doing it. Because we are going to grow the 
economy. The only way to balance this budget is to increase the economy 
as well as hold down the growth rate in Government spending. We are 
going to do them both. This is the first step in the road of 1,000 
miles to save our grandchildren.
  [[Page H4242]] That child that was born here today in 1995 will spend 
$187,000 on interest on the national debt during his lifetime. Please 
vote aye and save America.
  Mr. KASICH. Mr. Chairman, I yield 1 minute to the gentleman from 
Massachusetts [Mr. Torkildsen].
  Mr. TORKILDSEN. Mr. Chairman, I thank the distinguished chairman of 
the Committee on the Budget for yielding time to me.
  Mr. Chairman, I rise today in support of real deficit reduction and 
long-overdue tax relief for American families.
  Last week I was one of those members with genuine concerns about this 
package of tax cuts. One of the primary reasons I came to Washington in 
1992 was to help reign in the budget deficit which has crippled our 
economy and threatens our children's economic future.
  I was one of 23 members to support linking these much-needed tax cuts 
with a specific plan to eliminate the deficit in 7 years. This package 
contains language to guarantee deficit reduction and deficit 
elimination, and I strongly support its passage.
  In 1993, I opposed the Clinton tax increase which unfairly targeted 
small business and our senior citizens. As chairman of the Small 
Business Subcommittee on Government Programs, I applaud language in 
this bill that will reinstate the home office deduction for those who 
operate their business from their home.
  This Tax Relief Act also rolls back the Clinton tax increase on 
Social Security benefits and raises the senior citizen earning limit.
  The problem with government is not that it taxes people too little, 
the problem is still that the government taxes and spends too much.
  This bill will hold this and future Congress' accountable on deficit 
reduction. For deficit reduction, for a balanced budget and for tax 
relief, I urge my colleagues to vote yes on this bill.
  Mr. SABO. Mr. Chairman, I yield myself the balance of my time.
  The CHAIRMAN. The gentleman from Minnesota [Mr. Sabo] is recognized 
for 4 minutes.
  Mr. SABO. Mr. Chairman, we have heard lots of predictions today. Just 
let me remind Members that in August 1993, the now Speaker, Mr. 
Gingrich, had this to say when we passed the President's economic 
program.
  ``I believe this will lead to a recession next year.'' Newt Gingrich, 
August 1993.
  What has happened? Employment is up. Unemployment is down. Inflation 
is low. Growth is strong. Productivity is improving. Factories are 
operating at high rates. Investment is booming.
  The Members who bring this bill to us today were dead wrong in August 
of 1993 in foreseeing the future. And what they bring to us today is 
deeply flawed.
  I am sure you will hear how this bill is amazing. Well, I find it 
amazing also.
  We hear the new speaker, Speaker Gingrich, talk of renewing American 
civilization. Members, if this is renewing American civilization and 
the values impressed in this bill, I get nervous about this country. 
Because the values in this bill represent not the best of American 
ideals but some of the worst.
  It is, indeed, a unique Robinhood bill that takes from the poorest to 
give primarily tax benefits to the rich. Over half the benefits go to 
people with incomes over $100,000.
  We hear a great deal about the children's tax credit. By 2005, that 
is less than 25 percent of this bill. All the other things for the most 
affluent in this country explode in cost. And who pays? The poor, 
children, reduced nutrition programs, women, reduced health programs, 
poor seniors, low-income housing cut back, low-income fuel assistance 
cut back, all to pay for this tax cut for the most affluent in our 
society, at the same time that we are digging the deficit hole deeper.
  It is true this bill is paid for over a five-year period of time. But 
by the year 2000, it increases the deficit by $12 billion. It does not 
reduce it. It increases it in the year 2001, the year 2002. So all the 
speeches you hear about deficit reduction and this bill, it has nothing 
to do with deficit reduction. It just simply digs a hole deeper and 
makes the job more difficult, requiring more draconian cuts, I am sure 
targeted at the same people who have been targeted already.
  So, Members, we have a real choice today. To some degree it is about 
numbers, about a deficit that goes up under this bill, about dollars 
that flow to the most affluent in our society who profited the most 
from our economy over the last 20, 25 years. But it is ultimately about 
values, about how we want to structure government, how we want to pay 
for it, who we want to reward in our tax system.
  Clearly, this is a bill that takes from the most vulnerable to help 
the most affluent.
  I urge a ``no'' vote.
  The CHAIRMAN. The gentleman from Ohio [Mr. Kasich] is recognized for 
4\1/2\ minutes.
  Mr. KASICH. Mr. Chairman, I yield myself the balance of my time.
  Mr. Chairman, first thing I want to say is that I am not angered at 
all. I am just, frankly, shocked at some of the rhetoric that has come 
from the other side--I am not referring necessarily to the rhetoric of 
the gentleman from Minnesota--bragging about the economic plan that 
passed in 1993.
  We had $250 billion worth of tax increases and higher spending. And 
do you know what, aside from all that, aside from our opinion and our 
charts and our numbers, we had a referendum, we had a referendum on the 
president's program.
  The American people last November had a chance to go to the polls and 
cast a vote on what they thought about President Clinton's economic 
plan.
  Remember, he promised he would be a new Democrat. He would reinvent 
government. He was not going to raise taxes on us. That is what he 
promised. And he took power, and he got bought off by the special 
interests who run this town, who love the status quo, who love big 
government, who love big Washington, who love bureaucracy and who hate 
change.

                              {time}  1845

  Guess what? The American people had their say last November. They 
said no, no, a thousand times no. For the first time in 40 years they 
put the Republicans in charge of the House. For the first time in 40 
years, they rejected that plan of the status quo.
  What are Republicans talking about? Let us talk about some of our 
Federal programs and how Republicans want to downsize.
  We have 163 job training programs in the Federal Government. I put 
this together in about five minutes. This is just a short list. There 
are 23 separate programs to prevent child abuse, eight separate 
programs on child care, 42 separate programs for health professions 
education, 300 separate economic development programs, nine agencies 
promoting trade, 71 departments and agencies duplicating the functions 
of Commerce.
  Guess what, Mr. Speaker? Our taxpayers who work hard every day are 
paying for this duplication. Do Members know why it goes on? Because it 
is the people's money, not their own. It is time for it to be stopped.
  Let me suggest what we also have done in the area of our social 
program: welfare reform. Do Members know what people in America say 
about welfare reform? The say it does not work, it creates dependency, 
fosters so many of the wrong things. They want to help people who need 
help. That is the old American Judeo-Christian principle: help those 
who are in need. However, let me also suggest that it is wrong to help 
those who do not need to be helped.
  The Republicans have finally passed a welfare program through this 
House that the American people have been calling for for 25 years. Let 
me suggest, in the area of cash welfare, what does the Republican plan 
do? It increases spending over the next 5 years. Child care goes up. 
Child protection goes up. School nutrition goes up. Family nutrition 
goes up. SSI goes up. Food stamps go up.
  What is the total? We go from $81 billion to $100 billion in spending 
to help the poor under the Republican plan. And what the liberals in 
this Congress say is, ``It just still isn't enough, and we have to take 
more from taxpayers.''
  Forget it. We are reinventing the system, we are imposing discipline, 
and we are responding to what the American people want in this country.
  Mr. Chairman, let us talk about this President's budget and what we 
have out here today. We have $190 billion 
[[Page H4243]] worth of tax relief. For who? If you have children, you 
are going to get a $500 tax credit. Why? Because you can spend the 
money better on your kids than the bureaucrats can who are camped in 
all these buildings across this town. That is part of what we want to 
do.
  Secondly, if you are poor, we want to give risk incentives for people 
to invest and create jobs so your kids can go to school, they can have 
a better life, and they can become president of the bank or President 
of the United States, any man or woman. What we do is we have deficit 
reduction to the tune of $27 billion.
  The President's budget that he sent this year, shame on what he sent 
us, increases the deficit by $31 billion. What have Republicans done? 
We have cut taxes. We have provided relief. We have made a down payment 
on the deficit. And Members have seen nothing yet, because in May we 
are going to complete the number two job, which is basically this: 
balance the Federal budget. Just wait. The American people are on our 
side.
  The CHAIRMAN. All time has expired under the control of the Committee 
on the Budget.
  Under the rule, 1 hour of general debate remains, to be controlled by 
the Committee on Commerce.
  The gentleman from Virginia [Mr. Bliley] will control 30 minutes, and 
the gentleman from Michigan [Mr. Dingell] will control 30 minutes.
  The Chair recognizes the gentleman from Virginia, [Mr. Bliley].
  Mr. BLILEY. Mr. Chairman, I yield myself 2 minutes.
  (Mr. BLILEY asked and was given permission to revise and extend his 
remarks.)
  Mr. BLILEY. Mr. Chairman, this is a good bill. We all should support 
it.
  In my home town of Richmond, I have seen how hard it is for young 
families, almost impossible for them to own their own homes. They are 
working two jobs, and they are still living from paycheck to paycheck. 
Things like a new car, a new appliance, a short vacation with the kids 
are out of reach. It is almost impossible for them to get together the 
down payment for a first home.
  The culprit is not that they are irresponsible. The culprit is the 
Federal Government that was soaking up their money like a sponge.
  In my own district, there are 127,941 children whose families will be 
eligible for this tax cut. Altogether, it will bring almost $64 million 
into our community every single year.
  Let us put an end to this class warfare demagoguery. Fully 75 percent 
of this money will go to families with combined incomes, that is mother 
and father combined, of $75,000 or less. Yes, 75 percent will go to 
families with $75,000 or less income.
  Another provision in this bill removes, or at least raises the cap, 
on earnings for senior citizens who are retired from the current 
$11,000 to $30,000 over 5 years. Many of our seniors put away some 
money for their retirement, only to find inflation has made it so that 
they must work. They want to work, they are physically able to work, 
but we put this penalty on if they work and earn more than $11,000.
  This is a good bill. Let us get on the bandwagon and let us support 
it.
  Mr. Chairman, I reserve the balance of my time.
  Mr. DINGELL. Mr. Chairman, I yield such time as he may consume to the 
gentleman from Oregon [Mr. DeFazio].
  (Mr. DeFAZIO asked and was given permission to revise and extend his 
remarks.)
  Mr. DeFAZIO. Mr. Chairman, I stand in opposition to this Republican 
tax giveaway.
  Mr. Chairman, the legislation before us will not provide meaningful 
tax relief for the middle class, but instead is merely a giveaway for 
corporate American and the Nation's wealthiest taxpayers. Most 
importantly, the Republicans have not come up with enough revenue to 
pay for the more than $600 billion shortfall over the next ten years. 
Our first responsibility is to get the deficit under control, not hand 
out politically popular goodies for multibillion dollar corporations 
and families that make more than $200,000 a year.
  Our country now owes more than $4.6 trillion, and that figure is 
growing fast. The interest payment on this debt will exceed $200 
billion this year. Worst of all, we're adding to that debt at the rate 
of $4 billion every single week. Our first priority should be to reduce 
the deficit, not engage in politics-as-usual.
  I must admit, the Republicans have made some attempts to pay for 
their tax giveaway. Tax cuts would be paid for by cutting $110 billion 
out of a number of domestic programs, including WIC, food stamps and 
other Federal nutrition programs, Medicare, and welfare for legal 
immigrants in the United States. In addition, Federal employees would 
be required to increase their pension fund contributions. The increase 
is expected to cost a Federal employee earning $30,000 a year an 
additional $750 in taxes each year.
  And what does the Republican's tax plan pay for? Not relief for the 
average families. The Republican majority tax cut proposals would give 
only a nod toward tax relief for middle income families. In the 
Republican plan, a family would receive the so-called family tax breaks 
if they earn between $20,000 and $250,000--those who earn less than 
$20,000 would receive nothing.
  When you take the other tax breaks into account, the average family 
doesn't do much better, but the rich would see a windfall. Families 
making more than $200,000 would see more than $11,000. Let me put that 
into perspective. Average families may see enough of a tax break to pay 
for a tank of gas each month. However, if you make more than $200,000, 
your tax break would be enough to buy a new BMW. That is right, the 
rich will get enough of a tax rebate for the monthly payments on a new 
luxury car.
  I am particularly outraged over the Republican proposal to do away 
with the alternative minimum tax for profitable corporations. There was 
a huge public outcry during the early 1980's when many were very large 
and profitable corporations paid little or no income tax. Some of these 
corporations even received refundable tax credits. For example, AT&T 
made $24.9 billion in profits from 1982-1985. However, their team of 
tax lawyers wrangled a rebate of $636 million from the U.S. Treasury. 
The alternative minimum tax was established to stop large corporations 
from abusing the tax code. A repeal of this system
 would represent a government subsidy of the Nation's largest 
corporations and cost the Treasury $17 billion. I can't support that.

  This Nation does need tax relief for working Americans and small 
businesses. I examine tax proposals to see whether working Americans 
would benefit. First, does it address the inequities of the last two 
decades when middle income people paid the largest share of increases? 
Second, if the proposal includes a revenue decrease, does it also 
include a corresponding revenue increase to ensure that it doesn't 
increase the federal debt? For example, I would support cutting taxes 
for working Americans, while also increasing the share of taxes paid by 
foreign multinational corporations, which enjoyed substantial windfalls 
in the 1980's.
  One of my colleagues tried to put forward legislation this week to 
end special tax breaks for multinational corporations and foreign 
investors. Unfortunately, the Republicans did not allow us to vote on 
the language by Representative Evans. We will have no opportunity to 
save $24 billion in revenue by closing loopholes and special tax breaks 
for these foreign investors.
  I agree, we have got to encourage savings and investment in this 
country. I would support an equitable capital gains tax cut that really 
encouraged long-term, productive investment and job creation in the 
United States. That's not the case with the Republican proposal, which 
established no limits on the types of investments, nor provided 
adequate incentives for longer term investment. Only about 25 percent 
of this multibillion dollar tax break would go to families earning less 
than $150,000 a year--the same families who were hit hard by the tax 
changes of the 1980's. Most families would get no benefit at all.
  The proposed capital gains tax cut would not distinguish between the 
rapidly growing world of high stakes gambling in derivatives, and other 
speculative investments, versus productive investment. When I think of 
how such a tax cut could truly benefit working Americans, I think of 
the Oregon family who realized the fruits of 35 years investment in a 
tree farm. Shouldn't the tax codes encourage this type of investment as 
opposed to derivative speculation on Wall Street? Unfortunately, the 
Republican proposal does not discriminate between productive investment 
and speculation.
  So at the end of the Republican majority's first hundred days. Here's 
the heart of the Republican agenda. Take from the middle class and the 
needy, and give to the rich. It is trickle down economics all over 
again, and we know how well that worked in the 1980's.
  Mr. DINGELL. Mr. Chairman, I yield such time as she may consume to 
the gentlewoman from Missouri [Ms. McCarthy].
  (Ms. McCARTHY asked and was given permission to revise and extend her 
remarks.

[[Page H4244]]

  Ms. McCARTHY. Mr. Chairman, I rise in opposition to H.R. 1215, the 
Contract With America Tax Relief Act of 1995. However, before I 
enumerate the concerns I have with the bill, let me make a few general 
remarks about tax legislation and the process that brought this bill to 
the floor for consideration.
  As the former chairperson of the Ways and Means Committee in the 
Missouri House of Representatives, I take great interest in the tax 
legislation before the House today and bring considerable knowledge and 
experience in crafting bipartisan tax legislation. However, if I have 
one lament about moving from the state legislature to the national 
body, especially as we enter the denouement of the contract period, it 
is the intense level of partisanship that exists in this body when it 
comes to formulating policy. Here was a prime opportunity, that has now 
been lost, for Democrats and Republicans to work together on important 
tax reform issues. Because Republicans insisted on keeping to a 
political schedule instead of working to craft sound tax policy, they 
lost the opportunity to work with me and other Democrats who favor tax 
reform.
  This is not to say that I opposed all the provisions in this tax 
bill. In fact, there are a good many provisions in the bill that I 
favor. The provisions on IRA's, capital gains and other tax reforms 
notwithstanding, I believe this legislation is fatally flawed because 
it turns its back on the most compelling issue facing this Congress, 
which is the need for deficit reduction. The Republican attitude 
regarding deficit reduction ignores the message elicited at the town 
hall meetings that were held throughout the country earlier this year 
by Mr. Kasich and the Budget Committee, where people overwhelmingly 
expressed their support for deficit reduction over tax cuts. Adding an 
additional $660 billion over 10 years to the deficit, when we currently 
face annual budget deficits of $200 billion, is not in line with the 
commitment I made to balance the budget, nor in line with the wishes of 
the people in my district.
  Any change to the tax code produces winners and losers. What is 
troubling and what has been made clear throughout this debate on the 
items in the Republican contract is who the majority has elected to 
help and who they have elected to disregard. As I have stated, I am not 
opposed to certain tax reforms. I have, however, serious problems with 
the way the tax cuts in this bill are structured and who the majority 
relies on to pay for their tax cuts. For example, the Republican 
majority decided to cut child nutrition programs, loans for college 
students and programs for the elderly, as well as increase taxes on 
Federal employees, to pay for tax cuts that mainly accrue to the top 
wage earners in this country.
  It is worth noting that many conscientious Republicans (106) also 
made clear their opposition to the way the tax bill was structured when 
they signed a letter to the Republican leadership stating that 
providing tax credits to families earning up to $250,000 was not 
advisable. In addition, it is estimated that 70 percent of the tax 
savings from the capital gains cut will go to those making $100,000 or 
more.
  Another concern is the impact this legislation will have on State 
revenues. Because of linkages between the Federal and State tax 
systems, the State of Missouri is estimated to lose $1.2 billion in 
revenue over the next 10 years. This potential revenue lose could leave 
an enormous budget hole for Missouri. This body recently passed 
legislation to shift enormous Federal responsibilities back to the 
States. We are now telling the States in this legislation that you will 
have even fewer dollars to carry out those obligations.
  For these, and many other reasons, I cannot and will not support this 
legislation. Put simply, the Republican tax measure is not sound tax or 
fiscal policy.
  Mr. DINGELL. Mr. Chairman, I yield myself 2 minutes.
  Mr. Chairman, it is all very simple. This is a Robin Hood in reverse 
tax proposal. It is part of a package which is geared to help the rich 
and to hurt the poor. If we look, we will find that better than 50 
percent of the tax reductions are going to go to those who earn more 
than $100,000 a year, the top 1 percent of the population of the 
country.
  Beyond that, it is going to cut programs which are important to 
people. It is going to cut the school lunch program. It is a bill which 
will cut the Women, Infants, and Children program. It is going to 
eliminate one of the most successful nutrition programs in the history 
of this country.
  It is a package that is going to cut school loans, college loans, 
college scholarships, and summer jobs. When we read this against the 
rest of the Contract on America, we will find out why this proposal 
should be rejected.
  Mr. Chairman, I urge my colleagues to reject this tax cut. It is 
unfair. I urge my colleagues to wait and to support the Democratic 
alternative, which will be a better package, fairer to everyone. It is 
going to strike, among other things in this package, the retirement 
taxes and the benefit cuts that Civil Service employees have worked for 
for a lifetime, that increase their costs solely to benefit the well-
to-do.
  Mr. Chairman, the Medicare, Energy, and Telecommunications provisions 
of this bill reported by the Commerce Committee exemplify the tangled 
and deceptive nature of the measure before the House.
  This bill's title falsely advertises tax fairness and deficit 
reduction. The bill accomplishes neither. Nothing in the title of the 
bill advertises the fact that it imposes $10 billion in new costs on 
Medicare beneficiaries,
 providers, and employers. Nor does it mention a hastily drawn sale of 
a government asset, the Uranium Enrichment Corporation.

  In a most curious piece of theater, the Commerce Committee was 
summoned to a markup a few weeks ago to consider this assortment of 
unrelated health, energy and communications measures.
  In a Congress filled with surprises and irregular procedures, were we 
getting a jump on reconciliation and beginning the process of deficit 
reduction? My hopes were dashed. In the markup, Republicans made clear 
that we were not meeting for deficit reduction, when every Republican 
voted against our amendments to devote the savings from almost $10 
billion in Medicare cuts, from extended auctions of spectrum licenses 
and from the sale of the uranium enrichment corporation exclusively to 
deficit reduction.
  In Medicare, the Republicans here propose raising premiums as much as 
$120 per year, shifting costs onto employers, and reducing payments to 
providers. Let us be straight with the elderly about what would happen 
under this bill. You will pay more in health insurance premiums to 
finance this tax cut.
  With respect to the extension of competitive bidding authority for 
radio licenses, Commerce Committee Democrats objected to the fact that 
the legislation was approved without a hearing or any attempt to 
determine whether, in fact, competitive bidding authority ought to be 
extended. For example, during the markup both Republican and Democratic 
Members expressed concern about the manner in which the Commission was 
utilizing this authority with respect to licenses in the Specialized 
Mobile Radio Service [SMR]. These concerns should have been vented 
during an oversight hearing and not raised for the first time at a 
markup.
  Ironically, during the same week that H.R. 1218 was introduced and 
approved by the Committee, a court issued a stay to prevent the 
Commission from using its competitive bidding authority to issue 
licenses for one group of licenses for broadband PCS. These are blocks 
of frequencies reserved for ``Designated Entities'', including small 
businesses, firms owned by minorities and women, and small telephone 
companies.
  Many of our colleagues support the ``Designated Entity'' approach 
adopted by the Commission. No matter what our position, however, it is 
irresponsible to approve H.R. 1218, thereby blessing the Commission's 
``Designated Entity'' policies, without conducting the necessary 
oversight so as to determine whether the underlying statute ought to be 
modified or in some way clarified.
  Similarly, many of us want to privatize the U.S. Uranium Enrichment 
Corporation. We made privatization part of the 1992 energy strategy 
legislation. However, in the majority's rush to generate revenues to 
finance tax cuts, the committee allowed itself to be swept up in a 
hasty and imprudent process. As a result, the committee and the 
Congress are largely in the dark as to whether the American taxpayer 
will realize a fair return from the sale of the Corporation.
  No hearing was held on the underlying bill. In fact, Chairman 
Schaefer's questions following a February 24 oversight hearing on the 
Corporation have not been answered. These outstanding matters include 
applications of the antitrust laws, rights to sensitive technology, and 
disposition of recycled Soviet weapons materials under a contract the 
Corporation entered into in 1994, including the difficult issue of 
matched sales.
  My colleagues on the other side have restored to an odd rhetorical 
gesture to justify some of these cuts: the cuts, they argue, are in 
President Clinton's budget. We should all note the irony of Republicans 
taking such comfort in the recommendations of a President they have so 
pilloried. The President, to his credit, has laid down a comprehensive 
budget proposal. Republicans have not. The President has expressed 
opposition to putting further burdens on the elderly. Republicans seem 
to welcome the opportunity to impose them.
  This legislation is poorly conceived and hastily drawn. I urge its 
defeat.
  Mr. Chairman, I reserve the balance of my time.
  [[Page H4245]] Mr. BLILEY. Mr. Chairman, I yield 3 minutes to the 
gentleman from Tampa, FL [Mr. Bilirakis], chairman of the Subcommittee 
on Health and Environment of the Committee on Commerce.
  (Mr. BILIRAKIS asked and was given permission to revise and extend 
his remarks.)
  Mr. BILIRAKIS. Mr. Chairman, I would like to use my time to address 
three of the provisions of this legislation that are of particular 
importance to my constituents: the increase in the Social Security 
earnings test, the repeal of the Clinton administration's tax increases 
on Social Security benefits, and tax incentives for private long-term 
care insurance.
  In 1980, Florida had in excess of 1\1/2\ million individuals aged 65 
or older. In 2000, more than 3 million Florida residents will be 65 or 
older.
  Florida is first in the Nation in percentage of the population 65 
years and older--and by this measure, my district is one of the oldest 
in the country. Thus, the three provisions of this bill that I am 
emphasizing today are very important to my constituents.
  First, as a long-time supporter of eliminating--not just increasing, 
but eliminating--the earnings test; as a cosponsor of H.R. 300, the 
Older Americans Freedom to Work Act, in the previous Congress and as a 
signatory of the Contract With America, I am delighted that we are 
finally taking action on these matters today.
  I simply do not understand why--through the current Social Security 
law--we want to penalize retired individuals willing to work by forcing 
them to lose a portion of their Social Security benefits if they have 
income above a certain level.
  The current earnings test amounts to an additional 33 percent 
marginal tax rate--on top of existing income taxes--and punishes 
seniors who choose to remain productive beyond age 64. This makes no 
sense. We should be encouraging rather than penalizing productive, 
experienced people who want to work.
  In fact, our work force benefits greatly from the expertise of older 
workers--and our young workers can gain much from the experience of 
their older counterparts.
  Second, this legislation provides further tax relief to middle-income 
seniors by repealing the tax increase on Social Security benefits 
enacted by the previous Congress.
  I just do not believe that this type of tax burden should be borne by 
our older Americans, and by reducing the taxable portion of benefits 
from 85 percent back to just 50 percent--the level prior to enactment 
of the 1993 Clinton tax law--we can make a bold statement in 
affirmation of this belief.
  Finally, let me touch briefly on one final component of this bill, 
tax incentives for private long-term care insurance and for families 
caring for a dependent elderly parent or grandparent in the home. As 
the author of bipartisan consensus health reform and other legislation 
in the previous Congress that sought to establish similar incentives, I 
am particularly proud of these provisions.
  Everyone is concerned with the high cost of long-term care insurance, 
and with more than 7 million elderly Americans in need of long-term 
care today, these incentives certainly belong in this package.
  Mr. Chairman, I strongly encourage all of my colleagues in the House 
to reach out to America's seniors today by voting for and passing this 
legislation.
  Mr. DINGELL. Mr. Chairman, I yield 2 minutes to the distinguished 
gentleman from New Jersey [Mr. Pallone].
  Mr. PALLONE. Mr. Chairman, I want to address my remarks to the aspect 
of this legislation that deals with the U.S. Enrichment Corp. I am 
opposed to the use of the funds for the sale of the U.S. Enrichment 
Corp. for the tax cut plan.
  The U.S. Enrichment Corp. took over the Department of Energy's 
uranium enrichment program in July 1993. Under the Energy Policy Act of 
1992, the Enrichment Corp. is required to prepare a strategic plan by 
July 1 of this year on prospects for privatization.
  That plan is to consider alternative means of transferring ownership 
to the private sector and identify the preferred method of 
privatization. The 1992 act also provides that the corporation may not 
implement the plan without Presidential approval, and cannot privatize 
less than 60 days after notifying Congress of its intent to implement 
the plan.
  Mr. Chairman, none of these things have happened. I would suggest 
that what we are doing today is premature. In fact, when we had a 
hearing of our Subcommittee on Energy and Power on February 28 this 
year, a lot of questions were raised about the proposed privatization.
  A letter, in fact, was sent by the chairman of our subcommittee, the 
gentleman from Colorado [Mr. Schaefer], asking various agencies for 
input on the terms of privatization.
  We do not have any answers to the letter from the chairman. We don't 
ever know what the proceeds will be from the sale of the corporation.
  Mr. Chairman, my criticism has nothing to do with the overall merits 
of the tax cut plan. It simply should not include potential proceeds 
from the sale of the U.S. Enrichment Corp.
  Mr. BLILEY. Mr. Chairman, it is a pleasure to yield 2 minutes to the 
gentleman from New York [Mr. Paxon], chairman of the Republican 
Congressional Committee.
                              {time}  1900

  Mr. PAXON. Mr. Chairman, over the past 90 days and certainly today we 
have heard two different visions of America enunciated here on the 
House floor. The Democrats view is America is a Nation of class 
warfare. They believe that to climb the ladder of opportunity you must 
pull someone else down.
  In the Democrats' America, bureaucrats should make key decisions for 
families, the government will grow and taxpayers will pay more and 
more. Our vision of America is different. Our key goal is to empower 
families, not bureaucrats. To do this we cut spending and let taxpayers 
keep more of their hard-earned tax dollars. In so doing together, all 
Americans can renew the American dream of hope and opportunity.
  Now, for the past 40 years, Democrats have fulfilled their vision of 
this country. In 1950 Washington took 5 percent of family income. Today 
government takes a full 40 percent. As a matter of fact, the 40 percent 
the government takes in taxes is more than the family budgets for food, 
clothing, and shelter in this Nation combined. Tonight we scale back 
Washington's share and we increase the share the American family keeps.
  How do we do it? For example, the $500 per child tax credit puts a 
quarter of a billion dollars back in the pockets of families in the 
nine counties I represent in the Buffalo, Rochester, Finger Lakes area. 
That is 447,000 children who will each receive, their families will 
receive $500 tax credit. In my region 15,000 couples are married 
annually. They will keep money when we scale back the marriage penalty, 
and 28,000 seniors in my region will keep more when we repeal the 
marriage tax penalty.
  The bottom line is kids, families, seniors benefit. It is good for 
this country, it will help renew the American dream. Tonight, finally a 
tax bill American people will like to receive from the government.
  Mr. DINGELL. Mr. Chairman, I yield 2 minutes to the gentlewoman from 
Oregon [Ms. Furse].
  Ms. FURSE. Mr. Chairman, plain and simple, the answer on this bill is 
we cannot afford it. We cannot afford to give tax breaks to people who 
do not need them, even if they are our friends, and we cannot afford to 
cut school loans, housing assistance, school lunches, nutrition for the 
elderly because that will hurt our future. Now we can afford to cut 
some other programs, but if we cut programs, we need to put that saving 
to the deficit, not to tax cuts for corporations.
  We hear a lot today about this $500 child credit, but I would like to 
tell you who gets the credit. One-third of the children of America will 
not get any credit, and yet they will be the ones who most need it 
because they will be the children, the one-third who are in the lower 
tax bracket. They will not get the break, but, Mr. Chairman, they will 
get the debt. You have to have enough money to file an income tax 
return to get this $500, but those one-third of American children will 
not have that money.
  [[Page H4246]] Now what about this tax break? OK. If your income is 
between $30,000 and $75,000, where most of us are, you will get $760 in 
return, but you will also get higher interest rates. But if your income 
is over $200,000, you will get $11,000 in a tax break. That is a great 
deal. Except that 41 million households are in that first category 
getting $760, and only 2.8 million will get the $11,000. Same old 
story, once again the rich are getting richer.
  Now, some of our biggest corporations under this bill will not pay 
any taxes. Now, we all love to give large expensive gifts to our 
friends, but if it hurts our children and our elders, we just cannot 
afford it. We cannot afford this bill.
  Mr. BLILEY. Mr. Chairman, I yield myself 30 seconds.
  Mr. Chairman, I note for the record that the Member who just spoke 
cast the deciding vote 2 years ago to raise the taxes on constituents 
of her district by $808 million and now opposes a $500 tax credit that 
would go right to the parents. There are 127,000 children in her 
district. In fact, the bill she opposes would allow the middle-class 
families of her own district to keep a total of $63 million of their 
own hard-earned money.
  Mr. Chairman, I yield 2 minutes to the gentleman from Ohio [Mr. 
Oxley].
  (Mr. OXLEY asked and was given permission to revise and extend his 
remarks.)
  Mr. OXLEY. Mr. Chairman, during the first 100 days of the Contract 
With America, I have repeatedly received three words of advice from my 
constituents in Ohio's Fourth Congressional District: ``Keep it up.'' 
The people I have talked with in my district are pleased that we are 
carving the lard out of an obese bureaucracy that micromanages our 
lives. They feel more secure knowing that we have passed a real crime 
bill this time, and they think it is about time that we revived the 
principle that the route to prosperity is through work, not welfare. 
They support our approval of the balanced budget amendment and respect 
us for facing up to the hard decisions needed to reduce the deficit.
  They have consistently told me one other thing. We are overtaxed and 
we need relief. I have been struck by one remarkable statistic. The 
average American family spends about half of its budget on Federal, 
State, and local taxes. Hardworking families just cannot afford to 
raise children and feed a hungry bureaucracy as well.
  H.R. 1215 represents a long overdue down payment on tax fairness. It 
provides relief for families and senior citizens, establishes 
critically needed
 savings, and encourages private sector investment that will promote 
economic growth and create thousands of jobs. The average taxpayer in 
my State of Ohio will save about $1,400. That is $1,400 for an 
individual family to spend rather than spent by a faceless Federal 
bureaucrat.

  Importantly, this $189 billion tax cut is fully paid for by 
responsible budget cuts and savings. To cite just one example that I 
have had a personal interest in, it is estimated that $2 billion, that 
is $2 billion in savings, will be realized through the extension of the 
Federal Communications Commission's spectrum auction authority. I 
sponsored the legislation that originally paved the way for these 
auctions which have already raised over $9 billion for the U.S. 
Treasury. Read that, the taxpayers.
  H.R. 1215 is a bill that all of us should support. The taxpayers have 
earned it, they deserve to keep it.
  Mr. Chairman, I ask for a strong support of this legislation.
  Mr. DINGELL. Mr. Chairman, I yield 1 minute to the distinguished 
gentlewoman from California [Ms. Eshoo].
  Ms. ESHOO. Mr. Chairman, millions of middle-class Americans make 
sacrifices for their children every day.
  How many times have we known parents to put off buying a new car to 
pay for their childrens' education? How many times have we seen parents 
postpone their vacation to save for their kids' tuition?
  Yet today, we are considering giving huge tax cuts to the privileged 
few instead of investing in our children's education and our country's 
future.
  Is this what the American people really want? I don't think so. I 
represent one of the wealthiest districts in the country they want 
deficit reduction and they recognize that education is an investment.
  Middle-class Americans do need relief--they need relief from the ever 
climbing costs of education--the seed corn which allows our Nation to 
harvest a trained work force.
  They want deficit reduction--not a Republican deficit buster which 
doesn't invest in our future or address the fundamental issues which 
face our country.
  I urge my colleagues to reject this so-called crown jewel of the 
contract. It's costume jewelry. Education produces the true crown 
jewels in our families, our communities, and in our country.
  Mr. BLILEY. Mr. Chairman, I yield 4 minutes to the gentleman from 
Ohio [Mr. Traficant].
  Mr. TRAFICANT. Mr. Chairman, America's tax system stifles growth, 
kills commerce, slows investment, and destroys jobs. Our tax code must 
be changed, it must be energized, it must be incentivized. That is why 
I rise to support this bill. The Republican plan does cut taxes on 
families, American families. The plan does cut taxes on business, 
American companies. It does cut taxes on senior citizens, your parents 
and grandparents as well as all other Americans. These are tax cuts for 
your constituents and my constituents and they make sense, and I think 
it is time to stop the class warfare around here. If people with money 
do not invest their money in America, poor people will only have 
welfare and never get a job in this great country.
  It is time to utilize the Tax Code to leverage the private sector, 
where jobs are created, where American workers get a paycheck, not a 
handout, and they pay taxes and keep this train coming down the track. 
Now, I would like to see the ceiling for that child tax credit dropped 
down to $90,000 and hopefully that will happen, and I would like to see 
us repeal section 903, change section 956 of the code. We give too many 
foreign tax loopholes in there. I would like to see tax credits for 
investment in America, tax credits for the purchase of American-made 
goods. Every study says it is a tax break, and in fact it raises 
revenue. I could not get the party here to look at it.
  H.R. 389, 391 and 392 should have a hearing. But, Mr. Chairman, let 
me say this, America needs capital punishment, but we do not need it in 
our tax code. Capital gains deserves a change at this modified 
realistic level. You know, grandma and grandpa and our farmers are not 
exactly Daddy Warbucks around here.
  But I would like to remind my Democrat colleagues of one thing. I 
will support the Democrat substitute. I like the language that deals 
with education. But let me say this: There are a lot of Ph.D.'s in New 
York driving cabs. It is time to incentivize the tax code. Our current 
system is anti-family, anti-business, anti-parents, anti-investment, 
anti-jobs, and it is anti-smart.
  One other thing. The Republicans do not necessarily have a patent on 
tax cuts. John Kennedy cut taxes for much of the same reason the 
Republican party is addressing this issue, and I am not going to put 
him down for that. But it is time to get away from it. The tax code 
basically divided America, old against young, worker against company, 
rich against poor, and I come from as poor a family as anybody in the 
Congress, and my dad never worked for a poor person, never.
  If we are going to create jobs, we are certainly not going to do it 
with the tax code that we have. I keep hearing about all this great 
economy. My God, of the top 50 banks in the world, the top American 
bank was listed at 29. We are still bailing out the savings and loans. 
Most pension plans are underfunded. Jobs are still being shipped 
overseas. We have got a record trade deficit. Right now America is 
buying back American dollars with borrowed American dollars from Japan 
and Germany to save the endangered American dollar.
  Beam me up here if things are so great. Let us change the tax code. I 
support this bill, and it is time to put this class warfare aside.
  Mr. DINGELL. Mr. Chairman, I yield 2 minutes to the distinguished 
gentleman from Michigan [Mr. Stupak].
  Mr. STUPAK. Mr. Chairman, over the past few weeks I have been coming 
to this floor to talk about what I call 
[[Page H4247]] the Republican version of the AFDC, not Aid to Families 
with Dependent Children, but aid for dependent corporations. Over this 
100 days we have seen the Republicans repeatedly reward the privileged 
and special interests while trying to do cuts in veterans programs, 
student financial aid, and law enforcement, and in this bill there is a 
$5 billion cut for law enforcement.
  This tax bill is another example of those misguided priorities. The 
Republican tax plan essentially repeals the corporate income tax by 
phasing out, among other things, the corporate alternative minimum tax, 
a provision of the tax code that was put in in 1986 to ensure that 
profitable corporations pay a fair share of income taxes. This 
alternative minimum tax repeal was not included in the original 
Contract on America, but was inserted at the last minute following 
pressure by corporate lobbyists and special interest groups.
  I offered an amendment before the Committee on Rules to delete the 
phase-out, but that was not made in order by the Republican leadership.
  What does the alternative minimum tax mean for average working 
Americans? It means that corporations cannot use attorneys and tax 
loopholes to avoid paying a minimum level of taxes. Every year 
thousands of parents make room in their household budget to buy school 
supplies for their kids. Like this 99 cent bottle of glue. Most of you 
do not know that in 1981 virtually every parent who purchased a bottle 
of glue like this paid taxes, more than the company that produced it.
  According to the watchdog group Citizens for Tax Justice, in 1981 the 
producer Borden Company, makers of the glue, despite a profit of over 
$200 million, paid no income taxes.
                              {time}  1915

  In fact, they got back $14.9 million in income tax credits. This is 
the very thing which the corporate minimum tax was designed to stop and 
to end. Even President Ronald Reagan supports the alternative minimum 
tax.
  Mr. Chairman, this is a bad bill, it is going to stick it to big 
corporations and we must not allow big corporations to take advantage 
of another tax loophole brought forth by the GOP.
  Mr. BLILEY. Mr. Chairman, I yield myself 3 minutes and I will take 
this time to engage in a colloquy with the chairman of the Committee on 
Ways and Means.
  Mr. ARCHER. Mr. Chairman, will the gentleman yield?
  Mr. BLILEY. I yield to the gentleman from Texas.
  Mr. ARCHER. Mr. Chairman, I thank the gentleman for yielding.
  Mr. Chairman, in title III of this bill, H.R. 1215, the Tax Fairness 
and Deficit Reduction Act of 1995, a tax provision was originally 
included in language providing for the privatization of the United 
States Enrichment Corporation. As the gentleman knows, Federal tax 
provisions are within the jurisdiction of the Committee on Ways and 
Means. As a consequence, I requested that the Commerce Committee 
chairman ask the Rules Committee to remove this specific provision from 
the language providing for the privatization of the U-S-E-C, with the 
understanding that the issues surrounding the tax treatment of the 
privatization will be fully addressed in conference.
  Mr. BLILEY. Reclaiming my time, Mr. Chairman, the distinguished 
chairman of the Ways and Means Committee correctly states that a 
provision was include in the bill providing for the privatization of 
the U-S-E-C that would ensure that the first step in the privatization 
of the U-S-E-C would be a non-taxable event. It is my understanding 
that this is how the Internal Revenue Service should treat the event in 
question; given the immense size of this transaction, the Commerce 
Committee simply wanted to be certain that there would be no ambiguity 
in
 the tax consequences of this aspect of the privatization. I would tell 
my good friend that after his concerns were brought to my attention, I 
concurred that the provision falls within the jurisdiction of the Ways 
and Means Committee, and agreed to ask the Rules Committee to remove 
the specific tax language from the bill with the understanding that we 
would deal with this issue at a later time, after we have had an 
opportunity to confer on the best way to ensure the sound and effective 
privatization of the U-S-E-C. Our two committees have exchanged 
correspondence detailing this situation, and I would request that these 
letters be incorporated into the Record at the appropriate point.

  I think both of us agree on the intent of the provision, and I look 
forward to working with my good friend, the chairman of the Ways and 
Means Committee, to accomplish a responsible tax provision in 
conference, and I thank him for his cooperation today.
  Mr. ARCHER. The gentlemen is correct, and I will work with him to 
include appropriate tax provisions in conference.
  Mr. Chairman, the letters referred to are as follows:

                                         House of Representatives,


                                  Committee on Ways and Means,

                                    Washington, DC, April 3, 1995.
     Hon. Thomas J. Bliley, Jr.,
     Chairman, Committee on Commerce, House of Representatives, 
         Washington, DC.
       Dear Chairman Bliley: On March 28, 1995, the Chairman of 
     the Committee on the Budget, Mr. Kasich, introduced the bill 
     H.R. 1327, the ``Tax Fairness and Deficit Reduction Act of 
     1995'', which incorporated the text of H.R. 1215, the 
     ``Contract with America Tax Relief Act of 1995'', along with 
     other necessary offsetting spending reduction provisions. I 
     understand that the text of H.R. 1327 is to be considered as 
     the base text for floor consideration of H.R. 1215 this week.
       H.R. 1327 includes the provisions of H.R. 1216, a bill to 
     provide for the privatization of the United States Enrichment 
     Corporation (USEC), reported by the Committee on Commerce on 
     March 23, 1995.
       Section 3006 of H.R. 1327 includes a provision regarding 
     the tax treatment of the USEC privatization. This matter lies 
     within the jurisdiction of the Committee on Ways and Means, 
     and was reported contrary to Rule XXI, clause 5(b), which 
     provides that no bill carrying a tax measure may be reported 
     by any committee not having jurisdiction to report tax 
     measures.
       On that basis, I would respectfully request that you write 
     to the Chairman of the Committee on Rules and ask that the 
     rule for floor consideration of H.R. 1215, as amended, delete 
     the tax treatment provision in Section 3006. This action 
     would be done with the understanding that the provision would 
     be treated without prejudice as to its merits when 
     considered, as appropriate, by the Committee on Ways and 
     Means during the course of its legislative agenda later this 
     year.
       Your cooperation in this matter is greatly appreciated.
           Sincerely,
                                                      Bill Archer,
     Chairman.
                                                                    ____

                                         House of Representatives,


                                  Committee on Ways and Means,

                                    Washington, DC, April 3, 1995.
     Hon. Gerald B.H. Solomon,
     Chairman, Committee on Rules, House of Representatives, 
         Washington, DC.
       Dear Mr. Chairman: On March 27, 1995, I wrote to you 
     requesting a rule for floor consideration of H.R. 1215, the 
     ``Contract with America Tax Relief Act of 1995'', which would 
     make in order a consolidated bill (since introduced as H.R. 
     1327, the ``Tax Fairness and Deficit Reduction Act of 1995'') 
     incorporating other offsetting spending reduction provisions 
     as the base text for the purposes of amendment.
       H.R. 1327 includes the text of H.R. 1216, a bill to provide 
     for the privatization of the United States Enrichment 
     Corporation (USEC), reported by the Committee on Commerce on 
     March 23, 1995.
       Since the date of my original letter to you, it has come to 
     my attention that Section 3006 of H.R. 1216 includes a 
     provision regarding the tax treatment of the USEC 
     privatization. This provision lies within the jurisdiction of 
     the Committee on Ways and Means, and was reported contrary to 
     Rule XXI, clause 5(b), which provides that no bill carrying a 
     tax measure may be reported by any committee not having 
     jurisdiction to report tax measures.
       On this basis, I respectfully request that the rule for 
     floor consideration of H.R. 1215, as amended, strike this 
     provision.
       Your cooperation and that of the Committee on Rules in this 
     matter is greatly appreciated.
           Sincerely,
                                                      Bill Archer,
     Chairman.
                                                                    ____

                                         House of Representatives,


                                  Committee on Ways and Means,

                                    Washington, DC, April 4, 1995.
     Hon. Thomas J. Bliley, Jr.,
     Chairman, House Committee on Commerce, 2125 Rayburn HOB, 
         Washington, DC.
       Dear Chairman Bliley: As you know, H.R. 1216 (the ``USEC 
     Privatization Act'') as reported by the Commerce Committee 
     contains a tax provision. That provision is intended to allow 
     the United States Enrichment Corporation to transfer its 
     assets without Federal income tax consequences to a state 
     chartered corporation, pursuant to a privatization plan. The 
     provisions of H.R. 1216 were included in H.R. 1327, the ``Tax 
     Fairness and Deficit Reduction Act of 1995'', and the text of 
     H.R. 1327 is expected to be adopted as a substitute to the 
     text of H.R. 1215.
       [[Page H4248]] As you know, Federal tax provisions are 
     solely within the jurisdiction of the Committee on Ways and 
     Means. Accordingly, I appreciate your agreeing to delete the 
     provision from the legislation intended to replace the text 
     of H.R. 1215.
       I want to affirm my commitment to work with you in 
     conference to provide appropriate tax provisions to 
     facilitate privatization of the USEC. In particular, I 
     understand that the transfer from a federal to a state 
     charter should be a non-taxable event. I will work in 
     conference to provide statutory language making clear that 
     the transfer from a federal to state charter is a non-taxable 
     event. The fact that such a provision will not be included in 
     the House bill will not prejudice consideration of such a 
     provision in the conference. With respect to such tax 
     provisions, I intend to consult with you to ensure the most 
     effective privatization of the USEC.
           Sincerely,
                                                      Bill Archer,
     Chairman.
                                                                    ____

                                         House of Representatives,


                                        Committee on Commerce,

                                    Washington, DC, April 4, 1995.
     Hon. Bill Archer,
     Chairman, Committee on Ways and Means, Washington, DC.
       Dear Chairman Archer: Thank you for your letters of April 
     3, 1995, and April 4, 1995, regarding certain provisions in 
     H.R. 1216, the USEC Privatization Act, which would affect the 
     tax treatment of the privatization of the United States 
     Enrichment Corporation. As you know, the text of H.R. 1216 
     has been incorporated into H.R. 1327, the Tax Fairness and 
     Deficit Reduction Act of 1995, which is to be considered on 
     the floor later this week.
       The Commerce Committee acknowledges the jurisdiction of the 
     Ways and Means Committee on Federal tax provisions and agrees 
     to delete the tax provisions in H.R. 1327 which pertain to 
     the privatization of the USEC. This agreement is predicated 
     on an understanding, as set forth in your letter of April 4, 
     1995, that the Ways and Means Committee will work with this 
     Committee in conference to include appropriate tax provisions 
     that facilitate privatization of the USEC.
       As you know, my interest has been in providing a framework 
     for the sound and effective privatization of the USEC. I 
     appreciate your assurance that you agree that the transfer of 
     the USEC from a Federal to a state charter should be a non-
     taxable event. I also appreciate your commitment to work with 
     me to provide statutory language making clear that the 
     transfer from a Federal to a state charter is a non-taxable 
     event. The assurances provided in your April 4th letter give 
     me sufficient confidence that you agree with the importance 
     of such protections, and that this matter will be addressed 
     properly in conference. Accordingly, I have communicated to 
     the Rules Committee my request that the language found in 
     section 1503(a)(5) of H.R. 1216 be deleted from the text of 
     H.R. 1327.
       Thank you for your cooperation in this matter.
           Sincerely,
                                            Thomas J. Bliley, Jr.,
                                                         Chairman.

  Mr. DINGELL. Mr. Chairman, I yield 3 minutes to the distinguished 
gentlewoman from Illinois [Mrs. Collins], the ranking minority member 
of the Committee on Government Reform and Oversight.
  (Mrs. COLLINS of Illinois asked and was given permission to revise 
and extend her remarks.)
  Mrs. COLLINS of Illinois. Mr. Chairman, today we are voting on the 
final item in the Republican's Contract on America, the so-called crown 
jewel of the 100 day take-money-from-schoolkids-and-give-it-to-the-rich 
extravaganza.
  Well, in case we weren't able to figure out the point of this whole 
Contract With America, H.R. 1215, the Republican tax bill, makes it all 
crystal clear.
  H.R. 1215 is a reckless, deficit-exploding, who-cares-about-the-poor 
bill full of goodies and bonuses by the wealthy and the rich. What a 
fitting finale, Mr. Chairman!
  My Republican colleagues have abandoned this commitment to deficit 
reduction in their Contract With America in favor of this blatant 
payoff to the rich.
  Let's take a look at who exactly this bill benefits. For starters, 
corporations are big winners under H.R. 1215. Back in the 1980's, 
Congress realized that many of our richest, biggest companies weren't 
paying a single dime in taxes by taking advantage of all the tax write-
offs available. As a result, the alternative minimum tax was 
established to ensure that corporations make at least a nominal 
contribution to the National Treasury.
  Well, our friends on the other side of the aisle clearly think that 
its OK if some of the Fortune 500 corporations leave everyone else to 
pick up the bill on April 15th because H.R. 1215 completely repeals the 
alternative minimum tax. This is expected to reduce revenues to the 
U.S. Treasury by $35.6 billion over the next 10 years that will have to 
be made up through deficit spending or more cuts in programs that help 
to ease the financial burdens of the guy who needs a helping hand.
  America's wealthiest individuals and families also come out way ahead 
under H.R. 1215 with the capital gains tax cut and other goodies that 
ensure that the well-off become even better off. A U.S. Treasury 
Department analysis of the impact of this legislation reveals that more 
than half of the benefits in H.R. 1215 go to the top 10 percent of 
American families with incomes of more than $100,000 a year and nearly 
30 percent of the bill's benefits go to the top 2 percent of families 
making over $200,000 year. These families will receive an average tax 
break of $938 a month! That's a gift from the Republicans of $12,256 a 
year.
  And who is going to be paying for this? The American Federal 
employees, these people who have worked for Federal Government are 
going to have to make vast contributions from their own Federal 
retirement system in order to pay for these tax cuts.
  I want to talk about these Federal employees who only earn $30,000 or 
so a year. On average they are going to be forced to pay $750 more 
toward their pension every year under this doggone bill, so the top 2 
percent we just talked about who have incomes over $200,000 a year are 
going to be enriched further.
  Somebody mentioned a few minutes ago about welfare, somebody else 
called it corporate welfare. What else can it be called? It is also 
welfare to those Americans who are quite wealthy, over $200,000 a year. 
They are going to get a $500 tax credit for each one of their kids, and 
yet the poor guy making $30,000 a year is going to have to work forever 
just to have $4,500 over 5 years in order get about $900 in benefits on 
his retirement check.
  Something is wrong here, Mr. Chairman. It seems to me we are way out 
of line on this. It seems to me if we wanted to give a real tax break, 
give it to the guy who really needs it, not the guy who earns $200,000 
a year. It just does not make sense to do so.
  Now, since we know who wins under this bill, let's look at who loses. 
Unless you're in the highest income bracket in the United States, 
you're just plain out of luck. The Republicans promised to lower your 
taxes, right? Well, if you are a working family with an income under 
$75,000 a year, you can expect to receive a tax break of a whopping $36 
a month. This will barely buy a pair of sneakers. And families earning 
between $40,000 and $50,000 a year can expect to pocket an average 
capital gains tax break of $32 a year. This might cover one trip to 
McDonalds if your family isn't too big or too hungry.
  Not only do average working families gain nothing from H.R. 1215 but 
they will have to pay for the big shots' tax cuts through the exploding 
deficit and spending cuts.
  Its important to note, too, that the vast majority of tax benefits in 
H.R. 1215 are specifically designed not to apply to low-income 
Americans. For example, the $500 per child tax refund available to 
families with incomes up to $250,000 is only available to families with 
tax liability. In other words, the lowest-income families would receive 
no benefit under this credit. Low-income families would also receive no 
benefit whatsoever from this bill's marriage penalty tax credit or the 
$5,000 tax credit for adoption.
  To make matters worse, these same low-income families who aren't 
eligible for any of H.R. 1215's tax goodies are forced to fund this 
corporate giveaway. H.R. 1215 is paid for through cuts in programs such 
as the Low Income Housing Energy Assistance [LIHEAP] Program that helps 
2 million senior citizens pay for their heating bills, Healthy Start, 
which provides prenatal care to expectant moms, and other programs that 
remove lead-based paint from public housing, provide summer jobs to our 
teenagers, and so forth.
  Senior citizens and Federal employees are also singled out to pay for 
this tax break bonanza. Medicare will be cut dramatically and Federal 
employees will be taxed through significantly higher contributions to 
their retirement plans in order to receive lower benefits.
  This is the Republican crown jewel that passes out caviar to the rich 
and leaves the rest of America starving. I oppose this shameful bill 
and urge my colleagues to do the same.
  Mr. BLILEY. Mr. Chairman, I yield 3 minutes to the gentleman from 
Illinois [Mr. Hastert], the chief deputy whip, and a member of the 
Committee on Commerce.
  [[Page H4249]] Mr. HASTERT. Mr. Chairman, My good friend, the 
gentlewoman from Illinois [Mrs. Collins] just spoke, but you know I 
think I remember just 2 years ago that my good friend from Illinois 
just raised the tax on her constituents that would cost $711 milion and 
now opposes a $500 tax credit to go right to the parents of the 89,000 
children that are in her district. The fact is she opposes the bill 
that would allow middle-class families in her district to keep a total 
of $44 million of their own hard-earned money.
  Mr. Chairman, I also rise in support of the Tax Fairness and Deficit 
Reduction Act we are considering today. I am especially pleased to 
support the Senior Citizens Equity Act portion of this legislation.
  We heard a great deal in recent weeks about Republicans being mean 
spirited. I contend that what some Democrats have done to our senior 
citizens has been mean spirited.
  Ever since I first came to Congress I have been fighting against the 
unfair Social Security earnings limit, and this earnings limit taxes 
seniors at a rate twice as high as millionaires have to pay if they 
choose to work.
  This tax hurts productivity, it robs the country of needed 
experience, and penalizes people who we should be trying to help. 
Despite the obvious unfairness of this earnings limit, the Democrat 
leadership refused to bring legislation to correct this situation to 
the floor.
  I call that mean spirited.
  Today, in this bill, the Republican majority finally brings a long 
needed solution to this problem to the floor. I call that fairness.
  In 1993 President Clinton's budget, passed over the unanimous 
objections of House Republicans, included a hefty tax increase on 
Social Security recipients. I call that mean spirited.
  Today in this bill, we repeal that tax increase. I call that 
fairness.
  Mr. Chairman, today in the Senior Citizens Equity Act, we reverse 
these mean spirited taxes on our senior citizens, we repeal the 
President's Social Security benefits tax, and I ask for my colleagues' 
yes vote on passage.
  Mr. DINGELL. Mr. Chairman, for purposes of correcting the Record, I 
yield 30 seconds to the distinguished gentlewoman from Oregon [Ms. 
Furse].
  Ms. FURSE. Mr. Chairman, I thank the gentleman for yielding me the 
time.
  Mr. Chairman, there seems to be a concerted attack on those of us who 
voted for the President's 1993 budget. I just want to point out that 
many poor and middle-income families received substantial tax returns 
from the earned income tax credit. In fact, 16,000 families in the 
First District of Oregon received an earned income tax credit as a 
result of the 1993 budget.
  Mr. DINGELL. Mr. Chairman, in view of an imbalance in time, I think 
we should yield some time over here and, therefore, I yield 4 minutes 
to the distinguished gentleman from Maryland [Mr. Hoyer].
  Mr. HOYER. Mr. Chairman, I thank the gentleman for yielding me this 
time.
  Mr. Chairman, I came to this House at a time of another Republican 
described revolution. It was the Reagan revolution, instituting the 
Kemp-Roth supply side economic proposal for feel good, no sweat, no 
pain Federal fiscal policy. When it passed in August of 1981, President 
Reagan proclaimed the budget would be in balance by October 1, 1983.
  When that revolution began, the debt confronting our Nation was $932 
billion. At its conclusion in January of 1993, it was $4.1 trillion. 
During that 12 years, not a red cent was spent on America that either 
President Reagan or President Bush did not sign off on.
  Today we are in the throes of another Republican led and named 
revolution, and according to Speaker Gingrich we today consider the 
crown jewel of the 1990s version of trickle-down economics. It is a 
synthetic, virtually worthless stone. I will oppose it. Neither our 
country nor our children can afford it.
  It is, quite frankly, a time for us as a people, as a Congress, and 
as a great Nation to demonstrate the discipline and the resolve 
necessary to put our financial house in order and show that America and 
Americans continue to have the courage to face tough problems without 
shrinking into policy more expected from nations falling into fiscal 
chaos and national weakness. That has been the history of the all of 
great nations: a focus on the immediate, the temporary, the politically 
popular quick fix.
  Mr. Chairman, there can be a time for a reduction of taxes, and when 
we succeed in eliminating our annual operating deficits, then will be 
the time to cut taxes.
  Then we will be able to say to our children we are paying for what we 
buy, and we are not passing those expenses on to you. That is why I 
voted for the balanced budget amendment.
  We will convey to you a great Nation, we can tell our children, which 
has the wisdom to discipline itself and not squander your inheritance, 
a Nation proud of its history and committed to its future, a Nation 
prepared to invest prudently in its people, a nation unwilling to slide 
self-satisfied and self-absorbed into second-rate status.
  Over 100 or our Republican colleagues, over 100 of
   our Republican colleagues urged their party to support such a path. 
They were rejected.

  I urge this House to stand for what it knows to be the correct course 
for today, for tomorrow and for generations to come; for our senior 
citizens, for our students, for our families, for our children, and 
most of all, for our country. Vote, ladies and gentlemen of this House, 
for fiscal health and responsibility. Our children and grandchildren 
should expect no less of us. Vote ``no.''
  Mr. BLILEY. Mr. Chairman, how much time is remaining?
  The CHAIRMAN pro tempore (Mr. Foley). The gentleman from Virginia 
[Mr. Bliley] has 13 minutes remaining, and the gentleman from Michigan 
[Mr. Dingell] has 14 minutes remaining.

                              {time}  1930

  Mr. BLILEY. Mr. Chairman, I yield 2 minutes to the gentleman from 
California [Mr. Bilbray], a new member of our committee, the Committee 
on Commerce.
  Mr. BILBRAY. Mr. Chairman, 2 years ago as a member of the public I 
watched these proceedings, and I watched my colleague from Maryland 
support the largest tax increase in the United States.
  Mr. HOYER. Will the gentleman yield? Would the gentleman like to know 
what he is doing to my constituents in this tax bill?
  Mr. BLILEY. Regular order, Mr. Chairman.
  Mr. BILBRAY. Mr. Chairman, that vote cost his constituents $539 
million.
  Mr. HOYER. Does the gentleman know how much this bill is costing my 
constituents?
  Mr. BILBRAY. Regular order, Mr. Chairman.
  The CHAIRMAN pro tempore (Mr. Foley). The gentleman will suspend. The 
gentleman from California [Mr. Bilbray] has command of the time.
  Mr. BILBRAY. Mr. Chairman, I am not trying to be confrontational. I 
am trying to just communicate what a citizen sees in these proceedings.
  You know, we are talking about 137,000 children in his district that 
parents that could have access to this. Now, that is fine, and we can 
make those judgments.
  But do you realize that 2 years ago when this vote was, the tax 
increase was put in, my dear colleagues on the other side of the aisle, 
there was a commitment made that once the tax increase went in, you 
will see tough, tough budget cuts; you will see us reduce it; trust us. 
What happened this year with the President's budget?
  Will you agree that the credibility of the political process was 
destroyed when the President of the United States proposed a budget 
that had none of the cuts that were proposed 2 years ago when the tax 
increase goes in? And as a citizen, I ran for Congress because the 
credibility was being destroyed by making promises on one side to raise 
taxes and never coming across the other way.
  Mr. Chairman, I represent a diverse district along the Pacific coast, 
but I grew up and I live in a working-class neighborhood, and when I 
hear all the battle about the rich getting some benefit, I would wish 
my colleagues on the other side would be half as worried about the 
middle class getting their fair share of tax cuts rather than always 
worrying about something might happen that may benefit somebody who has 
been a little more prosperous.
  [[Page H4250]] My neighbors do not want to be sacrificed on the altar 
of work there, and I close with this, please, go outside and ask the 
security guards if they are rich that work in this Chamber. They make 
enough money to make that tax writeoff.
  Mr. Chairman, it is time to stop the class warfare.
  Mr. HOYER. Mr. Chairman, would my friend, the gentleman from 
Virginia, yield for just 1 second? I would like to ask him a question 
about talking to the security guards outside.
  The CHAIRMAN pro tempore. The gentleman will suspend. The gentleman 
from Michigan has not yielded time.
  Mr. HOYER. The gentleman did not yield me time?
  Mr. DINGELL. No.
  Mr. HOYER. I apologize, Mr. Chairman.
  Mr. DINGELL. Mr. Chairman, I yield 3 minutes to the gentlewoman from 
North Carolina [Mrs. Clayton].
  Mrs. CLAYTON. Mr. Chairman, I have always been told that it is more 
important to watch what one does rather than what one says. The 
Republicans say that this tax is not for the wealthy, but what do they 
do? More than 100 of their own Members signed a letter urging their 
leaders to reduce coverage of the tax cut from those earning from 
$200,000 to that of $95,000.
  They say that this tax cut is not about making sure that the wealthy 
at the expense of low and middle income, but what do they do? Mr. 
Chairman, yesterday the gentleman from Ohio [Mr. Kasich] passed around 
this letter. Clearly in that letter it showed the spending cuts coming 
from the low-income and middle-income people will be for what, to pay 
for the tax cut.
  They say this bill is the Contract With America, relief of 1995, but 
what will they do? Who do they give relief to? They give relief to the 
privileged few and little relief to the rest of America.
  They say this bill is senior-friendly. But what do they do? Nearly 
three-fourths of the senior tax relief will go to the seniors who make 
$75,000 or more. To which seniors are they willing to be friendly?
  They say this bill is a fair bill. In fact, they call this bill the 
tax fairness of 1995. But what do they do? They unfairly and unequally 
distribute the benefits and the burdens.
  Guess what, they give the benefits to those who have a lot of money 
and give the burdens to those who have very little or minimal income.
  Three-fourths of the capital gains tax relief in the bill goes to 
those who earn more than $100,000 a year. If you make more than 
$200,000 a year, you will get $11,000 tax relief. But if you make 
$30,000 a year, you may get a couple of hundred dollars.
  They say this tax bill will stimulate the economy. But what do they 
do? They ignore the last tax bill, tax cut, that they gave in the 
1980's, which pushed this Nation in a deficit and a sluggish economy, 
in fact, a deep recession that we have yet to recover.
  They say this is a Contract With America. But America certainly is 
more than about billionaires and big business. America is college 
students, minimum-wage workers, infants, senior citizens, 
schoolchildren, pregnant women, and middle-income workers.
  I urge Americans to listen carefully to what they say they are going 
to do. But I urge them to listen more closely to what they do. I urge 
my colleagues to vote against this unfair tax bill.
  Mr. BLILEY. Mr. Chairman, I yield 2 minutes to the gentleman from 
Connecticut [Mr. Franks], a member of the committee.
  Mr. FRANKS of Connecticut. Mr. Chairman, failed tax-and-spend 
policies as demonstrated in a proficient manner by a Congress 
controlled by the Democrats for 40 years, versus less taxation and less 
spending by Republicans in 1995: America, you voiced your opinion 
loudly this past November.
  Making more money available to private citizens and private industry 
will inevitably result in more money going into our economy to produce 
economic growth and, yes, ladies and gentlemen, more tax revenues.
  The method to improve our cities is not through new and fancy social 
spending programs. The first way is to help strengthen our families. 
Encouraging marriage, adoptions, savings by families, long-term health 
care, and senior citizens' equity are steps in the right direction.
  Second, this and future tax incentives properly directed will allow 
us to improve the economic condition of our cities. We as Republicans, 
and I believe many moderate-to-conservative Democrats, would agree that 
we must help employers to employ more employees, and we must encourage 
more entrepreneurs of all hues.
  Let us remember that with strong families, less taxation, less 
spending, and less government, we will be able to turn our society 
around for the better.
  Mr. DINGELL. Mr. Chairman, I yield 1\1/2\ minutes to the 
distinguished gentleman from North Carolina [Mr. Hefner].
  (Mr. HEFNER asked and was given permission to revise and extend his 
remarks.)
  Mr. HEFNER. I find it interesting; it disturbs me when Member after 
Member from this side of the aisle comes and talks about the failures 
we have had over the past 40 years.
  This is the greatest country on the face of the Earth. We do not have 
to worry about keeping people in here. We do not have to worry. We have 
to worry about people wanting to come here.
  I have seen programs over the last 40 years. We have had some 
failures. We have had some abuses. But we have had some great 
successes. Thanks to programs, people are able to go to school that 
would not have been able to go to school before, that can get a loan to 
buy a house that would never have been able to have a home; they got a 
little loan to send their kids to our colleges in North Carolina and 
all over this country, to take part in this great experiment called 
democracy.
  I take offense when people say how bad this country is. If you want 
to leave, exercise your right to renounce your citizenship and do not 
pay taxes and leave this country. But this is the greatest country on 
the face of the Earth.
  The reason I oppose this is the reason that 100 Members of this side 
of the aisle wrote the letter and wanted us to lower the caps, because 
it just plain ain't fair. This package is not fair, and that couple 
that is working in that textile mill back home in North Carolina, they 
are not going to get anything out of this tax package. They are not 
going to receive anything for their children.
  But I can tell you who is: everybody that has come to either one of 
these podiums today, everybody that has spoken in favor of this tax 
package is going to get a benefit from it. Everybody here that has got 
a kid going to school that is a Member of Congress is going to benefit 
from it whether they have got two or three kids or four kids, because 
we are in that bracket.
  But it just plain ain't fair to Middle America, and people that work 
every day to try to support their families and educate their kids. It 
just plain ain't fair.
  Mr. DINGELL. Mr. Chairman, I yield 1\1/2\ minutes to the gentleman 
from Wisconsin [Mr. Klug].
  Mr. KLUG. Mr. Chairman, Paul Tsongas said it years ago, let me repeat 
it tonight. I am not Santa Claus. I wish I was.
  I wish I could vote for this tax package and tuck a $1,000 refund 
check in all of the stockings hung with care from the mantle.
  For that matter, I wish I were the Easter Bunny tonight and could 
hide baskets of goodies in the backyard bushes, but I cannot, folks, 
because it is my job tonight to play the role of grinch and remind 
everybody in this Chamber that we are flat-out broke.
  Now, there are a lot of my colleagues on the other side of the aisle 
tonight who suddenly have found religion in deficit reduction, and we 
will see just where they are come May, because we know where they have 
been in the past.
  I will be delighted to vote for the budget package and help the 
chairman, the gentleman from Ohio [Mr. Kasich], and do everything I can 
in my will to pass this tough deficit-reduction plan.
  I understand, as John Kennedy did, that capital gains breaks help 
grow the economy and help small businessmen and farmers back in 
Wisconsin, and IRA's will help average families save more for 
retirement.
  And if that is all this bill was about tonight, I would be glad to 
lead the charge up San Juan Hill. Instead, what I hear tonight is not 
necessarily an assault on the deficit. I am afraid it is a retreat from 
deficit reduction.
  [[Page H4251]] The cuts are not specified. The tax cuts are too 
generous. The timing in a robust economy, I believe, is all wrong. 
Maybe it will all make sense and add up later this summer when this 
bill gets through conference. As for me, I am putting Rudolph back in 
the stable tonight and telling the elves to put up their feet and 
relax, because, in my mind, it is not Christmastime tonight.
  Mr. BLILEY. Mr. Chairman, I yield 1 minute to the gentleman from New 
Jersey [Mr. Andrews].
  (Mr. ANDREWS asked and was given permission to revise and extend his 
remarks.)
  Mr. ANDREWS. Mr. Chairman, I rise in favor of this tax reduction bill 
here tonight. I do so thinking about the American families and the 
families in my district who sit around the kitchen table on a Friday 
night, and they take out their checkbook, and after they write their 
check for their mortgage and their property taxes and their credit card 
bill and their health insurance and their utility bill and all the 
other bills they have to pay to meet their family budget, for many of 
them there is nothing left, and for some of them there is an 
insufficient amount to pay even those bills.
  In my opinion the question of this bill here tonight is this: Does 
this legislation help or not help that family? I think this legislation 
helps that family.
  It is my conclusion that $500 per child in their hand is better spent 
by them. It is my conviction that that $500 belongs to them. They 
earned it. It is a necessity for their way of life, and by voting for 
this bill tonight, I think we can let them keep more of what they 
earned.
  I rise in support of the legislation.
  Mr. DINGELL. Mr. Chairman, I yield 1\1/2\ minutes to the gentlewoman 
from Texas [Ms. Jackson-Lee].
  Ms. JACKSON-LEE. Mr. Chairman, I rise to state that I am going to 
vote for a tax cut today. I am going to vote for the Gephardt plan. 
Today we had a full-blown circus played out on the steps of the United 
States Capitol, and to the American people, I really mean it, elephants 
and clowns. Pure fantasy which is what the Republican tax bill is.
  But I am going to another fantasy, and I am going to say bab, humbug, 
because Scrooge is in the Chamber today.
  The reason why I say that is that Scrooge is taking from those who 
need it, and giving to those who do not need it.
  Let me read for a moment, Dave Stockman, the Reagan OMB Director, who 
said, ``The combination of incentive-minded tax-rate reductions and 
firm budget controls is expected to lead to a balanced budget by 
1984.'' Another fantasy.
  I can tell you that we did not have a balanced budget in 1984, and 
tax reductions did nothing for the balanced budget in 1984.
  Let us stop the class warfare and tell the truth. Why are the 
American people angry? They are angry because they have seen middle-
class incomes
 remain stagnant while those in the highest echelons of our community 
have seen their earnings increase more than 29.5 percent over the 
years, but the folk who need the tax cuts, which this present tax bill 
does not address, the lowest fifth, the second and the third wage 
earners, they have not been earning enough dollars or they have not 
been having the infusion of cash to support their basic needs.

                              {time}  1945

  Talk about capital gains, and I know I have heard some senior 
citizens call in and say, ``I have property I'd like to sell.'' Well, 
if we were not rushing to judgment on this Republican tax bill, we 
might have been able to have means testing on capital gains tax. We 
might have been able to sit down at the table and reasonably address 
the question, who deserves a tax cut. I believe it is those earning 
under $75,000.
  I will vote for a tax cut, but I certainly will not join the fantasy 
of the circus that was held here at the United States Capitol today and 
the circus that will be held tonight when we vote for a tax cut that 
will not help the American people!
  Mr. BLILEY. Mr. Chairman, I yield 2 minutes to the gentleman from 
Kentucky [Mr. Whitfield], a member of the committee.
  Mr. WHITFIELD. Mr. Chairman, as my colleagues know, this debate, as 
much as any debate on this House floor, epitomizes the difference in 
the philosophy of the Democratic Party and the Republican Party, and, 
when I say Democratic Party, I do not include all Democrats because we 
know that many Democrats are very much concerned about the deficit. But 
for 30 years, since the Great Society, the Democratic Party has had no 
concern about Federal deficits in America, and during that time many 
programs, good programs, have provided benefits for people in our great 
country.
  But as may colleagues know, as times approaches to old problems, and 
today we have a $4.7 trillion debt in America, $200-and-some billion 
dollars a year just to pay the interest, and I say to my colleagues, 
``When you take the entitlements, and you take the interest on the 
debt, it's by the year 1997 those two items alone will exceed the total 
tax revenues of this country.''
  So we have to take care of the problem in two ways. First of all, we 
have to adopt a tax policy, and that is what this tax bill does. It 
provides tax breaks for business men and women, small business men and 
women, to create new jobs and economic expansion in this country. Two, 
it provides tax credits for men and women with children so that they 
can get a tax break, and then further, Mr. Chairman, it provides a 
backbone and a basis for the first step in solving this deficit, and 
that is a tax policy that will create new jobs just like the tax 
reduction of Ronald Reagan and, yes, John Kennedy.
  Now the second thing that we have to do, and we plan to do it, is we 
are going to control this deficit because, unlike the Democratic Party 
for the last 30 years, we are going to do something about the deficit, 
and that is the second part of our plan.
  Mr. DINGELL. Mr. Chairman, I yield 1\1/2\ minutes to the gentleman 
from Vermont [Mr. Sanders].
  Mr. SANDERS. Mr. Chairman, this is a bad bill and a very unfair bill. 
This is, in fact, a bill based precisely on the principles of class 
warfare. That is exactly what it is.
  I say to my colleagues, ``When you take from the poor, and you give 
to the rich, that's class warfare. When you take from hungry children 
and give to profitable multinational corporations, that's class 
warfare.''
  Mr. Chairman, half of the individual tax breaks in this bill go to 
families earning $100,000 a year, and this bill cuts back on nutrition 
programs for hungry children. That is class warfare. A quarter of the 
tax breaks go to people earning $200,000 a year, and the bill cuts back 
on loans to college students whose families today cannot afford the 
high cost of college. That is class warfare. The highest earning 1 
percent of the population will get more tax breaks than the bottom 60 
percent, and then they cut back on a wide variety of programs that 
lower income senior citizens need.
  I say to my colleagues, ``When you tell low income seniors in Vermont 
that they have to live without fuel assistance, that's class warfare.''
  Mr. BLILEY. Mr. Chairman, I yield 2 minutes to the gentleman from 
North Carolina [Mr. Burr], a member of the committee.
  Mr. BURR. Mr. Chairman, those here tonight that would suggest that it 
is going to be tough to balance the budget are in fact right. We knew 
it would be tough when we came to Congress, that there would be tough 
decisions, but we knew we were up to the task of making those 
decisions.
  Tonight we have a special opportunity. Tonight we have the 
opportunity to make it easier on working Americans to balance their 
budget. I hope we do not take this opportunity and blow it like we have 
in the past.
  Mr. Chairman, during my campaign there were two areas that I 
concentrated on very heavily, commitments to stop the punishment on 
seniors in this country and a commitment to leave money in the pockets 
of working Americans. Tonight we have an opportunity for seniors to 
roll back that unfair tax that was placed on them in 1993 and to raise 
the earnings limits of seniors to allow them to stay in the workplace 
and to be productive in their later years versus feeling like they are 
drain on us, and for the American families we have an opportunity to 
leave 
[[Page H4252]] the money in their pockets rather than to bring it to 
Washington and decide what to do here with it, as well as for those 
families that take care of parents and grandparents, to make sure there 
is a $500 credit for the added burden and costs that they incur.
  Mr. Chairman, the debate today is between those who feel they know 
best and those that believe that parents and seniors know best what to 
do with their money. Mr. Chairman, I, for one, am willing to bet on 
parents and seniors knowing best, and I urge my colleagues to support 
this important piece of legislation tonight.
  Mr. DINGELL. Mr. Chairman, I yield such time as he may consume to the 
distinguished gentleman from California [Mr. Beilenson].
  (Mr. BEILENSON asked and was given permission to revise and extend 
his remarks.)
  Mr. BEILENSON. Mr. Chairman, I rise in strong opposition to the so-
called Tax Fairness and Deficit-Reduction Act, a bill which would 
produce the opposite result of its title's claims, and which is one of 
the most economically and socially damaging pieces of legislation that 
has come before this body in many years.
  This bill would reduce revenues by nearly $200 billion over 5 years, 
and by $630 billion over 10 years. These tax cuts would constitute the 
largest increase in deficits since the 1981 tax cut, which was the root 
cause of most of the deficit problem we have been struggling with for 
the last decade and a half. They would obliterate much of the hard work 
we have done in recent years to close the huge gap between spending and 
revenues, and would make it much more difficult than it is already 
going to be to reduce deficits further.
  That difficulty cannot be overstated. With the loss of revenue from 
this bill, we would need to cut spending by about $1 trillion over the 
next 7 years to reach the goal of a balanced budget by the year 2002. 
It is probably not possible to make such cuts; it is certainly not 
possible to do so without cutting payments to the elderly, disabled and 
the poor; and without cutting funds for crime control, immigration 
control, environmental protection, highways and airports, education and 
job training, and many other critically important activities Americans 
expect from their government--many of which have already been cut to 
the bone in recent years.
  To make matters worse, many of the tax provisions are backloaded--
they will cost more in the future than they will during the first few 
years. The capital gains inflation indexing, the American Dream Savings 
Accounts, the neutral cost recovery provisions, and the phasing-in of 
many of the tax provisions will result in exploding revenue losses in 
the years beyond 2000. Compensating for that lost revenue will be 
increasingly difficult as time goes on.
  It makes no sense whatsoever to make it more difficult to reduce 
Federal deficits. As economists have been saying for years, reducing 
these deficits is the most important step the Government can take to 
increase jobs and productivity over the long term. Cutting Federal 
borrowing would free up more of our Nation's limited savings for 
private capital. We need sustained deficit reduction far more than 
capital gains tax breaks or anything else in this bill to generate 
growth and ensure our Nation's future prosperity.
  Equally troubling to its impact on the deficit is the fact this bill 
would exacerbate the growing disparity between the rich and poor. It 
confers most of its benefits on people who are already well off--those 
who least need a tax cut--while providing little gain to those of 
modest means who need tax relief the most. When this bill is combined 
with the spending cuts for programs that serve the poor that the 
Republican leadership has been promoting, the effect is an unjust and 
unconscionable shift of resources from the poor and middle-class to the 
rich.
  Under this bill, the average tax benefits for families earning over 
$200,000 annually would be $11,270; for families earning $50,000 to 
$70,000, about $1000; for those earning $30,000 to $50,000, $570; and 
for those earning $0 to $30,000, $124.
  Over half of the total tax benefits, and three-quarters of the 
capital gains tax benefits, would go to the top 12% of families that 
earn $100,000 a year or more. Some highly profitable corporations would 
pay little or nothing in income taxes. It is little wonder that 
Americans have not been clamoring for this bill, and that they have 
indicated by large margins in recent polls that they would much prefer 
that Congress reduce deficits than cut taxes.
  One of the most unfair provisions in the bill is the highly touted 
tax credit of $500 per child, which was intended to make it easier for 
parents to pay for food, clothing, and other costs of raising children. 
Because the credit is nonrefundable, the families who are most in need 
of help in meeting these expenses--about 10 million working families 
making less than $20,000 a year--will receive less than full $500 per 
child, or no credit at all. Meanwhile, families with incomes of 
$200,000 annually, who, obviously, are not struggling to pay for 
necessities for their children, would receive the full $500 credit.
  Another particularly egregious provision is the increase in the 
pension contribution required of federal employees, which is the 
equivalent of a 10 percent tax increase for our nation's two million 
federal employees, the great majority of whom have relatively modest 
salaries. This increased contribution is not necessary to keep the 
civil service retirement system insolvent; it is included only because 
it provides nearly $11 billion over five years to help pay for the 
bill's tax cuts.
  I would note that this provision was rejected by the Committee on 
Government Reform and Oversight, which has jurisdiction over this 
matter, and efforts to allow a separate vote on it on the floor where 
rejected by the Rules Committee.
  Mr. Chairman, the bill before us would exacerbate our nation's 
serious budget deficit problem and contribute to the disparity of 
wealth among income groups. I urge our colleagues to reject this 
legislation.
  Mr. DINGELL. Mr. Chairman, I yield 1\1/2\ minutes to the 
distinguished gentlewoman from California [Ms. Harman].
  Ms. HARMAN. Mr. Chairman, I rise in opposition to both tax cut 
proposals that will be considered today.
  It is time to stop trying to kid our constituents. We cannot spend 
$630 billion over 10 years on tax cuts and make any dent in our $5 
trillion national debt.
  Deficit reduction is a higher priority than tax cuts. Put another 
way, it is a better way to lower interest rates, create jobs and 
economic growth than to enact the ill-timed tax cuts in these bills.
  This House just voted, with my strong support, to amend the 
Constitution to require a balanced Federal budget. And yet one of our 
first steps is to retreat.
  It is not credible to link tax reductions to deficit reductions as 
the sponsors of both proposals would do. This have-your-cake-and-eat-
it-too concept would not work because, once again, it postpones the 
tough decisions about cuts, and, further, it creates uncertainty about 
whether individuals and businesses can plan on receiving tax breaks.
  In my view, a number of the proposed tax cuts have merit--but not 
now. I have two kids in college, and know how higher education expenses 
burden families. I applaud the Democratic leader for trying to offer 
relief. But not now. I also support expanded eligibility for fully 
deductible IRA's, a fair capital gains tax reduction, increased 
business expensing, and a credit for long-term elderly care. But not 
now.
  Let us stop the gimmicks and start the straight talk. Deficit 
reduction now. Fair tax reduction when we can afford it. That is a 
tough choice, and in my view, the right choice.
  Mr. BLILEY. Mr. Chairman, I yield 1 minute to the gentleman from 
California [Mr. Hunter].
  Mr. HUNTER. Mr. Chairman, I want to just tell the gentlewoman from 
California [Ms. Harman], my good friend, that there are 98,000 children 
in her district, and their parents could certainly use this $500 per 
child tax deduction. Working people understand that, and let me 
underscore a point that the gentleman from Ohio [Mr. Traficant] made so 
effectively when he talked about blue-collar workers and how important 
this bill is.
  Mr. Chairman, blue-collar workers cannot hire each other. They need 
to have somebody who has enough capital who is not giving that money to 
the Government, to Uncle Sam, to be able to buy that extra piece of 
equipment, expand that facility, put those extra 2, or 3, or 5, or 10 
people on the payroll, and thereby give them some help, and help their 
children, help their family and also expand, ultimately, revenues to 
the United States. This is in many ways a blue-collar tax cut.
  Mr. Chairman, the smartest thing Democrats can do is vote for it; the 
smartest thing President Clinton can do is sign it.
  Mr. DINGELL. Mr. Chairman, I yield 2 minutes to the distinguished 
gentlewoman from California [Ms. Waters].
  Ms. WATERS. Mr. Chairman, this bill is not the answer to the real 
problems of America. We all know that middle-class America is worried. 
We all know that poor Americans continue to struggle. It is no mystery 
why this is so. Since the mid-1970's wages have 
[[Page H4253]] stagnated. Corporate America has exported our jobs 
overseas for cheap labor. As trade unions have been beaten back, hard-
earned benefits like health coverage, pensions, and family leave have 
eroded.
  Mr. Chairman, in the 1980's, taxes increased on working class 
Americans. So the squeeze is on and politicians are feeling the heat.
  We could go right at the problem, but the Republicans have resorted 
to cheap politics. They have gone back to old-fashioned, trickle-down 
economic theory: reward the rich and pray.
  Mr. Chairman, the capital gains tax cut contained in this bill would 
yield over 75 percent of its benefits to those earning over $100,000 a 
year. Low-and middle-income families may need tax relief, but the 
Republican plan goes to families earning up to $200,000.
  To make matters worse, last week the Republicans deleted a Senate 
proposal to get tough on billionaires who renounce their American 
citizenship to avoid paying capital gains taxes. The Republican 
leadership placed in a provision protecting a $63 million business deal 
for the Speaker's friend, Rupert Murdoch. This is not a strategy for 
economic opportunity. It is indeed class warfare of the rich against 
poor and working-class and middle-class Americans.
  This Congress needs to reject Wall Street's solutions to Main Street 
problems. Cheesy tax cut promises only make Americans cynical about 
Government and politicians. Until we begin to address basic American 
concerns, this institution will continue to suffer in the public's eye.
  I say to my colleagues, ``Don't play with the fears of anxious 
Americans. Let's get serious about our economic problems. Let's reject 
this Republican charade. Let's vote this turkey down.''
  Mr. BLILEY. Mr. Chairman, I yield 1 minute to the gentleman from 
Pennsylvania [Mr. Gekas].
  Mr. GEKAS. Mr. Chairman, I want to reinforce in my brief time the 
notion and the truth that this is truly a middle-class tax cut that we 
are undertaking here, not only the $500 portion up for families earning 
up to $200,000, because nobody knows where the middle class begins, nor 
it ends, but we know that most of our people fall in that bracket 
between zero and $200,000. So that is a middle-class tax cut, but 
wonder against wonder, the capital gains reform that is built into this 
bill is also a middle-class tax cut.
  Why do I say that? In the last full year of capital gains reporting 
in 1985, 75 percent of all the people who earned $50,000 or less had an 
item of capital gains in their tax returns, and if that is not enough, 
we also learned that in that same capital gains year people earning 
$100,000 or less, hundreds of them had a capital gains item in their 
tax return. Capital gains is good for the middle class.

                                  2000

  Mr. DINGELL. Mr. Chairman, I yield myself the balance of my time.
  The CHAIRMAN. The gentleman from Michigan is recognized for 1\1/2\ 
minutes.
  Mr. DINGELL. Mr. Chairman, the memories of my Republican colleagues 
are very convenient. They have forgotten the last time we had a 
Republican tax cut in this body. That multiplied the national debt by 
better than 4.5 times, from about $700 billion to $4.5 trillion. They 
have forgotten most of that went to the rich, not to the poor, and not 
to the middle class. They have also forgotten that six million jobs 
were created by the Clinton budget; that that budget cut the national 
deficit by $700 billion. They have also ignored the fact it gave a tax 
cut in the President's budget to those who had need. Somewhere in 
between 16 million and 20 million Americans were removed from the tax 
rolls and were given tax reductions in each and every Congressional 
District, including their own, by that particular tax package. There 
memories are most convenient on these matters.
  The hard fact is that Voodoo Economics, Trickle-Down Economics II, 
which this tax package happens to be, is nothing more or less than a 
raid on the poor, a sop to the rich, and a benefit to those who have no 
need of tax expense, sweated out of the hides of those who have the 
least. It is a cut in school lunch programs, education, and every other 
program that has meaning, not only to this generation, to the young 
people of this country, but the young people of the future. I urge the 
rejection of this rotten Republican tax package.
  Mr. Chairman, the tax package before us is fiscally irresponsible and 
distributionally inequitable in the extreme. It commits this Nation to 
a budget structure that runs counter to deficit reduction. It also 
leaves behind those most in need of tax relief--working middle class 
families. Better than half of the cuts go to people earning more than 
$100,000 a year.
  The last time the American people were promised both a balanced 
budget and a tax cut was in 1981. That plan, which was put forward by 
the patron saint of my colleagues on the other side of the aisle, 
President Ronald Reagan, led to an explosion in deficit spending. More 
than a decade later, the national debt has increased three-fold to 
better than $4 trillion. During that same period, middle class families 
have seen their wages stagnate, while wealthy Americans enjoyed 
substantial gains.
  My colleagues across the aisle have clearly not learned the No. 1 
rule of holes: When you find yourself in one, stop digging. If they had 
learned this lesson, we would not be debating this unwise legislation, 
that returns us to the failed supply side economic policies of the 
past.
  The costs of this measure are truly staggering--$180 billion over the 
next 5 years. At a time when one-seventh of the Federal budget is 
needed to pay interest on the debt, we can ill-afford this 
extravagance. However, the long-term burdens are far worse. Costs 
skyrocket to more than $450 billion over the next 5 years, and keep 
rising after that.
  The budgetary impact of these cuts are kept artificially low in the 
early years through accounting gimmicks. However, the out year impact 
of the capital gains tax cut, the restoration of huge corporate 
depreciation loopholes and the repeal of the alternative minimum tax 
for corporations is enormous. These changes, which will principally 
benefit the wealthy, are expected to cost: $24 billion between 1995-
2000; $221 billion between 2001-2000.
  As my colleagues may or may not know, the corporate depreciation tax 
breaks were eliminated, and the alternative minimum tax was set up in 
1986 with strong bipartisan support and the backing of President 
Reagan. This was done in response to the outcry of the American people 
who were appalled by the fact that large corporations with enormous 
profits were gaming depreciation loopholes set up in 1981 to avoid 
paying taxes and in some cases receive a rebate. According to the 
Citizens for Tax Justice:
  AT&T received $636 million in tax rebates from 1982 to 1985 despite 
earning $24.9 billion in pretax profits.
  DuPont had $3.8 billion in 1982-1985 pretax profits supplemented by 
$179 million in rebates.
  General Dynamics had four out of five no tax years from 1981 to 1985. 
In addition, its $2 billion in pretax profits from 1982-1985 were 
augmented by $91 million in tax rebates.
  Under this bill, the secretaries and mailroom workers at many of our 
most profitable corporations will be required to pay more in taxes than 
their employers.
  Many of the specific spending cuts to finance these tax breaks have 
not been identified. We hear that they will be achieved largely through 
lowering the discretionary spending caps already in place. However, 
that still doesn't provide a clear answer to the question--what cuts 
will be made to finance this package and the better than $1 trillion in 
savings needed to balance the budget by 2002?
  The only suggestions we have seen so far from the Republicans are 
harsh spending cuts that strike right at the most vulnerable in this 
country--the elderly and children of this Nation. In a rush to keep a 
political promise that clearly favors the wealthy, my colleagues have 
slashed funding for the school lunch, child nutrition, summer youth 
employment, and education programs. Seniors have also watched as home 
heating and housing assistance has been eliminated. And today, they are 
faced with significant cuts to the Medicare program.
  As I have mentioned, the middle income taxpayer is left behind by 
this package. In fact, 34 percent of America's children are not covered 
by the middle class tax cut, because their family's incomes are too 
low. Only 1 percent are denied a credit because their family's income 
is too high.
  Middle income families are also being targeted by cuts in student aid 
programs. My colleagues have proposed cutting $13 billion in college 
assistance by eliminating or restructuring student loan programs. As a 
result, the average cost of a college loan will rise by $4,500. In 
addition, students will now be forced to pay interest from the first 
day they arrive on campus--not 6 months after graduation as they are 
currently allowed to do.
  I cannot support the fiscally irresponsible tax policy laid out in 
H.R. 1215. This legislation 
[[Page H4254]] will help the privileged few who already have plenty get 
more at the expense of everyone else. It will also further mortgage our 
children's future by exploding the Federal budget deficit at a time 
when we should be focusing on paying it down. I urge my colleagues to 
defeat the bill.
  Mr. BLILEY. Mr. Chairman, I yield myself the balance of my time.
  The CHAIRMAN. The gentleman from Virginia is recognized for 2 
minutes.
  Mr. BLILEY. Mr. Chairman, it has been a long debate, it has been a 
good debate, but I think now is the time to reward Americans and to 
contrast two philosophies, our philosophy on this side of the aisle 
that the people who earn the money should keep the money, rather than 
the other way around, that the government knows best how to spend the 
money.
  Mr. Chairman, we will reduce the deficit. We will get on a slope to a 
balanced budget in 2002. And for every $1 billion we reduce spending, 
we pay for a $500 tax credit for two million citizens.
  Mr. Chairman, this is a good bill, it is a good debate, this bill 
ought to pass, and I urge my colleagues to support the bill and reject 
the substitute.
  Mr. RAHALL. Mr. Chairman, I rise in opposition to H.R. 1215, the so-
called Tax Fairness and Deficit Reduction Act of 1995. In the first 
place, it isn't fair, and in the second, it does nothing to reduce the 
deficit, unless you live in a house of smoke and mirrors.
  But before I go into the many reasons why I cannot vote for this 
bill, let me tell you about the good things that are in it, and for 
which I would vote if they were offered separately.
  This bill contains an increase, over 5 years, in the earnings 
limitation for senior citizens who are receiving Social Security 
benefits, but who still work at jobs to supplement their low incomes.
  I have been a cosponsor of this earnings limitation increase 
legislation for years. It hasn't come up in the House for a vote--
despite my signing a Discharge Petition last year to force it to a 
vote. Increasing, almost three-fold, this earnings limitation over 5 
years to enable working seniors to earn as much as $30,000 a year 
before their earnings are offset against their social security checks, 
is a Godsend to seniors. Regrettably, because the majority here in the 
House will not allow a separate vote on it--I am forced to vote against 
it because of other unacceptable provisions contained in H.R. 1215.
  Another provision, which I have also cosponsored in the past, is the 
phased-in repeal of the 1993 new taxes on social security benefits for 
those singles earning more than $34,000 a year and married couples 
earning more than $44,000 a year. Had this new tax come before me for a 
separate vote in 1993, I would have voted against it. Now that its 
repeal is before this House for a vote, I must vote against it because 
no separate vote is being allowed.
  IRA Accounts. I have cosponsored and supported new IRA's which permit 
early withdrawal without penalty for such things as first time home 
buyers, college costs, extraordinary medical expenses, and even for 
periods of unemployment. I would very much like to vote in favor of 
this new IRA. But I can't. It isn't being brought up as a separate 
vote.
  I stand behind no one when it comes to imposing and enforcing tougher 
penalties for those engaged in child pornography. During the 103d 
Congress, I signed the amicus brief before the Supreme Court to force 
the U.S. Department of Justice to stop weakening existing child 
pornography laws. We won that battle--and Stephen Knox is behind bars 
for exploiting children in sexually explicit photographs which he had 
been peddling to perverts nationwide for huge profits. Yet in this 
bill, giving House Members a chance to toughen those laws, I will have 
no separate vote on the issue.
  If given a separate vote on the issues, I would also strongly support 
adoption and foster care enhancements, not to mention tax deduction for 
home office expenses, which I cosponsor in separate legislation.
  In the 103d Congress, I cosponsored a bill, introduced by my friend 
and colleague Representative Frank Wolf of Virginia, to give an 
additional $500 per child deduction to low- and middle-income parents. 
That provision is in this bill. Why can't I vote for it?
  Two reasons: First, the tax credit is given to families with incomes 
as high as $200,000 a year; and secondly, it isn't being brought up as 
a separate vote, but is included in the bill as a whole with no 
amendments allowed.
  Who wouldn't support making accelerated death benefits to the 
terminally ill tax-free? But I can't vote in favor of this, because it 
too is incorporated into the bill as a whole.
  Who wouldn't support an Eldercare tax credit, or tax incentives for 
long-term care insurance? I would vote for these, if they were offered 
separately. Too bad they are incorporated into the bill--one vote 
only--up or down.
  Yes, Mr. Chairman, there is much in the bill to recommend it. If the 
bill were being offered under an open rule, allowing separate votes on 
initiatives favored by a majority of Members regardless of party, then 
perhaps I could--many Members could--vote for them. As it is, we 
cannot.
  Now that I have reiterated the provisions in the bill that would have 
my support if voted on separately, I will tell my colleagues what is in 
the bill that prevents me from voting in its favor.
  First of all--recent surveys show that America prefers that we keep 
on reducing the deficit--as we have done since 1993--the first time the 
deficit has declined three years in a row since Harry Truman was 
President. They don't want a tax cut--and especially since many of them 
are now aware that this so-called tax cut won't help them because they 
aren't rich enough. How rich is rich enough? Earning over $200,000 a 
year is rich enough. That will get you about $11,000 in tax cuts. But 
if you earn under $30,000 a year, you might get about $124 in reduced 
taxes.
  The so-called tax cut for middle America isn't. That is, middle-
income working Americans will not realize much of a benefit from any of 
the tax-cuts proposed. Fifty-one percent of all tax cuts and tax 
credits in the bill go to the richest people and corporations. For 
example, while I could and would support a reduced capital gains tax 
for individuals holding assets they wish to sell, I cannot in good 
conscience support the 50 percent capital gains exclusions for 
individuals because of its serious, adverse effect on small businesses. 
West Virginia is made up of small businesses--and it is these that 
create more jobs in my State than any other employer. We need those 
jobs. I can't afford to vote for something here that will hurt, not 
help them. Let me quote to you from a letter from the U.S. Small
 Business Administration, dated April 3, 1995:

       Specifically, Sec. 6301 of H.R. 1215 (or H.R. 1327) * * * 
     creates a 50 percent capital gains exclusion for individuals 
     but, in doing so, repeals the special small business capital 
     gains tax incentive in the existing law (P.L. 103-66, Sec. 
     13113). This will have the effect of raising the taxes of 
     future investors in qualifying, high growth, small businesses 
     from the previous maximum rate of 14 percent to the new rate 
     of 19.8 percent. This may be the only category of taxpayer to 
     have its taxes raised under the capital gains provisions of 
     the proposal.

  She goes on to say:

       * * * the repeal is troubling for small businesses for two 
     reasons. First as a matter of even-handed tax policy, it 
     seems incongruous to raise the tax rates of those who invest 
     in the research, plant and equipment of a high-risk, emerging 
     growth company while rewarding non-productive speculation in 
     real estate or the stock market with substantial tax 
     reductions.

  So to all my colleagues whose districts are comprised of many small 
businesses, which create the jobs our Districts need, but not so many 
big businesses, beware of voting for this bill because of the much-
touted reduction in the capital gains tax for individuals. If you don't 
believe me, read the two-page letter from the Small Business 
Administration.
  Another provision--reducing and ultimately repealing the Alternative 
Minimum Tax for business. This AMT was put into the 1986 tax reform 
legislation because we learned that more than 130 companies--from A to 
X--Aetna to Xerox, not only didn't pay any taxes between 1982 and 1985, 
but that many such companies received tax rebates. Companies such as 
these will be back on the ``no tax'' gravy train if this bill passes as 
is.
  Proponents of H.R. 1215 will tell you it won't cost but $188 billion. 
Treasury estimates put the cost at near $700 billion over 10 years.
  You might ask: How is the majority going to pay for this tax cut 
bill?
  First, they would ``save'' $100 billion in unidentified cuts in 
discretionary programs. While the programs haven't been precisely 
identified, the Budget Committee chairman, in his budget proposal, H.R. 
1219, has a list of ``proposed areas'' in which cuts should be made. 
What cuts? Student aid comes to mind--$13 billion in cuts. Repeal of 
the Davis Bacon Act comes to mind. Repeal of the Essential Air Service 
comes to mind. There are many, many other discretionary safety-net 
programs included in the $100 billion cut.
  Secondly, they would claim the $62 billion ``saved'' when they 
passed, without my support, their so-called Welfare Reform bill--a bill 
that makes war on innocent children and pregnant women, and senior 
citizens.
  Thirdly, they would claim the $17 billion in Rescissions recently 
passed by the House, which I have already rejected.
  Fourth, they would find another $10.8 billion in ``savings'' under 
Medicare by
 cutting both services to seniors, and payments to doctors and 
hospitals.

  Fifth, they would find another $10.5 billion in new payroll taxes for 
Federal employees. This small segment of our working population--1.8 
[[Page H4255]] million Federal employees--would be expected to pay more 
into their pension plans, and get less out when they retire. These 
people are being given a tax increase--to help pay for a tax cut for 
the wealthiest population in the United States.
  The Committee on Government Oversight and Reform couldn't muster 
enough votes among its majority party to report this bill changing the 
Federal Retirement System and yet it has been plunked down in the 
middle of a so-called middle-income tax cut bill.
  The Congressional Research Service, in a report issued March 18, 
1995, clearly stated that: the Federal retirement system is self-
financing and its costs can never exceed its income--now or in the 
future. In other words, it ain't broke and it don't need fixing.
  The $62 billion in claimed ``savings'' in this bill to help pay for 
the tax cut, comes directly from cuts in school lunches and breakfasts, 
in reductions in WIC for pregnant women and children, from denying 
assistance to children of teen mothers under 18 years of age, and from 
denying assistance to children whose mothers have other children, or 
who have been on welfare more than 60 months. All this amounts to an 
economic jihad against helpless children. If government won't take care 
of them who will? If not now, when? When it's too late? When children 
have been arrested in their mental and physical development due to a 
lack of adequate and proper nutrition? Amazing to see this happening to 
children, when all we've heard from the past two years is how to 
encourage preventive health care to keep down health care costs.
  Last, while I reiterate that this bill's stated cost of $188 billion 
will grow to nearly $700 billion over 10 years--seven times more in the 
second 5 years than in the first 5 years--let me also state another 
provision lacking in the bill that would make it much more acceptable, 
if that were possible, and that would be the elimination of corporate 
welfare.
  I am a cosponsor of legislation, known as the ``Corporate Welfare 
Reduction Act'' to eliminate corporate welfare. This legislation will 
close a $200 billion loophole that buries corporate welfare in our tax 
code in the form of giveaways--while we continually ask Americans to 
sacrifice more and more in higher and higher taxes. We sought to make 
our bill in order under the Rule, so that Members could vote for this 
legislation while considering the tax cut bill. The Rules committee 
rejected our request, yet it would have given us the chance to ``find'' 
$200 billion to cut out of our tax code, and perhaps make it 
unnecessary to cut programs for the poor, low-income working Americans, 
the elderly, and school children.
  And just this past week, Mr. Chairman, the majority adamantly opposed 
requiring those persons who renounce their citizenship in this country 
and take their assets overseas--tax
 free--to pay tax on their assets--on the profits they made doing 
business in the United States under our free enterprise system--before 
they are allowed to renounce their citizenship. It was deleted from the 
bill, H.R. 831.

  I am a lot more concerned, Mr. Chairman, about Child-Fare than I am 
about Corporate fare. How can the richest Nation on earth, the only 
true Democracy, think of declaring war--the equivalent of an economic 
jihad--on children so that greedy corporations can get richer, fat cats 
can get fatter, stockholders' dividend checks can get bigger, and 
salaries of Corporate CEO's can exceed $6 million a year in many cases.
  Vote in favor of H.R. 1215? I think not, Mr. Chairman. A vote in 
favor of this bill, among other things, would have me vote for the 
heart of the FY95 Budget Resolution which hasn't even been brought 
before the House yet this year--cutting $100 billion randomly among 
discretionary programs. These cuts, of course, have not been 
specifically identified, but they point to cutting $13 billion in 
student aid, and repealing the Davis Bacon Act, the Economic 
Development Act, the Appalachian Regional Commission, and many others. 
This is a pig-in-a-poke and I am not buying it. When H.R. 1219--the 
budget resolution--comes to the floor, the majority is going to get up 
and tout the passage of H.R. 1215--saying: Gee, guys and gals, you've 
already voted to cut $100 billion when you voted for the ``crown 
jewel'' of the Contract With America--the tax cut proposal, so step 
right up and vote for the budget bill--it is one and the same.
  A vote in favor of H.R. 1215 would have me voting for $17 billion in 
rescissions--which I've already rejected once.
  A vote in favor of H.R. 1215 would have me voting for $62 billion in 
welfare reform cuts to programs that serve at-risk women and their 
infants, hungry school children and the elderly who need home heating 
assistance to keep from freezing to death in the winter--a bill I have 
already rejected.
  A vote in favor of H.R. 1215 would have me voting for $10.8 billion 
in Medicare cuts, both in services to the elderly and to hospitals and 
physicians.
  A vote in favor of H.R. 1215 would have me voting to require 1.8 
million hard-working Federal employees to pay more into their 
retirement system and get less out of it upon retirement. It would add 
$905 more in payroll deductions for Federal employees each year, in 
order to give an $11,000 tax cut to individuals earnings more than 
$200,000 a year. This is a blatant new payroll tax on working Americans 
to help pay for a tax cut for the richest 12 percent of 260 million 
people who live and work in the United States. It pits 1.8 million 
Federal workers and retirees against the rest of the country. Talk 
about David against Goliath.
  Those of us who were here in 1981, have been down this road of 
trickle-down,
 borrow and spend economics. The economic policies of the 1980's made 
us into a debtor nation for the first time in our history--we now owe 
foreign countries more than they owe us. We saw those economic policies 
translate into a quadrupling of our national debt.

  Let's not go down that road again.
  In conclusion let me say this: Any tax cut bill ought to be tied to 
deficit reduction, through carefully crafted spending cuts, not by 
using a meat-ax approach, so that we don't give parents money today 
that their children will have to repay in the future in the form of a 
mammoth interest on a mammoth national debt.
  Let us save $200 billion by eliminating tax loopholes protecting 
corporate welfare in our tax code such as that embodied in the 
Corporate Welfare Reform Act which I and my colleagues have introduced, 
instead of taking $200 billion out of the mouths of hungry kids.
  Let us concern ourselves with child fare--not protecting welfare for 
the wealthy.
  I said early on, when the Contract With America was first presented 
to the House: there are a lot of god ideas in there--but none of them 
should be enacted if they intentionally harm the children. The biggest 
part of the contract that supposedly saves the most money is that which 
reduces and takes away support for children, in their nutrition 
programs, in their child care, in Head Start, in food stamps, in AFDC, 
in Medicaid. A literal war on children.
  A tax cut bill should be one which provides relief for America's 
struggling families--and that alone should remain a top priority. The 
power to un-tax is the power to truly rescue those who need rescuing. 
Regrettably, H.R. 1215 does none of these things.
  I urge my colleagues to reject this bill by voting against it.
  Mr. BORSKI. Mr. Chairman, I rise in strong opposition to H.R. 1215, 
the so-called Tax Fairness and Deficit Reduction Act. Mr. Chairman, 
this bill is the farthest thing from being fair. The tax cuts included 
in this plan overwhelmingly benefit the highest-income Americans and 
will be paid for with cuts in programs important to working people and 
senior citizens.
  The Treasury Department's analysis of this plan shows that the tax 
cuts in this bill will primarily benefit wealthy Americans. According 
to the Treasury, over half of the tax cuts in this proposal benefit 
only the top 12 percent of families with incomes over $100,000, and 20 
percent of the cuts benefit only the top 1 percent of families with 
incomes over $350,000. In addition, this bill would eliminate the 
Alternative Minimum Tax [AMT] allowing huge corporations like Mobil Oil 
and Texaco to pay no taxes at all.
  Mr. Chairman, I do not believe that the highest-income Americans and 
corporations need big tax give-aways from the Federal Government. The 
problem in this country is not that wealthy Americans do not have 
enough money, but that working Americans do not earn high enough wages. 
This bill does nothing to address this fundamental problem for working 
Americans. In fact, it will make matters worse for them.
  The Republicans have proposed to pay for these tax cuts for the 
wealthy, which will cost nearly $200 billion over 5 years and $600 
billion over 10 years, by cutting deep into programs vital to working 
Americans and senior citizens.
  Their plan will repeal the Davis-Bacon Act which ensures a decent 
wage to laborers working on federally funded or assisted projects. 
Repealing the Davis-Bacon Act will make small contractors and their 
employees vulnerable to wage busting by outside companies.
  In addition, H.R. 1215 will cut over $11 billion from Medicare. This 
Medicare cut will force premiums for senior citizens to increase by 25 
percent of program growth. With Medicare growing by over 10 percent a 
year, it will not be long before Medicare premiums eat away at senior's 
Social Security check and force many seniors below the poverty line.
  This bill will also impose a tax on Federal workers by raising their 
retirement contribution rate by 2.5 percent. This provision will raise 
taxes on the average Federal employee by $750 a year. I feel it is 
unconscionable to raise the taxes of lower-middle and middle-income 
families by nearly $11 billion to pay for tax cuts for the wealthy. 
H.R. 1215 also will reduce the pensions of Federal workers by 
[[Page H4256]] changing the formula that is used to determine their 
pension benefit.
  In addition, the Republicans have targeted student loans. Students in 
my State of Pennsylvania will lose $830 million in higher education 
assistance. While education is becoming the key to higher wages in a 
changing economy, Republicans will raise the cost of attending college 
and force many students out of school altogether, denying them the only 
chance they have to secure a decent living.
  Mr. Chairman, I believe it is absolutely unjust that Republicans are 
even considering cutting these highly successful programs for working 
Americans and seniors in order to cut taxes on the wealthiest Americans 
and corporations. Those who say that these tax cuts on the wealthy will 
grow the economy and trickle down to the rest of the country had better 
read their history. This supply-side economics logic was tried under 
the Reagan administration and was a complete failure for working 
Americans, whose incomes stagnated and whose taxes increased. It was 
also the root cause of our enormous deficit problems today which 
continue to threaten our future. The American people will not be fooled 
again. They know that this is merely a give away to upper income 
Americans and special interests and they are the ones who will have to 
pay. I urge my colleagues to defeat this highly unfair tax bill.
  Mr. BEREUTER. Mr. Chairman, this Member rises in reluctant support of 
this measure.
  This Member will vote for H.R. 1215, as it does contain many positive 
provisions, but he remains concerned that this bill was not allowed to 
be made better through the amendment process. This Member believes the 
Senate will improve the bill. Sounds emanating from the Senate indicate 
a more equitable and reasonable approach on some expected parts of this 
omnibus tax-cut legislation. And Mr. Chairman, it must be improved 
before this Member will support a conference report. Specifically, an 
improved bill must target its tax breaks toward truly middle income 
Americans.
  Still, this Member does support this bill because of the many 
positive steps it will take to restore a sense of tax fairness to the 
American people. These include:
  A 50 percent cut in the capital gains tax and prospective indexing 
for inflation. After years of taxing individuals and businesses at the 
current rate, without any relief through indexing for inflation, this 
cut and the beginning of indexation to account for the ravages of 
inflation is the least we can do.
  Elimination of the Marriage Penalty. The bill at long last would 
provide married couples who file joint returns with an income tax 
credit of up to $145 to at least reduce the marriage penalty for most 
couples. This provision ends the inequitable and irrational current 
policy of taxing married couples more than if the couple filed 
separately. It is notable that this bill eliminates this problem, which 
was exacerbated by the Clinton tax increase of 2 years ago.
  Expansion of existing IRAs and creation of a new type of IRA. The 
measure modifies present law governing deductible IRAs to permit annual 
deductible contributions of up to $2,000 for each spouse, thus finally 
eliminating a penalty on spouses who choose to be homemakers. 
Additionally, the measure provides for creation of American Dream 
Savings [ADS] accounts. Individuals will be able to contribute up to 
$2,000 per year--$4,000 for married couples--into a tax-free, 
nondeductible ADS account. Contributors will pay income tax when funds 
are deposited, but not when withdrawing the funds, effectively making 
the interest on the account tax free. Contributors may make tax-free 
withdrawals of funds after 5 years for retirement income, purchase of a 
first home, education expenses, or medical costs--including the 
purchase of long-term care insurance.
  Increasing the exemptions under the Estate and Gift tax from $600,000 
to $750,000 to account for the ravages of inflation since the current 
exemption was first enacted and then indexing the exemption to 
inflation. Families and small business owners have been hit hard by an 
exemption which has not been indexed for inflation. They have seen 
their ability to pass on family businesses and farms diminished by the 
increasing value of the property. By increasing the exemption we make 
up for past inflation and indexing the exemption assists families and 
small businesses down the road.
  Increasing the depreciation on equipment and inventory for small 
businesses. The current depreciation limit of $17,500 is increased over 
4 years to $35,000. This increase provides some relief to small 
businesses--allowing them to expand and update, thereby creating new 
jobs and a stronger economy.
  Increase in the Social Security Earnings Limit. The bill raises the 
current $11,280 earnings limit for seniors to $30,000
 over 5 years. This change which I have long supported eliminates what 
amounts to a 33-percent marginal tax rate on seniors earning up to 
$30,000. It is ridiculous that we punish seniors who want to remain 
productive and pay more income taxes past the age of 64; this measure 
ends that punishment.

  Tax incentives for private long-term health care insurance. To 
encourage people to provide for their long-term care needs, the bill 
treats long-term care insurance as a tax-free employee benefit--up to 
$73,000 annually--like regular health insurance; allows life insurance 
policies to offer tax-free accelerated death benefits in the event of 
terminal illness or confinement to a nursing home; allows tax free 
withdrawals from IRA's, 401(k) plans and other pension plans for the 
purchase of long-term care insurance; and allows deductions for long-
term care premiums.
  Repeal of the Social Security Benefits Tax. This measure reduces, 
over 5 years, the amount of Social Security benefits subject to income 
tax back to 50 percent, eliminating the increase to 85 percent which 
was passed as part of President Clinton's tax increase package, passed 
by the Democrat controlled Congress in 1993. Elderly citizens earning 
more than $34,000 individually, or couples earning more than $44,000 
will now be taxed on 50 percent of their benefits, not 85 percent as 
they were under the Clinton plan.
  Adoption Assistance. The bill creates a refundable tax credit for 
adoption expenses. The credit starts at $5,000 per child and is 
proportionally reduced to zero for incomes exceeding $60,000, 
eliminating it totally for adjusted gross incomes over $100,000.
  Despite these many positive provisions this Member's support is 
reluctant because only one amendment was made in order under the rule. 
This closed rule violates the spirit of the Contract With America since 
it calls for full and open debate and a clear and fair vote on each of 
the 10 Contract items. The Ganske/Roberts amendment should have been 
ruled in order. At least 102 Republican Members and many Democrats 
wanted
 to vote for the Ganske/Roberts amendment. It was a reasonable and fair 
amendment which helped maintain equity in this bill for people who 
really are middle-income Americans. Those provisions, limiting the $500 
per child tax credit to families earning $95,000 per year or less, were 
intended to fine tune this measure toward assisting those we have 
pledged to help--the middle income.

  A $95,000 per year income is a much more realistic cut-off for 
determining who is middle income. Try telling the people of Nebraska 
that families earning up to $200,000 are middle income; you won't have 
much success. This is a very substantial tax cut for wealthy and upper-
income Americans--a loss of revenue that should have been devoted to 
reducing the deficit. And I might add, Mr. Chairman, my informal survey 
of my constituents shows that, on an 8 to 1 ratio, they believe that 
savings from reduced expenditures should first be used for deficit 
reduction. Provisions in this bill like the repeal of the Alternative 
Minimum Tax for corporations are not helpful to middle income Americans 
and it is bad tax policy which reverses recent reforms. Savings 
achieved by the cuts made in this measure should either benefit people 
who truly are middle income or go toward reducing the deficit. They 
should not provide additional tax benefits to corporations and the 
wealthy.
  Mr. Chairman, despite my concern about some of the provisions of this 
bill, the positive reform elements just mentioned on balance easily 
make this a good and needed bill. This Member urges its passage, while 
lamenting that all of the provisions in the bill are not as effective 
and reasonable as those positive ones that this Member has highlighted.
  Mr. GILMAN. Mr. Chairman, although there are many worthy provisions 
in this measure, H.R. 1215, I must take exception to the inclusion of 
title IV, the Congressional and Federal Employee Retirement 
Equalization Act. It is important to note that due to a lack of 
consensus by Members of both parties, these retirement provisions, 
originally H.R. 1185, never came to a vote in the Committee of 
Jurisdiction. Now these same provisions are being brought to the floor 
under a closed rule and as part of a separate legislative package. 
These actions stand in direct contradiction to the committee process 
and have in effect, restricted debate on an issue that will affect 
thousands of hard working families in my district.
  The inclusion of title IV in a tax reduction bill seems ironic 
because, in essence, title IV is a tax increase on Federal workers. 
Title IV mandates a 2.5 percent payroll tax increase on Federal 
employees and institutes a fundamental change in the calculation of 
each worker's retirement benefits. The Congressional Budget Office 
estimates that this change will cause Federal workers to suffer a 4 
percent decrease in future pension benefits. In this same bill which 
grants a tax benefit of $500 per child for families with an upper limit 
income of $200,000, title IV will cost an additional $750 per year for 
the family of a Federal employee earning an average salary of $30,000 
per year. Along with many of my constituents, I believe this is an 
unfair burden to place on our dedicated Federal workers.
   [[Page H4257]] Most importantly, the central issue of the debate 
over title IV is the issue of honoring the commitments we have made to 
Federal employees. When Congress restructured the Federal Retirement 
System in 1986, barely 9 years ago, we set up the FERS system on a 
self-sustaining basis and established a system for honoring the 
liabilities of the old Civil Service Retirement System. At that time we 
promised our Federal employees that this would be the last time we 
would alter their pension plan. Many hard working families relied on 
that commitment and planned their families' futures based on that 
commitment.
  We should live up to the contract we have made with our Federal 
workers. Title IV of this measure breaks that promise.
  Regrettably, title IV has been included within a tax and spending 
reduction bill which includes many positive proposals, including: A tax 
credit for long-term care, the establishment of an American dream 
savings account, relief of the marriage penalty tax, IRA deductions, 
and capital gains benefits and reductions.
  These tax cuts are fiscally responsible. Of course that tax cuts as a 
whole reduce Federal revenues, that is what tax cuts do. However, 
families in my district deserve a tax cut and deserve to have Federal 
spending reined in. Accordingly, this legislation will accomplish both, 
cut spending that needs to be cut and using those savings to reduce 
taxes for American families and businesses.
  Accordingly, I will vote for passage of this measure, despite my 
objections to the provisions of title IV.
  Mr. COSTELLO. Mr. Chairman, tonight, the House is being asked to 
approve large and growing tax cuts that make the goal of balancing the 
budget farther and farther out of reach. The Republican ``Contract with 
America'' promised to balance the budget. However, it does not make 
sense to make drastic and painful cuts in order to provide a tax break 
to wealthy Americans before we get serious about deficit reduction.
  While this bill pays for the tax breaks over a 5-year period, after 
five years the costs explode, and the federal deficit will actually 
increase. The long-term result of this bill will be an increase in the 
deficit by $630 billion over 10 years. This would be the second largest 
deficit increase in history, behind only the 1981 tax cuts.
  Mr. Speaker, this is epitome of hypocrisy. If Republicans were 
serious about deficit reduction, as they claim, the spending cuts 
included in this tax package would be applied to the deficit, rather 
than financing a huge tax break for the wealthy.
  This tax-and-spending-cut package will cut programs for the most 
vulnerable in our society to pay for tax breaks that will largely 
benefit wealthy American citizens. This bill has been called the 
``crown jewel'' of the Republican ``Contract With America,'' but it 
appears most of the crown jewels will only go to the rich.
  To reduce our Federal budget deficit, we must cut every area of our 
discretionary budget. However, to make these very difficult cuts only 
to give the savings to wealthy Americans does not make sense to me. 
That is why I oppose this ``crown jewel'' of the ``Contract With 
America.''
  I believe we must restore fiscal sanity to our budget process. We 
have an obligation to put an end to the huge interest payments that are 
eating away at our children's future. However, the solution to this 
problem does not lie in handing over our nation's ``crown jewels'' to 
those who need them the least.
  Mr. KLECZKA. Mr. Chairman, this is a sad day for this country . 
Today, the Republicans passed what should be called a ``Deficit 
Acceleration Bill'' under the guise of a tax cut bill.
  This measure will not receive my support because it is a Trojan 
Horse. It sounds and looks friendly, but it will have dire consequences 
by exploding the federal budget deficit we have worked so hard the last 
2 years to contain. If passed into law, this measure would entail a 
$630 billion loss to the Federal Treasury over the next 10 years. That 
is inexcusable.
  We have a debt of $4 trillion. We have annual deficits estimated to 
rise in future years due to demographics. Moreover, we are $1.2 
trillion short of the balanced budget so many of us want to achieve 
over the next 7 years. Cutting taxes in this manner and at this time is 
the absolute height of folly.
  This bill is the same mindset as the trickle-down, supply-side tax 
cuts made during the early 1980's. Those tax cuts, along with massive 
defense spending increases, got us into this fiscal mess. Those tax 
cuts are the reason each and every child born in this country is born 
about $20,000 in debt. They are the reason we pay 16 percent of our 
budget on interest payments on that debt.
  My constituents have told me over and over that they want us to 
concentrate on cutting the deficit first. They have said so 
consistently, and I agree with them. That is why the Deficit 
Acceleration Bill is not just wrong, but morally objectionable. It robs 
our children and our grandchildren of their futures. And, it ruins any 
chance of responsibly achieving a balanced budget.
  This bill offers huge tax benefits to the wealthy and precious little 
to those who could use them--hard-working, middle-income Americans. 
Nearly two-thirds of the tax benefits provided by the Deficit 
Acceleration Bill will go to those earning more than $75,000 a year. 
Moreover, the bill gives people who make up to a quarter million 
dollars unneeded tax relief.
  The tax cuts will amount to nearly $1,000 a month for the average 
household with children that has income over $200,000, but less than 
$66 a month for those that earn between $30,000 and $75,000. That is 
just $16 a week, which is not enough to take a family to the movies for 
a matinee these days.
  It is my hope that the next step is for the Senate to reject this 
Deficit Acceleration Plan so we can work together on a bipartisan basis 
to address our long run deficit problems. As Vice President Gore said 
this week, ``On Day 101 we're going to start fixing the damage that was 
done during the 100 days of the Republican Contract.'' There is no 
piece of legislation more in need of fixing than the bill we are 
considering today.
  Mr. YOUNG of Florida. Mr. Chairman, I rise tonight in support of H.R. 
1327, the Tax Fairness and deficit Reduction Act of 1995, one of the 
most pro family bills this House will consider.
  This legislation, which incorporates several provisions contained in 
the 10 points of the Republican Contract With America, makes good on 
the promise we made to ease the tax burden on American families. H.R. 
1327 delivers the kind of genuine change that the American people asked 
for in November, and I am pleased that the House is acting on this 
legislation, as pledged, within the first 100 days of the 104th 
Congress.
  The family is the core of our society, and the Congress should 
support our nation's families, not penalize them. We support families 
with this legislation by addressing the so-called ``marriage penalty'', 
where married couples pay more in taxes than they would as two 
individuals. I have long been a critic of the marriage penalty, and 
believe that the government should not punish people for getting 
married.
  H.R. 1327 is pro family because it will help this same couple when 
they have children by providing a $500 per child tax credit. If they 
choose to adopt a child, this bill establishes a refundable tax credit 
for adoption expenses. This same family will also benefit from the 
creation of the American Dream Savings Account. Individuals can 
contribute up to $2,000 a year into these accounts. They can then make 
tax-free withdrawals if used for retirement income, for a first time 
home purchase, for post secondary education, for medical emergencies, 
or purchasing long-term care health insurance. Make no mistake about 
it, tonight we are helping families buy their first home, educate 
themselves or their children, and plan for their future medical needs. 
While the initial deposit is taxed, by allowing interest in these 
accounts to accrue tax free, we will foster the American dreams of home 
ownership, a better job, and retirement security while increasing our 
nation's savings rate.
  When families start to age, H.R. 1327 provides a $500 refundable tax 
credit for individuals who care for a disabled parent or grandparent at 
home. Families will benefit because this legislation encourages people 
to plan ahead for their long-term care needs, by allowing tax-free 
withdrawals from IRAs, 401(k) plans, and other qualified pension plans 
so they can purchase long-term care insurance. Also, H.R. 1347 allows a 
tax deduction for long-term care premiums, and encourages employers to 
provide these policies by treating them as a tax-free employee benefit 
like regular health insurance.
  As the Representative of Florida's Tenth Congressional District, 
which is home to one of our Nation's largest populations of senior 
citizens, I am also pleased that H.R. 1327 will remove a number of 
onerous burdens on older Americans. One of the first bills I ever 
introduced in Congress would have repealed the Social Security earnings 
limitation, and I have consistently cosponsored legislation that would 
overturn the unfair limit on outside income which penalizes older 
Americans for working. While the former House Leadership failed to 
allow us to debate this legislation on its own in the House, and 
prohibited us from raising it as an amendment to any other pending 
legislation, I am pleased that today, we will be able to vote for this 
bill that would raise the earnings limit from $11,280 to $30,000 over 
the next 5 years. As I have repeatedly told my colleagues, I firmly 
believe our Nation can benefit greatly from the skills and experience 
of older employees, and we should encourage their contributions to our 
economy.
  Another portion of the contract that I strongly support is the repeal 
of the 1993 Clinton tax increase on Social Security benefits. I opposed 
the original legislation that required senior citizens who earn more 
than $34,000, 
[[Page H4258]] or couples earning more than $44,000, to pay income 
taxes on 85 percent of their Social Security benefits. I cosponsored 
legislation in the 103d Congress to repeal this tax increase, and I 
will support this legislation before us which will roll this tax back 
over 5 years to the pre-Clinton levels.
  Finally, one of the most important parts of the Tax Fairness and 
Deficit Reduction Act is a reduction in the capital gains tax rate. I 
have long been supportive of these efforts, because this reduction will 
be good for all Americans. Allowing individuals a deduction equal to 50 
percent of their net capital gains for a taxable year is good economic 
policy because it will encourage personal savings in our Nation and 
help our captial markets preform more efficiently. By increasing our 
Nation's personal savings, we will make it easier for businesses to 
raise capital in order to expand, and create more jobs, leading in turn 
to more economic opportunities for every American.
  Mr. Chairman, the legislation before us this evening makes good on 
many of the promises we made in the Contract With America. It is pro 
family. It promotes higher education. It respects the contributions 
older Americans have made to our Nation. It encourages home ownership. 
It fosters savings. Most importantly, it creates greater economic 
opportunities for all sectors of our society.
  Mr. Chairman, this legislation is pro family, pro growth, and pro 
America. I urge its strong support this evening.
  Mr. MANZULLO. Mr. Chairman, the passage of the tax legislation that 
we are considering today will be a triumph for our Nation's seniors. 
One of the most onerous and counterproductive taxes that exists in our 
current code is the Social Security earnings test. This penalty reduces 
Social Security benefits for those ages 65 to 69 by $1 for every $3 
earned above $11,280--a 33-percent marginal tax rate. In fact, because 
of President Clinton's 85 percent tax on so called wealthy senior's 
benefits, many workers age 65 to 69 face a marginal tax rate as high as 
88.8 percent.
  Without question, these high marginal tax rates affect the behavior 
of senior workers. About 1.9 million retired workers in this country 
age 65 to 69 who are eligible for Social Security benefits earn income. 
An inordinate number of them earn up to or near the earnings limit and 
then quit working. It is obvious that these workers earn all they can 
without being subject to the retirement earnings penalty.
  Mr. Chairman, I know first hand of such behavior and the importance 
of this legislation. A constituent of mine, Bess Marsala from Rockford, 
IL, called me regularly last year to find out the status of 
Representative Denny Hastert's legislation in the 103d Congress that 
would have raised the earnings limit. She candidly told my staff that 
she had job opportunities that would have put her earnings over the 
current $11,280 limit, but had to decline due to the draconian and 
punitive taxes she would incur.
  Mr. Chairman, the retirement earnings limit has been part of Social 
Security since its inception. The original reason given for it was that 
Social Security should replace lost earnings. Benefits, it was 
believed, should not go to people who continued to work. This policy 
was consistent with the Depression era view that Social Security should 
encourage older workers to leave the work force, making more jobs 
available for the young.
  Times have changed. The United States now faces a shortage of 
workers, not a glut. The continuing labor force participation of older 
Americans who possess valuable skills acquired over 30 or 40 years is 
increasingly important to the health of the U.S. economy. The result of 
the current earnings limit is that a vast store of human capital, rich 
in talent and ability, is wasted.
  Raising the earnings limit for retired workers makes good economic 
sense. The substantial reduction in marginal tax rates on wages will 
lead to an increase in labor effort that yields additional income and 
payroll tax revenues to offset the increase in Social Security benefit 
payments.
  Mr. Chairman, I am excited that today I will be able to tell Bess 
Marsala that the House of Representatives has taken the first step 
toward giving seniors such as herself the freedom to work.
  Mr. GILLMOR. Mr. Chairman, I rise today in support of H.R. 1327, the 
Tax Fairness and Deficit Reduction Act of 1995. It is with a great 
sense of personal satisfaction that I see this bill come to the House 
floor for debate as part of it, the ability for individuals to create 
American Dream Savings Accounts, is very similar to a bill I have been 
introducing since my first term in Congress. That bill, the Education 
Savings Account, H.R. 769, contains many of the provisions which are 
included in the legislation we are now debating.
  My legislation would allow families to contribute $1,500 annually, 
tax-free, to education savings accounts for each child under age 19. 
This provides an incentive for families to begin saving while their 
children are young. For families who have children closer to college 
age, this bill has the unique feature of allowing an immediate transfer 
of funds from an Individual Retirement Account [IRA] to the ESA so that 
those savings can be used for higher education. Money in the ESA not 
spent on education can be transferred penalty-free back to the IRA.
  Enactment of the tax bill we are now considering will allow families 
to take the initiative and begin saving for their children's education. 
We all realize how important higher education is to succeeding in 
today's work force and the cost of college is continually escalating.
  Consider the fact that the family share of college expenses has 
increased to more than 50 percent with parents contributing over one-
fourth of the total spending on higher education and student 
contributing about one-fifth. This holds for both private and public 
schools, although the contribution is generally greater for those 
families whose children attend private institutions.
  In fact, if present trends continue, the cost of a college education 
for my own son who will enter college in the year 2010 could be as much 
as $107,000 for 4-year public schools, $168,000 for 4-year private 
schools and $29,000 for 2-year community colleges. That is why it is 
imperative for us to enact legislation such as H.R. 1327 to help 
families prepare for these exorbitant costs.
  The Fifth District of Ohio, which I represent, is small town Ohio at 
its best and in many respects represents the same viewpoints of small 
communities throughout our country. From traveling through my district, 
one of the most common complaints I hear is that government spends too 
much and taxes too much. ``Cut government spending and cut it now'' is 
a frequent refrain. I am delighted that the 104th Congress is about to 
vote on actually implementing some of these reductions. For example, as 
a result of this legislation your average tax reduction per filer in 
Ohio will save $1,439.
  Let me briefly examine some of the more important provisions which 
will have such great impact on small town Ohio. There is a section 
which would increase the Federal estate and gift tax
 exemption from $600,000 to $750,000. This increase is important for 
small business owners and farmers who wish to pass on their businesses 
to their children.

  There is also a changed requirement with respect to capital gains, 
the alternative minimum tax, and accelerated depreciation. All of these 
provisions will strengthen our Nation's economy and make for an 
improved business climate.
  Another reason for supporting this bill is that it goes a long way in 
restoring faith and confidence in our seniors while giving back to them 
some of the financial security that was stripped away by the 
administration's budget 2 years ago. This bill takes three important 
steps for seniors.
  First, it raises the earnings limit for seniors who want to work and 
remain productive citizens. Government should not prevent people from 
working, keeping them against their will in a nonactive, nonproductive 
retirement. There are thousands of seniors who would love to contribute 
to our society and we should allow them the ability to do so.
  Second, the tax reductions bill repeals the tax hike on Social 
Security benefits imposed by the Clinton administration's budget in 
1993. The tax should be eliminated for a couple of reasons. To increase 
taxes on seniors who are in retirement on fixed incomes is to target 
one of our most vulnerable populations. It would be wrong to increase 
taxes on working seniors, seniors wanting to remain in the work force.
  The final reason I am for this tax reductions bill involves long-term 
care insurance. For many seniors, long-term care becomes a necessity. 
We should provide incentives for people to purchase long-term care 
insurance before they need it. This bill provides tax deductibility 
towards the purchase of long-term care insurance so that when people 
are in the unfortunate situation of needing long-term care, it will be 
there.
  I think the issue of Federal pensions needs to be examined. I believe 
the review of them has not been adequately completed, and the 
provisions regarding them should not be included in this bill. However, 
we must evaluate the bill as a whole, and on balance it is a good bill. 
The pension issue needs to be reviewed before this bill clears 
Congress.
  Mr. Chairman, today is not the final act in implementation of the 
Contract With America. Many of the initiatives must be debated by the 
Senate. But it is absolutely critical that the Members of the House of 
Representatives endorse this package with the strongest possible vote 
and begin delivering real and meaningful tax reform to Americans.
  Mr. SERRANO. Mr. Chairman, I rise in strong opposition to H.R. 1215 
and urge my colleagues to reject it.
  With our overall economy doing well, and with the American people 
demanding attention 
[[Page H4259]] to the Federal deficit, this is not the time to cut 
taxes.
  But even if this were the time, I believe any tax cuts should be 
directed to helping working families improve their lives and enhance 
their ability to participate fully in our economy. Instead of this 
bill, we should be looking at further expanding the earned income tax 
credit, providing other refundable credits, or providing credits or 
deductions for the costs of education and training, as the Democratic 
leader's substitute would do.
  Instead, we have a bill that directs more than half of its benefits 
to households with incomes above $100,000 and over 66 percent of its 
benefits to households above $75,000.
  And how do we pay for all this generosity? Well, by cutting 
appropriations for programs such as those on the Budget Committee's 
list of illustrative cuts--LIHEAP, job training, workplace safety, 
education, housing, biomedical research at NIH, to name only a few--
none of which should be used to offset anything on the pay-as-you-go 
side of the budget. And by slamming Federal employees through their 
pension system. And by raiding the Medicare trust fund. Any by relying 
on the wrong-headed savings from welfare so-called reform, which will 
in fact either increase State costs--and State taxes--or increase 
misery among our most vulnerable populations.
  I will concede that H.R. 1215 has a couple of good points, such as 
the accelerated death benefits provisions, which I cosponsored, and the 
tax credits for expenses of adoption and of caring for an elderly 
relative at home. Of course, the credits would be much better if they 
were refundable, as they were in the contract, to encourage people of 
limited means to build and strengthen families.
  But overall, the bad points in this bill far, far outweigh the good. 
Where to begin?
  If I begin at the beginning, I must protest the provisions that 
violate the spirit of the Budget Act by removing the barrier between 
the discretionary and the pay-go sides of the budget, allowing 
appropriations cuts to offset tax cuts. The portion of the budget that 
is subject to appropriation has already been the major contributor to 
deficit reduction, but has not--until now--been available to pay for 
tax cuts. This is very bad policy.
  Then there's the extraneous stuff, particularly the provisions 
relating to Federal pensions that couldn't win a majority vote in the 
committee that actually has jurisdiction over them. But here they are, 
in H.R. 1215. The authors of the Contract With America want to violate 
the Federal Government's contract with its employees. Two million 
Federal employees face tax increases that exceed any tax cuts they 
might hope to receive from the rest of the bill, so we can cut everyone 
else's taxes.
  The American Dream Restoration provisions would explode the deficit, 
especially in the years beyond our 5-year budget calculations.
  The family tax credit in the original contract was refundable, so all 
families with incomes up to $200,000 could benefit, even those whose 
income tax liability is small, but who still pay Social Security, 
Medicare, and State and local taxes. But in this bill the credit is not 
refundable. The parents of 34 percent of American children will not be 
able to receive the full credit because their incomes are too low. Only 
the better-off fully benefit from this credit.
  The American Dream Savings Account is written so that it brings 
revenue in in early years but loses tremendous amounts after 5-years, 
just when efforts to balance the Federal budget are at their most 
intense.
  The overwhelming winners under the capital gains tax rate reduction 
for individuals are the households with incomes over $100,000, which 
would receive 76.3 percent of the benefits.
  The business tax changes are also backloaded, with major revenue 
losses coming in the years after 2000. And even as the big changes in 
depreciation make an alternate minimum tax more necessary, to assure 
that profitable businesses pay at least some income taxes, the bill 
phases the minimum tax cut.
  The taxpayer debt buydown is another deeply troubling concept. We are 
already facing extremely hard choices as we attack the federal deficit, 
but the ``glideslope'' could become impossibly steep if taxpayers can 
divert up to 10 percent of income tax revenues from legitimate 
Government spending to a debt reduction fund.
  Mr. Chairman, this is an untimely, bad, misguided bill. I urge all my 
colleagues to vote to reject it.
  Mr. ABERCROMBIE. Mr. Chairman, I submitted to the Rules Committee an 
amendment to H.R. 1215, the Tax Fairness and Deficit Reduction Act of 
1995, regarding the one-time exclusion of gain from sale principal 
residence by individual who has attained age 55. However, under this 
closed rule I will not have the opportunity to offer an amendment which 
deserves consideration by the House.
  Currently, under 26 U.S.C.S. section 121, an individual has the 
option to elect not to include gain from the sale or exchange of 
property if they meet certain criteria: First, the taxpayer has 
attained the age of 55 before the date of such sale or exchange, and 
second, during the 5-year period ending on the date of the sale or 
exchange, such property has been owned and used by the taxpayer as his 
principal residence for periods aggregating 3 years or more.
  Furthermore, the limitations for the application of this option are 
subject to: First, dollar limitation. The amount of the gain excluded 
from gross income shall not exceed $125,000--$62,500 in the case of a 
separate return by a married individual, and second; application. An 
individual can only elect to utilize this option once.
  Mr. Chairman, section 121 was added to the code in 1964. Initially, 
an individual had the option to exclude a gain of $20,000 from the sale 
or exchange of property. The attainment age was 65 and during an 8-year 
period ending on the date of the sale or exchange, such property had to 
have been owned and used as a principal residence for 5 years.
  Since that time section 121 has been amended to its present form. 
yet, the last time the option to exclude from gross income was 
increased was in 1981 from $100,000/$50,000 to $125,000/$62,500. My 
amendment would increase the exclusion on sale of principal residence 
to $250,000/$125,000. Also, I have included language so that the 
property would has to be owned and used by an individual as a principal 
residence for 6 out of the 10 years on the date of sale or exchange.
  Mr. Chairman, my amendment is not for speculators. The purpose of the 
amendment is to provide a real option for individuals who have seen 
property values increase dramatically since 1981, particularly in the 
State of Hawaii and other high cost housing areas. In 1980-81, the 
average cost for single-family housing in Hawaii was $169,000, In 1994, 
the average cost for single-family housing had risen to $430,000. 
Nowadays, most of my constituents do not even have the opportunity to 
purchase a house. They have been priced out of the market. By the same 
token, seniors who in may cased have lived in the same house for their 
entire lives do not have the option of selling their property because 
it would be fiscally imprudent.
  Mr. Chairman, it is unfortunate that as the House moves to consider 
legislation to establish tax fairness I am unable to offer an amendment 
that would move towards this goal.
  Mr. BENTSEN. Mr. Chairman, I rise in opposition to H.R. 1215. While 
reducing taxes at any bracket is appealing, I believe this legislation 
is contrary to our national priorities at this time.
  There are many provisions in the Tax Code which I believe need to be 
changed in order to help middle-income families regain lost purchasing 
power, encourage business investment and expand personal saving. 
However, as drafted this measure fails to fully achieve these goals. 
More importantly, by choosing this path, the House is telling the world 
that we are not serious about deficit reduction. I cannot support that 
position.
  House bill 1215 does not provide sufficient middle income tax relief. 
The bulk of relief goes to those earning more than $50,000 per year and 
is greatly skewed up the income scale. The $500 child tax credit is 
structured so that wage earners who pay most of their taxes through 
payroll deductions will receive little of its benefit. Anyone earning 
$50,000 or less will receive little under this bill. The bill provides 
greater flexibility for deductions for individual for individual 
retirement accounts and earnings limitation for Social Security 
beneficiaries, but is deficient on true middle-income relief while 
potentially increasing the burden on middle-income families by not 
reducing the national debt.
  H.R. 1215 also provides significant relief to corporate tax payers 
through the elimination of the corporate minimum income tax and neutral 
cost recovery. Additionally, the capital gains tax rate is cut and 
indexed for inflation. I believe that cutting the gains rate may spur 
investment, but I do not believe significant capital is sitting on the 
sidelines because of the current 28 percent rate. I support indexation 
of capital gains just as the code provides for income taxes. Taxpayers 
should not have to pay for the costs of inflation. Yet, I cannot 
support this combination of corporate tax breaks when the economy is 
growing and the Government is broke.
  I am greatly concerned about the cost of this bill--estimated to be 
$700 billion over 10 years. This will double the amount of spending 
cuts that Congress must achieve to balance the budget. Democrats and 
Republicans know that
 balancing the budget without this tax cut will be painful. Why 
increase the pain for limited benefit? Why not address the deficit 
first?

  Where will the cuts come from to pay for this bill? The majority has 
told us that discretionary spending will be cut in the out years, but 
that will require future Congresses to 
[[Page H4260]] abide by this agreement, in addition to balancing the 
budget. We now know that under this bill, all Federal employees will 
have their contributions to retirement increased by 2.5 percent 
annually while benefits will be reduced at retirement. The net effect 
is a 2.5 percent tax increase or pay cut for Federal Employees in order 
to redistribute income through the Tax Code. This proposal will cost 
$750 for the NASA employee who lives in my district making $30,000 per 
year. What the American people don't know is that this item was 
rejected by a bipartisan vote in the Government Oversight Committee but 
the Republican leadership slipped it into this bill. That breaks the 
bond between employer and employee and is unfair.
  We know that the bill counts on $70 billion in savings from the 
welfare system, but as we learned from the debate 2 weeks ago, those 
savings will come at the expense of the States since the welfare reform 
bill merely cuts spending and transfers responsibility. This so-called 
reform, with no work requirement, will cost my Sate of Texas $1 billion 
per year.
  So what the proponents are doing is shifting the costs of welfare to 
the States and cutting the pay of Federal employees to pay for part of 
the tax cut. The rest will come from the good will of a future 
Congress.
  Let me say, I give the committee credit for including congressional 
pension reform which I have long supported. Congressional pensions 
should be in line with other Federal employees. But we should not have 
to cut Federal employees pay to reform our own pensions. Let's bring 
that bill up for a vote now, don't hide it in a tax bill.
  Passage of this bill will be another missed opportunity to cut 
spending and balance the budget. This bill spends the cuts Congress 
already made, but we have learned that to be the case on every spending 
cut bill considered this year. With the economy growing at a 
substantial rate, but deficits still running at $200 billion annually, 
wouldn't it be prudent to pare down the debt first? We should have real 
tax relief for the middle class, including expansion of IRA's and 
indexing of capital gains, but we need debt relief first. We should 
focus our efforts on the middle class, those earning between $25,000 
and $75,000 who have seen their purchasing power decline. Debt 
reduction will help. This bill fails to achieve that goal. When a 
company is drowning in debt, it cuts that debt, we should do the same. 
Let's put this measure aside and begin the hard task of balancing the 
budget.
  Mr. CLAY. Mr. Chairman, I rise in opposition to this so-called Tax 
Relief Act and the punitive measures it would levy against Federal 
workers.
  The Committee on Government Reform and Oversight--which has 
jurisdiction over Federal personnel issues--has not held a single 
hearing on the Federal pension legislation before us today. Not long 
ago Congress spent almost 2 years creating the Federal Employee 
Retirement System--which is modeled after private sector pensions 
plans. It is irresponsible for this Congress to circumvent the 
legislative process in order to sabotage the careful, deliberative 
program which was painstakingly produced.
  The problem with reducing the Federal workers pensions benefits has 
been well stated by the conservative think tank, the Hudson Institute, 
in its report, ``Civil Service 2000.''

       If federal pay, benefits and working conditions are 
     perceived to be inferior to those available from private 
     employers, Federal employers may be faced with higher levels 
     of turnover at senior levels, and the challenge of recruiting 
     and keeping senior professional and technical people will 
     grow.

  Mr. Chairman, despite what the proponents of this legislation 
pretend, there is no financial crisis in the Federal Employees 
Retirement System of the Civil Service Retirement System. Both the 
Congressional Research Service and the General Accounting Office have 
confirmed the financial solvency of the Federal retirement program. 
There is no reason for this body to deny reality.
  The pension payment increases contained in the Tax Fairness and 
Reduction Act will effectively increase taxes for most Federal workers 
by approximately 10 percent. It is dishonest to attempt to offset a tax 
reduction for the wealthiest households in our Nation by gutting the 
pension benefits of our Nation's public servants.
  Mr. Chairman, I urge my colleagues to reject this legislation.
  Mr. ROEMER. Mr. Chairman, I rise in strong opposition to H.R. 1215, 
the Contract With America Tax Relief Act of 1995. At a time when 16 
percent of all Federal spending is used to pay interest on the national 
debt, it is clear that it is the wrong time to reduce taxes, 
particularly in the manner recommended in this bill. We cannot afford 
to spend $630 billion over the next 10 years on this proposal.
  I doubt there is a Member in this Chamber who opposes easing the tax 
burden on working Americans. In an ideal fiscal situation, I would 
advocate tax simplification and reduction. I am a supporter of capital 
gains tax reductions, for example. I hear often and loudly from my 
constituents about the complexity of the Internal Revenue Code, which 
many view as overly confusing and punitive. There is no question that 
improvements can and must be made. I will support budget-neutral tax 
reduction plans that stimulate the economy.
  However, our national debt today stands at $4,873,480,746,464.74, and 
our budget deficit is estimated to be more than $165 billion this 
fiscal year alone. As these numbers indicate, our country is in a 
fiscal crisis. It is nothing short of irresponsible to be considering 
tax cuts that will add at least $630 billion to the deficit over the 
next 10 years. We should be looking to cut spending first, not cut 
taxes.
  There are some provisions of H.R. 1215 that I support. I have long 
favored a targeted capital gains tax cut. The bill includes a 50 
percent capital gains reduction for individuals, as well as allows for 
capital gains indexing tied to inflation. These capital gains changes 
would greatly assist family farmers and small business owners, and are 
proposals that I endorse. But is imperative that we pay for these 
proposals with cuts in Government spending.
  I also support the Super Individual Retirement Account [IRA] 
initiative that is contained in H.R. 1215. Under the Super IRA 
proposal, withdrawals from IRA's would be penalty-free if used for the 
purchase of a first-time home, or for education and medical expenses. 
Once an individual reaches age 59\1/2\, withdrawals would not only be 
penalty-free but interest would not be subject to taxation. With the 
net personal savings rate in the U.S. at an all-time low of 3.5 percent 
of gross domestic product, these changes are long overdue.
  However, H.R. 1215 contains many egregious and unfair tax changes. 
The bill repeals the Alternative Minimum Tax [AMT] for corporations. 
The AMT was established in 1986 when it was discovered that some of the 
country's largest and most profitable corporations paid no federal 
taxes or, because they took advantage of countless deductions and tax 
credits, actually received a tax rebate. Not only does this bill repeal 
the AMT, which insures that profitable corporations pay a fair share in 
taxes, but it also permits companies to use their prior AMT payments as 
credits against future taxes. At a time when even the most effective 
Federal programs are subject to significant cuts, it is simply 
unconscionable that many corporations will be able to eliminate some or 
all of their Federal income tax liability.
  This bill will cost middle-income American taxpayers $188 billion in 
the next five years alone. Yet, middle class Americans will see very 
little benefit. Those making $30,000 or less will see a tax cut of $124 
per year while those making $200,000 can expect to save $11,000 per 
year under this bill. While I am not promoting class warfare here, I am 
encouraging tax fairness.
  This legislation makes promises which will explode the deficit after 
the first five years. The offsets contained in the bill are not from 
Federal entitlement or revenue programs, but rather are derived from 
domestic discretionary programs. Because these programs are already 
capped, subject to annual review, and do not grow at the same rate as 
tax revenue losses or entitlement programs, they will not pay for the 
tax cuts over time. Simply put, this bill will add to our already 
overwhelming deficit.
  With respect to fairness, or lack of it, school lunches for children 
and college loans for middle-income students are cut to pay for tax 
breaks or tax exemptions for large companies. We should not nickel and 
dime to death child nutrition and college loan programs in order to 
relieve fair tax obligations for some profitable businesses. 
Additionally, small subsidies for senior citizens to heat their homes 
during frigid winters is completely eliminated to fund these tax breaks 
and loopholes. The best tax cut for all Americans is to reduce the 
deficit.
  For the sake of future generations, we need to focus on deficit 
reduction. Only when progress has been made on this goal should we look 
to reduce taxes. Once we are successful in balancing the Federal 
budget, then we should focus on tax cuts. I hope we can start in a 
bipartisan way to craft substantive changes in the Federal tax code to 
encourage long-term savings and investment critical to the 
competitiveness of our national and local economies as soon as we 
return from the Easter work period. We need to practice common sense 
when we revise the tax code.
  Mrs. COLLINS of Illinois. Mr. Chairman, the bill we are considering 
today may be called the Tax Fairness and Deficit Reduction Act; but 
there is nothing fair about this tax bill.
  For 2 million middle class Americans, this bill is a tax increase 
bill, not a tax cut bill. The bill also cuts benefits for future 
Federal retirees by 4 percent.
  In this one bill, my Republican colleagues have succeeded in breaking 
two important promises they made to the American people: not to raise 
taxes; and not to tamper with pensions for the elderly.
  [[Page H4261]] Under this bill, the 2 million people working for the 
Federal Government will be taxed a total of 9.5 percent of their income 
to pay for their retirement benefits. Contributions for those employees 
participating in the Civil Service Retirement System will increase by 
36 percent. Contributions for employees covered by the Federal 
Employees Retirement System will increase by 313 percent.
  If the Congress passes this bill, the average Federal employee will 
pay an additional $4,525 over 5 years, or an average of $905 more each 
year, in order to participate in the retirement program.
  No one, let me repeat, no one should take any comfort in the fact 
that only Federal employees will be hit with this new tax. The Federal 
retirement program is funded through payroll withholding, just like 
Social Security.
  If the Republican leadership thinks it is all right for Federal 
employees to pay 9.5 percent of their salary for retirement, may they 
soon not conclude that workers covered by Social Security should pay 
9.5 percent of income for their benefits too?
  In fact, what we may be seeing here is the Republican answer to the 
crisis facing our entitlement programs. If you think it costs too much 
for the Federal Government to make good on its commitments to the 
elderly, the sick, children and survivors, just raise the tax workers 
pay for these benefits--only, this is very important, do not call it a 
tax.
  Even though this bill will take 9.5 percent of an employee's salary 
out of his or her check, in the same way income taxes are deducted, 
proponents claim it is not a tax.
  I disagree. All the complicated arguments in the world cannot change 
the basic fact that 2 million Americans will have about $900 less to 
spend each year, as a result of this bill. Under House Rules, it should 
take a vote of three/fifths of the Members to pass it; but, that is not 
what the Rules Committee provided.
  It is ironic. When I appeared on a bi-partisan panel before the Rules 
Committee, which was telecast by C-SPAN, none of the Members of that 
Committee had any trouble understanding that this was a new tax on 
employees and that it should not be in this bill. In fact, the Rules 
Committee chairman said:

       But, I have to agree with you that this is a case where we 
     are raising taxes on some to pay for tax cuts for others and 
     that to me is wrong. I don't believe we ought to be doing 
     this in this bill.

  Similarly, Members on both sides of the aisle of the Committee on 
Government Reform and Oversight emphatically rejected any attempt to 
raise taxes on Federal employees to pay for tax cuts. Let me repeat, 
the Committee of jurisdiction refused to approve the tax increase for 
Federal employees this bill contains.
  You have to wonder, then, why are we now faced with this proposal as 
part of the tax bill?
  Some in the majority suggest this tax increase is needed, because 
they claim the retirement fund is financially unstable and will soon 
become a huge burden on taxpayers.
  This simply is not true. The Congressional Research Service of the 
Library of Congress recently issued a memorandum that makes it very 
clear, the Federal retirement system is solvent, and the issue of 
future liabilities has been adequately addressed in previous pension 
legislation.
  Proponents of these changes also allege that it would restore greater 
balance to the Federal retirement system. However, Federal employees 
already contribute 28 percent of the total amount spent each year on 
retirement benefits. On the other hand, GAO says that 95 percent of all 
private sector retirement plans involve no, I repeat, no employee 
contribution.
  Clearly, Federal workers already assume far greater financial 
responsibility for their retirement program than do many workers in the 
private sector. If this is the case, what is the justification for 
raising the retirement tax Federal employees must pay and for cutting 
their benefits?
  The simple answer is that the majority needs $11 billion to help pay 
for their tax cut for those wealthy Americans fortunate enough to have 
investment earnings. There is no other answer.
  Apparently, Republicans do not mind taking hard-earned dollars from 
middle-class Americans to pay for tax cuts they give their rich 
friends. But, I do, and I believe most Americans do as well.
  There is nothing fair about this approach to tax reduction.
  In an effort to disguise what this bill does, Chairman Clinger has 
made the claim that the increased retirement contributions of Federal 
employees will offset tax cuts, will strengthen the federal retirement 
system, and will reduce the deficit--all at the same time.
  This explanation defies basic common sense. Obviously, the same 
dollars cannot be used for three simultaneous purposes that directly 
conflict. Instead, this is what really happens in simple English: the 
increased revenues generated by the tax on Federal employees offset the 
reduced revenues from the tax cut. The deficit is not reduced, nor is 
the retirement system healthier.
  The accounting trick is that although the revenues go directly into 
the Federal retirement trust fund under the law, what really goes into 
the trust fund are non-negotiable government securites--in effect, a 
government IOU to itself.
  This allows the revenues to be scored under the Budget Act at 
increased receipts that are available for other purposes. The increased 
receipts would reduce the deficit under Budget Act accounting. However, 
the tax cuts in the bill offset this reduction, resulting in no 
reduction of the deficit.
  Mr. Chairman, Congress dealt with reforms needed in the Federal 
retirement system in 1986. At that time, we asked Federal employees to 
make a final and irrevocable choice as to the retirement plan in which 
they would participate.
  Having made that choice, Federal employees have the right to expect 
that the Government they have served would not change the rules in the 
middle of the game.
  Mr. Chairman, our contract with Federal employees is every bit as 
binding as the Contract With America. Federal employees have fulfilled 
their obligations; it is now up to us to make sure the Government 
delivers on its commitments.
  Each of my Colleagues should remember that if this tax cut bill can 
be used to raise taxes on Federal employees, no one is safe. Social 
Security and Medicaid taxes can be raised just as easily.
  I urge my Colleagues to vote no on the tax bill.
  Mr. PORTER. Mr. Chairman, I have never supported a tax increase, and 
I supported the Reagan tax cuts which came with the promise of spending 
cuts to follow which never materialized.
  No one should believe that the Castle-Upton package is more than a 
fig leaf that allows Congress to rationalize cutting taxes before 
balancing the budget. We have seen deficit reduction packages before. 
Gramm Rudman promised a balanced budget by 1991, and yet it is 1995 and 
we have an ongoing $200 billion deficit.
  No, Mr. Chairman, we have to get the priorities straight. As much as 
I would like to support a tax cut now, I refuse to require our children 
and grandchildren to pay for it by adding its $189 billion cost to the 
deficit.
  Some argue that the tax cuts will stimulate the economy and pay for 
themselves. We've been down that road before, too, Mr. Chairman. 
Dynamic scoring may make us feel good about doing what we want to do, 
but is not a conservative approach. In working to reduce deficits, we 
should never assume things that may not come true. We should be 
cautious in our predictions. We should be conservative.
  Mr. Speaker, I supported the rule because in signing the Contract 
With America I promised to bring this bill and all the others before 
the House for a vote during the first 100 days of this Congress. But 
the contract did not require us to support the legislation, nor would I 
have signed it if it did.
  There is no ground swell for tax cuts across America. To the 
contrary, the American people are urging us not to cut taxes, but to 
cut the deficit. American business, a major beneficiary of the tax 
cuts, is also more anxious that we address deficit reduction.
  Mr. Chairman, under previous Congresses and administrations there 
were always higher priorities than getting our fiscal house in order. 
One could argue that they were justified. But now with the end of the 
cold war, our huge deficits continue unabated and we have yet another 
higher priority than balancing the budget.
  Well, I for one do not, Mr. Chairman. A young person entering the 
American work force today is being handed a bill for his or her share 
of the interest on the debt accumulated to date of $250,000 that will 
have to be paid throughout his or her working lifetime, money that will 
not be available to buy a home or educate their children or to start a 
business. For a college graduate the bill is $500,000 to $700,000 or 
more. This is unconscionable, Mr. Chairman. This is fiscal child abuse 
and must not be allowed to continue. Not even to cut taxes.
  As much as I, as a Republican, want to vote for this tax cut package, 
I cannot do so. I would breach faith with my own children and 
grandchild. There is a higher priority--their future. For my, for this 
Republican, my vote must be no.
  Mr. BARTLETT of Maryland. Mr. Chairman, I rise today in strong 
support of H.R. 1215, the Tax Fairness and Deficit Reduction Act of 
1995. By passing this important legislation today, Republicans will 
fulfill the promises made in the Contract With America. H.R. 1215 
offers something for everyone; tax relief for America's hard-working 
families, relief for senior citizens, and job-creating incentives for 
[[Page H4262]] businesses. For Maryland residents, these tax cuts mean 
an average reduction of $1,718 per filer. It is time for the Federal 
Government to stop stealing money out of the taxpayer's hands and let 
them keep it.
  The Federal Government consumes a huge portion of the family budget. 
In 1948, the average American family paid only 3 percent of its income 
to the Federal Government. Today, the same family pays 24.5 percent of 
their income to Uncle Sam. It is no wonder that a majority of families 
have both parents working harder and longer hours, but are constantly 
struggling to make ends meet.
  The Republican tax bill offers true tax relief for working middle-
class families. Unlike the phony so-called commitment of a middle-class 
tax cut made by President Clinton and Vice President Gore in 1992, the 
Republicans are delivering on their promises. Also, let us not forget 
that President Clinton crammed the largest tax increase in American 
history down the throats of hard-working American taxpayers.
  America's families deserve tax relief. H.R. 1215 allows families to 
keep their money by providing a $500-per-child tax credit for families 
with incomes below $200,000. So a family with two children under the 
age of 18 will reduce their taxes by $1,000. Seventy-four percent of 
this tax credit will go to families with incomes below $75,000 and it 
will eliminate the Federal income tax liability for 4.7 million 
families. For those couples who are caring for an elderly parent or 
grandparent at home, the legislation gives them a $500 tax credit. 
Nonworking spouses will be able to make a $2,000 tax deductible 
contribution to an IRA. These tax cuts truly reflect a pro-family 
agenda.
  This bill also allows senior citizens to keep more of their Social 
Security benefits and not be penalized for working. We all remember 
President Clinton's 1993 tax increase on Social Security for seniors 
with incomes above $34,000 if single or $44,000 for married couples. 
Not one Republican in either the House or the Senate voted for this 
increase. Let me repeat: President Clinton raised Social Security 
taxes. In Maryland alone, Clinton's increase affected nearly 110,671 
senior citizens.
  Republicans, not the tax-and-spend Democrats, are repealing this 
unfair and discriminatory tax increase. No one, especially senior 
citizens, should be discouraged from working. Unfortunately, it was 
President Clinton, who in 1993 singled out and penalized one group, 
senior citizens, for attempting to remain financially independent.
  The best way to spur economic growth and job creation is to get the 
Government off of the backs of business. The tax cuts in this 
legislation will increase economic growth, which creates more economic 
opportunity for every American. Our current tax code is oppressive by 
penalizing successful business owners, thereby eliminating any 
incentive to remain in business or even start one.
  Mr. Chairman, I believe that there is a fundamental difference 
between Republicans and Democrats when it comes to investment and job 
creation. Republicans want all Americans to prosper by promoting jobs 
in the private sector, not in Government bureaucracy. Democrats view 
government spending as an investment, while Republicans want the 
taxpayers to keep their money and make their own investments.
  H.R. 1215 will create unlimited economic opportunities by allowing 
small business to deduct the first $35,000 they invest in equipment and 
expanding the home office deduction. In order to protect the future 
economic stability of our country, we must reduce the tax burden on 
workers and businesses.
  Out of these provisions, I believe the reduction in capital gains is 
the most important because it provides access to capital. In order to 
create jobs, people need access to capital, such as tools, equipment, 
and computers to increase their productivity. Capital is not magically 
created; business can only secure it if people save and invest. As a 
member of the Small Business Committee, I have listened to business 
owners from around the country comment on the high cost of capital and 
how that hinders new and existing businesses.
  The current capital gains tax forces investors to hold on to their 
assets, thus forcing the investor not to sell the investment and 
reinvest the proceeds in a higher paying alternative if the capital 
gains taxes he would owe exceeds the expected higher return. By 
lowering the tax, we will free up capital for small business and 
entrepreneurs. This will essentially unleash the free enterprise system 
so it will create more jobs and improve the pay of existing jobs.
  As promised in the Contract With America, House Republicans are 
reducing the burden of Government to empower families, create jobs, and 
enhance our children's future, while paying for it and at the same 
time, reducing the Federal deficit.
  Mr. FRELINGHUYSEN. Mr. Chairman, I rise today in support of H.R. 
1327, the Tax Fairness and Deficit Reduction Act of 1995. While I had 
my reservations about whether we could afford a tax cut this year, I am 
extremely satisfied with this new plan.
  Since the beginning of the year, I have received over 7,000 letters 
and calls from constituents who almost universally sent the same 
message: cut spending, balance the budget, and provide tax relief. I 
made it my first priority and responsibility in Congress to work in 
that direction.
  The key to my support is the added provision clearly stating that tax 
cuts can only become law as part of legislation that lays out our 
course for a balanced budget by the year 2002. Furthermore, the 
legislation strengthens enforcement, through limiting discretionary 
spending, of our promise to bring the deficit to zero in 7 years. This, 
Mr. Speaker, this bill strongly clarifies and holds us accountable to 
our commitment to balancing the Nation's budget, as well as providing 
tax relief to hard-working American families.
  And, let's keep these tax cuts in perspective. At current rates, 
taxpayers will contribute to our Government coffers over the next 7 
years more than $7.5 trillion. A $188 billion tax relief package is 
comparatively small and manageable over 5 years. Yet as the bill is now 
written, this will be immense relief for millions of American families.
  For the State of New Jersey, nearly $8 billion will be pumped back 
into the economy--that's $1,803 over 5 years into the hands of working 
New Jerseyans.
  I am also comforted by knowing that the legislation helps those who 
need it most: families, individuals, our elderly, and small businesses. 
For families, a $500-per-child tax credit relieves the burden of year-
end tax liabilities. New nondeductible contributions of up to $2,000 
for single filers annually and $4,000 for married couples annually will 
encourage greater savings.
  For the elderly, it repeals the unfair tax hike passed in 1993 on 
Social Security benefits, and raises the earnings limit from $11,280 to 
$30,000 by the year 2000. The bill makes long-term care insurance more 
affordable and more widely available, and it clarifies and improves 
current law for terminally ill individuals who would not be able to use 
tax-free distributions for their life insurance policies to pay medical 
bills and living expenses.
  It establishes a credit for married couples who file joint tax 
returns to alleviate the marriage tax penalty, and provides a $500 tax 
credit for families caring for a dependent elderly parent or 
grandparent.
  Finally, individuals and small businesses will benefit and economic 
growth will be spurred from a 50-percent capital gains deduction for 
individuals, abolishing the 28-percent maximum rate on capital gains, 
indexing capital gains to adjust for inflation, allowing small 
businesses to deduct the first 35,000 dollars' worth of investment each 
year, and clarifies the home office deduction.
  Mr. Chairman, this proposal is about fairness. This is an opportunity 
to help working Americans who feel that their best efforts to provide 
for their families are thwarted by an oppressive tax system and an 
uncontrolled Federal debt that threatens our children's futures.
  Our goal is clear--we must bring spending under control and allow all 
Americans to control more of their hard-earned money. H.R. 1327 is an 
equitable and intelligent approach, and I urge my colleagues to pass 
this bill.
  Mr. CUNNINGHAM. Mr. Chairman, I rise today in strong support of the 
Tax Fairness and Deficit Reduction Act.
  This landmark legislation increases the take-home pay of American 
families with a $500-per-child tax credit. It removes the barriers that 
discourage seniors from work, and repeals the unfair Clinton taxes on 
seniors' Social Security. It grows the economy by reducing the job-
killing tax on capital gains. And it reduces Federal government 
spending, reduces the size of the Federal government and actually 
lowers the Federal deficit by $90 billion .
  For these reasons, this important legislation has been called the 
``crown jewel'' of our Contract With America.
  Contrast this tax cut legislation with the Clinton tax increase of 
1993. Bill Clinton campaigned on a promise to cut taxes. Instead, he 
rammed through a Democrat-controlled Congress the largest tax increase 
in American history. The Clinton plan added $1 trillion to the huge 
Federal debt. It was enacted into law without a single Republican vote. 
The President failed to keep his promise. The American people replied 
last November by electing a new Republican Congress.
  Our Contract With America included tax relief for American families. 
We're keeping our promise.
  We're keeping our promise to allow American families to keep more of 
their pay. We're keeping our promise to encourage families to save for 
retirement, home ownership, college education or long-term health care, 
through new America Dream Savings Accounts. We're 
[[Page H4263]] keeping out promise to help American's seniors, who I 
prefer to call our ``chronologically gifted'' citizens, by repealing 
the Clinton taxes on seniors, and rolling back the unfair Social 
Security Earnings Test. We're keeping our promise to create jobs, by 
adopting a cut in the capital gains tax and other provisions to spur 
investment.
  And we're keeping our promise to reduce the growth of Federal 
spending. This legislation cuts the deficit $30 billion more than 
President Clinton's budget.
  This matter of keeping promises is common sense in America, but 
radical change for Washington, D.C. I am confident this legislation 
will have bipartisan support. But for all the promise-keeping, this 
legislation would not be worthwhile unless it was in best interest of 
our children.
  For the first time in history. American families feel their children 
will grow up to have a lower, not a higher, standard of living. They 
see government taking more of their money, and controlling more of 
their lives. The know Federal spending is spiralling out of control. 
Thus, families lose hope for the real American dream, a better life for 
their kids. The Tax Fairness and Deficit Reduction Act represents real 
hope for American families. It reduces government's appetite for their 
money. It grows the economy and jobs. Most importantly, it leaves cash 
in the hands of American families that they can use in their best 
interests.
  After all, whose money is it anyway? The Federal government does not 
have one dime that hasn't been taken from an American family, today or 
tomorrow.
  I strongly urge my colleagues to support this legislation. Let's keep 
our promises. And let's trust American families to make the best 
decisions about the money they have earned.
  Mr. BROWN of California. Mr. Chairman, I rise in opposition to H.R. 
1215 for a number of reasons. One key reason is that this bill would 
dramatically reduce our investments in research and development to pay 
for a misguided tax cut. The bill reduces discretionary spending by 
$100 billion dollars over the next 5 years. We are being told that this 
bill will result in reductions of $2.3 billion in energy supply 
research, over $1.5 billion in economically important climate and 
weather research, over $2 billion in technology development programs 
within the Department of Commerce, and a whole host of other R&D and 
capital investments.
  The profound irony here is that the stated objective is to stimulate 
economic growth by creating a more favorable tax climate for business 
through reductions in capital gains taxation and increases in 
depreciation for capital investments.
  Mr. Chairman, countless economic studies have shown that between one 
fourth and one half of all economic growth is directly attributable to 
technology development of the type being eliminated in this bill.
  A recent report from the World Economic Forum in Geneva Switzerland 
is useful in putting our situation in perspective. We rank well behind 
other competitors such as Japan, Sweden, Switzerland, and even the 
Czech Republic in the total R&D investment as a percent of GNP. We rank 
an astonishing 28th in terms of the per cent of public funding going to 
civilian R&D.
  On the other hand, this same report shows that the U.S. ranks 33rd in 
all the world in terms of corporate taxes on business profits, income, 
and capital gains as a percent of GNP. Simply said, we already have one 
of the most favorable business tax environments in existence.
  There is a simple principle of physics learned by all high school 
students that one gains maximum leverage by pushing on the long end of 
the fulcrum lever, not the short end. We will gain in productivity only 
by addressing the basic problem--underinvestment in technology and 
research. A more favorable tax environment will, no doubt, make some in 
industry happy but it will not result in any productivity gains not any 
long term economic growth.
  Mr. Chairman, I am also voting against this measure because I believe 
that most of the tax cuts contained within it will simply increase our 
federal deficit at the wrong time. We can better help more Americans 
not through tax cuts at this time but by reducing the deficit, which 
will lead to a more secure financial future and lower interest rates.
  While I am opposed to this overall bill, I am supportive of one 
portion, but am disappointed that the Republican leadership has 
attached it to the tax package and thus I am not able to vote for it 
separately. This positive portion of the bill would raise the Social 
Security Earnings Limit for senior citizens.
  The bill would nearly triple the amount of outside earnings that 
seniors aged 65 to 69 earn before their Social Security payments are 
reduced. Currently, the level of income is only $11,160 annually, and 
seniors lose $1 in Social Security benefits for every $3 they earn in 
excess of $11,160. Under the bill the Social Security Earnings Limit 
would be raised to $30,000 by the year 2000.
  I have always supported relaxing the earnings threshold and repealing 
this unjust tax burden on hard--working seniors. The current limit is 
unfair and simply does not make sense. Rather than penalizing senior 
citizens for working, the Government should encourage them in their 
efforts to be financially self-sufficient. I think it is fair to say 
that, for the most part, senior citizens who are working do so because 
they need the money.
  Under current law, seniors who work to supplement their Social 
Security benefits are penalized, while no limits are placed on those 
seniors who have alternative forms of income such as private pensions 
or investments. This is simply not right. Seniors who work are paying 
taxes, putting money back into the system, and providing society with a 
valuable pool of experience. We should encourage seniors' participation 
in the work force by changing the current law that causes working 
seniors to lose what is sometimes more than 50% of their Social 
Security benefits.
  However, all news is not good news for seniors. With this bill, the 
Government would be giving to seniors with one hand and taking from 
them with the other. Medicare cuts totaling $10.5 billion help pay for 
the Republican's tax cuts, which will go primarily to the wealthy. 
These cuts are another reason why I could not support the overall bill. 
Part of the savings derived from Medicare is achieved by limiting 
Medicare payments for home care. Although this may save money in one 
area, it will cost more in the long run by discouraging seniors from 
seeking less costly care in the home and driving them into hospitals or 
emergency rooms where care is far more expensive.
  Mr. Chairman, I very much want to take action to help America's 
families and for that reason have been very tempted to support the 
proposal in this bill to provide a $500 tax credit for children. 
However, in thinking carefully about this provision, I have come to the 
conclusion that the tax credit is not the best way to help America's 
moderate and middle income families. A $500 tax credit for children 
would be very expensive and would use critical Federal revenues that 
could--and should--be used to reduce our Nation's budget deficit. From 
my studies on these matters, I am convinced that the best way and the 
most responsible way to help America's families--and all Americans at 
this time--is to reduce our budget deficit. Continued deficit reduction 
will lead to reduced interest rates, which in turn will save many 
American families well over $500 a year in reduced credit interest 
costs, refinanced home mortgages, and more affordable home purchases. 
The increased economic activity resulting from these savings to 
American consumers will lead to the creation of more jobs.
  Mr. HEINEMAN. Mr. Chairman, I rise today in strong support of 
America's senior citizens. This week, we in Congress have the 
opportunity to give the senior citizens of this Nation some much needed 
tax relief.
  As a senior citizen, I see the far-reaching implications of these tax 
relief provisions, perhaps a bit better than some of my younger 
colleagues do.
  Two years ago, this body and the President of the United States 
passed the largest tax increase in history. The greatest part of that 
burden fell on the shoulders of those in the United States who could 
least afford it: Our senior citizens.
  We must roll back the 1993 tax increase on Social Security benefits. 
It is wrong to raise taxes on our seniors who live on fixed incomes.
  The 1993 tax increase targeted supposedly wealthy senior citizens who 
made $34,000 or more.
  We must raise the limit on the amount that our seniors can earn and 
still remain eligible for Social Security benefits. It is wrong to 
target working seniors--older Americans have been the backbone of our 
Nation. They pay their fair share, and it is an outrage to ask them to 
pay anything more.
  This bill is vitally important to our Nation for many reasons. But 
any Member of this House should find it easy to vote for this bill on 
the basis of fairness to our senior citizens alone.
  The United States has a contract with the citizens who have made this 
Nation great--our senior citizens--and that contract has been breached. 
This Congress must pass this legislation and honor the Contract our 
government has with our senior citizens.
  This Congress must make things right.
  This Congress must act now.
  I urge my colleagues to support this bill and the senior citizens of 
this Nation.
  Mrs. FOWLER. Mr. Chairman, I rise in strong support of H.R. 1215, the 
Tax Fairness and Deficit Reduction Act.
  For far too long the American people have been called upon to bear 
the costs of a federal government whose spending habits have rampaged 
unchecked.
  [[Page H4264]] In 1950, the average American family paid only two 
percent of its income in taxes to the federal government. Today, that 
figure has ballooned to 24.5 percent. Under current provisions, a 
family with a median income of $52,895 pays some 50.4% of its income to 
federal, state, and local taxes.
  This is not just unconscionable. It is a short-sighted misuse of 
America's productive energies. Government has an important role to play 
in our nation in a number of areas--national security, public safety, 
public health, to name a few--but it is the private sector that has 
been the true engine for progress in our country.
  The bill before us today would give greater power over economic 
affairs to the American people and allow for the more productive use of 
American capital. When coupled with welfare reform and other 
legislation we have passed under the Contract with America, we will 
reduce federal spending by some $280 billion over the next five years, 
providing for both tax cuts and some $90.7 billion in deficit 
reduction.
  Most importantly, H.R. 1215 provides greater disposable income to 
Americans through tax credits to families, alleviation of the marriage 
tax penalty, repeal of the President's 1993 tax increase on Social 
Security recipients, a reduction in capital gains taxation, and much 
more. It is a package designed to unshackle America's true economic 
potential.
  I urge my colleagues to support this measure.
  Mr. GONZALEZ. Mr. Chairman, the Republican tax bill is the wrong 
thing to do--it gives a huge tax break to the wealthy, and little or 
nothing to Americans who need it most. It is the same old Republican 
menu, the one that makes most of us eat baloney, but guarantees filet 
mignon to the country club. The Republican bill robs poor people and 
hands the money to the rich. They claim that the rich will invest the 
money and give fine jobs to the poor, but there's not an honest 
economist in the land who believes this will happen. They claim that 
their bill won't make the deficit worse, but they refuse to make the 
tax cuts contingent on actually producing a lower deficit. The 
Republican bill is flatly irresponsible from a fiscal point of view, 
unfair in its approach and unwise in its details.
  There are more than a hundred Republicans who signed a letter urging 
that the family tax credit be modified, in recognition that families 
earning more than $95,000 a year don't need a gift from the Treasury. 
But no, this change wasn't allowed, and those common-sense Republicans 
have been told to swallow their doubts and vote with the radicals.
  There are other Republicans who see that the bill includes a change 
to Federal retirement benefits that even the chairman of the Rules 
Committee says is unfair. These are changes that the committee of 
jurisdiction could not find the votes to approve. But those Republicans 
have been told to swallow their conscience and vote with the radicals.
  There are Republicans who think that it is silly to cut taxes and run 
up the deficit. They believe that any tax cut should be contingent on 
actually cutting the deficit. But they have been told to forget about 
common sense and vote with the radicals.
  There are Republicans who think that it is wrong to cut school 
lunches in order to give wealthy families a tax break averaging $11,000 
a year, which is 100 times the benefit that families earning $30,000 or 
less will see. But these fair-minded Republicans have been told that 
fairness is class warfare, and to vote with the radicals.
  This bill is a catalog of the silly, the mean-spirited and the flat 
wrong. Fortunately, most of it will never be enacted, and the radicals 
know it. But they must demonstrate their power and mastery, and will do 
whatever they must do, break whatever promises they must, and twist 
whatever arms they must, to make their point: the radicals are running 
things, and they don't care about what is right or reasonable, what is 
workable or unworkable, or what is responsible or irresponsible. They 
merely aim to make the point that they are in control, and they will 
remain so as long as moderate and fair-minded Republicans are willing 
to swallow their pride and common sense, chloroform their consciences, 
and vote for this abomination. This bill is a disgrace and ought to be 
defeated. But that will only happen if common sense prevails, and they 
radicals are told that sometimes party loyalty demands too much.
  Mr. PALLONE. Mr. Chairman, I rise to express my opposition to the 
provisions to cut pension benefits for Federal retirees and to increase 
pension contributions for current Federal employees that were included 
in H.R. 1215, the Tax Fairness and Deficit Reduction Act.
  I did vote for the bill on final passage because I have pledged to my 
constituents to work for tax relief. But the package that we voted on 
tonight has a serious flaw with regard to Federal workers. While we 
provide tax relief to millions of Americans, we are providing 2 million 
middle-class Federal employees with a tax hike.
  The increased pension contributions represent about a 10-percent 
increase for Federal workers. This bill also changes the number of 
years used to compute employees' annuities, from 3 years to 5 years.
  Mr. Chairman, I supported the Gephardt substitute, which did not 
contain provisions increasing pension contributions by Federal 
employees or cutting pension benefits for Federal retirees. The 
Gephardt substitute would have provided $31.6 billion in tax cuts, 
offset by $32 billion in spending cuts and other savings, without 
punishing Federal employees and retirees.
  Furthermore, the motion to recommit that we just voted on would take 
out the punitive hit on Federal employees while keeping intact the 
provisions that decrease the levels of accrual rates for Members of 
Congress and our staffs. In case some people are trying to score cheap 
political points by suggesting that this effort to protect Federal 
employees is motivated by the self-interest of Members of Congress. It 
should be clear the motion to recommit is intended to restore fairness 
to 2 million Federal employees, even as those of us who serve in 
Congress vote to reduce our own benefits.
  We hear a lot of nasty and irresponsible rhetoric about faceless 
bureaucrats and other vicious attacks on the Federal work force. The 
truth is that Federal employees are hard-working middle-class 
taxpayers, people who care about their communities, who are devoted to 
their country and who want to make a decent life for themselves and 
their families.
  Mr. Chairman, Democrats are for tax relief. Some of us crossed party 
lines to vote for this legislation--albeit with a heavy heart over the 
Federal employees and retirees provisions. I will work to have this 
portion of the bill stricken in the Senate or in conference between the 
two Houses. Then, we can begin the work of crafting a bipartisan 
package that will provide true tax relief to all Americans.
  The CHAIRMAN. All time for general debate has expired.
  Pursuant to the rule, the amendment in the nature of a substitute 
consisting of the text of H.R. 1327, modified by the amendment printed 
in part 1 of House Report 104-100, is considered as an original bill 
for the purpose of amendment and is considered as having been read.
  The text of the amendment in the nature of a substitute, as modified, 
is as follows:

                               H.R. 1327

       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 Fairness and Deficit 
     Reduction Act of 1995''.
                     TITLE I--DISCRETIONARY SAVINGS

     SEC. 1001. SHORT TITLE.

       This title may be cited as the ``Discretionary Spending 
     Reduction and Control Act of 1995''.

     SEC. 1002. DISCRETIONARY SPENDING LIMITS.

       (a) Limits.--Section 601(a)(2) of the Congressional Budget 
     Act of 1974 is amended by striking subparagraphs (A), (B), 
     (C), (D), and (F), by redesignating subparagraph (E) as 
     subparagraph (A) and by striking ``and'' at the end of that 
     subparagraph, and by inserting after subparagraph (A) the 
     following new subparagraphs:
       ``(B) with respect to fiscal year 1996, for the 
     discretionary category: $502,994,000,000 in new budget 
     authority and $537,946,000,000 in outlays;
       ``(C) with respect to fiscal year 1997, for the 
     discretionary category: $497,816,000,000 in new budget 
     authority and $531,793,000,000 in outlays;
       ``(D) with respect to fiscal year 1998, for the 
     discretionary category: $489,046,000,000 in new budget 
     authority and $523,703,000,000 in outlays;
       ``(E) with respect to fiscal year 1999, for the 
     discretionary category: $491,586,000,000 in new budget 
     authority and $522,063,000,000 in outlays; and
       ``(F) with respect to fiscal year 2000, for the 
     discretionary category: $492,282,000,000 in new budget 
     authority and $521,690,000,000 in outlays;''.
       (b) Committee Allocations and Enforcement.--Section 602 of 
     the Congressional Budget Act of 1974 is amended--
       (1) in subsection (c), by striking ``1995'' and inserting 
     ``2000'' and by striking its last sentence; and
       (2) in subsection (d), by striking ``1992 to 1995'' in the 
     side heading and inserting ``1995 to 2000'' and by striking 
     ``1992 through 1995'' and inserting ``1995 through 2000''.
       (c) Five-Year Budget Resolutions.--Section 606 of the 
     Congressional Budget Act of 1974 is amended--
       (1) in subsection (a), by striking ``1992, 1993, 1994, or 
     1995'' and inserting ``1995, 1996, 1997, 1998, 1999, or 
     2000''; and
       (2) in subsection (d)(1), by striking ``1992, 1993, 1994, 
     and 1995'' and inserting ``1995, 1996, 1997, 1998, 1999, and 
     2000'', and by striking ``(i) and (ii)''.
     [[Page H4265]]   (d) Effective Date.--Section 607 of the 
     Congressional Budget Act of 1974 is amended by striking 
     ``1991 to 1998'' and inserting ``1995 to 2000''.
       (e) Sequestration Regarding Crime Trust Fund.--(1) Section 
     251A(b)(1) of the Balanced Budget and Emergency Deficit 
     Control Act of 1985 is amended by striking subparagraphs (B), 
     (C), and (D) and its last two sentences and inserting the 
     following:
       ``(B) For fiscal year 1996, $1,827,000,000.
       ``(C) For fiscal year 1997, $3,082,000,000.
       ``(D) For fiscal year 1998, $3,840,000,000.
       ``(E) For fiscal year 1999, $4,415,000,000.
       ``(F) For fiscal year 2000, $4,874,000,000.

     ``The appropriate levels of new budget authority are as 
     follows: for fiscal year 1996, $3,357,000,000; for fiscal 
     year 1997, $3,915,000,000; for fiscal year 1998, 
     $4,306,000,000; for fiscal year 1999, $5,089,000,000; and for 
     fiscal year 2000, $5,089,000,000.''.
       (2) The last two sentences of section 310002 of the Violent 
     Crime Control and Law Enforcement Act of 1994 (42 U.S.C. 
     14212) are repealed.

     SEC. 1003. GENERAL STATEMENT AND DEFINITIONS.

       (a) General Statement.--Section 250(b) of the Balanced 
     Budget and Emergency Deficit Control Act of 1985 is amended 
     by striking the first sentence and inserting the following: 
     ``This part provides for the enforcement of deficit reduction 
     through discretionary spending limits and pay-as-you-go 
     requirements for fiscal years 1995 through 2000.''.
       (b) Definitions.--Section 250(c) of the Balanced Budget and 
     Emergency Deficit Control Act of 1985 is amended--
       (1) by striking paragraph (4) and inserting the following:
       ``(4) The term `category' means all discretionary 
     appropriations.'';
       (2) by striking paragraph (6) and inserting the following:
       ``(6) The term `budgetary resources' means new budget 
     authority, unobligated balances, direct spending authority, 
     and obligation limitations.'';
       (3) in paragraph (9), by striking ``1992'' and inserting 
     ``1995'';
       (4) in paragraph (14), by striking ``1995'' and inserting 
     ``2000''; and
       (5) by striking paragraph (17) and by redesignating 
     paragraphs (18) through (21) as paragraphs (17) through (20), 
     respectively.

     SEC. 1004. ENFORCING DISCRETIONARY SPENDING LIMITS.

       Section 251 of the Balanced Budget and Emergency Deficit 
     Control Act of 1985 is amended--
       (1) in the side heading of subsection (a), by striking 
     ``1991-1998'' and inserting ``1995-2000'';
       (2) in the first sentence of subsection (b)(1), by striking 
     ``1992, 1993, 1994, 1995, 1996, 1997 or 1998'' and inserting 
     ``1995, 1996, 1997, 1998, 1999, or 2000'' and by striking 
     ``through 1998'' and inserting ``through 2000'';
       (3) in subsection (b)(1), by striking subparagraphs (B) and 
     (C) and by striking ``the following:'' and all that follows 
     through ``The adjustments'' and inserting ``the following: 
     the adjustments'';
       (4) in subsection (b)(2), by striking ``1991, 1992, 1993, 
     1994, 1995, 1996, 1997, or 1998'' and inserting ``1995, 1996, 
     1997, 1998, 1999, or 2000''
      and by striking ``through 1998'' and inserting ``through 
     2000'';
       (5) by striking subparagraphs (A), (B), and (C) of 
     subsection (b)(2);
       (6) in subsection (b)(2)(E), by striking clauses (i), (ii), 
     and (iii) and by striking ``(iv) if, for fiscal years 1994, 
     1995, 1996, 1997, and 1998'' and inserting ``If, for fiscal 
     years 1995, 1996, 1997, 1998, 1999, and 2000''; and
       (7) in subsection (b)(2)(F), strike everything after ``the 
     adjustment in outlays'' and insert ``for a category for a 
     fiscal year shall not exceed 0.5 percent of the adjusted 
     discretionary spending limit on outlays for that fiscal year 
     in fiscal year 1996, 1997, 1998, 1999, or 2000.''.

     SEC. 1005. ENFORCING PAY-AS-YOU-GO.

       Section 252 of the Balanced Budget and Emergency Deficit 
     Control Act of 1985 is amended--
       (1) in the side heading of subsection (a), by striking 
     ``1992-1998'' and inserting ``1995-2000'';
       (2) in subsection (d), by striking ``1998'' each place it 
     appears and inserting ``2000''; and
       (3) in subsection (e), by striking ``1991 through 1998'' 
     and inserting ``1995 through 2000'' and by striking ``through 
     1995'' and inserting ``through 2000''.

     SEC. 1006. REPORTS AND ORDERS.

       Section 254 of the Balanced Budget and Emergency Deficit 
     Control Act of 1985 is amended--
       (1) in subsection (d)(2), by striking ``1998'' and 
     inserting ``2000''; and
       (2) in subsection (g), by striking ``1998'' each place it 
     appears and inserting ``2000''.

     SEC. 1007. TECHNICAL CORRECTION.

       Section 258 of the Balanced Budget and Emergency Deficit 
     Control Act of 1985, entitled ``Modification of Presidential 
     Order'', is repealed.

     SEC. 1008. EFFECTIVE DATE.

       (a) Expiration.--Section 275(b) of the Balanced Budget and 
     Emergency Deficit Control Act of 1985 is amended by striking 
     ``1995'' and inserting ``2000''.
       (b) Expiration.--Section 14002(c)(3) of the Omnibus Budget 
     Reconciliation Act of 1993 (2 U.S.C. 900 note; 2 U.S.C. 665 
     note) is repealed.
     SEC. 1009. SPECIAL RULE ON INTERRELATIONSHIP BETWEEN CHANGES 
                   IN DISCRETIONARY SPENDING LIMITS AND PAY-AS-
                   YOU-GO REQUIREMENTS.

       (a)(1) Section 252 of the Balanced Budget and Emergency 
     Deficit Control Act of 1985 is amended by adding at the end 
     the following new subsection:
       ``(f) Special Rule on Interrelationship between Sections 
     251, 251A, and 252.--Whenever the Committee on the Budget of 
     the House of Representatives or the Senate reports 
     legislation that decreases the discretionary spending limits 
     for budget authority and outlays for a fiscal year set forth 
     in section 601(a)(2) of the Congressional Budget Act of 1974 
     or in section 251A(b) of the Balanced Budget and Emergency 
     Deficit Control Act of 1985, or both, then, for purposes of 
     subsection (b), an amount equal to that decrease in the 
     discretionary spending limit for outlays shall be treated as 
     direct spending legislation decreasing the deficit for that 
     fiscal year.''.
       (2) Section 310(a) of the Congressional Budget Act of 1974 
     is amended by striking ``or'' at the end of paragraph (3), by 
     redesignating paragraph (4) as paragraph (5) and by striking 
     ``and (3)'' in such redesignated paragraph (5) and inserting 
     ``(3), and (4)'', and by inserting after paragraph (3) the 
     following new paragraph:
       ``(4) carry out section 252(f) of the Balanced Budget and 
     Emergency Deficit Control Act of 1985; or''.
       (b) For purposes of section 252(f) of the Balanced Budget 
     and Emergency Deficit Control Act of 1985 (as amended by 
     subsection (a)(1))--
       (1) this Act shall be deemed to be legislation reported by 
     the Committee on the Budget of the House of Representatives; 
     and
       (2)(A) reductions in the discretionary spending limit for 
     outlays set forth in section 601(a)(2) of the Congressional 
     Budget Act of 1974 for fiscal years 1999 and 2000 under 
     section 1002 shall be measured as reductions from the 
     discretionary spending limit for outlays for fiscal year 1998 
     as in effect immediately before the enactment of this Act; 
     and
       (B) reductions in the discretionary spending limit for 
     outlays set forth in section 251A(b) of the Balanced Budget 
     and Emergency Deficit Control Act of 1985 for fiscal years 
     1999 and 2000 under section 1002 shall be measured as 
     reductions from the level for outlays for fiscal year 1999 
     and 2000, as the case may be, referred to in the last two 
     sentences of section 251A(b)(1) as in effect immediately 
     before the enactment of this Act.
       (c) In the final sequestration report of the Director of 
     the Office of Management and Budget for fiscal year 1996--
       (1) all adjustments required by section 251(b)(2) of the 
     Balanced Budget and Emergency Deficit Control Act of 1985 
     made after the sequestration preview report for fiscal year 
     1996 shall be made to the discretionary spending limits set 
     forth in 601(a)(2) of the Congressional Budget Act of 1974 as 
     amended by section 1002; and
       (2) all statutory changes in the discretionary spending 
     limits set forth in 601(a)(2) of the Congressional Budget Act 
     of 1974 made after issuance of the sequestration preview 
     report for fiscal year 1996 of the Director of the Office of 
     Management and Budget and before the date of enactment of 
     this Act shall be made to those limits as amended by section 
     1002.
 TITLE II--EXTENSION OF AUTHORITY OF FEDERAL COMMUNICATIONS COMMISSION 
                       TO USE COMPETITIVE BIDDING

     SEC. 2001. EXTENSION OF AUTHORITY.

       Section 309(j)(11) of the Communications Act of 1934 (47 
     U.S.C. 309(j)(11)) is amended by striking ``September 30, 
     1998'' and inserting ``September 30, 2000''.
  TITLE III--PRIVATIZATION OF THE UNITED STATES ENRICHMENT CORPORATION

     SEC. 3001. SHORT TITLE AND REFERENCE.

       (a) Short Title.--This title may be cited as the ``USEC 
     Privatization Act''.
       (b) Reference.--Except as otherwise expressly provided, 
     whenever in this title an amendment or repeal is expressed in 
     terms of an amendment to, or repeal of, a section or other 
     provision, the reference shall be considered to be made to a 
     section or other provision of the Atomic Energy Act of 1954 
     (42 U.S.C. 2011 et seq.).

     SEC. 3002. PRODUCTION FACILITY.

       Paragraph v. of section 11 (42 U.S.C. 2014 v.) is amended 
     by striking ``or the construction and operation of a uranium 
     enrichment production facility using Atomic Vapor Laser 
     Isotope Separation technology''.

     SEC. 3003. DEFINITIONS.

       Section 1201 (42 U.S.C. 2297) is amended--
       (1) in paragraph (4), by inserting before the period the 
     following: ``and any successor corporation established 
     through privatization of the Corporation'';
       (2) by redesignating paragraphs (10) through (13) as 
     paragraphs (14) through (17), respectively, and by inserting 
     after paragraph (9) the following new paragraphs:
       ``(10) The term `low-level radioactive waste' has the 
     meaning given such term in section 102(9) of the Low-Level 
     Radioactive Waste Policy Amendments Act of 1985 (42 U.S.C. 
     2021b(9)).
       ``(11) The term `mixed waste' has the meaning given such 
     term in section 1004(41) of the Solid Waste Disposal Act (42 
     U.S.C. 6903(41)).
       ``(12) The term `privatization' means the transfer of 
     ownership of the Corporation to private investors pursuant to 
     chapter 25.
       ``(13) The term `privatization date' means the date on 
     which 100 percent of ownership of the Corporation has been 
     transferred to private investors.'';

[[Page H4266]]

       (3) by inserting after paragraph (17) (as redesignated) the 
     following new paragraph:
       ``(18) The term `transition date' means July 1, 1993.''; 
     and
       (4) by redesignating the unredesignated paragraph (14) as 
     paragraph (19).

     SEC. 3004. EMPLOYEES OF THE CORPORATION.

       (a) Paragraph (2).--Paragraphs (1) and (2) of section 
     1305(e) (42 U.S.C. 2297b-4(e)(1)(2)) are amended to read as 
     follows:
       ``(1) In general.--It is the purpose of this subsection to 
     ensure that the privatization of the Corporation shall not 
     result in any adverse effects on the pension benefits of 
     employees at facilities that are operated, directly or under 
     contract, in the performance of the functions vested in the 
     Corporation.
       ``(2) Applicability of existing collective bargaining 
     agreement.--The Corporation shall abide by the terms of the 
     collective bargaining agreement in effect on the 
     privatization date at each individual facility.''.
       (b) Paragraph (4).--Paragraph (4) of section 1305(e) (42 
     U.S.C. 2297b-4(e)(4)) is amended--
       (1) by striking ``and detailees'' in the heading;
       (2) by striking the first sentence;
       (3) in the second sentence, by inserting ``from other 
     Federal employment'' after ``transfer to the Corporation''; 
     and
       (4) by striking the last sentence.

     SEC. 3005. MARKETING AND CONTRACTING AUTHORITY.

       (a) Marketing Authority.--Section 1401(a) (42 U.S.C. 
     2297c(a)) is amended effective on the privatization date (as 
     defined in section 1201(13) of the Atomic Energy Act of 
     1954)--
       (1) by amending the subsection heading to read ``Marketing 
     Authority.--''; and
       (2) by striking the first sentence.
       (b) Transfer of Contracts.--Section 1401(b) (42 U.S.C. 
     2297c(b)) is amended--
       (1) in paragraph (2)(B), by adding at the end the 
     following: ``The privatization of the Corporation shall not 
     affect the terms of, or the rights or obligations of the 
     parties to, any such power purchase contract.''; and
       (2) by adding at the end the following:
       ``(3) Effect of transfer.--
       ``(A) As a result of the transfer pursuant to paragraph 
     (1), all rights, privileges, and benefits under such 
     contracts, agreements, and leases, including the right to 
     amend, modify, extend, revise, or terminate any of such 
     contracts, agreements, or leases were irrevocably assigned to 
     the Corporation for its exclusive benefit.
       ``(B) Notwithstanding the transfer pursuant to paragraph 
     (1), the United States shall remain obligated to the parties 
     to the contracts, agreements, and leases transferred pursuant 
     to paragraph (1) for the performance of the obligations of 
     the United States thereunder during the term thereof. The 
     Corporation shall reimburse the United States for any amount 
     paid by the United States in respect of such obligations 
     arising after the privatization date to the extent such 
     amount is a legal and valid obligation of the Corporation 
     then due.
       ``(C) After the privatization date, upon any material 
     amendment, modification, extension, revision, replacement, or 
     termination of any contract, agreement, or lease transferred 
     under paragraph (1), the United States shall be released from 
     further obligation under such contract, agreement, or lease, 
     except that such action shall not release the United States 
     from obligations arising under such contract, agreement, or 
     lease prior to such time.''.
       (c) Pricing.--Section 1402 (42 U.S.C. 2297c-1) is amended 
     to read as follows:

     ``SEC. 1402. PRICING.

       ``The Corporation shall establish prices for its products, 
     materials, and services provided to customers on a basis that 
     will allow it to attain the normal business objectives of a 
     profitmaking corporation.''.
       (d) Leasing of Gaseous Diffusion Facilities of 
     Department.--Effective on the privatization date (as defined 
     in section 1201(13) of the Atomic Energy Act of 1954), 
     section 1403 (42 U.S.C. 2297c-2) is amended by adding at the 
     end the following:
       ``(h) Low-Level Radioactive Waste and Mixed Waste.--
       ``(1) Responsibility of the department; costs.--
       ``(A) With respect to low-level radioactive waste and mixed 
     waste generated by the Corporation as a result of the 
     operation of the facilities and related property leased by 
     the Corporation pursuant to subsection (a) or as a result of 
     treatment of such wastes at a location other than the 
     facilities and related property
      leased by the Corporation pursuant to subsection (a) the 
     Department, at the request of the Corporation, shall--
       ``(i) accept for treatment or disposal of all such wastes 
     for which treatment or disposal technologies and capacities 
     exist, whether within the Department or elsewhere; and
       ``(ii) accept for storage (or ultimately treatment or 
     disposal) all such wastes for which treatment and disposal 
     technologies or capacities do not exist, pending development 
     of such technologies or availability of such capacities for 
     such wastes.
       ``(B) All low-level wastes and mixed wastes that the 
     Department accepts for treatment, storage, or disposal 
     pursuant to subparagraph (A) shall, for the purpose of any 
     permits, licenses, authorizations, agreements, or orders 
     involving the Department and other Federal agencies or State 
     or local governments, be deemed to be generated by the 
     Department and the Department shall handle such wastes in 
     accordance with any such permits, licenses, authorizations, 
     agreements, or orders. The Department shall obtain any 
     additional permits, licenses, or authorizations necessary to 
     handle such wastes, shall amend any such agreements or orders 
     as necessary to handle such wastes, and shall handle such 
     wastes in accordance therewith.
       ``(C) The Corporation shall reimburse the Department for 
     the treatment, storage, or disposal of low-level radioactive 
     waste or mixed waste pursuant to subparagraph (A) in an 
     amount equal to the Department's costs but in no event 
     greater than an amount equal to that which would be charged 
     by commercial, State, regional, or interstate compact 
     entities for treatment, storage, or disposal of such waste.
       ``(2) Agreements with other persons.--The Corporation may 
     also enter into agreements for the treatment, storage, or 
     disposal of low-level radioactive waste and mixed waste 
     generated by the Corporation as a result of the operation of 
     the facilities and related property leased by the Corporation 
     pursuant to subsection (a) with any person other than the 
     Department that is authorized by applicable laws and 
     regulations to treat, store, or dispose of such wastes.''.
       (e) Liabilities.--
       (1) Subsection (a) of section 1406 (42 U.S.C. 2297c-5(a)) 
     is amended--
       (A) by inserting ``and Privatization'' after ``Transition'' 
     in the heading; and
       (B) by adding at the end the following: ``As of the 
     privatization date, all liabilities attributable to the 
     operation of the Corporation from the transition date to the 
     privatization date shall be direct liabilities of the United 
     States.''.
       (2) Subsection (b) of section 1406 (42 U.S.C. 2297c-5(b)) 
     is amended--
       (A) by inserting ``and Privatization'' after ``Transition'' 
     in the heading; and
       (B) by adding at the end the following: ``As of the 
     privatization date, any judgment entered against the 
     Corporation imposing liability arising out of the operation 
     of the Corporation from the transition date to the 
     privatization date shall be considered a judgment against the 
     United States.''.
       (3) Subsection (d) of section 1406 (42 U.S.C. 2297c-5(d)) 
     is amended--
       (A) by inserting ``and Privatization'' after ``Transition'' 
     in the heading; and
       (B) by striking ``the transition date'' and inserting ``the 
     privatization date (or, in the event the privatization date 
     does not occur, the transition date)''.
       (f) Transfer of Uranium.--Title II (42 U.S.C. 2297 et seq.) 
     is amended by redesignating section 1408 as section 1409 and 
     by inserting after section 1407 the following:

     ``SEC. 1408. TRANSFER OF URANIUM.

       ``The Secretary may, before the privatization date, 
     transfer to the Corporation without charge raw uranium, low-
     enriched uranium, and highly enriched uranium.''.

     SEC. 3006. PRIVATIZATION OF THE CORPORATION.

       (a) Establishment of Private Corporation.--Chapter 25 (42 
     U.S.C. 2297d et seq.) is amended by adding at the end the 
     following new section:

     ``SEC. 1503. ESTABLISHMENT OF PRIVATE CORPORATION.

       ``(a) Establishment.--
       ``(1) In general.--In order to facilitate privatization, 
     the Corporation may provide for the establishment of a 
     private corporation organized under the laws of any of the 
     several States. Such corporation shall have among its 
     purposes the following:
       ``(A) To help maintain a reliable and economical domestic 
     source of uranium enrichment services.
       ``(B) To undertake any and all activities as provided in 
     its corporate charter.
       ``(2) Authorities.--The corporation established pursuant to 
     paragraph (1) shall be authorized to--
       ``(A) enrich uranium, provide for uranium to be enriched by 
     others, or acquire enriched uranium (including low-enriched 
     uranium derived from highly enriched uranium);
       ``(B) conduct, or provide for conducting, those research 
     and development activities related to uranium enrichment and 
     related processes and activities the corporation considers 
     necessary or advisable to maintain itself as a commercial 
     enterprise operating on a profitable and efficient basis;
       ``(C) enter into transactions regarding uranium, enriched 
     uranium, or depleted uranium with--
       ``(i) persons licensed under section 53, 63, 103, or 104 in 
     accordance with the licenses held by those persons;
       ``(ii) persons in accordance with, and within the period 
     of, an agreement for cooperation arranged under section 123; 
     or
       ``(iii) persons otherwise authorized by law to enter into 
     such transactions;
       ``(D) enter into contracts with persons licensed under 
     section 53, 63, 103, or 104, for as long as the corporation 
     considers necessary or desirable, to provide uranium or 
     uranium enrichment and related services;
       ``(E) enter into contracts to provide uranium or uranium 
     enrichment and related services in accordance with, and 
     within the period of, an agreement for cooperation arranged 
     under section 123 or as otherwise authorized by law; and
       ``(F) take any and all such other actions as are permitted 
     by the law of the jurisdiction of incorporation of the 
     corporation.
     [[Page H4267]]   ``(3) Transfer of assets.--For purposes of 
     implementing the privatization, the Corporation may transfer 
     some or all of its assets and obligations to the corporation 
     established pursuant to this section, including--
       ``(A) all of the Corporation's assets, including all 
     contracts, agreements, and leases, including all uranium 
     enrichment contracts and power purchase contracts;
       ``(B) all funds in accounts of the Corporation held by the 
     Treasury or on deposit with any bank or other financial 
     institution;
       ``(C) all of the Corporation's rights, duties, and 
     obligations, accruing subsequent to the privatization date, 
     under the power purchase contracts covered by section 
     1401(b)(2)(B); and
       ``(D) all of the Corporation's rights, duties, and 
     obligations, accruing subsequent to the privatization date, 
     under the lease agreement between the Department and the 
     Corporation executed by the Department and the Corporation 
     pursuant to section 1403.
       ``(4) Merger or consolidation.--For purposes of 
     implementing the privatization, the Corporation may merge or 
     consolidate with the corporation established pursuant to 
     subsection (a)(1) if such action is contemplated by the plan 
     for privatization approved by the President under section 
     1502(b). The Board shall have exclusive authority to approve 
     such merger or consolidation and to take all further actions 
     necessary to consummate such merger or consolidation, and no 
     action by or in respect of shareholders shall be required. 
     The merger or consolidation shall be effected in accordance 
     with, and have the effects of a merger or consolidation 
     under, the laws of the jurisdiction of incorporation of the 
     surviving corporation, and all rights and benefits provided 
     under this title to the Corporation shall apply to the 
     surviving corporation as if it were the Corporation.
       ``(b) OSHA Requirements.--For purposes of the regulation of 
     radiological and nonradiological hazards under the 
     Occupational Safety and Health Act of 1970, the corporation 
     established pursuant to subsection (a)(1) shall be treated in 
     the same manner as other employers licensed by the Nuclear 
     Regulatory Commission. Any interagency agreement entered into 
     between the Nuclear Regulatory Commission and the 
     Occupational Safety and Health Administration governing the 
     scope of their respective regulatory authorities shall apply 
     to the corporation as if the corporation were a Nuclear 
     Regulatory Commission licensee.
       ``(c) Legal Status of Private Corporation.--
       ``(1) Not federal agency.--The corporation established 
     pursuant to subsection (a)(1) shall not be an agency, 
     instrumentality, or establishment of the United States 
     Government and shall not be a Government corporation or 
     Government-controlled corporation.
       ``(2) No recourse against united states.--Obligations of 
     the corporation established pursuant to subsection (a)(1) 
     shall not be obligations of, or guaranteed as to principal or 
     interest by, the Corporation or the United States, and the 
     obligations shall so plainly state.
       ``(3) No claims court jurisdiction.--No action under 
     section 1491 of title 28, United States Code, shall be 
     allowable against the United States based on the actions of 
     the corporation established pursuant to subsection (a)(1).
       ``(d) Board of Director's Election After Public Offering.--
     In the event that the privatization is implemented by means 
     of a public offering, an election of the members of the board 
     of directors of the Corporation by the shareholders shall be 
     conducted before the end of the 1-year period beginning the 
     date shares are first offered to the public pursuant to such 
     public offering.
       ``(e) Adequate Proceeds.--The Secretary of Energy shall not 
     allow the privatization of the Corporation unless before the 
     sale date the Secretary determines that the estimated sum of 
     the gross proceeds from the sale of the Corporation will be 
     an adequate amount.''.
       (b) Ownership Limitations.--Chapter 25 (as amended by 
     subsection (a)) is amended by adding at the end the following 
     new section:

     ``SEC. 1504. OWNERSHIP LIMITATIONS.

       ``(a) Securities Limitation.--In the event that the 
     privatization is implemented by means of a public offering, 
     during a period of 3 years beginning on the privatization 
     date, no person, directly or indirectly, may acquire or hold 
     securities representing more than 10 percent of the total 
     votes of all outstanding voting securities of the 
     Corporation.
       ``(b) Application.--Subsection (a) shall not apply--
       ``(1) to any employee stock ownership plan of the 
     Corporation,
       ``(2) to underwriting syndicates holding shares for resale, 
     or
       ``(3) in the case of shares beneficially held for others, 
     to commercial banks, broker-dealers, clearing corporations, 
     or other nominees.
       ``(c) No director, officer, or employee of the Corporation 
     may acquire any securities, or any right to acquire 
     securities, of the Corporation--
       ``(1) in the public offering of securities of the 
     Corporation in the implementation of the privatization,
       ``(2) pursuant to any agreement, arrangement, or 
     understanding entered into before the privatization date, or
       ``(3) before the election of directors of the Corporation 
     under section 1503(d) on any terms more favorable than those 
     offered to the general public.''.
       (c) Exemption From Liability.--Chapter 25 (as amended by 
     subsection (b)) is amended by adding at the end the following 
     new section:

     ``SEC. 1505. EXEMPTION FROM LIABILITY.

       ``(a) In General.--No director, officer, employee, or agent 
     of the Corporation shall be liable, for money damages or 
     otherwise, to any party if, with respect to the subject 
     matter of the action, suit, or proceeding, such person was 
     fulfilling a duty, in connection with any action taken in 
     connection with the privatization, which such person in good 
     faith reasonably believed to be required by law or vested in 
     such person.
       ``(b) Exception.--The privatization shall be subject to the 
     Securities Act of 1933 and the Securities Exchange Act of 
     1934. The exemption set forth in subsection (a) shall not 
     apply to claims arising under such Acts or under the 
     Constitution or laws of any State, territory, or possession 
     of the United States relating to transactions in securities, 
     which claims are in connection with a public offering 
     implementing the privatization.''.
       (d) Resolution of Certain Issues.--Chapter 25 (as amended 
     by subsection (c)) is amended by adding at the end the 
     following new section:
     ``SEC. 1506. RESOLUTION OF CERTAIN ISSUES.

       ``(a) Corporation Actions.--Notwithstanding any provision 
     of any agreement to which the Corporation is a party, the 
     Corporation shall not be considered to be in breach, default, 
     or violation of any such agreement because of any provision 
     of this chapter or any action the Corporation is required to 
     take under this chapter.
       ``(b) Right To Sue Withdrawn.--The United States hereby 
     withdraws any stated or implied consent for the United 
     States, or any agent or officer of the United States, to be 
     sued by any person for any legal, equitable, or other relief 
     with respect to any claim arising out of, or resulting from, 
     acts or omissions under this chapter.''.
       (e) Application of Privatization Proceeds.--Chapter 25 (as 
     amended by subsection (d)) is amended by adding at the end 
     the following new section:

     ``SEC. 1507. APPLICATION OF PRIVATIZATION PROCEEDS.

       ``The proceeds from the privatization shall be included in 
     the budget baseline required by the Balanced Budget and 
     Emergency Deficit Control Act of 1985 and shall be counted as 
     an offset to direct spending for purposes of section 252 of 
     such Act, notwithstanding section 257(e) of such Act.''.
       (f) Conforming Amendment.--The table of contents for 
     chapter 25 is amended by inserting after the item for section 
     1502 the following:

``Sec. 1503. Establishment of Private Corporation.
``Sec. 1504. Ownership Limitations.
``Sec. 1505. Exemption from Liability.
``Sec. 1506. Resolution of Certain Issues.
``Sec. 1507. Application of Privatization Proceeds.''.
       (g) Section 193 (42 U.S.C. 2243) is amended by adding at 
     the end the following:
       ``(f) Limitation.--If the privatization of the United 
     States Enrichment Corporation results in the Corporation 
     being--
       ``(1) owned, controlled, or dominated by a foreign 
     corporation or a foreign government, or
       ``(2) otherwise inimical to the common defense or security 
     of the United States,

     any license held by the Corporation under sections 53 and 63 
     shall be terminated.''.
       (h) Period for Congressional Review.--Section 1502(d) (42 
     U.S.C. 2297d-1(d)) is amended by striking ``less than 60 days 
     after notification of the Congress'' and inserting ``less 
     than 60 days after the date of the report to Congress by the 
     Comptroller General under subsection (c)''.

     SEC. 3007. PERIODIC CERTIFICATION OF COMPLIANCE.

       Section 1701(c)(2) (42 U.S.C. 2297f(c)(2)) is amended by 
     striking ``Annual application for certificate of 
     compliance.--The Corporation shall apply at least annually to 
     the Nuclear Regulatory Commission for a certificate of 
     compliance under paragraph (1).'' and inserting ``Periodic 
     application for certificate of compliance.--The Corporation 
     shall apply to the Nuclear Regulatory Commission for a 
     certificate of compliance under paragraph (1) periodically, 
     as determined by the Nuclear Regulatory Commission, but not 
     less than every 5 years.''.

     SEC. 3008. LICENSING OF OTHER TECHNOLOGIES.

       Subsection (a) of section 1702 (42 U.S.C. 2297f-1(a)) is 
     amended by striking ``other than'' and inserting 
     ``including''.

     SEC. 3009. CONFORMING AMENDMENTS.

       (a) Repeals in Atomic Energy Act of 1954 as of the 
     Privatization Date.--
       (1) Repeals.--As of the privatization date (as defined in 
     section 1201(13) of the Atomic Energy Act of 1954), the 
     following sections (as in effect on such privatization date) 
     of the Atomic Energy Act of 1954 are repealed:
       (A) Section 1202.
       (B) Sections 1301 through 1304.
       (C) Sections 1306 through 1316.
       (D) Sections 1404 and 1405.
       (E) Section 1601.
       (F) Sections 1603 through 1607.
       (2) Conforming amendment.--The table of contents of such 
     Act is amended by repealing the items referring to sections 
     repealed by paragraph (1).
       (b) Statutory Modifications.--As of such privatization 
     date, the following shall take effect:
     [[Page H4268]]   (1) For purposes of title I of the Atomic 
     Energy Act of 1954, all references in such Act to the 
     ``United States Enrichment Corporation'' shall be deemed to 
     be references to the corporation established pursuant to 
     section 1503 of the Atomic Energy Act of 1954 (as added by 
     section 6(a)).
       (2) Section 1018(1) of the Energy Policy Act of 1992 (42 
     U.S.C. 2296b-7(1)) is amended by striking ``the United 
     States'' and all that follows through the period and 
     inserting ``the corporation referred to in section 1201(4) of 
     the Atomic Energy Act of 1954.''.
       (3) Section 9101(3) of title 31, United States Code, is 
     amended by striking subparagraph (N), as added by section 
     902(b) of Public Law 102-486.
       (c) Revision of Section 1305.--As of such privatization 
     date, section 1305 of the Atomic Energy Act of 1954 (42 U.S.C 
     2297b-4) is amended--
       (1) by repealing subsections (a), (b), (c), and (d), and
       (2) in subsection (e)--
       (A) by striking the subsection designation and heading,
       (B) by redesignating paragraphs (1) and (2) (as added by 
     section 4(a)) as subsections (a) and (b) and by moving the 
     margins 2-ems to the left,
       (C) by striking paragraph (3), and
       (D) by redesignating paragraph (4) (as amended by section 
     4(b)) as subsection (c), and by moving the margins 2-ems to 
     the left.
                          TITLE IV--RETIREMENT
     SEC. 4001. SHORT TITLE; TABLE OF CONTENTS.

       (a) Short Title.--This title may be cited as the 
     ``Congressional and Federal Employee Retirement Equalization 
     Act''.
       (b) Table of Contents.--The table of contents for this 
     title is as follows:

Sec. 4001. Short title; table of contents.
Sec. 4002. Amendment of title 5, United States Code.
Sec. 4003. Individual contributions.
Sec. 4004. Average pay.
Sec. 4005. Accrual rates.
Sec. 4006. Elimination of Members' option to elect not to participate 
              in FERS.
     SEC. 4002. AMENDMENT OF TITLE 5, UNITED STATES CODE.

       Except as otherwise expressly provided, whenever in this 
     title an amendment or repeal is expressed in terms of an 
     amendment to, or repeal of, a section or other provision, the 
     reference shall be considered to be made to a section or 
     other provision of title 5, United States Code.
     SEC. 4003. INDIVIDUAL CONTRIBUTIONS.

       (a) CSRS.--
       (1) In general.--The table under section 8334(c) is 
     amended--
       (A) in the matter relating to an employee by striking


                                                                        
                                                                        
                                                                        
                        ``7.........  After December 31, 1969.''        
                                                                        

     and inserting the following:


                                                                        
                                                                        
                                                                        
                        ``7.........  January 1, 1970, to December 31,  
                                       1995.                            
                        ``8\1/2\....  January 1, 1996, to December 31,  
                                       1996.                            
                        ``9.........  January 1, 1997, to December 31,  
                                       1997.                            
                        ``9\1/2\....  After December 31, 1997.'';       
                                                                        

       (B) in the matter relating to a Member or employee for 
     Congressional employee service by striking


                                                                        
                                                                        
                                                                        
                        ``7\1/2\....  After December 31, 1969.''        
                                                                        

     and inserting the following:


                                                                        
                                                                        
                                                                        
                        ``7\1/2\....  January 1, 1970, to December 31,  
                                       1995.                            
                        ``8\1/2\....  January 1, 1996, to December 31,  
                                       1996.                            
                        ``9.........  January 1, 1997, to December 31,  
                                       1997.                            
                        ``9\1/2\....  After December 31, 1997.'';       
                                                                        

       (C) in the matter relating to a Member for Member service 
     by striking


                                                                        
                                                                        
                                                                        
                        ``8.........  After December 31, 1969.''        
                                                                        

     and inserting the following:


                                                                        
                                                                        
                                                                        
                        ``8.........  January 1, 1970, to December 31,  
                                       1995.                            
                        ``8\1/2\....  January 1, 1996, to December 31,  
                                       1996.                            
                        ``9.........  January 1, 1997, to December 31,  
                                       1997.                            
                        ``9\1/2\....  After December 31, 1997.'';       
                                                                        

       (D) in the matter relating to a law enforcement officer for 
     law enforcement service and firefighter for firefighter 
     service by striking


                                                                        
                                                                        
                                                                        
                        ``7\1/2\....  After December 31, 1974.''        
                                                                        

     and inserting the following:


                                                                        
                                                                        
                                                                        
                        ``7\1/2\....  January 1, 1975, to December 31,  
                                       1995.                            
                        ``9.........  January 1, 1996, to December 31,  
                                       1996.                            
                        ``9\1/2\....  January 1, 1997, to December 31,  
                                       1997.                            
                        ``10........  After December 31, 1997.'';       
                                                                        

       (E) in the matter relating to a bankruptcy judge by 
     striking


                                                                        
                                                                        
                                                                        
                        ``8.........  After December 31, 1983.''        
                                                                        

     and inserting the following:


                                                                        
                                                                        
                                                                        
                        ``8.........  January 1, 1984, to December 31,  
                                       1995.                            
                        ``8\1/2\....  January 1, 1996, to December 31,  
                                       1996.                            
                        ``9.........  January 1, 1997, to December 31,  
                                       1997.                            
                        ``9\1/2\....  After December 31, 1997.'';       
                                                                        

       (F) in the matter relating to a judge of the United States 
     Court of Appeals for the Armed Forces for service as a judge 
     of that court by striking


                                                                        
                                                                        
                                                                        
                        ``8.........  On and after the date of the      
                                       enactment of the Department of   
                                       Defense Authorization Act,       
                                       1984.''                          
                                                                        

     and inserting the following:


                                                                        
                                                                        
                                                                        
                        ``8.........  The date of the enactment of the  
                                       Department of Defense            
                                       Authorization Act, 1984, to      
                                       December 31, 1995.               
                        ``8\1/2\....  January 1, 1996, to December 31,  
                                       1996.                            
                        ``9.........  January 1, 1997, to December 31,  
                                       1997.                            
                        ``9\1/2\....  After December 31, 1997.'';       
                                                                        

       (G) in the matter relating to a United States magistrate by 
     striking


                                                                        
                                                                        
                                                                        
                        ``8.........  After September 30, 1987.''       
                                                                        

     and inserting the following:


                                                                        
                                                                        
                                                                        
                        ``8.........  October 1, 1987, to December 31,  
                                       1995.                            
                        ``8\1/2\....  January 1, 1996, to December 31,  
                                       1996.                            
                        ``9.........  January 1, 1997, to December 31,  
                                       1997.                            
                        ``9\1/2\....  After December 31, 1997.''; and   
                                                                        

       (H) in the matter relating to a Claims Court judge by 
     striking


                                                                        
                                                                        
                                                                        
                        ``8.........  After September 30, 1988.''       
                                                                        

     and inserting the following:


                                                                        
                                                                        
                                                                        
                        ``8.........  October 1, 1988, to December 31,  
                                       1995.                            
                        ``8\1/2\....  January 1, 1996, to December 31,  
                                       1996.                            
                        ``9.........  January 1, 1997, to December 31,  
                                       1997.                            
                        ``9\1/2\....  After December 31, 1997.''.       
                                                                        

       (2) Deductions.--The first sentence of section 8334(a)(1) 
     is amended to read as follows: ``The employing agency shall 
     deduct and withhold from the basic pay of an employee, 
     Member, Congressional employee, law enforcement officer, 
     firefighter, bankruptcy judge, judge of the United States 
     Court of Appeals for the Armed Forces, United States 
     magistrate, or Claims Court judge, as the case may be, the 
     percentage of basic pay applicable under subsection (c).''.
       (3) Government contributions.--
       (A) In general.--Section 8334(a) is amended by adding at 
     the end the following:
       ``(3) The amount to be contributed under the second 
     sentence of paragraph (1) with respect to any service period 
     occurring during any calendar year after 1995 shall be 
     determined as if the percentage then applicable under 
     subsection (c) were the percentage that was applicable for 
     calendar year 1995 plus 3 percent.''.
       (B) Technical amendment.--The second sentence of section 
     8334(a)(1) is amended by 
     [[Page H4269]] striking the period at the end and inserting 
     ``, subject to paragraph (3).''.
       (4) Other service.--
       (A) Military service.--Section 8334(j) is amended--
       (i) in paragraph (1)(A) by inserting ``and subject to 
     paragraph (5),'' after ``Except as provided in subparagraph 
     (B),''; and
       (ii) by adding at the end the following:
       ``(5) Effective with respect to any period of military 
     service after December 31, 1995, the percentage of basic pay 
     under section 204 of title 37 payable under paragraph (1) 
     shall be equal to the same percentage as would be applicable 
     under section 8334(c) for that same period for service as an 
     `employee', subject to paragraph (1)(B).''.
       (B) Volunteer service.--Section 8334(l) is amended--
       (i) in paragraph (1) by striking the period at the end and 
     inserting ``, subject to paragraph (4).''; and
       (ii) by adding at the end the following:
       ``(4) Effective with respect to any period of service after 
     December 31, 1995, the percentage of the readjustment 
     allowance or stipend (as the case may be) payable under 
     paragraph (1) shall be equal to the same percentage as would 
     be applicable under section 8334(c) for that same period for 
     service as an `employee'.''.
       (b) FERS.--
       (1) In general.--Section 8422(a) is amended by striking 
     paragraph (2) and inserting the following:
       ``(2) The percentage to be deducted and withheld from basic 
     pay for any pay period shall be equal to--
       ``(A) the applicable percentage under paragraph (3), minus
       ``(B) the percentage then in effect under section 3101(a) 
     of the Internal Revenue Code of 1986 (relating to rate of tax 
     for old-age, survivors, and disability insurance).
       ``(3) The applicable percentage under this paragraph, for 
     civilian service after December 31, 1995, shall be as 
     follows:

                                                                        
                         Percentage                                     
                        of basic pay            Service period          
                                                                        
``Employee............  8\1/2\......  January 1, 1996, to December 31,  
                                       1996.                            
                        ``9.........  January 1, 1997, to December 31,  
                                       1997.                            
                        ``9\1/2\....  After December 31, 1997.          
``Congressional         8\1/2\......  January 1, 1996, to December 31,  
 employee.                             1996.                            
                        ``9.........  January 1, 1997, to December 31,  
                                       1997.                            
                        ``9\1/2\....  After December 31, 1997.          
``Member..............  8\1/2\......  January 1, 1996, to December 31,  
                                       1996.                            
                        ``9.........  January 1, 1997, to December 31,  
                                       1997.                            
                        ``9\1/2\....  After December 31, 1997.          
``Law enforcement       9...........  January 1, 1996, to December 31,  
 officer.                              1996.                            
                        ``9\1/2\....  January 1, 1997, to December 31,  
                                       1997.                            
                        ``10........  After December 31, 1997.          
``Firefighter.........  9...........  January 1, 1996, to December 31,  
                                       1996.                            
                        ``9\1/2\....  January 1, 1997, to December 31,  
                                       1997.                            
                        ``10........  After December 31, 1997.          
``Air traffic           9...........  January 1, 1996, to December 31,  
 controller.                           1996.                            
                        ``9\1/2\....  January 1, 1997, to December 31,  
                                       1997.                            
                        ``10........  After December 31, 1997.''.       
                                                                        

       (2) Other service.--
       (A) Military service.--Section 8422(e) is amended--
       (i) in paragraph (1)(A) by inserting ``and subject to 
     paragraph (6),'' after ``Except as provided in subparagraph 
     (B),''; and
       (ii) by adding at the end the following:
       ``(6) Effective with respect to any period of military 
     service after December 31, 1995, the percentage of basic pay 
     under section 204 of title 37 payable under paragraph (1) 
     shall be equal to the same percentage as would be applicable 
     under section 8422(a)(3) for that same period for service as 
     an `employee', subject to paragraph (1)(B).''.
       (B) Volunteer service.--Section 8422(f) is amended--
       (i) in paragraph (1) by striking the period at the end and 
     inserting ``, subject to paragraph (4).''; and
       (ii) by adding at the end the following:
       ``(4) Effective with respect to any period of service after 
     December 31, 1995, the percentage of the readjustment 
     allowance or stipend (as the case may be) payable under 
     paragraph (1) shall be equal to the same percentage as would 
     be applicable under section 8422(a)(3) for that same period 
     for service as an employee.''.
       (c) Exemption.--
       (1) In general.--Section 1005(d) of title 39, United States 
     Code, is amended by adding at the end the following:
       ``(3) For purposes of applying chapters 83 and 84 of title 
     5 with respect to any officer or employee of the Postal 
     Service, section 4003 of the Congressional and Federal 
     Employee Retirement Equalization Act shall be treated as if 
     it had not been enacted.''.
       (2) Technical amendment.--The second sentence of section 
     1005(d)(1) of title 39, United States Code, is amended by 
     striking the period and inserting ``, subject to paragraph 
     (3).''.
       (d) Effective Date.--This section shall take effect on 
     January 1, 1996.

     SEC. 4004. AVERAGE PAY.

       (a) CSRS.--
       (1) In general.--Subchapter III of chapter 83 is amended by 
     inserting after section 8339 the following:

     ``Sec. 8339a. Special rules relating to average pay

       ``(a) Notwithstanding section 8331(4), for purposes of 
     computing any annuity or survivor annuity under this 
     subchapter, eligibility for which is based on a separation 
     occurring after December 31, 1995, `average pay' shall, if 
     the separation occurs--
       ``(1) during calendar year 1996, have the meaning given 
     such term by subsection (b)(1); or
       ``(2) after calendar year 1996, have the meaning given such 
     term by subsection (b)(2).
       ``(b) For purposes of this section--
       ``(1) the meaning given the term `average pay' by this 
     paragraph shall be the meaning such term would have under 
     section 8331(4) if `4 consecutive years' were substituted for 
     `3 consecutive years' and `4 years' were substituted for `3 
     years'; and
       ``(2) the meaning given the term `average pay' by this 
     paragraph shall be the meaning such term would have under 
     section 8331(4) if `5 consecutive years' were substituted for 
     `3 consecutive years' and `5 years' were substituted for `3 
     years'.
       ``(c) Nothing in this section shall be considered to apply 
     with respect to any annuity or survivor annuity eligibility 
     for which is based on a separation occurring before January 
     1, 1996.
       ``(d) The Office of Personnel Management shall prescribe 
     such regulations as may be necessary to carry out this 
     section.''.
       (2) Technical amendments.--
       (A) Section 8331(4) is amended by striking ``effect;'' and 
     inserting ``effect, subject to section 8339a;''.
       (B) The table of sections for chapter 83 is amended by 
     inserting after the item relating to section 8339 the 
     following:

``8339a. Special rules relating to average pay.''.
       (b) FERS.--
       (1) In general.--Chapter 84 is amended by inserting after 
     section 8461 the following:

     ``Sec. 8461a. Special rules relating to average pay

       ``(a) Notwithstanding section 8401(3), for purposes of 
     computing any annuity or survivor annuity under this chapter, 
     eligibility for which is based on a separation occurring 
     after December 31, 1995, `average pay' shall, if the 
     separation occurs--
       ``(1) during calendar year 1996, have the meaning given 
     such term by subsection (b)(1); or
       ``(2) after calendar year 1996, have the meaning given such 
     term by subsection (b)(2).
       ``(b) For purposes of this section--
       ``(1) the meaning given the term `average pay' by this 
     paragraph shall be the meaning such term would have under 
     section 8401(3) if `4 consecutive years' were substituted for 
     `3 consecutive years' and `4 years' were substituted for `3 
     years'; and
       ``(2) the meaning given the term `average pay' by this 
     paragraph shall be the meaning such term would have under 
     section 8401(3) if `5 consecutive years' were substituted for 
     `3 consecutive years' and `5 years' were substituted for `3 
     years'.
       ``(c) Nothing in this section shall be considered to apply 
     with respect to any annuity or survivor annuity eligibility 
     for which is based on a separation occurring before January 
     1, 1996.
       ``(d) The Office of Personnel Management shall prescribe 
     such regulations as may be necessary to carry out this 
     section.''.
       (2) Technical amendments.--
       (A) Section 8401(3) is amended by striking ``effect;'' and 
     inserting ``effect, subject to section 8461a;''.
       (B) The table of sections for chapter 84 is amended by 
     inserting after the item relating to section 8461 the 
     following:

``8461a. Special rules relating to average pay.''.
       (c) Regulations.--The Office of Personnel Management shall 
     prescribe such regulations as may be necessary to carry out 
     the purposes of this section, including regulations to 
     provide that section 302(a)(6) of the Federal Employees' 
     Retirement System Act of 1986 (5 U.S.C. 8331 note) shall be 
     carried out in a manner consistent with the amendments made 
     by this section.

     SEC. 4005. ACCRUAL RATES.

       (a) CSRS.--
       (1) Members.--
       (A) In general.--Section 8339(c) is amended by striking all 
     that follows ``with respect to--'' and inserting the 
     following:
       ``(1) so much of his service as a Member as is or was 
     performed before January 1, 1996;
     [[Page H4270]]   ``(2) so much of his military service as--
       ``(A) is creditable for the purpose of this subsection; and
       ``(B) is or was performed before January 1, 1996; and
       ``(3) so much of his Congressional employee service as is 
     or was performed before January 1, 1996;
     by multiplying 2\1/2\ percent of his average pay by the years 
     of that service.''.
       (B) Technical amendment.--Section 8332(d) is amended by 
     striking ``section 8339(c)(1)'' and inserting ``section 
     8339(c)''.
       (2) Congressional employees.--Section 8339(b) is amended--
       (A) by inserting ``so much of'' after ``is computed with 
     respect to''; and
       (B) by inserting ``as is or was performed before January 1, 
     1996,'' before ``by multiplying''.
       (b) FERS.--
       (1) Members.--Section 8415(b) is amended by striking 
     ``shall'' and inserting ``shall, to the extent that such 
     service is or was performed before January 1, 1996,''.
       (2) Congressional employees.--Section 8415(c) is amended by 
     striking ``shall'' and inserting ``shall, to the extent that 
     such service is or was performed before January 1, 1996,''.
       (3) Provisions relating to the 1.1 percent accrual rate.--
     Section 8415(g) is amended--
       (A) in paragraph (1) by striking ``an employee under 
     paragraph (2),'' and inserting ``an employee or Member under 
     paragraph (2),'';
       (B) in paragraph (2) by inserting ``or Member'' after ``in 
     the case of an employee'' and by striking ``Congressional 
     employee,''; and
       (C) by adding at the end the following:
       ``(3) Notwithstanding any other provision of this 
     subsection--
       ``(A) this subsection shall not apply in the case of a 
     Member or Congressional employee whose separation (on which 
     entitlement to annuity is based) occurs before January 1, 
     1996; and
       ``(B) in the case of a Member or Congressional employee to 
     whom this subsection applies, the 1.1 percent accrual rate 
     shall apply only with respect to any period of service other 
     than a period with respect to which the 1.7 percent accrual 
     rate applies under subsection (b) or (c).''.

     SEC. 4006. ELIMINATION OF MEMBERS' OPTION TO ELECT NOT TO 
                   PARTICIPATE IN FERS.

       (a) In General.--Section 8401(20) is amended by striking 
     ``2106,'' and all that follows through the semicolon and 
     inserting ``2106;''.
       (b) Effective Date; Savings Provision.--
       (1) Effective date.--Subsection (a) shall take effect on 
     January 1, 1996.
       (2) Savings provision.--The amendment made by subsection 
     (a) shall not affect any election made before such subsection 
     takes effect.
                  TITLE V--MEDICARE SAVINGS EXTENSIONS
     SEC. 5001. SHORT TITLE.

       This title may be cited as the ``Medicare Presidential 
     Budget Savings Extension Act of 1995''.
   Subtitle A--Provisions Relating to Part A of the Medicare Program

     SEC. 5101. MAINTAINING SAVINGS RESULTING FROM TEMPORARY 
                   FREEZE ON PAYMENT INCREASES FOR SKILLED NURSING 
                   FACILITY SERVICES.

       (a) Basing Updates to Per Diem Cost Limits on Limits for 
     Fiscal Year 1993.--
       (1) In general.--The last sentence of section 1888(a) of 
     the Social Security Act (42 U.S.C. 1395yy(a)) is amended by 
     adding at the end the following: ``(except that such updates 
     may not take into account any changes in the routine service 
     costs of skilled nursing facilities occurring during cost 
     reporting periods which began during fiscal year 1994 or 
     fiscal year 1995).''.
       (2) No exceptions permitted based on amendment.--The 
     Secretary of Health and Human Services shall not consider the 
     amendment made by paragraph (1) in making any adjustments 
     pursuant to section 1888(c) of the Social Security Act.
       (b) Payments Determined on Prospective Basis.--Any change 
     made by the Secretary of Health and Human Services in the 
     amount of any prospective payment paid to a skilled nursing 
     facility under section 1888(d) of the Social Security Act for 
     cost reporting periods beginning on or after October 1, 1995, 
     may not take into account any changes in the costs of 
     services occurring during cost reporting periods which began 
     during fiscal year 1994 or fiscal year 1995.
   Subtitle B--Provisions Relating to Part B of the Medicare Program

     SEC. 5201. SETTING THE PART B PREMIUM AT 25 PERCENT OF 
                   PROGRAM EXPENDITURES PERMANENTLY.

       (a) In General.--Section 1839(a)(3) of the Social Security 
     Act (42 U.S.C. 1395r(a)(3)) is amended by striking ``The 
     monthly premium'' and all that follows through ``November 
     1.'' and inserting the following: ``The monthly premium shall 
     be equal to 50 percent of the monthly actuarial rate for 
     enrollees age 65 and over, as determined according to 
     paragraph (1), for that succeeding calendar year.''.
       (b) Conforming Amendments.--Section 1839 of such Act (42 
     U.S.C. 1395r) is amended--
       (1) in subsection (a)(2), by striking ``(b) and (e)'' and 
     inserting ``(b), (c), (e), and (f)'';
       (2) in the last sentence of subsection (a)(3), by striking 
     ``and the derivation of the dollar amounts specified in this 
     paragraph''; and
       (3) in subsection (e)--
       (A) by striking ``(1)(A) Notwithstanding'' and all that 
     follows through ``(B)'',
       (B) by striking paragraph (2), and
       (C) by redesignating clauses (i) through (v) as paragraphs 
     (1) through (5).
   Subtitle C--Provisions Relating to Parts A and B of the Medicare 
                                Program
     SEC. 5301. PERMANENT EXTENSION OF CERTAIN SECONDARY PAYER 
                   PROVISIONS.

       (a) Data Match.--
       (1) Section 1862(b)(5)(C) of the Social Security Act (42 
     U.S.C. 1395y(b)(5)(C)) is amended by striking clause (iii).
       (2) Section 6103(l)(12) of the Internal Revenue Code of 
     1986 is amended by striking subparagraph (F).
       (b) Application to Disabled Individuals in Large Group 
     Health Plans.--
       (1) In general.--Section 1862(b)(1)(B) of the Social 
     Security Act (42 U.S.C. 1395y(b)(1)(B)) is amended--
       (A) in clause (i), by striking ``clause (iv)'' and 
     inserting ``clause (iii)'',
       (B) by striking clause (iii), and
       (C) by redesignating clause (iv) as clause (iii).
       (2) Conforming amendments.--Paragraphs (1) through (3) of 
     section 1837(i) of such Act (42 U.S.C. 1395p(i)) and the 
     second sentence of section 1839(b) of such Act (42 U.S.C. 
     1395r(b)) are each amended by striking ``1862(b)(1)(B)(iv)'' 
     each place it appears and inserting ``1862(b)(1)(B)(iii)''.
       (c) Period of Application to Individuals with End Stage 
     Renal Disease.--Section 1862(b)(1)(C) of the Social Security 
     Act (42 U.S.C. 1395y(b)(1)(C)) is amended--
       (1) in the first sentence, by striking ``12-month'' each 
     place it appears and inserting ``18-month'', and
       (2) by striking the second sentence.
     SEC. 5302. MAINTAINING SAVINGS RESULTING FROM TEMPORARY 
                   FREEZE ON PAYMENT INCREASES FOR HOME HEALTH 
                   SERVICES.

       (a) Basing Updates to Per Visit Cost Limits on Limits for 
     Fiscal Year 1993.--Section 1861(v)(1)(L)(iii) of the Social 
     Security Act (42 U.S.C. 1395x(v)(1)(L)(iii)) is amended by 
     adding at the end the following sentence: ``In establishing 
     limits under this subparagraph, the Secretary may not take 
     into account any changes in the costs of the provision of 
     services furnished by home health agencies with respect to 
     cost reporting periods which began on or after July 1, 1994, 
     and before July 1, 1996.''.
       (b) No Exceptions Permitted Based on Amendment.--The 
     Secretary of Health and Human Services shall not consider the 
     amendment made by subsection (a) in making any exemptions and 
     exceptions pursuant to section 1861(v)(1)(L)(ii) of the 
     Social Security Act.
         TITLE VI--CONTRACT WITH AMERICA TAX RELIEF ACT OF 1995

     SEC. 6001. SHORT TITLE; AMENDMENT OF 1986 CODE.

       (a) Short Title.--This title may be cited as the ``Contract 
     With America Tax Relief Act of 1995''.
       (b) Amendment of 1986 Code.--Except as otherwise expressly 
     provided, whenever in this title an amendment or repeal is 
     expressed in terms of an amendment to, or repeal of, a 
     section or other provision, the reference shall be considered 
     to be made to a section or other provision of the Internal 
     Revenue Code of 1986.
       (c) Table of Contents.--

         TITLE V--CONTRACT WITH AMERICA TAX RELIEF ACT OF 1995

Sec. 6001. Short title; amendment of 1986 Code.

                 Subtitle A--American Dream Restoration

Sec. 6101. Family tax credit.
Sec. 6102. Credit to reduce marriage penalty.
Sec. 6103. Establishment of American Dream Savings Accounts.
Sec. 6104. Spousal IRA computed on basis of compensation of both 
              spouses.

                  Subtitle B--Senior Citizens' Equity

     Part I--Repeal of Increase in Tax on Social Security Benefits

Sec. 6201. Repeal of increase in tax on social security benefits.

      Part II--Treatment of Long-term Care Insurance and Services

Sec. 6211. Treatment of long-term care insurance.
Sec. 6212. Qualified long-term care services treated as medical care.
Sec. 6213. Certain exchanges of life insurance contracts for long-term 
              care insurance contracts not taxable.
Sec. 6214. Exclusion from gross income for amounts withdrawn from 
              certain retirement plans for long-term care insurance.

           Part III--Treatment of Accelerated Death Benefits

Sec. 6221. Treatment of accelerated death benefits by recipient.
Sec. 6222. Tax treatment of companies issuing qualified accelerated 
              death benefit riders.

  Part IV--Inclusion in Gross Income of Excess Long-term Care Benefits

Sec. 6231. Inclusion in income of excess long-term care benefits.
Sec. 6232. Reporting requirements.
      [[Page H4271]] Subtitle C--Job Creation and Wage Enhancement

                      Part I--Capital Gains Reform


      SUBPART A--CAPITAL GAINS REDUCTION FOR TAXPAYERS OTHER THAN 
                              CORPORATIONS

Sec. 6301. Capital gains deduction.
Sec. 6302. Indexing of certain assets acquired after December 31, 1994, 
              for purposes of determining gain.


          SUBPART B--CAPITAL GAINS REDUCTION FOR CORPORATIONS

Sec. 6311. Reduction of alternative capital gain tax for corporations.


   SUBPART C--CAPITAL LOSS DEDUCTION ALLOWED WITH RESPECT TO SALE OR 
                    EXCHANGE OF PRINCIPAL RESIDENCE

Sec. 6316. Capital loss deduction allowed with respect to sale or 
              exchange of principal residence.

                   Part II--Cost Recovery Provisions

Sec. 6321. Depreciation adjustment for certain property placed in 
              service after December 31, 1994.
Sec. 6322. Treatment of abandonment of lessor improvements at 
              termination of lease.

                Part III--Alternative Minimum Tax Relief

Sec. 6331. Phaseout of application of alternative minimum tax to 
              corporations.

                    Part IV--Taxpayer Debt Buy-down

Sec. 6341. Designation of amounts for reduction of public debt.
Sec. 6342. Public debt reduction trust fund.
Sec. 6343. Taxpayer-generated sequestration of Federal spending to 
              reduce the public debt.

                   Part V--Small Business Incentives

Sec. 6351. Cost-of-living adjustments relating to estate and gift tax 
              provisions.
Sec. 6352. Increase in expense treatment for small businesses.
Sec. 6353. Clarification of treatment of home office use for 
              administrative and management activities.
Sec. 6354. Treatment of storage of product samples.

                    Subtitle D--Family Reinforcement

Sec. 6401. Credit for adoption expenses.
Sec. 6402. Credit for taxpayers with certain persons requiring 
              custodial care in their households.

               Subtitle E--Social Security Earnings Test

Sec. 6501. Adjustments in monthly exempt amount for purposes of the 
              social security earnings test.

                   Subtitle F--Technical Corrections

Sec. 6601. Coordination with other subtitles.
Sec. 6602. Amendments related to Revenue Reconciliation Act of 1990.
Sec. 6603. Amendments related to Revenue Reconciliation Act of 1993.
Sec. 6604. Miscellaneous provisions.
                 Subtitle A--American Dream Restoration

     SEC. 6101. FAMILY TAX CREDIT.

       (a) In General.--Subpart A of part IV of subchapter A of 
     chapter 1 is amended by inserting after section 22 the 
     following new section:
     ``SEC. 23. FAMILY TAX CREDIT.

       ``(a) Allowance of Credit.--There shall be allowed as a 
     credit against the tax imposed by this chapter for the 
     taxable year an amount equal to $500 multiplied by the number 
     of qualifying children of the taxpayer.
       ``(b) Limitation.--The amount of credit which would (but 
     for this subsection) be allowed by subsection (a) shall be 
     reduced (but not below zero) by an amount which bears the 
     same ratio to such amount of credit as--
       ``(1) the excess (if any) of the taxpayer's adjusted gross 
     income (determined without regard to sections 911, 931, and 
     933) over $200,000, bears to
       ``(2) an amount equal to 100 times the dollar amount in 
     effect under subsection (a) for the taxable year.
       ``(c) Qualifying Child.--For purposes of this section--
       ``(1) In general.--The term `qualifying child' means any 
     individual if--
       ``(A) the taxpayer is allowed a deduction under section 151 
     with respect to such individual for such taxable year,
       ``(B) such individual has not attained the age of 18 as of 
     the close of the calendar year in which the taxable year of 
     the taxpayer begins, and
       ``(C) such individual bears a relationship to the taxpayer 
     described in section 32(c)(3)(B) (determined without regard 
     to clause (ii) thereof).
       ``(2) Exception for certain noncitizens.--The term 
     `qualifying child' shall not include any individual who would 
     not be a dependent if the first sentence of section 152(b)(3) 
     were applied without regard to all that follows `resident of 
     the United States'.
       ``(d) Inflation Adjustments.--
       ``(1) In general.--In the case of a taxable year beginning 
     in a calendar year after 1996, the $500 and $200,000 amounts 
     contained in subsections (a) and (b) shall each be increased 
     by an amount equal to--
       ``(A) such dollar amount, multiplied by
       ``(B) the cost-of-living adjustment determined under 
     section 1(f)(3) for the calendar year in which the taxable 
     year begins, determined by substituting `calendar year 1995' 
     for `calendar year 1992' in subparagraph (B) thereof.
       ``(2) Rounding.--If any amount as adjusted under paragraph 
     (1) is not a multiple of $50, such amount shall be rounded to 
     the nearest multiple of $50.
       ``(e) Certain Other Rules Apply.--Rules similar to the 
     rules of subsections (d) and (e) of section 32 shall apply 
     for purposes of this section.''
       (b) Conforming Amendment.--The table of sections for 
     subpart A of part IV of subchapter A of chapter 1 is amended 
     by inserting after the item relating to section 22 the 
     following new item:

``Sec. 23. Family tax credit.''
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1995.
     SEC. 6102. CREDIT TO REDUCE MARRIAGE PENALTY.

       (a) In General.--Subpart A of part IV of subchapter A of 
     chapter 1 is amended by inserting after section 23 the 
     following new section:
     ``SEC. 24. CREDIT TO REDUCE MARRIAGE PENALTY.

       ``(a) Allowance of Credit.--In the case of a joint return 
     for the taxable year, there shall be allowed as a credit 
     against the tax imposed by this chapter for such taxable year 
     an amount equal to the marriage penalty reduction credit.
       ``(b) Limitations.--
       ``(1) Dollar limitation.--The amount of credit allowed by 
     subsection (a) for the taxable year shall not exceed $145.
       ``(2) Credit disallowed for individuals claiming section 
     911, etc.--No credit shall be allowed under this section for 
     any taxable year if either spouse claims the benefits of 
     section 911, 931, or 933 for such taxable year.
       ``(c) Marriage Penalty Reduction Credit.--For purposes of 
     this section--
       ``(1) In general.--The marriage penalty reduction credit is 
     an amount equal to the excess (if any) of--
       ``(A) the joint tax amount of the taxpayer, over
       ``(B) the sum of the unmarried tax amounts for each spouse.
       ``(2) Unmarried tax amount.--For purposes of paragraph (1), 
     the unmarried tax amount, with respect to an individual, is 
     the amount of tax which would be imposed by section 1(c) if 
     such individual's taxable income were equal to the excess (if 
     any) of--
       ``(A) such individual's qualified earned income for the 
     taxable year, over
       ``(B) the sum of--
       ``(i) an amount equal to the basic standard deduction under 
     section 63(c)(2)(C) for the taxable year, plus
       ``(ii) the exemption amount (as defined in section 151(d)) 
     for such taxable year.
       ``(3) Joint tax amount.--For purposes of paragraph (1), the 
     joint tax amount is the amount of tax which would be imposed 
     by section 1(a) if the taxpayer's taxable income were equal 
     to the excess (if any) of--
       ``(A) the taxpayer's qualified earned income for the 
     taxable year, over
       ``(B) the sum of--
       ``(i) an amount equal to the basic standard deduction under 
     section 63(c)(2)(A) for the taxable year, plus
       ``(ii) an amount equal to twice the exemption amount (as so 
     defined) for such taxable year.
       ``(d) Qualified Earned Income.--For purposes of this 
     section--
       ``(1) In general.--The term `qualified earned income' means 
     an amount equal to the excess (if any) of--
       ``(A) the earned income for the taxable year, over
       ``(B) an amount equal to the sum of the deductions 
     described in paragraphs (1), (2), (6), (7), and (12) of 
     section 62(a) to the extent that such deductions are properly 
     allocable to or chargeable against earned income for such 
     taxable year.

     The amount of qualified earned income shall be determined 
     without regard to any community property laws.
       ``(2) Earned income.--For purposes of paragraph (1)--
       ``(A) In general.--The term `earned income' means income 
     which is earned income within the meaning of section 
     401(c)(2)(C) or 911(d)(2) (determined without regard to the
      phrase `not in excess of 30 percent of his share of the net 
     profits of such trade or business' in subparagraph (B) 
     thereof).
       ``(B) Exception.--Such term shall not include any amount--
       ``(i) not includible in gross income,
       ``(ii) received as a pension or annuity,
       ``(iii) paid or distributed out of an individual retirement 
     plan (within the meaning of section 7701(a)(37)),
       ``(iv) received as deferred compensation, or
       ``(v) received for services performed by an individual in 
     the employ of his spouse (within the meaning of section 
     3121(b)(3)(B)).
       ``(e) Amount of Credit To Be Determined Under Tables.--
       ``(1) In general.--The amount of the credit allowed by this 
     section shall be determined under tables prescribed by the 
     Secretary.
       ``(2) Requirements for tables.--The tables prescribed under 
     paragraph (1) shall reflect the provisions of subsection (c) 
     and shall round to the nearest $25 any amount of credit which 
     is less than the maximum credit under subsection (b)(1).''
       (b) Clerical Amendment.--The table of sections for subpart 
     A of part IV of subchapter A of chapter 1 is amended by 
     inserting after the item relating to section 23 the following 
     new item:

``Sec. 24. Credit to reduce marriage penalty.''
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1995.

[[Page H4272]]

     SEC. 6103. ESTABLISHMENT OF AMERICAN DREAM SAVINGS ACCOUNTS.

       (a) In General.--Subpart A of part I of subchapter D of 
     chapter 1 (relating to pension, profit-sharing, stock bonus 
     plans, etc.) is amended by inserting after section 408 the 
     following new section:
     ``SEC. 408A. AMERICAN DREAM SAVINGS ACCOUNTS.
       ``(a) General Rule.--Except as provided in this section, an 
     American Dream Savings Account shall be treated for purposes 
     of this title in the same manner as an individual retirement 
     plan.
       ``(b) American Dream Savings Account.--For purposes of this 
     title, the term `American Dream Savings Account' or `ADS 
     account' means an individual retirement plan which is 
     designated at the time of the establishment of the plan as an 
     American Dream Savings Account. Such designation shall be 
     made in such manner as the Secretary may prescribe.
       ``(c) Contribution Rules.--
       ``(1) No deduction allowed.--No deduction shall be allowed 
     under section 219 for a contribution to an ADS account.
       ``(2) Contribution limit.--
       ``(A) In general.--The aggregate amount of contributions 
     (other than rollover contributions) for any taxable year to 
     all ADS accounts maintained for the benefit of an individual 
     shall not exceed the lesser of--
       ``(i) $2,000, or
       ``(ii) an amount equal to the compensation includible in 
     the individual's gross income for such taxable year.
       ``(B) $4,000 limitation for certain additional married 
     individuals.--
       ``(i) In general.--In the case of an individual to whom 
     this subparagraph applies for the taxable year, the 
     limitation of subparagraph (A)(ii) shall be equal to the sum 
     of--
       ``(I) the compensation includible in such individual's 
     gross income for the taxable year, plus
       ``(II) the compensation includible in the gross income of 
     such individual's spouse for the taxable year reduced by the 
     amount of the limitation under subparagraph (A) applicable to 
     such spouse for such taxable year.

       ``(ii) Individuals to whom clause (i) applies.--Clause (i) 
     shall apply to any individual if--

       ``(I) such individual files a joint return for the taxable 
     year, and
       ``(II) the amount of compensation (if any) includible in 
     such individual's gross income for the taxable year is less 
     than the compensation includible in the gross income of such 
     individual's spouse for the taxable year.

       ``(C) Adjustment for inflation.--
       ``(i) In general.--In the case of a taxable year beginning 
     in a calendar year after 1996, the $2,000 amount contained in 
     subparagraph (A) shall be increased by an amount equal to--

       ``(I) such dollar amount, multiplied by
       ``(II) the cost-of-living adjustment under section 1(f)(3) 
     for the calendar year in which the taxable year begins, 
     determined by substituting `calendar year 1995' for `calendar 
     year 1992' in subparagraph (B) thereof.

       ``(ii) Rounding.--If any amount as adjusted under clause 
     (i) is not a multiple of $50, such amount shall be rounded to 
     the nearest multiple of $50.
       ``(D) Tax on excess contributions.--Section 4973 shall be 
     applied separately with respect to individual retirement 
     plans which are ADS accounts and individual retirement plans 
     which are not ADS accounts; except that, for purposes of 
     applying such section with respect to individual retirement 
     plans which are ADS accounts, excess contributions shall be 
     considered to be any amounts in excess of the limitation 
     under subsection (c)(2)(A).
       ``(3) Contributions permitted after age 70\1/2\.--
     Contributions to an ADS account may be made even after the 
     individual for whom the account is maintained has attained 
     age 70\1/2\.
       ``(4) Mandatory distribution rules not to apply, etc.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     subsections (a)(6) and (b)(3) of section 408 (relating to 
     required distributions) and section 4974 (relating to excise 
     tax on certain accumulations in qualified retirement plans) 
     shall not apply to any ADS account.
       ``(B) Post-death distributions.--Rules similar to the rules 
     of section 401(a)(9) (other than subparagraph (A) thereof) 
     shall apply for purposes of this section.
       ``(5) Limitations on rollover contributions.--No rollover 
     contribution may be made to an ADS account unless--
       ``(A) such contribution is from another ADS account, or
       ``(B) such contribution is from an individual retirement 
     plan (other than an ADS account) and is made before January 
     1, 1998.
       ``(d) Distribution Rules.--For purposes of this title--
       ``(1) General rules.--
       ``(A) Exclusion from gross income.--No portion of a 
     qualified distribution from an ADS account shall be 
     includible in gross income.
       ``(B) Exception from penalty tax.--Section 72(t) shall not 
     apply to--
       ``(i) any qualified distribution from an ADS account, and
       ``(ii) any qualified special purpose distribution (whether 
     or not a qualified distribution) from an ADS account.
       ``(2) Qualified distribution.--For purposes of this 
     subsection--
       ``(A) In general.--The term `qualified distribution' means 
     any payment or distribution--
       ``(i) made on or after the date on which the individual 
     attains age 59\1/2\,
       ``(ii) made to a beneficiary (or to the estate of the 
     individual) on or after the death of the individual,
       ``(iii) attributable to the individual's being disabled 
     (within the meaning of section 72(m)(7)), or
       ``(iv) which is a qualified special purpose distribution.
       ``(B) Distributions within 5 years.--No payment or 
     distribution shall be treated as a qualified distribution 
     if--
       ``(i) it is made within the 5-taxable year period beginning 
     with the 1st taxable year for which the individual made a 
     contribution to an ADS account (or such individual's spouse 
     made a contribution to an ADS account) established for such 
     individual, or
       ``(ii) in the case of a payment or distribution properly 
     allocable to a rollover contribution (or income allocable 
     thereto), it is made within 5 years after the date on which 
     such rollover contribution was made, as determined under 
     regulations prescribed by the Secretary.

     Clause (ii) shall not apply to a rollover contribution from 
     an ADS account.
       ``(3) Income inclusion for rollovers from non-ads 
     accounts.--In the case of any amount paid or distributed out 
     of an individual retirement plan (other than an ADS account) 
     which is paid into an ADS account (established for the 
     benefit of the payee or distributee, as the case may be) 
     before the close of the 60th day after the day on which the 
     payment or distribution is received--
       ``(A) sections 72(t) and 408(d)(3) shall not apply, and
       ``(B) any amount required to be included in gross income by 
     reason of this paragraph shall be so included ratably over 
     the 4-taxable year period beginning with the taxable year in 
     which the payment or distribution is made.
       ``(e) Qualified Special Purpose Distribution.--
       ``(1) In general.--For purposes of this section, the term 
     `qualified special purpose distribution' means any payments 
     or distributions from an ADS account to the individual for 
     whose benefit such account is established--
       ``(A) if such payments or distributions are qualified 
     first-time homebuyer distributions, or
       ``(B) to the extent such payments or distributions do not 
     exceed--
       ``(i) the qualified higher education expenses of the 
     taxpayer for the taxable year in which received, and
       ``(ii) the qualified medical expenses of the taxpayer for 
     the taxable year in which received.
       ``(2) Qualified first-time homebuyer distributions.--
       ``(A) In general.--For purposes of this subsection, the 
     term `qualified first-time homebuyer distribution' means any 
     payment or distribution received by an individual to the 
     extent such payment or distribution is used by the individual 
     before the close of the 60th day after the day on which such 
     payment or distribution is received to pay qualified 
     acquisition costs with respect to a principal residence for 
     such individual as a first-time homebuyer.
       ``(B) Qualified acquisition costs.--For purposes of this 
     paragraph, the term `qualified acquisition costs' means the 
     costs of acquiring, constructing, or reconstructing a 
     residence. Such term includes any usual or reasonable 
     settlement, financing, or other closing costs.
       ``(C) First-time homebuyer; other definitions.--For 
     purposes of this paragraph--
       ``(i) First-time homebuyer.--The term `first-time 
     homebuyer' means any individual if such individual (and, if 
     married, such individual's spouse) had no present ownership 
     interest in a principal residence during the 3-year period 
     ending on the date of acquisition of the principal residence 
     to which this paragraph applies.
       ``(ii) Principal residence.--The term `principal residence' 
     has the same meaning as when used in section 1034.
       ``(iii) Date of acquisition.--The term `date of 
     acquisition' means the date--

       ``(I) on which a binding contract to acquire the principal 
     residence to which subparagraph (A) applies is entered into, 
     or
       ``(II) on which a binding contract to construct or 
     reconstruct such a principal residence is entered into.

       ``(D) Special rule where delay in acquisition.--If any 
     payment or distribution out of an ADS account fails to meet 
     the requirements of subparagraph (A) solely by reason of a 
     delay or cancellation of the purchase, construction, or 
     reconstruction of the residence, the amount of the payment or 
     distribution may be contributed to an ADS account as provided 
     in subsection (d)(3)(A)(i) of section 408 (determined by 
     substituting `120th day' for `60th day' in such subsection), 
     except that--
       ``(i) subsection (d)(3)(B) of such section shall not be 
     applied to such contribution, and
       ``(ii) such amount shall not be taken into account in 
     determining whether subsection (d)(3)(A)(i) of such section 
     applies to any other amount.
       ``(3) Qualified higher education expenses.--For purposes of 
     this subsection--
       ``(A) In general.--The term `qualified higher education 
     expenses' means tuition, fees, books, supplies, and equipment 
     required for the enrollment or attendance of--
     [[Page H4273]]   ``(i) the taxpayer,
       ``(ii) the taxpayer's spouse, or
       ``(iii) the taxpayer's child (as defined in section 
     151(c)(3)) or grandchild,

     at an eligible educational institution (as defined in section 
     135(c)(3)).
       ``(B) Coordination with savings bond provisions.--The 
     amount of qualified higher education expenses for any taxable 
     year shall be reduced by any amount excludable from gross 
     income under section 135.
       ``(4) Qualified medical expenses.--
       ``(A) In general.--For purposes of this subsection, the 
     term `qualified medical expenses' means any amounts paid 
     during the taxable year, not compensated for by insurance or 
     otherwise, for medical care (as defined in section 213(d)) of 
     the taxpayer, his spouse, or a dependent (as defined in 
     section 152).
       ``(B) Long-term care insurance premiums treated as medical 
     expenses.--For purposes of subparagraph (A), section 
     213(d)(1)(C) shall not apply but the term `qualified medical 
     expenses' shall include premiums for long-term care insurance 
     (as defined in section 7702B(b)) for coverage of the taxpayer 
     or his spouse.
       ``(f) Other Definitions.--For purposes of this section--
       ``(1) Rollover contributions.--The term `rollover 
     contributions' means contributions described in sections 
     402(c), 403(a)(4), 403(b)(8), or 408(d)(3).
       ``(2) Compensation.--The term `compensation' has the 
     meaning given such term by section 219(f).''
       (b) Termination of Nondeductible IRA Contributions.--
       (1) Section 408(o) is amended by adding at the end the 
     following new paragraph:
       ``(5) Termination.--This subsection shall not apply to any 
     designated nondeductible contribution for any taxable year 
     beginning after December 31, 1995.''
       (2) Section 219(f) of is amended by striking paragraph (7).
       (c) Excess Distributions Tax Not To Apply.--Subparagraph 
     (B) of section 4980A(e)(1) is amended by inserting ``other 
     than an ADS account (as defined in section 408A(b))'' after 
     ``retirement plan''.
       (d) Clerical Amendment.--The table of sections for subpart 
     A of part I of subchapter D of chapter 1 is amended by 
     inserting after the item relating to section 408 the 
     following new item:

``Sec. 408A. American Dream Savings Accounts.''
       (e) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1995.
     SEC. 6104. SPOUSAL IRA COMPUTED ON BASIS OF COMPENSATION OF 
                   BOTH SPOUSES.

       (a) In General.--Subsection (c) of section 219 (relating to 
     special rules for certain married individuals) is amended to 
     read as follows:
       ``(c) Special Rules for Certain Married Individuals.--
       ``(1) In general.--In the case of an individual to whom 
     this paragraph applies for the taxable year, the limitation 
     of subsection (b)(1) shall be equal to the lesser of--
       ``(A) $2,000, or
       ``(B) the sum of--
       ``(i) the compensation includible in such individual's 
     gross income for the taxable year, plus
       ``(ii) the compensation includible in the gross income of 
     such individual's spouse for the taxable year reduced by the 
     amount allowable as a deduction under subsection (a) to such 
     spouse for such taxable year.
       ``(2) Individuals to whom paragraph (1) applies.--Paragraph 
     (1) shall apply to any individual if--
       ``(A) such individual files a joint return for the taxable 
     year, and
       ``(B) the amount of compensation (if any) includible in 
     such individual's gross income for the taxable year is less 
     than the compensation includible in the gross income of such 
     individual's spouse for the taxable year.''
       (b) Technical Amendment.--Paragraph (2) of section 219(f) 
     (relating to other definitions and special rules) is amended 
     by striking ``subsections (b) and (c)'' and inserting 
     ``subsection (b)''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1995.
                  Subtitle B--Senior Citizens' Equity

     PART I--REPEAL OF INCREASE IN TAX ON SOCIAL SECURITY BENEFITS

     SEC. 6201. REPEAL OF INCREASE IN TAX ON SOCIAL SECURITY 
                   BENEFITS.

       (a) In General.--Subsection (a) of section 86 (relating to 
     social security and tier 1 railroad retirement benefits) is 
     amended by adding at the end the following new paragraph:
       ``(3) Phaseout of additional amount.--In the case of any 
     taxable year beginning in a calendar year after 1995 and 
     before 2000, paragraph (2) shall be applied by substituting 
     the percentage determined under the following table for `85 
     percent' each place it appears:

                                        ``In the case of a taxable ye  
                                            beginningThe percentage is:
      1996.................................................75 percent  
      1997.................................................65 percent  
      1998.................................................60 percent  
      1999..............................................55 percent.''  
       (b) Termination of Additional Amount.--Paragraph (2) of 
     section 86(a) is amended by adding at the end the following 
     new flush sentence:
     ``This paragraph shall not apply to any taxable year 
     beginning after December 31, 1999.''
       (c) Conforming Amendments.--
       (1) Paragraph (3) of section 871(a) is amended--
       (A) by striking ``85 percent'' in subparagraph (A) and 
     inserting ``50 percent'', and
       (B) by inserting before the last sentence the following new 
     flush sentence:
     ``In the case of any taxable year beginning in a calendar 
     year after 1995 and before 2000, subparagraph (A) shall be 
     applied by substituting the percentage determined for such 
     calendar year under section 86(a)(3) for `50 percent'.''
       (2)(A) Subparagraph (A) of section 121(e)(1) of the Social 
     Security Amendments of 1983 (Public Law 98-21) is amended--
       (i) by striking ``(A) There'' and inserting ``There'';
       (ii) by striking ``(i)'' immediately following ``amounts 
     equivalent to''; and
       (iii) by striking ``, less (ii)'' and all that follows and 
     inserting a period.
       (B) Paragraph (1) of section 121(e) of such Act is amended 
     by striking subparagraph (B).
       (C) Paragraph (3) of section 121(e) of such Act is amended 
     by striking subparagraph (B) and by redesignating 
     subparagraph (C) as subparagraph (B).
       (D) Paragraph (2) of section 121(e) of such Act is amended 
     in the first sentence by striking ``paragraph (1)(A)'' and 
     inserting ``paragraph (1)''.
       (d) Effective Date.--
       (1) In general.--Except as provided in paragraph (2), the 
     amendments made by this section shall apply to taxable years 
     beginning after December 31, 1995.
       (2) Subsection (c)(2).--The amendments made by subsection 
     (c)(2) shall apply to tax liabilities for taxable years 
     beginning after December 31, 1995.

      PART II--TREATMENT OF LONG-TERM CARE INSURANCE AND SERVICES

     SEC. 6211. TREATMENT OF LONG-TERM CARE INSURANCE.

       (a) General Rule.--Chapter 79 (relating to definitions) is 
     amended by inserting after section 7702A the following new 
     section:

     ``SEC. 7702B. TREATMENT OF LONG-TERM CARE INSURANCE.

       ``(a) In General.--For purposes of this title--
       ``(1) a long-term care insurance contract shall be treated 
     as an accident and health insurance contract,
       ``(2) amounts (other than policyholder dividends, as 
     defined in section 808, or premium refunds) received under a 
     long-term care insurance contract shall be treated as amounts 
     received for personal injuries and sickness and shall be 
     treated as reimbursement for expenses actually incurred for 
     medical care (as defined in section 213(d)),
       ``(3) any plan of an employer providing coverage under a 
     long-term care insurance contract shall be treated as an 
     accident and health plan with respect to such coverage,
       ``(4) except as provided in subsection (d)(3), amounts paid 
     for a long-term care insurance contract providing the 
     benefits described in subsection (b)(2)(A) shall be treated 
     as payments made for insurance for purposes of section 
     213(d)(1)(D), and
       ``(5) a long-term care insurance contract shall be treated 
     as a guaranteed renewable contract subject to the rules of 
     section 816(e).
       ``(b) Long-Term Care Insurance Contract.--For purposes of 
     this title--
       ``(1) In general.--The term `long-term care insurance 
     contract' means any insurance contract if--
       ``(A) the only insurance protection provided under such 
     contract is coverage of qualified long-term care services,
       ``(B) such contract does not pay or reimburse expenses 
     incurred for services or items to the extent that such 
     expenses are reimbursable under title XVIII of the Social 
     Security Act or would be so reimbursable but for the 
     application of a deductible or coinsurance amount,
       ``(C) such contract is guaranteed renewable,
       ``(D) such contract does not provide for a cash surrender 
     value or other money that can be--
       ``(i) paid, assigned, or pledged as collateral for a loan, 
     or
       ``(ii) borrowed,
     other than as provided in subparagraph (E) or paragraph 
     (2)(C), and
       ``(E) all refunds of premiums, and all policyholder 
     dividends or similar amounts, under such contract are to be 
     applied as a reduction in future premiums or to increase 
     future benefits.
       ``(2) Special rules.--
       ``(A) Per diem, etc. payments permitted.--A contract shall 
     not fail to be described in subparagraph (A) or (B) of 
     paragraph (1) by reason of payments being made on a per diem 
     or other periodic basis without regard to the expenses 
     incurred during the period to which the payments relate.
       ``(B) Special rules relating to medicare.--
       ``(i) Paragraph (1)(B) shall not apply to expenses which 
     are reimbursable under title XVIII of the Social Security Act 
     only as a secondary payor.
       ``(ii) No provision of law shall be construed or applied so 
     as to prohibit the offering of a long-term care insurance 
     contract on the basis that the contract coordinates its 
     benefits with those provided under such title.
       ``(C) Refunds of premiums.--Paragraph (1)(E) shall not 
     apply to any refund on the 
     [[Page H4274]] death of the insured, or on a complete 
     surrender or cancellation of the contract, which cannot 
     exceed the aggregate premiums paid under the contract. Any 
     refund on a complete surrender or cancellation of the 
     contract shall be includible in gross income to the extent 
     that any deduction or exclusion was allowable with respect to 
     the premiums.
       ``(c) Qualified Long-Term Care Services.--For purposes of 
     this section--
       ``(1) In general.--The term `qualified long-term care 
     services' means necessary diagnostic, preventive, 
     therapeutic, curing, treating, mitigating, and rehabilitative 
     services, and maintenance or personal care services, which--
       ``(A) are required by a chronically ill individual, and
       ``(B) are provided pursuant to a plan of care prescribed by 
     a licensed health care practitioner.
       ``(2) Chronically ill individual.--
       ``(A) In general.--The term `chronically ill individual' 
     means any individual who has been certified by a licensed 
     health care practitioner as--
       ``(i) being unable to perform (without substantial 
     assistance from another individual) at least 2 activities of 
     daily living for a period of at least 90 days due to a
      loss of functional capacity or to cognitive impairment, or
       ``(ii) having a level of disability similar (as determined 
     by the Secretary in consultation with the Secretary of Health 
     and Human Services) to the level of disability described in 
     clause (i).

     Such term shall not include any individual otherwise meeting 
     the requirements of the preceding sentence unless within the 
     preceding 12-month period a licensed health care practitioner 
     has certified that such individual meets such requirements.
       ``(B) Activities of daily living.--For purposes of 
     subparagraph (A), each of the following is an activity of 
     daily living:
       ``(i) Eating.
       ``(ii) Toileting.
       ``(iii) Transferring.
       ``(iv) Bathing.
       ``(v) Dressing.
       ``(vi) Continence.

     Nothing in this section shall be construed to require a 
     contract to take into account all of the preceding activities 
     of daily living.
       ``(3) Maintenance or personal care services.--The term 
     `maintenance or personal care services' means any care the 
     primary purpose of which is the provision of needed 
     assistance with any of the disabilities as a result of which 
     the individual is a chronically ill individual (including the 
     protection from threats to health and safety due to severe 
     cognitive impairment).
       ``(4) Licensed health care practitioner.--The term 
     `licensed health care practitioner' means any physician (as 
     defined in section 1861(r)(1) of the Social Security Act) and 
     any registered professional nurse, licensed social worker, or 
     other individual who meets such requirements as may be 
     prescribed by the Secretary.
       ``(d) Treatment of Coverage Provided as Part of a Life 
     Insurance Contract.--Except as otherwise provided in 
     regulations prescribed by the Secretary, in the case of any 
     long-term care insurance coverage (whether or not qualified) 
     provided by a rider on a life insurance contract--
       ``(1) In general.--This section shall apply as if the 
     portion of the contract providing such coverage is a separate 
     contract.
       ``(2) Application of 7702.--Section 7702(c)(2) (relating to 
     the guideline premium limitation) shall be applied by 
     increasing the guideline premium limitation with respect to a 
     life insurance contract, as of any date--
       ``(A) by the sum of any charges (but not premium payments) 
     against the life insurance contract's cash surrender value 
     (within the meaning of section 7702(f)(2)(A)) for such 
     coverage made to that date under the contract, less
       ``(B) any such charges the imposition of which reduces the 
     premiums paid for the contract (within the meaning of section 
     7702(f)(1)).
       ``(3) Application of section 213.--No deduction shall be 
     allowed under section 213(a) for charges against the life 
     insurance contract's cash surrender value described in 
     paragraph (2), unless such charges are includible in income 
     as a result of the application of section 72(e)(10) and the 
     rider is a long-term care insurance contract under subsection 
     (b).
       ``(4) Portion defined.--For purposes of this subsection, 
     the term `portion' means only the terms and benefits under a 
     life insurance contract that are in addition to the terms and 
     benefits under the contract without regard to the coverage 
     under a long-term care insurance contract.''
       (b) Reserve Method.--Clause (iii) of section 807(d)(3)(A) 
     is amended by inserting ``(other than a long-term care 
     insurance contract, as defined in section 7702B(b))'' after 
     ``insurance contract''.
       (c) Long-Term Care Insurance Not Permitted Under Cafeteria 
     Plans or Flexible Spending Arrangements.--
       (1) Cafeteria plans.--Section 125(f) is amended by adding 
     at the end the following new sentence: ``Such term shall not 
     include any long-term care insurance contract (as defined in 
     section 7702B(b)).''
       (2) Flexible spending arrangements.--The text of section 
     106 (relating to contributions by employer to accident and 
     health plans) is amended to read as follows:
       ``(a) General Rule.--Except as provided in subsection (b), 
     gross income of an employee does not include employer-
     provided coverage under an accident or health plan.
       ``(b) Inclusion of Long-Term Care Benefits Provided Through 
     Flexible Spending Arrangements.--
       ``(1) In general.--Effective on and after January 1, 1996, 
     gross income of an employee shall include employer-provided 
     coverage for qualified long-term care services (as defined in 
     section 7702B(c)) to the extent that such coverage is 
     provided through a flexible spending or similar arrangement.
       ``(2) Flexible spending arrangement.--For purposes of this 
     subsection, a flexible spending arrangement is a benefit 
     program which provides employees with coverage under which--
       ``(A) specified incurred expenses may be reimbursed 
     (subject to reimbursement maximums and other reasonable 
     conditions), and
       ``(B) the maximum amount of reimbursement which is 
     reasonably available to a participant for such coverage is 
     less than 500 percent of the value of such coverage.

     In the case of an insured plan, the maximum amount reasonably 
     available shall be determined on the basis of the underlying 
     coverage.''
       (d) Continuation Coverage Excise Tax Not To Apply.--
     Subsection (f) of section 4980B is amended by adding at the 
     end the following new paragraph:
       ``(9) Continuation of long-term care coverage not 
     required.--A group health plan shall not be treated as 
     failing to meet the requirements of this subsection solely by 
     reason of failing to provide coverage under any long-term 
     care insurance contract (as defined in section 7702B(b)).''
       (e) Amounts Paid to Relatives Treated as Not Paid for 
     Medical Care.--Section 213(d) is amended by adding at the end 
     the following new paragraph:
       ``(10) Certain payments to relatives treated as not paid 
     for medical care.--An amount paid for a qualified long-term 
     care service (as defined in section 7702B(c)) provided to an 
     individual shall be treated as not paid for medical care if 
     such service is provided--
       ``(A) by a relative (directly or through a partnership, 
     corporation, or other entity) unless the relative is a 
     licensed professional with respect to such services, or
       ``(B) by a corporation or partnership which is related 
     (within the meaning of section 267(b) or 707(b)) to the 
     individual.
     For purposes of this paragraph, the term `relative' means an 
     individual bearing a relationship to the individual which is 
     described in any of paragraphs (1) through (8) of section 
     152(a). This paragraph shall not apply for purposes of 
     section 105(b) with respect to reimbursements through 
     insurance.''
       (f) Clerical Amendment.--The table of sections for chapter 
     79 is amended by inserting after the item relating to section 
     7702A the following new item:

``Sec. 7702B. Treatment of long-term care insurance.''.
       (g) Effective Date.--
       (1) In general.--The amendments made by this section shall 
     apply to contracts issued after December 31, 1995.
       (2) Continuation of existing policies.--In the case of any 
     contract issued before January 1, 1996, which met the long-
     term care insurance requirements of the State in which the 
     contract was sitused at the time the contract was issued--
       (A) such contract shall be treated for purposes of the 
     Internal Revenue Code of 1986 as a long-term care insurance 
     contract (as defined in section 7702B(b) of such Code), and
       (B) services provided under, or reimbursed by, such 
     contract shall be treated for such purposes as qualified 
     long-term care services (as defined in section 7702B(c) of 
     such Code).
       (3) Exchanges of existing policies.--If, after the date of 
     enactment of this Act and before January 1, 1996, a contract 
     providing for long-term care insurance coverage is exchanged 
     solely for a long-term care insurance contract (as defined in 
     section 7702B(b) of such Code), no gain or loss shall be 
     recognized on the exchange. If, in addition to a long-term 
     care insurance contract, money or other property is received 
     in the exchange, then any gain shall be recognized to the 
     extent of the sum of the money and the fair market value of 
     the other property received. For purposes of this paragraph, 
     the cancellation of a contract providing for long-term care 
     insurance coverage and reinvestment of the cancellation 
     proceeds in a long-term care insurance contract within 60 
     days thereafter shall be treated as an exchange.
       (4) Issuance of certain riders permitted.--For purposes of 
     applying sections 101(f), 7702, and 7702A of the Internal 
     Revenue Code of 1986 to any contract--
       (A) the issuance of a rider which is treated as a long-term 
     care insurance contract under section 7702B, and
       (B) the addition of any provision required to conform any 
     other long-term care rider to be so treated,

     shall not be treated as a modification or material change of 
     such contract.

     SEC. 6212. QUALIFIED LONG-TERM CARE SERVICES TREATED AS 
                   MEDICAL CARE.

       (a) General Rule.--Paragraph (1) of section 213(d) 
     (defining medical care) is amended by striking ``or'' at the 
     end of subparagraph (B), by redesignating subparagraph (C) as 
     subparagraph (D), and by inserting after subparagraph (B) the 
     following new subparagraph:
       ``(C) for qualified long-term care services (as defined in 
     section 7702B(c)), or''.

[[Page H4275]]

       (b) Technical Amendments.--
       (1) Subparagraph (D) of section 213(d)(1) (as redesignated 
     by subsection (a)) is amended by striking ``subparagraphs (A) 
     and (B)'' and inserting ``subparagraphs (A), (B), and (C)''.
       (2)(A) Paragraph (1) of section 213(d) is amended by adding 
     at the end the following new flush sentence:
     ``In the case of a long-term care insurance contract (as 
     defined in section 7702B(b)), only eligible long-term care 
     premiums (as defined in paragraph (11)) shall be taken into 
     account under subparagraph (D).''
       (B) Subsection (d) of section 213 is amended by adding at 
     the end the following new paragraph:
       ``(11) Eligible long-term care premiums.--
       ``(A) In general.--For purposes of this section, the term 
     `eligible long-term care premiums' means the amount paid 
     during a taxable year for any long-term care insurance 
     contract (as defined in section 7702B(b)) covering an 
     individual, to the extent such amount does not exceed the 
     limitation determined under the following table:

      ``In the case of an individual                                   
        with an attained age before the                  The limitation
        close of the taxable year of:                           is:    
        40 or less...............................................$200  
        More than 40 but not more than 50.........................375  
        More than 50 but not more than 60.........................750  
        More than 60 but not more than 70.......................2,000  
        More than 70...........................................2,500.  
       ``(B) Indexing.--
       ``(i) In general.--In the case of any taxable year 
     beginning in a calendar year after 1996, each dollar amount 
     contained in subparagraph (A) shall be increased by the 
     medical care cost adjustment of such amount for such calendar 
     year. If any increase determined under the preceding sentence 
     is not a multiple of $10, such increase shall be rounded to 
     the nearest multiple of $10.
       ``(ii) Medical care cost adjustment.--For purposes of 
     clause (i), the medical care cost adjustment for any calendar 
     year is the percentage (if any) by which--

       ``(I) the medical care component of the Consumer Price 
     Index (as defined in section 1(f)(5)) for August of the 
     preceding calendar year, exceeds
       ``(II) such component for August of 1995.

     The Secretary shall, in consultation with the Secretary of 
     Health and Human Services, prescribe an adjustment which the 
     Secretary determines is more appropriate for purposes of this 
     paragraph than the adjustment described in the preceding 
     sentence, and the adjustment so prescribed shall apply in 
     lieu of the adjustment described in the preceding sentence.''
       (3) Paragraph (6) of section 213(d) is amended--
       (A) by striking ``subparagraphs (A) and (B)'' and inserting 
     ``subparagraphs (A), (B), and (C)'', and
       (B) by striking ``paragraph (1)(C)'' in subparagraph (A) 
     and inserting ``paragraph (1)(D)''.
       (4) Paragraph (7) of section 213(d) is amended by striking 
     ``subparagraphs (A) and (B)'' and inserting ``subparagraphs 
     (A), (B), and (C)''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1995.

     SEC. 6213. CERTAIN EXCHANGES OF LIFE INSURANCE CONTRACTS FOR 
                   LONG-TERM CARE INSURANCE CONTRACTS NOT TAXABLE.

       (a) In General.--Subsection (a) of section 1035 (relating 
     to certain exchanges of insurance contracts) is amended by 
     striking the period at the end of paragraph (3) and inserting 
     ``; or'', and by adding at the end the following new 
     paragraph:
       ``(4) a contract of life insurance or an endowment or 
     annuity contract for a long-term care insurance contract (as 
     defined in section 7702B(b)).''
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     1995.

     SEC. 6214. EXCLUSION FROM GROSS INCOME FOR AMOUNTS WITHDRAWN 
                   FROM CERTAIN RETIREMENT PLANS FOR LONG-TERM 
                   CARE INSURANCE.

       (a) In General.--Part III of subchapter B of chapter 1 
     (relating to items specifically excluded from gross income) 
     is amended by redesignating section 137 as section 138 and by 
     inserting after section 136 the following new section:

     ``SEC. 137. DISTRIBUTIONS FROM CERTAIN RETIREMENT PLANS FOR 
                   LONG-TERM CARE INSURANCE.

       ``(a) General Rule.--The amount which would (but for this 
     section) be includible in the gross income of an individual 
     for the taxable year by reason of eligible distributions 
     during the taxable year shall be reduced (but not below zero) 
     by the aggregate premiums paid by such individual during such 
     taxable year for any long-term care insurance contract (as 
     defined in section 7702B(b)) for coverage of such individual 
     or the spouse of such individual.
       ``(b) Eligible Distribution.--For purposes of this section, 
     the term `eligible distribution' means any distribution or 
     payment to an individual from--
       ``(1) an individual retirement plan of such individual,
       ``(2) amounts attributable to employer contributions made 
     pursuant to elective deferrals described in subparagraph (A) 
     or (C) of section 402(g)(3) or section 501(c)(18)(D)(iii), or
       ``(3) amounts deferred under section 457(a).''
       (b) Conforming Amendments.--
       (1) Section 401(k)(2)(B)(i) is amended by striking ``or'' 
     at the end of subclause (III), by striking ``and'' at the end 
     of subclause (IV) and inserting ``or'', and by inserting 
     after subclause (IV) the following new subclause:

       ``(V) the date distributions for premiums for a long-term 
     care insurance contract (as defined in section 7702B(b)) for 
     coverage of such individual or the spouse of such individual 
     are made, and''.

       (2) Section 403(b)(11) is amended by striking ``or'' at the 
     end of subparagraph (A), by striking the period at the end of 
     subparagraph (B) and inserting ``, or'', and by inserting 
     after subparagraph (B) the following new subparagraph:
       ``(C) for the payment of premiums for a long-term care 
     insurance contract (as defined in section 7702B(b)) for 
     coverage of the employee or the spouse of the employee.''
       (3) Subparagraph (A) of section 457(d)(1) is amended by 
     striking ``or'' at the end of clause (ii), by striking 
     ``and'' at the end of clause (iii) and inserting ``or'', and 
     by inserting after clause (iii) the following new clause:
       ``(iv) the date distributions for premiums for a long-term 
     care insurance contract (as defined in section 7702B(b)) for 
     coverage of such individual or the spouse of such individual 
     are made, and''.
       (4) The table of sections for part III of subchapter B of 
     chapter 1 is amended by striking the last item and inserting 
     the following new items:

``Sec. 137. Distributions from certain retirement plans for long-term 
              care insurance.
``Sec. 138. Cross references to other Acts.''
       (c) Effective Date.--The amendments made by this section 
     shall apply to payments and distributions after December 31, 
     1995.
           PART III--TREATMENT OF ACCELERATED DEATH BENEFITS

     SEC. 6221. TREATMENT OF ACCELERATED DEATH BENEFITS BY 
                   RECIPIENT.

       (a) In General.--Section 101 (relating to certain death 
     benefits) is amended by adding at the end the following new 
     subsection:
       ``(g) Treatment of Certain Accelerated Death Benefits.--
       ``(1) In general.--For purposes of this section, the 
     following amounts shall be treated as an amount paid by 
     reason of the death of an insured:
       ``(A) Any amount received under a life insurance contract 
     on the life of an insured who is a terminally ill individual.
       ``(B) Any amount received under a life insurance contract 
     on the life of an insured who is a chronically ill individual 
     (as defined in section 7702B(c)(2)) but only if such amount 
     is received under a rider or other provision of such contract 
     which is treated as a long-term care insurance contract under 
     section 7702B.
       ``(2) Treatment of viatical settlements.--
       ``(A) In general.--In the case of a life insurance contract 
     on the life of an insured described in paragraph (1), if--
       ``(i) any portion of such contract is sold to any viatical 
     settlement provider, or
       ``(ii) any portion of the death benefit is assigned to such 
     a provider,

     the amount paid for such sale or assignment shall be treated 
     as an amount paid under the life insurance contract by reason 
     of the death of such insured.
       ``(B) Viatical settlement provider.--The term `viatical 
     settlement provider' means any person regularly engaged in 
     the trade or business of purchasing, or taking assignments 
     of, life insurance contracts on the lives of insureds 
     described in paragraph (1) if--
       ``(i) such person is licensed for such purposes in the 
     State in which the insured resides, or
       ``(ii) in the case of an insured who resides in a State not 
     requiring the licensing of such persons for such purposes, 
     such person meets the requirements of sections 8 and 9 of the 
     Viatical Settlements Model Act of the National Association of 
     Insurance Commissioners.
       ``(3) Definitions.--For purposes of this subsection--
       ``(A) Terminally ill individual.--The term `terminally ill 
     individual' means an individual who has been certified by a 
     physician as having an illness or physical condition which 
     can reasonably be expected to result in death in 24 months or 
     less after the date of the certification.
       ``(B) Physician.--The term `physician' has the meaning 
     given to such term by section 1861(r)(1) of the Social 
     Security Act (42 U.S.C. 1395x(r)(1)).
       ``(4) Exception for business-related policies.--This 
     subsection shall not apply in the case of any amount paid to 
     any taxpayer other than the insured if such taxpayer has an 
     insurable interest with respect to the life of the insured by 
     reason of the insured being a director, officer, or employee 
     of the taxpayer or by reason of the insured being financially 
     interested in any trade or business carried on by the 
     taxpayer.

[[Page H4276]]

       ``(5) Cross reference.--

  ``For inclusion in gross income of excess benefits, see section 91.''
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to amounts received after December 31, 1995.

     SEC. 6222. TAX TREATMENT OF COMPANIES ISSUING QUALIFIED 
                   ACCELERATED DEATH BENEFIT RIDERS.

       (a) Qualified Accelerated Death Benefit Riders Treated as 
     Life Insurance.--Section 818 (relating to other definitions 
     and special rules) is amended by adding at the end the 
     following new subsection:
       ``(g) Qualified Accelerated Death Benefit Riders Treated as 
     Life Insurance.--For purposes of this part--
       ``(1) In general.--Any reference to a life insurance 
     contract shall be treated as including a reference to a 
     qualified accelerated death benefit rider on such contract.
       ``(2) Qualified accelerated death benefit riders.--For 
     purposes of this subsection, the term `qualified accelerated 
     death benefit rider' means any rider on a life insurance 
     contract if the
      only payments under the rider are payments meeting the 
     requirements of section 101(g).
       ``(3) Exception for long-term care riders.--Paragraph (1) 
     shall not apply to any rider which is treated as a long-term 
     care insurance contract under section 7702B.''
       (b) Effective Date.--
       (1) In general.--The amendment made by this section shall 
     take effect on January 1, 1996.
       (2) Issuance of rider not treated as material change.--For 
     purposes of applying sections 101(f), 7702, and 7702A of the 
     Internal Revenue Code of 1986 to any contract--
       (A) the issuance of a qualified accelerated death benefit 
     rider (as defined in section 818(g) of such Code (as added by 
     this Act)), and
       (B) the addition of any provision required to conform an 
     accelerated death benefit rider to the requirements of such 
     section 818(g),

     shall not be treated as a modification or material change of 
     such contract.
  PART IV--INCLUSION IN GROSS INCOME OF EXCESS LONG-TERM CARE BENEFITS

     SEC. 6231. INCLUSION IN INCOME OF EXCESS LONG-TERM CARE 
                   BENEFITS.

       (a) In General.--Part II of subchapter B of chapter 1 
     (relating to items specifically included in gross income) is 
     amended by adding at the end the following new section:

     ``SEC. 91. EXCESS LONG-TERM CARE BENEFITS.

       ``(a) General Rule.--Notwithstanding any other provision of 
     this title, gross income shall include the amount of excess 
     long-term care benefits received by the taxpayer during the 
     taxable year.
       ``(b) Exception for Terminally Ill Individuals.--Subsection 
     (a) shall not apply to any long-term care benefit paid by 
     reason of an insured who is a terminally ill individual (as 
     defined in section 101(g)) as of the date the benefit is 
     received.
       ``(c) Excess Long-Term Care Benefits.--For purposes of this 
     section--
       ``(1) In general.--The term `excess long-term care 
     benefits' means the excess (if any) of--
       ``(A) the value of the long-term care benefits received by 
     the taxpayer during the taxable year, over
       ``(B) the exclusion amount applicable to such benefits.
       ``(2) Long-term care benefits.--The term `long-term care 
     benefits' means--
       ``(A) payments and other benefits under long-term care 
     insurance contracts (as defined in section 7702B(b)) to the 
     extent excludable from gross income by reason of section 
     7702B(a)(2), and
       ``(B) payments which are excludable from gross income by 
     reason of section 101(g).
       ``(3) Exclusion amount.--
       ``(A) In general.--In the case of long-term care benefits 
     received by the taxpayer during the taxable year by reason of 
     the taxpayer being a chronically ill individual, the term 
     `exclusion amount' means the aggregate of $200 for each day 
     during such year on which the individual is a chronically ill 
     individual. In the case of individuals who are married to 
     each other and who are both chronically ill individuals, the 
     preceding sentence shall be applied separately with respect 
     to each spouse.
       ``(B) Other taxpayers.--In the case of long-term care 
     benefits received during the taxable year by a taxpayer by 
     reason of another individual being a chronically ill 
     individual, the term `exclusion amount' means so much of such 
     other individual's exclusion amount (for such other 
     individual's taxable year which begins in the calendar year 
     in which the taxpayer's taxable year begins) as is allocated 
     by such other individual to the taxpayer. Such an allocation 
     shall be made at the time and in the manner prescribed by the 
     Secretary; and once made, shall be irrevocable.
       ``(d) Chronically Ill Individual.--For purposes of this 
     section, the term `chronically ill individual' has the 
     meaning given to such term by section 7702B(c)(2).
       ``(e) Inflation Adjustment of $200 Benefit Limit.--In the 
     case of a calendar year after 1996, the $200 amount contained 
     in subsection (c)(3)(A) shall be increased at the same time 
     and in the same manner as amounts are increased pursuant to 
     section 213(d)(11).''
       (b) Clerical Amendment.--The table of sections for such 
     part II is amended by adding at the end the following new 
     item:

``Sec. 91. Excess long-term care benefits.''
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1995.
     SEC. 6232. REPORTING REQUIREMENTS.

       (a) In General.--Subpart B of part III of subchapter A of 
     chapter 61 is amended by adding at the end the following new 
     section:

     ``SEC. 6050Q. CERTAIN LONG-TERM CARE BENEFITS.

       ``(a) Requirement of Reporting.--Any person who pays long-
     term care benefits shall make a return, according to the 
     forms or regulations prescribed by the Secretary, setting 
     forth--
       ``(1) the aggregate amount of such benefits paid by such 
     person to any individual during any calendar year, and
       ``(2) the name, address, and TIN of such individual.
       ``(b) Statements To Be Furnished to Persons With Respect to 
     Whom Information Is Required.--Every person required to make 
     a return under subsection (a) shall furnish to each 
     individual whose name is required to be set forth in such 
     return a written statement showing--
       ``(1) the name of the person making the payments, and
       ``(2) the aggregate amount of long-term care benefits paid 
     to the individual which are required to be shown on such 
     return.
     The written statement required under the preceding sentence 
     shall be furnished to the individual on or before January 31 
     of the year following the calendar year for which the return 
     under subsection (a) was required to be made.
       ``(c) Long-Term Care Benefits.--For purposes of this 
     section, the term `long-term care benefit' has the meaning 
     given such term by section 91(c).''
       (b) Penalties.--
       (1) Subparagraph (B) of section 6724(d)(1) is amended by 
     redesignating clauses (ix) through (xiv) as clauses (x) 
     through (xv), respectively, and by inserting after clause 
     (viii) the following new clause:
       ``(ix) section 6050Q (relating to certain long-term care 
     benefits),''.
       (2) Paragraph (2) of section 6724(d) is amended by 
     redesignating subparagraphs (Q) through (T) as subparagraphs 
     (R) through (U), respectively, and by inserting after 
     subparagraph (P) the following new subparagraph:
       ``(Q) section 6050Q(b) (relating to certain long-term care 
     benefits),''.
       (c) Clerical Amendment.--The table of sections for subpart 
     B of part III of subchapter A of chapter 61 is amended by 
     adding at the end the following new item:

``Sec. 6050Q. Certain long-term care benefits.''
       (d) Effective Date.--The amendments made by this section 
     shall apply to benefits paid after December 31, 1995.
             Subtitle C--Job Creation and Wage Enhancement

                      PART I--CAPITAL GAINS REFORM

      Subpart A--Capital Gains Reduction for Taxpayers Other Than 
                              Corporations
     SEC. 6301. CAPITAL GAINS DEDUCTION.

       (a) In General.--Part I of subchapter P of chapter 1 
     (relating to treatment of capital gains), as amended by 
     subsection (d)(1), is amended by inserting after section 1201 
     the following new section:
     ``SEC. 1202. CAPITAL GAINS DEDUCTION.

       ``(a) General Rule.--If for any taxable year a taxpayer 
     other than a corporation has a net capital gain, 50 percent 
     of such gain shall be a deduction from gross income.
       ``(b) Estates and Trusts.--In the case of an estate or 
     trust, the deduction shall be computed by excluding the 
     portion (if any) of the gains for the taxable year from sales 
     or exchanges of capital assets which, under sections 652 and 
     662 (relating to inclusions of amounts in gross income of 
     beneficiaries of trusts), is includible by the income 
     beneficiaries as gain derived from the sale or exchange of 
     capital assets.
       ``(c) Coordination With Treatment of Capital Gain Under 
     Limitation on Investment Interest.--For purposes of this 
     section, the net capital gain for any taxable year shall be 
     reduced (but not below zero) by the amount which the taxpayer 
     takes into account as investment income under section 
     163(d)(4)(B)(iii).
       ``(d) Special Rule For Collectibles.--
       ``(1) In general.--At the election of the taxpayer, the 
     rate of tax imposed by section 1 on the excess of--
       ``(A) the amount which would be the net capital gain for 
     the taxable year without regard to the application of section 
     1222(12) to collectibles specified in such election, over
       ``(B) the net capital gain for such year,

     shall not exceed 28 percent.
       ``(2) Election.--Any election under this subsection, and 
     any specification therein, once made, shall be irrevocable.
       ``(3) Coordination with indexing.--Any collectible 
     specified in such an election shall be treated as not being 
     an indexed asset for purposes of section 1022.
       ``(e) Transitional Rule.--
       ``(1) In general.--In the case of a taxable year which 
     includes January 1, 1995--
       ``(A) the amount taken into account as the net capital gain 
     under subsection (a) shall not exceed the net capital gain 
     determined by only taking into account gains and losses 
     properly taken into account for the portion of the taxable 
     year on or after January 1, 1995, and
     [[Page H4277]]   ``(B) if the net capital gain for such year 
     exceeds the amount taken into account under subsection (a), 
     the rate of tax imposed by section 1 on such excess shall not 
     exceed 28 percent.
       ``(2) Special rules for pass-thru entities.--
       ``(A) In general.--In applying paragraph (1) with respect 
     to any pass-thru entity, the determination of when gains and 
     losses are properly taken into account shall be made at the 
     entity level.
       ``(B) Pass-thru entity defined.--For purposes of 
     subparagraph (A), the term `pass-thru entity' means--
       ``(i) a regulated investment company,
       ``(ii) a real estate investment trust,
       ``(iii) an S corporation,
       ``(iv) a partnership,
       ``(v) an estate or trust, and
       ``(vi) a common trust fund.''
       (b) Deduction Allowable in Computing Adjusted Gross 
     Income.--Subsection (a) of section 62 is amended by inserting 
     after paragraph (15) the following new paragraph:
       ``(16) Long-term capital gains.--The deduction allowed by 
     section 1202.''
       (c) Treatment of Collectibles.--
       (1) In general.--Section 1222 is amended by inserting after 
     paragraph (11) the following new paragraph:
       ``(12) Special rule for collectibles.--
       ``(A) In general.--Any gain or loss from the sale or 
     exchange of a collectible shall be treated as a short-term 
     capital gain or loss (as the case may be), without regard to 
     the period such asset was held. The preceding sentence shall 
     apply only to the extent the gain or loss is taken into 
     account in computing taxable income.
       ``(B) Treatment of certain sales of interest in 
     partnership, etc.--For purposes of subparagraph (A), any gain 
     from the sale or exchange of an interest in a partnership, S 
     corporation, or trust which is attributable to unrealized 
     appreciation in the value of collectibles held by such entity 
     shall be treated as gain from the sale or exchange of a 
     collectible. Rules similar to the rules of section 751(f) 
     shall apply for purposes of the preceding sentence.
       ``(C) Collectible.--For purposes of this paragraph, the 
     term `collectible' means any capital asset which is a 
     collectible (as defined in section 408(m) without regard to 
     paragraph (3) thereof).''
       (2) Charitable deduction not affected.--
       (A) Paragraph (1) of section 170(e) is amended by adding at 
     the end the following new sentence: ``For purposes of this 
     paragraph, section 1222 shall be applied without regard to 
     paragraph (12) thereof (relating to special rule for 
     collectibles).''
       (B) Clause (iv) of section 170(b)(1)(C) is amended by 
     inserting before the period at the
      end the following: ``and section 1222 shall be applied 
     without regard to paragraph (12) thereof (relating to 
     special rule for collectibles)''.
       (d) Technical and Conforming Changes.--
       (1)(A) Section 13113 of the Revenue Reconciliation Act of 
     1993 (relating to 50-percent exclusion for gain from certain 
     small business stock), and the amendments made by such 
     section, are hereby repealed; and the Internal Revenue Code 
     of 1986 shall be applied as if such section (and amendments) 
     had never been enacted.
       (B) At the election of a taxpayer who holds qualified small 
     business stock (as defined in section 1202 of such Code, as 
     in effect on the day before the date of the enactment of this 
     Act) as of such date of enactment--
       (i) the provisions repealed by subparagraph (A) shall 
     continue to apply to any disposition by such taxpayer of such 
     stock held on such date, and
       (ii) the amendments made by this section and section 6302 
     shall not apply to such stock; except that losses from the 
     sale or exchange of such stock shall be taken into account as 
     provided in the amendments made by paragraph (13) of this 
     subsection.

     Such an election may be made only during the 1-year period 
     beginning on the date of the enactment of this Act and, once 
     made, shall be irrevocable.
       (2) Section 1 is amended by striking subsection (h).
       (3) Paragraph (1) of section 170(e) is amended by striking 
     ``the amount of gain'' in the material following subparagraph 
     (B)(ii) and inserting ``50 percent (\25/35\ in the case of a 
     corporation) of the amount of gain''.
       (4)(A) Paragraph (2) of section 172(d) is amended to read 
     as follows:
       ``(2) Capital gains and losses.--
       ``(A) Losses of taxpayers other than corporations.--In the 
     case of a taxpayer other than a corporation, the amount 
     deductible on account of losses from sales or exchanges of 
     capital assets shall not exceed the amount includible on 
     account of gains from sales or exchanges of capital assets.
       ``(B) Deduction under section 1202.--The deduction under 
     section 1202 shall not be allowed.''
       (B) Subparagraph (B) of section 172(d)(4) is amended by 
     striking ``paragraphs (1) and (3)'' and inserting 
     ``paragraphs (1), (2)(B), and (3)''.
       (5) The last sentence of section 453A(c)(3) is amended by 
     striking all that follows ``long-term capital gain,'' and 
     inserting ``the maximum rate on net capital gain under 
     section 1201 or the deduction under section 1202 (whichever 
     is appropriate) shall be taken into account.''
       (6) Paragraph (4) of section 642(c) is amended to read as 
     follows:
       ``(4) Adjustments.--To the extent that the amount otherwise 
     allowable as a deduction under this subsection consists of 
     gain from the sale or exchange of capital assets held for 
     more than 1 year, proper adjustment shall be made for any 
     deduction allowable to the estate or trust under section 1202 
     (relating to deduction for excess of capital gains over 
     capital losses). In the case of a trust, the deduction 
     allowed by this subsection shall be subject to section 681 
     (relating to unrelated business income).''
       (7) Paragraph (3) of section 643(a) is amended by adding at 
     the end thereof the following new sentence: ``The deduction 
     under section 1202 (relating
      to deduction of excess of capital gains over capital losses) 
     shall not be taken into account.''
       (8) Subparagraph (C) of section 643(a)(6) is amended by 
     inserting ``(i)'' before ``there shall'' and by inserting 
     before the period ``, and (ii) the deduction under section 
     1202 (relating to capital gains deduction) shall not be taken 
     into account''.
       (9) Paragraph (4) of section 691(c) is amended by striking 
     ``sections 1(h), 1201, and 1211'' and inserting ``sections 
     1201, 1202, and 1211''.
       (10) The second sentence of section 871(a)(2) is amended by 
     inserting ``such gains and losses shall be determined without 
     regard to section 1202 (relating to deduction for capital 
     gains) and'' after ``except that''.
       (11)(A) Paragraph (2) of section 904(b) is amended by 
     striking subparagraph (A), by redesignating subparagraph (B) 
     as subparagraph (A), and by inserting after subparagraph (A) 
     (as so redesignated) the following new subparagraph:
       ``(B) Other taxpayers.--In the case of a taxpayer other 
     than a corporation, taxable income from sources outside the 
     United States shall include gain from the sale or exchange of 
     capital assets only to the extent of foreign source capital 
     gain net income.''
       (B) Subparagraph (A) of section 904(b)(2), as so 
     redesignated, is amended--
       (i) by striking all that precedes clause (i) and inserting 
     the following:
       ``(A) Corporations.--In the case of a corporation--'', and
       (ii) by striking in clause (i) ``in lieu of applying 
     subparagraph (A),''.
       (C) Paragraph (3) of section 904(b) is amended by striking 
     subparagraphs (D) and (E) and inserting the following new 
     subparagraph:
       ``(D) Rate differential portion.--The rate differential 
     portion of foreign source net capital gain, net capital gain, 
     or the excess of net capital gain from sources within the 
     United States over net capital gain, as the case may be, is 
     the same proportion of such amount as the excess of the 
     highest rate of tax specified in section 11(b) over the 
     alternative rate of tax under section 1201(a) bears to the 
     alternative rate of tax under section 1201(a).''
       (12) Subsection (d) of section 1044 is amended by striking 
     the last sentence.
       (13)(A) Paragraph (2) of section 1211(b) is amended to read 
     as follows:
       ``(2) the sum of--
       ``(A) the excess of the net short-term capital loss over 
     the net long-term capital gain, and
       ``(B) one-half of the excess of the net long-term capital 
     loss over the net short-term capital gain.''
       (B) So much of paragraph (2) of section 1212(b) as precedes 
     subparagraph (B) thereof is amended to read as follows:
       ``(2) Special rules.--
       ``(A) Adjustments.--
       ``(i) For purposes of determining the excess referred to in 
     paragraph (1)(A),
      there shall be treated as short-term capital gain in the 
     taxable year an amount equal to the lesser of--

       ``(I) the amount allowed for the taxable year under 
     paragraph (1) or (2) of section 1211(b), or
       ``(II) the adjusted taxable income for such taxable year.

       ``(ii) For purposes of determining the excess referred to 
     in paragraph (1)(B), there shall be treated as short-term 
     capital gain in the taxable year an amount equal to the sum 
     of--

       ``(I) the amount allowed for the taxable year under 
     paragraph (1) or (2) of section 1211(b) or the adjusted 
     taxable income for such taxable year, whichever is the least, 
     plus
       ``(II) the excess of the amount described in subclause (I) 
     over the net short-term capital loss (determined without 
     regard to this subsection) for such year.''

       (C) Subsection (b) of section 1212 is amended by adding at 
     the end the following new paragraph:
       ``(3) Transitional rule.--In the case of any amount which, 
     under paragraph (1) and section 1211(b) (as in effect for 
     taxable years beginning before January 1, 1996), is treated 
     as a capital loss in the first taxable year beginning after 
     December 31, 1995, paragraph (1) and section 1211(b) (as so 
     in effect) shall apply (and paragraph (1) and section 1211(b) 
     as in effect for taxable years beginning after December 31, 
     1995, shall not apply) to the extent such amount exceeds the 
     total of any net capital gains (determined without regard to 
     this subsection) of taxable years beginning after December 
     31, 1995.''
       (14) Paragraph (1) of section 1402(i) is amended by 
     inserting ``, and the deduction provided by section 1202 
     shall not apply'' before the period at the end thereof.
       (15) Subsection (e) of section 1445 is amended--
       (A) in paragraph (1) by striking ``35 percent (or, to the 
     extent provided in regulations, 28 percent)'' and inserting 
     ``25 percent (or, to 
     [[Page H4278]] the extent provided in regulations, 19.8 
     percent)'', and
       (B) in paragraph (2) by striking ``35 percent'' and 
     inserting ``25 percent''.
       (16)(A) The second sentence of section 7518(g)(6)(A) is 
     amended--
       (i) by striking ``during a taxable year to which section 
     1(h) or 1201(a) applies'', and
       (ii) by striking ``28 percent (34 percent'' and inserting 
     ``19.8 percent (25 percent''.
       (B) The second sentence of section 607(h)(6)(A) of the 
     Merchant Marine Act, 1936 is amended--
       (i) by striking ``during a taxable year to which section 
     1(h) or 1201(a) of such Code applies'', and
       (ii) by striking ``28 percent (34 percent'' and inserting 
     ``19.8 percent (25 percent''.
       (e) Clerical Amendment.--The table of sections for part I 
     of subchapter P of chapter 1 is amended by inserting after 
     the item relating to section 1201 the following new item:

``Sec. 1202. Capital gains deduction.''
       (f) Effective Date.--
       (1) In general.--Except as otherwise provided in this 
     subsection, the amendments made by this section shall apply 
     to taxable years ending after December 31, 1994.
       (2) Contributions.--The amendment made by subsection (d)(3) 
     shall apply to contributions on or after January 1, 1995.
       (3) Use of long-term losses.--The amendments made by 
     subsection (d)(13) shall apply to taxable years beginning 
     after December 31, 1995.
       (4) Withholding.--The amendment made by subsection (d)(15) 
     shall apply only to amounts paid after the date of the 
     enactment of this Act.

     SEC. 6302. INDEXING OF CERTAIN ASSETS ACQUIRED AFTER DECEMBER 
                   31, 1994, FOR PURPOSES OF DETERMINING GAIN.

       (a) In General.--Part II of subchapter O of chapter 1 
     (relating to basis rules of general application) is amended 
     by inserting after section 1021 the following new section:

     ``SEC. 1022. INDEXING OF CERTAIN ASSETS ACQUIRED AFTER 
                   DECEMBER 31, 1994, FOR PURPOSES OF DETERMINING 
                   GAIN.

       ``(a) General Rule.--
       ``(1) Indexed basis substituted for adjusted basis.--Solely 
     for purposes of determining gain on the sale or other 
     disposition by a taxpayer (other than a corporation) of an 
     indexed asset which has been held for more than 3 years, the 
     indexed basis of the asset shall be substituted for its 
     adjusted basis.
       ``(2) Exception for depreciation, etc.--The deductions for 
     depreciation, depletion, and amortization shall be determined 
     without regard to the application of paragraph (1) to the 
     taxpayer or any other person.
       ``(b) Indexed Asset.--
       ``(1) In general.--For purposes of this section, the term 
     `indexed asset' means--
       ``(A) common stock in a C corporation (other than a foreign 
     corporation), and
       ``(B) tangible property,

     which is a capital asset or property used in the trade or 
     business (as defined in section 1231(b)).
       ``(2) Stock in certain foreign corporations included.--For 
     purposes of this section--
       ``(A) In general.--The term `indexed asset' includes common 
     stock in a foreign corporation which is regularly traded on 
     an established securities market.
       ``(B) Exception.--Subparagraph (A) shall not apply to--
       ``(i) stock of a foreign investment company (within the 
     meaning of section 1246(b)),
       ``(ii) stock in a passive foreign investment company (as 
     defined in section 1296),
       ``(iii) stock in a foreign corporation held by a United 
     States person who meets the requirements of section 
     1248(a)(2), and
       ``(iv) stock in a foreign personal holding company (as 
     defined in section 552).
       ``(C) Treatment of american depository receipts.--An 
     American depository receipt for common stock in a foreign 
     corporation shall be treated as common stock in such 
     corporation.
       ``(c) Indexed Basis.--For purposes of this section--
       ``(1) General rule.--The indexed basis for any asset is--
       ``(A) the adjusted basis of the asset, increased by
       ``(B) the applicable inflation adjustment.
       ``(2) Applicable inflation adjustment.--The applicable 
     inflation adjustment for any asset is an amount equal to--
       ``(A) the adjusted basis of the asset, multiplied by
       ``(B) the percentage (if any) by which--
       ``(i) the gross domestic product deflator for the last 
     calendar quarter ending before the asset is disposed of, 
     exceeds
       ``(ii) the gross domestic product deflator for the last 
     calendar quarter ending before the asset was acquired by the 
     taxpayer.

     The percentage under subparagraph (B) shall be rounded to the 
     nearest \1/10\ of 1 percentage point.
       ``(3) Gross domestic product deflator.--The gross domestic 
     product deflator for any calendar quarter is the implicit 
     price deflator for the gross domestic product for such 
     quarter (as shown in the last revision thereof released by 
     the Secretary of Commerce before the close of the following 
     calendar quarter).
       ``(d) Suspension of Holding Period Where Diminished Risk of 
     Loss; Treatment of Short Sales.--
       ``(1) In general.--If the taxpayer (or a related person) 
     enters into any transaction which substantially reduces the 
     risk of loss from holding any asset, such asset shall not be 
     treated as an indexed asset for the period of such reduced 
     risk.
       ``(2) Short sales.--
       ``(A) In general.--In the case of a short sale of an 
     indexed asset with a short sale period in excess of 3 years, 
     for purposes of this title, the amount realized shall be an 
     amount equal to the amount realized (determined without 
     regard to this paragraph) increased by the applicable 
     inflation adjustment. In applying subsection (c)(2) for 
     purposes of the preceding sentence, the date on which the 
     property is sold short shall be treated as the date of 
     acquisition and the closing date for the sale shall be 
     treated as the date of disposition.
       ``(B) Short sale period.--For purposes of subparagraph (A), 
     the short sale period begins on the day that the property is 
     sold and ends on the closing date for the sale.
       ``(e) Treatment of Regulated Investment Companies and Real 
     Estate Investment Trusts.--
       ``(1) Adjustments at entity level.--
       ``(A) In general.--Except as otherwise provided in this 
     paragraph, the adjustment under subsection (a) shall be 
     allowed to any qualified investment entity (including for 
     purposes of determining the earnings and profits of such 
     entity).
       ``(B) Exception for corporate shareholders.--Under 
     regulations--
       ``(i) in the case of a distribution by a qualified 
     investment entity (directly or indirectly) to a corporation--

       ``(I) the determination of whether such distribution is a 
     dividend shall be made without regard to this section, and
       ``(II) the amount treated as gain by reason of the receipt 
     of any capital gain dividend shall be increased by the 
     percentage by which the entity's net capital gain for the 
     taxable year (determined without regard to this section) 
     exceeds the entity's net capital gain for such year 
     determined with regard to this section, and
       ``(ii) there shall be other appropriate adjustments 
     (including deemed distributions) so as to ensure that the 
     benefits of this section are not allowed (directly or 
     indirectly) to corporate shareholders of qualified investment 
     entities.
     For purposes of the preceding sentence, any amount includible 
     in gross income under section 852(b)(3)(D) shall be treated 
     as a capital gain dividend and an S corporation shall not be 
     treated as a corporation.
       ``(C) Exception for qualification purposes.--This section 
     shall not apply for purposes of sections 851(b) and 856(c).
       ``(D) Exception for certain taxes imposed at entity 
     level.--
       ``(i) Tax on failure to distribute entire gain.--If any 
     amount is subject to tax under section 852(b)(3)(A) for any 
     taxable year, the amount on which tax is imposed under such 
     section shall be increased by the percentage determined under 
     subparagraph (B)(i)(II). A similar rule shall apply in the 
     case of any amount subject to tax under paragraph (2) or (3) 
     of section 857(b) to the extent attributable to the excess of 
     the net capital gain over the deduction for dividends paid 
     determined with reference to capital gain dividends only. The 
     first sentence of this clause shall not apply to so much of 
     the amount subject to tax under section 852(b)(3)(A) as is 
     designated by the company under section 852(b)(3)(D).
       ``(ii) Other taxes.--This section shall not apply for 
     purposes of determining the amount of any tax imposed by 
     paragraph (4), (5), or (6) of section 857(b).
       ``(2) Adjustments to interests held in entity.--
       ``(A) Regulated investment companies.--Stock in a regulated 
     investment company (within the meaning of section 851) shall 
     be an indexed asset for any calendar quarter in the same 
     ratio as--
       ``(i) the average of the fair market values of the indexed 
     assets held by such company at the close of each month during 
     such quarter, bears to
       ``(ii) the average of the fair market values of all assets 
     held by such company at the close of each such month.
       ``(B) Real estate investment trusts.--Stock in a real 
     estate investment trust (within the meaning of section 856) 
     shall be an indexed asset for any calendar quarter in the 
     same ratio as--
       ``(i) the fair market value of the indexed assets held by 
     such trust at the close of such quarter, bears to
       ``(ii) the fair market value of all assets held by such 
     trust at the close of such quarter.
       ``(C) Ratio of 80 percent or more.--If the ratio for any 
     calendar quarter determined under subparagraph (A) or (B) 
     would (but for this subparagraph) be 80 percent or more, such 
     ratio for such quarter shall be 100 percent.
       ``(D) Ratio of 20 percent or less.--If the ratio for any 
     calendar quarter determined under subparagraph (A) or (B) 
     would (but for this subparagraph) be 20 percent or less, such 
     ratio for such quarter shall be zero.
       ``(E) Look-thru of partnerships.--For purposes of this 
     paragraph, a qualified investment entity which holds a 
     partnership interest shall be treated (in lieu of holding a 
     partnership interest) as holding its proportionate share of 
     the assets held by the partnership.
       ``(3) Treatment of return of capital distributions.--Except 
     as otherwise provided 
     [[Page H4279]] by the Secretary, a distribution with respect 
     to stock in a qualified investment entity which is not a 
     dividend and which results in a reduction in the adjusted 
     basis of such stock shall be treated as allocable to stock 
     acquired by the taxpayer in the order in which such stock was 
     acquired.
       ``(4) Qualified investment entity.--For purposes of this 
     subsection, the term `qualified investment entity' means--
       ``(A) a regulated investment company (within the meaning of 
     section 851), and
       ``(B) a real estate investment trust (within the meaning of 
     section 856).
       ``(f) Other Pass-Thru Entities.--
       ``(1) Partnerships.--
       ``(A) In general.--In the case of a partnership, the 
     adjustment made under subsection (a) at the partnership level 
     shall be passed through to the partners.
       ``(B) Special rule in the case of section 754 elections.--
     In the case of a transfer of an interest in a partnership 
     with respect to which the election provided in section 754 is 
     in effect--
       ``(i) the adjustment under section 743(b)(1) shall, with 
     respect to the transferor partner, be treated as a sale of 
     the partnership assets for purposes of applying this section, 
     and
       ``(ii) with respect to the transferee partner, the 
     partnership's holding period for purposes of this section in 
     such assets shall be treated as beginning on the date of such 
     adjustment.
       ``(2) S corporations.--In the case of an S corporation, the 
     adjustment made under subsection (a) at the corporate level 
     shall be passed through to the shareholders. This section 
     shall not apply for purposes of determining the amount of any 
     tax imposed by section 1374 or 1375.
       ``(3) Common trust funds.--In the case of a common trust 
     fund, the adjustment made under subsection (a) at the trust 
     level shall be passed through to the participants.
       ``(4) Indexing adjustment disregarded in determining loss 
     on sale of interest in entity.--Notwithstanding the preceding 
     provisions of this subsection, for purposes of determining 
     the amount of any loss on a sale or exchange of an interest 
     in a partnership, S corporation, or common trust fund, the 
     adjustment made under subsection (a) shall not be taken into 
     account in determining the adjusted basis of such interest.
       ``(g) Dispositions Between Related Persons.--
       ``(1) In general.--This section shall not apply to any sale 
     or other disposition of property between related persons 
     except to the extent that the basis of such property in the 
     hands of the transferee is a substituted basis.
       ``(2) Related persons defined.--For purposes of this 
     section, the term `related persons' means--
       ``(A) persons bearing a relationship set forth in section 
     267(b), and
       ``(B) persons treated as single employer under subsection 
     (b) or (c) of section 414.
       ``(h) Transfers To Increase Indexing Adjustment.--If any 
     person transfers cash, debt, or any other property to another 
     person and the principal purpose of such transfer is to 
     secure or increase an adjustment under subsection (a), the 
     Secretary may disallow part or all of such adjustment or 
     increase.
       ``(i) Special Rules.--For purposes of this section--
       ``(1) Treatment of improvements, etc.--If there is an 
     addition to the adjusted basis of any tangible property or of 
     any stock in a corporation during the taxable year by reason 
     of an improvement to such property or a contribution to 
     capital of such corporation--
       ``(A) such addition shall never be taken into account under 
     subsection (c)(1)(A) if the aggregate amount thereof during 
     the taxable year with respect to such property or stock is 
     less than $1,000, and
       ``(B) such addition shall be treated as a separate asset 
     acquired at the close of such taxable year if the aggregate 
     amount thereof during the taxable year with respect to such 
     property or stock is $1,000 or more.

     A rule similar to the rule of the preceding sentence shall 
     apply to any other portion of an asset to the extent that 
     separate treatment of such portion is appropriate to carry 
     out the purposes of this section.
       ``(2) Assets which are not indexed assets throughout 
     holding period.--The applicable inflation ratio shall be 
     appropriately reduced for periods during which the asset was 
     not an indexed asset.
       ``(3) Treatment of certain distributions.--A distribution 
     with respect to stock in a corporation which is not a 
     dividend shall be treated as a disposition.
       ``(4) Acquisition date where there has been prior 
     application of subsection (a)(1) with respect to the 
     taxpayer.--If there has been a prior application of 
     subsection (a)(1) to an asset while such asset was held by 
     the taxpayer, the date of acquisition of such asset by the 
     taxpayer shall be treated as not earlier than the date of the 
     most recent such prior application.
       ``(5) Collapsible corporations.--The application of section 
     341(a) (relating to collapsible corporations) shall be 
     determined without regard to this section.
       ``(j) Regulations.--The Secretary shall prescribe such 
     regulations as may be necessary or appropriate to carry out 
     the purposes of this section.''
       (b) Clerical Amendment.--The table of sections for part II 
     of subchapter O of chapter 1 is amended by inserting after 
     the item relating to section 1021 the following new item:

``Sec. 1022. Indexing of certain assets acquired after December 31, 
              1994, for purposes of determining gain.''
       (c) Effective Date.--
       (1) In general.--The amendments made by this section shall 
     apply to the disposition of any property the holding period 
     of which begins after December 31, 1994.
       (2) Certain transactions between related persons.--The 
     amendments made by this section shall not apply to the 
     disposition of any property acquired after December 31, 1994, 
     from a related person (as defined in section 1022(g)(2) of 
     the Internal Revenue Code of 1986, as added by this section) 
     if--
       (A) such property was so acquired for a price less than the 
     property's fair market value, and
       (B) the amendments made by this section did not apply to 
     such property in the hands of such related person.
       (d) Election To Recognize Gain on Assets Held on January 1, 
     1995.--For purposes of the Internal Revenue Code of 1986--
       (1) In general.--A taxpayer other than a corporation may 
     elect to treat--
       (A) any readily tradable stock (which is an indexed asset) 
     held by such taxpayer on January 1, 1995, and not sold before 
     the next business day after such date, as having been sold on 
     such next business day for an amount equal to its closing 
     market price on such next business day (and as having been 
     reacquired on such next business day for an amount equal to 
     such closing market price), and
       (B) any other indexed asset held by the taxpayer on January 
     1, 1995, as having been sold on such date for an amount equal 
     to its fair market value on such date (and as having been 
     reacquired on such date for an amount equal to such fair 
     market value).
       (2) Treatment of gain or loss.--
       (A) Any gain resulting from an election under paragraph (1) 
     shall be treated as received or accrued on the date the asset 
     is treated as sold under paragraph (1) and shall be 
     recognized notwithstanding any provision of the Internal 
     Revenue Code of 1986.
       (B) Any loss resulting from an election under paragraph (1) 
     shall not be allowed for any taxable year.
       (3) Election.--An election under paragraph (1) shall be 
     made in such manner as the Secretary may prescribe and shall 
     specify the assets for which
      such election is made. Such an election, once made with 
     respect to any asset, shall be irrevocable.
       (4) Readily tradable stock.--For purposes of this 
     subsection, the term ``readily tradable stock'' means any 
     stock which, as of January 1, 1995, is readily tradable on an 
     established securities market or otherwise.
       (e) Treatment of Principal Residences.--Property held and 
     used by the taxpayer on January 1, 1995, as his principal 
     residence (within the meaning of section 1034 of the Internal 
     Revenue Code of 1986) shall be treated--
       (1) for purposes of subsection (c)(1) of this section and 
     section 1022 of such Code, as having a holding period which 
     begins on January 1, 1995, and
       (2) for purposes of section 1022(c)(2)(B)(ii) of such Code, 
     as having been acquired on January 1, 1995.

     Subsection (d) shall not apply to property to which this 
     subsection applies.

          Subpart B--Capital Gains Reduction for Corporations

     SEC. 6311. REDUCTION OF ALTERNATIVE CAPITAL GAIN TAX FOR 
                   CORPORATIONS.

       (a) In General.--Section 1201 is amended to read as 
     follows:

     ``SEC. 1201. ALTERNATIVE TAX FOR CORPORATIONS.

       ``(a) General Rule.--If for any taxable year a corporation 
     has a net capital gain, then, in lieu of the tax imposed by 
     sections 11, 511, and 831 (a) and (b) (whichever is 
     applicable), there is hereby imposed a tax (if such tax is 
     less than the tax imposed by such sections) which shall 
     consist of the sum of--
       ``(1) a tax computed on the taxable income reduced by the 
     amount of the net capital gain, at the rates and in the 
     manner as if this subsection had not been enacted, plus
       ``(2) a tax of 25 percent of the net capital gain.
       ``(b) Transitional Rule.--
       ``(1) In general.--In the case of any taxable year ending 
     after December 31, 1994, and beginning before January 1, 
     1996, subsection (a)(2) shall be applied as if it read as 
     follows:
       `` `(2)(A) a tax of 25 percent of the lesser of--
       `` `(i) the net capital gain for the taxable year, or
       `` `(ii) the net capital gain taking into account only gain 
     or loss properly taken into account for the portion of the 
     taxable year after December 31, 1994, plus
       `` `(B) a tax of 35 percent of the excess (if any) of--
       `` `(i) the net capital gain for the taxable year, over
       `` `(ii) the amount of net capital gain taken into account 
     under subparagraph (A).'
       ``(2) Special rule for pass-thru entities.--Section 
     1202(e)(2) shall apply for purposes of paragraph (1).
       ``(c) Cross References.--

  ``For computation of the alternative tax--
  ``(1) in the case of life insurance companies, see section 801(a)(2),
  ``(2) in the case of regulated investment companies and their 
shareholders, see section 852(b)(3)(A) and (D), and
  ``(3) in the case of real estate investment trusts, see section 
857(b)(3)(A).''

[[Page H4280]]

       (b) Technical Amendment.--Clause (iii) of section 
     852(b)(3)(D) is amended by striking ``65 percent'' and 
     inserting ``75 percent''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years ending after December 31, 1994.
   Subpart C--Capital Loss Deduction Allowed With Respect to Sale or 
                    Exchange of Principal Residence

     SEC. 6316. CAPITAL LOSS DEDUCTION ALLOWED WITH RESPECT TO 
                   SALE OR EXCHANGE OF PRINCIPAL RESIDENCE.

       (a) In General.--Subsection (c) of section 165 (relating to 
     limitation on losses of individuals) is amended by striking 
     ``and'' at the end of paragraph (2), by striking the period 
     at the end of paragraph (3) and inserting ``; and'', and by 
     adding at the end the following new paragraph:
       ``(4) losses arising from the sale or exchange of the 
     principal residence (within the meaning of section 1034) of 
     the taxpayer.''
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to sales and exchanges after December 31, 1994, 
     in taxable years ending after such date.
                   PART II--COST RECOVERY PROVISIONS

     SEC. 6321. DEPRECIATION ADJUSTMENT FOR CERTAIN PROPERTY 
                   PLACED IN SERVICE AFTER DECEMBER 31, 1994.

       (a) In General.--Section 168 (relating to accelerated cost 
     recovery system) is amended by adding at the end thereof the 
     following new subsection:
       ``(k) Deduction Adjustment To Allow Equivalent of Expensing 
     For Certain Property Placed in Service After December 31, 
     1994.--
       ``(1) In general.--In the case of tangible property placed 
     in service after December 31, 1994, the deduction under this 
     section with respect to such property--
       ``(A) shall be determined by substituting `150 percent' for 
     `200 percent' in subsection (b)(1) in the case of property to 
     which the 200 percent declining balance method would 
     otherwise apply, and
       ``(B) for any taxable year after the taxable year during 
     which the property is placed in service shall be--
       ``(i) the amount determined under this section for such 
     taxable year without regard to this subparagraph, multiplied 
     by
       ``(ii) the applicable neutral cost recovery ratio for such 
     taxable year.
       ``(2) Applicable neutral cost recovery ratio.--For purposes 
     of paragraph (1)--
       ``(A) In general.--The applicable neutral cost recovery 
     ratio for the property for any taxable year is the number 
     determined by--
       ``(i) dividing--

       ``(I) the gross domestic product deflator for the calendar 
     quarter which includes the mid-point of the taxable year, by
       ``(II) the gross domestic product deflator for the calendar 
     quarter which includes the mid-point of the taxable year in 
     which the property was placed in service by the taxpayer, and

       ``(ii) then multiplying the number determined under clause 
     (i) by the number equal to 1.035 to the nth power where `n' 
     is the number of full years (as of the close of the taxable 
     year referred to in clause (i)(I)) after the date such 
     property was placed in service.

     The applicable neutral cost recovery ratio shall never be 
     less than 1. The applicable neutral cost recovery ratio shall 
     be rounded to the nearest \1/1000\.
       ``(B) Special rule for certain property.--In the case of 
     property described in paragraph (2) or (3) of subsection (b) 
     or in subsection (g), the applicable neutral cost recovery 
     ratio shall be determined without regard to subparagraph 
     (A)(ii).
       ``(3) Gross domestic product deflator.--For purposes of 
     paragraph (2), the gross domestic product deflator for any 
     calendar quarter is the implicit price deflator for the gross 
     domestic product for such quarter (as shown in the last 
     revision thereof released by the Secretary of Commerce before 
     the close of the following calendar quarter).
       ``(4) Coordination with indexing of basis for purposes of 
     determining gain.--Section 1022 shall not apply to any 
     property to which this subsection applies.
       ``(5) Election not to have subsection apply.--This 
     subsection shall not apply to any property if the taxpayer 
     elects not to have this subsection apply to such property. 
     Such an election, once made, shall be irrevocable.
       ``(6) Churning transactions.--This subsection shall not 
     apply to any property if this section would not apply to such 
     property were--
       ``(A) subsection (f)(5)(A)(ii) applied by substituting 
     `1995' for `1987' and `1994' for `1986', and
       ``(B) subsection (f)(5)(B) not applied.
       ``(7) Additional deduction not to affect basis or 
     recapture.--The additional amount determined under this 
     section by reason of this subsection shall not be taken into 
     account in determining the adjusted basis of any property or 
     of any interest in a pass-thru entity (as defined in section 
     1202(e)(2)) which holds such property and shall not be 
     treated as a deduction for depreciation for purposes of 
     sections 1245 and 1250.''
       (b) Minimum Tax Treatment.--
       (1) Paragraph (1) of section 56(a) is amended by adding at 
     the end thereof the following new subparagraph:
       ``(E) Use of neutral cost recovery ratio.--This paragraph 
     shall not apply to property to which section 168(k) 
     applies.''
       (2) Clause (i) of section 56(g)(4)(A) is amended by 
     striking ``(a)(1)(A)'' and inserting ``(a)(1)''.
       (3) Subparagraph (C) of section 56(g)(4) is amended by 
     adding at the end the following new clause:
       ``(v) Neutral cost recovery deduction.--Clause (i) shall 
     not apply to the additional deduction allowable by reason of 
     section 168(k).''
       (c) Technical Amendments.--
       (1) Clause (i) of section 280F(a)(1)(B) is amended by 
     adding at the end the following new sentence: ``For purposes 
     of this clause, the unrecovered basis of any passenger 
     automobile shall be treated as including the additional 
     amount determined under section 168 by reason of subsection 
     (k) thereof to the extent not allowed as a deduction by 
     reason of this paragraph for any taxable year in the recovery 
     period.''
       (2) Subparagraph (B) of section 382(h)(2) is amended by 
     adding at the end the following new sentence: ``The amount of 
     the net unrealized built-in loss shall be increased by the 
     amount of the additional deduction allowable by reason of 
     section 168(k) which is treated under the preceding sentence 
     as a recognized built-in loss.''
       (3) Subsection (a) of section 465 is amended by adding at 
     the end the following new paragraph:
       ``(4) Treatment of neutral cost recovery deduction.--
       ``(A) In general.--None of the additional deduction 
     allowable by reason of section 168(k) for the taxable year 
     shall be disallowed under paragraph (1) unless there is a 
     disallowed non-NCR loss for such year.
       ``(B) Proportionate disallowance.--
       ``(i) In general.--If there is a disallowed non-NCR loss 
     for the taxable year, only the disallowed portion of the 
     additional deduction allowable by reason of section 168(k) 
     shall not be allowed under paragraph (1).
       ``(ii) Disallowed portion.--For purposes of clause (i), the 
     disallowed portion is the percentage which the disallowed 
     non-NCR loss's allocable share of non-NCR depreciation is of 
     total non-NCR depreciation.
       ``(iii) Allocable share.--For purposes of clause (ii), a 
     disallowed non-NCR loss's allocable share of non-NCR 
     depreciation is the amount which bears the same ratio to the 
     amount of the loss as the amount of non-NCR depreciation for 
     the taxable year bears to the total amount of deductions for 
     such taxable year.
       ``(C) Definitions.--For purposes of this paragraph--
       ``(i) Disallowed non-ncr loss.--The term `disallowed non-
     NCR loss' means, for any taxable year, the amount of the loss 
     from the activity which would be disallowed under paragraph 
     (1) if such loss were determined without regard to the 
     additional deduction allowable by reason of section 168(k).
       ``(ii) Non-ncr depreciation.--The term `non-NCR 
     depreciation' means the amount allowable as a deduction under 
     section 168 without regard to subsection (k) thereof.''
       (4) Subparagraph (A) of section 1503(e)(1) is amended by 
     inserting before the comma ``and shall be determined without 
     regard to section 168(k)''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to taxable years ending after December 31, 1994.
     SEC. 6322. TREATMENT OF ABANDONMENT OF LESSOR IMPROVEMENTS AT 
                   TERMINATION OF LEASE.

       (a) In General.--Paragraph (8) of section 168(i) is amended 
     to read as follows:
       ``(8) Treatment of leasehold improvements.--
       ``(A) In general.--In the case of any building erected (or 
     improvements made) on leased property, if such building or 
     improvement is property to which this section applies, the 
     depreciation deduction shall be determined under the 
     provisions of this section.
       ``(B) Treatment of lessor improvements which are abandoned 
     at termination of lease.--An improvement--
       ``(i) which is made by the lessor of leased property for 
     the lessee of such property, and
       ``(ii) which is irrevocably disposed of or abandoned by the 
     lessor at the termination of the lease by such lessee,

     shall be treated for purposes of determining gain or loss 
     under this title as disposed of by the lessor when so 
     disposed of or abandoned.''
       (b) Effective Date.--Subparagraph (B) of section 168(i)(8) 
     of the Internal Revenue Code of 1986, as added by the 
     amendment made by subsection (a), shall apply to improvements 
     disposed of or abandoned after March 13, 1995.

                PART III--ALTERNATIVE MINIMUM TAX RELIEF
     SEC. 6331. PHASEOUT OF APPLICATION OF ALTERNATIVE MINIMUM TAX 
                   TO CORPORATIONS.

       (a) Termination.--Subsection (a) of section 55 is amended 
     by adding at the end the following new flush sentence:

     ``In the case of a corporation, the tentative minimum tax for 
     any taxable year beginning after December 31, 2000, shall be 
     zero.''
       (b) Earlier Termination of Certain Adjustments for All 
     Taxpayers.--
       (1) Depreciation.--Clause (i) of section 56(a)(1)(A) is 
     amended by inserting ``and before March 14, 1995,'' after 
     ``December 31, 1986,''.
       (2) Mining exploration and development costs.--Paragraph 
     (2) of section 56(a) is amended by inserting ``and before 
     January 1, 1996,'' after ``December 31, 1986,''.
     [[Page H4281]]   (3) Long-term contracts.--Paragraph (3) of 
     section 56(a) is amended by inserting ``and before January 1, 
     1996,'' after ``March 1, 1986,''.
       (4) Pollution control facilities.--Paragraph (5) of section 
     56(a) is amended by inserting ``and before January 1, 1996,'' 
     after ``December 31, 1986,''.
       (5) Installment sales.--Paragraph (6) of section 56(a) is 
     amended by inserting ``and before January 1, 1996,'' after 
     ``March 1, 1986,''.
       (c) Earlier Termination of Circulation and Research and 
     Experimental Expenditure Adjustment for Individuals.--
     Subparagraph (A) of section 56(b)(2) is amended by inserting 
     ``and before January 1, 1996,'' after ``December 31, 1986,''.
       (d) Earlier Termination of Certain Adjustments for 
     Corporations.--
       (1) Merchant marine capital construction funds.--Paragraph 
     (2) of section 56(c) is amended--
       (A) by inserting ``and before January 1, 1996,'' after 
     ``December 31, 1986,'' each place it appears, and
       (B) by striking the last sentence and inserting the 
     following new flush sentence:
     ``For purposes of this paragraph, any withdrawal of deposit 
     or earnings from the fund shall be treated as allocable to 
     deposits made, and earnings received or accrued, in the order 
     in which made, received, or accrued.''
       (2) Section 833(b) deduction.--Paragraph (3) of section 
     56(c) is amended by adding at the end the following new 
     sentence: ``This paragraph shall not apply to any taxable 
     year beginning after December 31, 1995.''
       (3) Certain earnings and profits items.--
       (A) Subparagraph (B) of section 56(g)(4) is amended by 
     adding at the end the following new clause:
       ``(iii) Termination.--This subparagraph shall not apply to 
     any taxable year beginning after December 31, 1995.''
       (B) Subparagraph (C) of section 56(g)(4) is amended by 
     adding at the end the following new clause:
       ``(vi) Termination.--This subparagraph shall not apply to 
     any taxable year beginning after December 31, 1995.''
       (4) Intangible drilling costs.--Clause (i) of section 
     56(g)(4)(D) is amended by adding at the end the following new 
     sentence: ``This clause shall not apply to any taxable year 
     beginning after December 31, 1995.''
       (5) Certain amortization provisions.--Clause (ii) of 
     section 56(g)(4)(D) is amended by adding at the end the 
     following new sentence: ``This clause shall not apply to any 
     expenditure paid or incurred after December 31, 1995.''
       (6) LIFO inventory adjustments.--Clause (iii) of section 
     56(g)(4)(D) is amended by adding at the end the following new 
     sentence: ``This clause shall not apply to any adjustment 
     arising in a taxable year beginning after December 31, 
     1995.''
       (7) Installment sales.--Clause (iv) of section 56(g)(4)(D) 
     is amended by adding at the end the following new sentence: 
     ``This clause shall not apply to any disposition after 
     December 31, 1995.''
       (8) Debt pools.--Subparagraph (E) of section 56(g)(4) is 
     amended by adding at the end the following new sentence: 
     ``This subparagraph shall not apply to any exchange after 
     December 31, 1995.''
       (9) Depletion.--Subparagraph (F) of section 56(g)(4) is 
     amended by adding at the end the following new clause:
       ``(iii) Termination.--This subparagraph shall not apply to 
     any deduction for depletion for any taxable year beginning 
     after December 31, 1995.''
       (10) Ownership changes.--Subparagraph (G) of section 
     56(g)(4) is amended by adding at the end the following new 
     sentence: ``This subparagraph
      shall not apply to any ownership change after December 31, 
     1995.''
       (e) Earlier Termination of Items of Tax Preference.--
       (1) Depletion.--Paragraph (1) of section 57(a) is amended 
     by adding at the end the following new sentence: ``This 
     paragraph shall not apply to any taxable year beginning after 
     December 31, 1995.''
       (2) Intangible drilling costs.--Paragraph (2) of section 
     57(a) is amended by adding at the end the following new 
     subparagraph:
       ``(F) Termination.--This paragraph shall not apply to any 
     taxable year beginning after December 31, 1995.''
       (3) Reserves for losses on bad debts.--Paragraph (4) of 
     section 57(a) is amended by adding at the end the following 
     new sentence: ``This paragraph shall not apply to any taxable 
     year beginning after December 31, 1995.''
       (4) Tax-exempt interest.--Paragraph (5) of section 57(a) is 
     amended by adding at the end the following new subparagraph:
       ``(D) Termination for corporations.--In the case of a 
     corporation (other than a corporation referred to in section 
     56(g)(6)), this paragraph shall not apply to interest 
     accruing for periods after December 31, 1995.''
       (f) Net Operating Loss Deduction.--Paragraph (1) of section 
     56(d) is amended by inserting ``(100 percent in the case of 
     taxable years beginning after December 31, 1995)'' after ``90 
     percent'' each place it appears.
       (g) Losses.--
       (1) Section 58 is amended by adding at the end the 
     following new subsection:
       ``(d) Termination.--This section shall not apply to any 
     loss incurred for any taxable year beginning after December 
     31, 1995.''
       (2) Subsection (h) of section 59 is amended by inserting 
     ``469,'' after ``465,''.
       (h) Foreign tax credit.--Paragraph (2) of section 59(a) is 
     amended by adding at the end the following new subparagraph:
       ``(D) Termination.--This paragraph shall not apply to any 
     taxable year beginning after December 31, 1995.''
       (i) Limitation on Use of Credit for Prior Year Minimum Tax 
     Liability.--
       (1) In general.--Subsection (c) of section 53 is amended to 
     read as follows:
       ``(c) Limitation.--The credit allowable under subsection 
     (a) for any taxable year shall not exceed the lesser of--
       ``(1) the excess (if any) of--
       ``(A) the regular tax liability of the taxpayer for such 
     taxable year reduced by the sum of the credits allowable 
     under subparts A, B, D, E, and F of this part, over
       ``(B) the tentative minimum tax for the taxable year, or
       ``(2) 90 percent of the amount determined under paragraph 
     (1)(A).''
       (2) Effective date.--The amendment made by paragraph (1) 
     shall apply to taxable years beginning after December 31, 
     1995.
                    PART IV--TAXPAYER DEBT BUY-DOWN

     SEC. 6341. DESIGNATION OF AMOUNTS FOR REDUCTION OF PUBLIC 
                   DEBT.

       (a) In General.--Subchapter A of chapter 61 of the Internal 
     Revenue Code of 1986 (relating to returns and records) is 
     amended by adding at the end the following new part:

          ``PART IX--DESIGNATION FOR REDUCTION OF PUBLIC DEBT
``Sec. 6097. Designation.
     ``SEC. 6097. DESIGNATION.

       ``(a) In General.--Every individual with adjusted income 
     tax liability for any taxable year may designate that a 
     portion of such liability (not to exceed 10 percent thereof) 
     shall be used to reduce the public debt.
       ``(b) Manner and Time of Designation.--A designation under 
     subsection (a) may be made with respect to any taxable year 
     only at the time of filing the return of tax imposed by 
     chapter 1 for the taxable year. The designation shall be made 
     on the first page of the return or on the page bearing the 
     taxpayer's signature.
       ``(c) Adjusted Income Tax Liability.--For purposes of this 
     section, the term `adjusted income tax liability' means 
     income tax liability (as defined in section 6096(b)) reduced 
     by any amount designated under section 6096 (relating to 
     designation of income tax payments to Presidential Election 
     Campaign Fund).''
       (b) Clerical Amendment.--The table of parts for such 
     subchapter A is amended by adding at the end the following 
     new item:

``Part IX. Designation for reduction of public debt.''
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years ending after the date of the 
     enactment of this Act.
     SEC. 6342. PUBLIC DEBT REDUCTION TRUST FUND.

       (a) In General.--Subchapter A of chapter 98 of the Internal 
     Revenue Code of 1986 (relating to trust fund code) is amended 
     by adding at the end the following new section:

     ``SEC. 9512. PUBLIC DEBT REDUCTION TRUST FUND.

       ``(a) Creation of Trust Fund.--There is established in the 
     Treasury of the United States a trust fund to be known as the 
     `Public Debt Reduction Trust Fund', consisting of any amount 
     appropriated or credited to the Trust Fund as provided in 
     this section or section 9602(b).
       ``(b) Transfers to Trust Fund.--There are hereby 
     appropriated to the Public Debt Reduction Trust Fund amounts 
     equivalent to the amounts designated under section 6097 
     (relating to designation for public debt reduction).
       ``(c) Expenditures.--Amounts in the Public Debt Reduction 
     Trust Fund shall be used by the Secretary of the Treasury for 
     purposes of paying at maturity, or to redeem or buy before 
     maturity, any obligation of the Federal Government included 
     in the public debt (other than an obligation held by the 
     Federal Old-Age and Survivors Insurance Trust Fund, the Civil 
     Service Retirement and Disability Fund, or the Department of 
     Defense Military Retirement Fund). Any obligation which is 
     paid, redeemed, or bought with amounts from the Public Debt 
     Reduction Trust Fund shall be canceled and retired and may 
     not be reissued.''
       (b) Clerical Amendment.--The table of sections for such 
     subchapter is amended by adding at the end the following new 
     item:

``Sec. 9512. Public Debt Reduction Trust Fund.''

       (c) Effective Date.--The amendments made by this section 
     shall apply to amounts received after the date of the 
     enactment of this Act.
     SEC. 6343. TAXPAYER-GENERATED SEQUESTRATION OF FEDERAL 
                   SPENDING TO REDUCE THE PUBLIC DEBT.

       (a) Sequestration To Reduce the Public Debt.--Part C of the 
     Balanced Budget and Emergency Deficit Control Act of 1985 is 
     amended by adding after section 253 the following new 
     section:
     ``SEC. 253A. SEQUESTRATION TO REDUCE THE PUBLIC DEBT.

       ``(a) Sequestration.--Notwithstanding sections 255 and 256, 
     within 15 days after Congress adjourns to end a session, and 
     on the same day as a sequestration (if any) under sections 
     251, 252, and 253, but after any sequestration of budget-year 
     budgetary resources required by those sections, there 
     [[Page H4282]] shall be a sequestration equivalent to the 
     estimated aggregate amount designated under section 6097 of 
     the Internal Revenue Code of 1986 for the calendar year two 
     years before the year in which that session of Congress 
     started, as estimated by the Department of the Treasury on 
     October 1 in the year after the applicable tax year and as 
     modified by the total of (1) any amounts by which net 
     discretionary spending is reduced by legislation below the 
     discretionary spending limits enacted after the enactment of 
     this section related to the fiscal year subject to the 
     sequestration or, in the absence of such limits, any net 
     reduction below discretionary outlays for fiscal year 1995 
     and (2) the net deficit change that has resulted from all 
     direct spending legislation enacted after the enactment of 
     this section related to the fiscal year subject to the 
     sequestration, as estimated by OMB. Within 5 days after the 
     enactment of any such direct spending legislation, OMB shall 
     estimate the change in spending resulting from that 
     legislation for the 5-fiscal-year period beginning with the 
     first fiscal year for which that legislation becomes 
     effective and transmit a report to the House of 
     Representatives and the Senate containing that estimate. Only 
     the estimated deficit reduction included in the 5-year 
     estimate made at the time the legislation is enacted shall be 
     used for purposes of determining whether there shall be a 
     sequestration under this subsection. Notwithstanding the 
     preceding two sentences, any estimates of direct spending 
     made by OMB under this subsection for any legislation that 
     first takes effect in fiscal year 1995, 1996, or 1997 shall 
     include estimates of the direct spending effects through 
     fiscal year 2002 and those estimates shall be used for 
     purposes of determining whether there shall be a 
     sequestration under this subsection. If the reduction in 
     spending under paragraphs (1) and (2) for a fiscal year is 
     greater than the estimated aggregate amount designated under 
     section 6097 of the Internal Revenue Code of 1986 respecting 
     that fiscal year, then there shall be no sequestration under 
     this section.
       ``(b) Applicability.--
       ``(1) In general.--Except as provided by paragraph (2), 
     each account of the United States shall be reduced by a 
     dollar amount calculated by multiplying the level of 
     budgetary resources in that account at that time by the 
     uniform percentage necessary to carry out subsection (a). All 
     obligational authority reduced under this section shall be 
     done in a manner that makes such reductions permanent.
       ``(2) Exempt accounts.--(A) No order issued under this part 
     may--
       ``(i) reduce benefits payable to the old-age and survivors 
     insurance program established under title II of the Social 
     Security Act;
       ``(ii) reduce payments for net interest (all of major 
     functional category 900); or
       ``(iii) make any reduction in the following accounts:
       ``Federal Deposit Insurance Corporation, Bank Insurance 
     Fund;
       ``Federal Deposit Insurance Corporation, FSLIC Resolution 
     Fund;
       ``Federal Deposit Insurance Corporation, Savings 
     Association Insurance Fund;
       ``National Credit Union Administration, credit union share 
     insurance fund; or
       ``Resolution Trust Corporation.
       ``(B) The following budget accounts, activities within 
     accounts, or income shall be exempt from sequestration--
       ``(i) all payments to trust funds from excise taxes or 
     other receipts or collections properly creditable to those 
     trust funds;
       ``(ii) offsetting receipts and collections;
       ``(iii) all payments from one Federal direct spending 
     budget account to another Federal budget account; all 
     intragovernmental funds including those from which funding is 
     derived primarily from other Government accounts, except
      to the extent that such funds are augmented by direct 
     appropriations for the fiscal year for which the order is 
     in effect; and those obligations of discretionary accounts 
     or activities that are financed by intragovernmental 
     payments from another discretionary account or activity;
       ``(iv) expenses to the extent they result from private 
     donations, bequests, or voluntary contributions to the 
     Government;
       ``(v) nonbudgetary activities, including but not limited 
     to--
       ``(I) credit liquidating and financing accounts;
       ``(II) the Pension Benefit Guarantee Corporation Trust 
     Funds;
       ``(III) the Thrift Savings Fund;
       ``(IV) the Federal Reserve System; and
       ``(V) appropriations for the District of Columbia to the 
     extent they are appropriations of locally raised funds;
       ``(vi) payments resulting from Government insurance, 
     Government guarantees, or any other form of contingent 
     liability, to the extent those payments result from 
     contractual or other legally binding commitments of the 
     Government at the time of any sequestration;
       ``(vii) the following accounts, which largely fulfill 
     requirements of the Constitution or otherwise make payments 
     to which the Government is committed--
       ``Administration of Territories, Northern Mariana Islands 
     Covenant grants (14-0412-0-1-806);
       ``Bureau of Indian Affairs, miscellaneous payments to 
     Indians (14-2303-0-1-452);
       ``Bureau of Indian Affairs, miscellaneous trust funds, 
     tribal trust funds (14-9973-0-7-999);
       ``Claims, defense;
       ``Claims, judgments, and relief act (20-1895-0-1-806);
       ``Compact of Free Association, economic assistance pursuant 
     to Public Law 99-658 (14-0415-0-1-806);
       ``Compensation of the President (11-0001-0-1-802);
       ``Customs Service, miscellaneous permanent appropriations 
     (20-9992-0-2-852);
       ``Eastern Indian land claims settlement fund (14-2202-0-1-
     806);
       ``Farm Credit System Financial Assistance Corporation, 
     interest payments (20-1850-0-1-351);
       ``Internal Revenue collections of Puerto Rico (20-5737-0-2-
     852);
       ``Panama Canal Commission, operating expenses and capital 
     outlay (95-5190-0-2-403);
       ``Payments of Vietnam and USS Pueblo prisoner-of-war claims 
     (15-0104-0-1-153);
       ``Payments to copyright owners (03-5175-0-2-376);
       ``Payments to the United States territories, fiscal 
     assistance (14-0418-0-1-801);
       ``Salaries of Article III judges;
       ``Soldier's and Airmen's Home, payment of claims (84-8930-
     0-7-705);
       ``Washington Metropolitan Area Transit Authority, interest 
     payments (46-0300-0-1-401).
       ``(viii) the following noncredit special, revolving, or 
     trust-revolving funds--
       ``Coinage profit fund (20-5811-0-2-803);
       ``Exchange Stabilization Fund (20-4444-0-3-155);
       ``Foreign Military Sales trust fund (11-82232-0-7-155); and
       ``(ix)(I) any amount paid as regular unemployment 
     compensation by a State from its account in the Unemployment 
     Trust Fund (established by section 904(a) of the Social 
     Security Act);
       ``(II) any advance made to a State from the Federal 
     unemployment account (established by section 904(g) of such 
     Act) under title XII of such Act and any advance appropriated 
     to the Federal unemployment account pursuant to section 1203 
     of such Act; and
       ``(III) any payment made from the Federal Employees 
     Compensation Account (as established under section 909 of 
     such Act) for the purpose of carrying out chapter 85 of title 
     5, United States Code, and funds appropriated or transferred 
     to or otherwise deposited in such Account.
       ``(3) Federal Administrative Expenses.--
       ``(A) Administrative expenses incurred by the departments 
     and agencies, including independent agencies, of the Federal 
     Government in connection with any program, project, activity, 
     or account shall be subject to reduction pursuant to any 
     sequestration order, without regard to the exemptions under 
     paragraph (2) and regardless of whether the program, project, 
     activity, or account is self-supporting and does not receive 
     appropriations.
       ``(B) Payments made by the Federal Government to reimburse 
     or match administrative costs incurred by a State or 
     political subdivision under or in connection with any 
     program, project, activity, or account shall not be 
     considered administrative expenses of the Federal Government 
     for purposes of this section, and shall be subject to 
     sequestration to the extent (and only to the extent) that 
     other payments made by the Federal Government under or in 
     connection with that program, project, activity, or account 
     are subject to that reduction or sequestration; except that 
     Federal payments made to a State as reimbursement of 
     administrative costs incurred by that State under or in 
     connection with the unemployment compensation programs 
     specified in paragraph (2)(ix) shall be subject to reduction 
     or sequestration under this part notwithstanding the 
     exemption otherwise granted to such programs under that 
     paragraph.''.
       (b) Reports.--Section 254 of the Balanced Budget and 
     Emergency Deficit Control Act of 1985 is amended--
       (1) in subsection (a), by inserting after the item relating 
     to the GAO compliance report the following:
       ``October 1 . . . Department of Treasury report to Congress 
     estimating amount of income tax designated pursuant to 
     section 6097 of the Internal Revenue Code of 1986.'';
       (2) in subsection (d)(1), by inserting ``, and 
     sequestration to reduce the public debt,'';
       (3) in subsection (d), by redesignating paragraph (5) as 
     paragraph (6) and by inserting after paragraph (4) the 
     following new paragraph:
       ``(5) Sequestration to reduce the public debt reports.--The 
     preview reports shall set forth for the budget year estimates 
     for each of the following:
       ``(A) The aggregate amount designated under section 6097 of 
     the Internal Revenue Code of 1986 for the calendar year two 
     years before the year in which the budget year begins.
       ``(B) The amount of reductions required under section 253A 
     and the deficit remaining after those reductions have been 
     made.
       ``(C) The sequestration percentage necessary to achieve the 
     required reduction in accounts under section 253A(b).''; and
       (4) in subsection (g), by redesignating paragraphs (4) and 
     (5) as paragraphs (5) and (6), respectively, and by inserting 
     after paragraph (3) the following new paragraph:
       ``(4) Sequestration to reduce the public debt reports.--The 
     final reports shall contain all of the information contained 
     in the public debt taxation designation report required on 
     October 1.''.
       (c) Effective Date.--Notwithstanding section 275(b) of the 
     Balanced Budget and Emergency Deficit Control Act of 1985, 
     the expiration date set forth in that section shall not 
     [[Page H4283]] apply to the amendments made by this section. 
     The amendments made by this section shall cease to have any 
     effect after the first fiscal year during which there is no 
     public debt.
                   PART V--SMALL BUSINESS INCENTIVES

     SEC. 6351. COST-OF-LIVING ADJUSTMENTS RELATING TO ESTATE AND 
                   GIFT TAX PROVISIONS.

       (a) Increase in Unified Estate and Gift Tax Credit.--
       (1) Estate tax credit.--
       (A) Subsection (a) of section 2010 (relating to unified 
     credit against estate tax) is amended by striking 
     ``$192,800'' and inserting ``the applicable credit amount''.
       (B) Section 2010 is amended by redesignating subsection (c) 
     as subsection (d) and by inserting after subsection (b) the 
     following new subsection:
       ``(c) Applicable Credit Amount.--For purposes of this 
     section--
       ``(1) In general.--The applicable credit amount is the 
     amount of the tentative tax which would be determined under 
     the rate schedule set forth in section 2001(c) if the amount 
     with respect to which such tentative tax is to be computed 
     were the applicable exclusion amount determined in accordance 
     with the following table:

``In the case of estates of                              The applicable
 decedents dying, and                                         exclusion
 gifts made, during:                                         amount is:
      1996.....................................................$700,000
      1997.....................................................$725,000
      1998 or thereafter......................................$750,000.

       ``(2) Cost-of-living adjustments.--In the case of any 
     decedent dying, and gift made, in a calendar year after 1998, 
     the $750,000 amount set forth in paragraph (1) shall be 
     increased by an amount equal to--
       ``(A) $750,000, multiplied by
       ``(B) the cost-of-living adjustment determined under 
     section 1(f)(3) for such calendar year by substituting 
     `calendar year 1997' for `calendar year 1992' in subparagraph 
     (B) thereof.

     If any amount as adjusted under the preceding sentence is not 
     a multiple of $10,000, such amount shall be rounded to the 
     nearest multiple of $10,000.''
       (C) Paragraph (1) of section 6018(a) is amended by striking 
     ``$600,000'' and inserting ``the applicable exclusion amount 
     in effect under section 2010(c) (as adjusted under paragraph 
     (2) thereof) for the calendar year which includes the date of 
     death''.
       (D) Paragraph (2) of section 2001(c) is amended by striking 
     ``$21,040,000'' and inserting ``the amount at which the 
     average tax rate under this section is 55 percent''.
       (E) Subparagraph (A) of section 2102(c)(3) is amended by 
     striking ``$192,800'' and inserting ``the applicable credit 
     amount in effect under section 2010(c) for the calendar year 
     which includes the date of death''.
       (2) Unified gift tax credit.--Paragraph (1) of section 
     2505(a) is amended by striking ``$192,800'' and inserting 
     ``the applicable credit amount in effect under section 
     2010(c) for such calendar year''.
       (3) Effective date.--The amendments made by this subsection 
     shall apply to the estates of decedents dying, and gifts 
     made, after December 31, 1995.
       (b) Alternate Valuation of Certain Farm, Etc., Real 
     Property.--Subsection (a) of section 2032A is amended by 
     adding at the end the following new paragraph:
       ``(3) Inflation adjustment.--In the case of estates of 
     decedents dying in a calendar year after 1998, the $750,000 
     amount contained in paragraph (2) shall be increased by an 
     amount equal to--
       ``(A) $750,000, multiplied by
       ``(B) the cost-of-living adjustment determined under 
     section 1(f)(3) for such calendar year by substituting 
     `calendar year 1997' for `calendar year 1992' in subparagraph 
     (B) thereof.

     If any amount as adjusted under the preceding sentence is not 
     a multiple of $10,000, such amount shall be rounded to the 
     nearest multiple of $10,000.''
       (c) Annual Gift Tax Exclusion.--Subsection (b) of section 
     2503 is amended--
       (1) by striking the subsection heading and inserting the 
     following:
       ``(b) Exclusions From Gifts.--
       ``(1) In general.--'',
       (2) by moving the text 2 ems to the right, and
       (3) by adding at the end the following new paragraph:
       ``(2) Inflation adjustment.--In the case of gifts made in a 
     calendar year after 1998, the $10,000 amount contained in 
     paragraph (1) shall be increased by an amount equal to--
       ``(A) $10,000, multiplied by
       ``(B) the cost-of-living adjustment determined under 
     section 1(f)(3) for such calendar year by substituting 
     `calendar year 1997' for `calendar year 1992' in subparagraph 
     (B) thereof.

     If any amount as adjusted under the preceding sentence is not 
     a multiple of $1,000, such amount shall be rounded to the 
     nearest multiple of $1,000.''
       (d) Exemption From Generation-Skipping Tax.--Section 2631 
     (relating to GST exemption) is amended by adding at the end 
     the following new subsection:
       ``(c) Inflation Adjustment.--In the case of an individual 
     who dies in any calendar year after 1998, the $1,000,000 
     amount contained in subsection (a) shall be increased by an 
     amount equal to--
       ``(1) $1,000,000, multiplied by
       ``(2) the cost-of-living adjustment determined under 
     section 1(f)(3) for such calendar year by substituting 
     `calendar year 1997' for `calendar year 1992' in subparagraph 
     (B) thereof.

     If any amount as adjusted under the preceding sentence is not 
     a multiple of $10,000, such amount shall be rounded to the 
     nearest multiple of $10,000.''
       (e) Amount of Tax Eligible For 4 Percent Interest Rate on 
     Extension of Time for Payment of Estate Tax on Closely Held 
     Business.--
       (1) Subparagraph (A) of section 6601(j)(2) is amended by 
     striking ``$345,800'' and inserting ``the applicable 
     limitation amount''.
       (2) Subsection (j) of section 6601 is amended by 
     redesignating paragraph (3) as paragraph (4) and by inserting 
     after paragraph (2) the following new paragraph:
       ``(3) Applicable limitation amount.--
       ``(A) In general.--For purposes of paragraph (2), the 
     applicable limitation amount is the amount of the tentative 
     tax which would be determined under the rate schedule set 
     forth in section 2001(c) if the amount with respect to which 
     such tentative tax is to be computed were $1,000,000.
       ``(B) Inflation adjustment.--In the case of estates of 
     decedents dying in a calendar year after 1998, the $1,000,000 
     amount contained in subparagraph (A) shall be increased by an 
     amount equal to--
       ``(i) $1,000,000, multiplied by
       ``(ii) the cost-of-living adjustment determined under 
     section 1(f)(3) for such calendar year by substituting 
     `calendar year 1997' for `calendar year 1992' in subparagraph 
     (B) thereof.

     If any amount as adjusted under the preceding sentence is not 
     a multiple of $10,000, such amount shall be rounded to the 
     nearest multiple of $10,000.''

     SEC. 6352. INCREASE IN EXPENSE TREATMENT FOR SMALL 
                   BUSINESSES.

       (a) General Rule.--Paragraph (1) of section 179(b) 
     (relating to dollar limitation) is amended to read as 
     follows:
       ``(1) Dollar limitation.--The aggregate cost which may be 
     taken into account under subsection (a) for any taxable year 
     shall not exceed the following applicable amount:

                                                  ``If thThe applicable
                                                             amount is:
      1996......................................................$22,500
      1997...................................................... 27,500
      1998...................................................... 32,500
      1999 or thereafter..................................... 35,000.''

       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to taxable years beginning after December 31, 
     1995.
     SEC. 6353. CLARIFICATION OF TREATMENT OF HOME OFFICE USE FOR 
                   ADMINISTRATIVE AND MANAGEMENT ACTIVITIES.
       (a) In General.--Paragraph (1) of section 280A(c) is 
     amended by adding at the end the following new sentence: 
     ``For purposes of subparagraph (A), the term `principal place 
     of business' includes a place of business which is used by 
     the taxpayer for the administrative or management activities 
     of any trade or business of the taxpayer if there is no other 
     fixed location of such trade or business where the taxpayer 
     conducts substantial administrative or management activities 
     of such trade or business.''
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to taxable years beginning after December 31, 
     1995.

     SEC. 6354. TREATMENT OF STORAGE OF PRODUCT SAMPLES.

       (a) In General.--Paragraph (2) of section 280A(c) is 
     amended by striking ``inventory'' and inserting ``inventory 
     or product samples''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to taxable years beginning after December 31, 
     1995.
                    Subtitle D--Family Reinforcement

     SEC. 6401. CREDIT FOR ADOPTION EXPENSES.

       (a) In General.--Subpart A of part IV of subchapter A of 
     chapter 1 is amended by inserting after section 25 the 
     following new section:

     ``SEC. 25A. ADOPTION EXPENSES.

       ``(a) Allowance of Credit.--In the case of an individual, 
     there shall be allowed as a credit against the tax imposed by 
     this chapter for the taxable year the amount of the qualified 
     adoption expenses paid or incurred by the taxpayer during 
     such taxable year.
       ``(b) Limitations.--
       ``(1) Dollar limitation.--The aggregate amount of qualified 
     adoption expenses which may be taken into account under 
     subsection (a) with respect to the adoption of a child shall 
     not exceed $5,000.
       ``(2) Income limitation.--The amount allowable as a credit 
     under subsection (a) for any taxable year shall be reduced 
     (but not below zero) by an amount which bears the same ratio 
     to the amount so allowable (determined without regard to this 
     paragraph but with regard to paragraph (1)) as--
       ``(A) the amount (if any) by which the taxpayer's adjusted 
     gross income (determined without regard to sections 911, 931, 
     and 933) exceeds $60,000, bears to
       ``(B) $40,000.
       ``(3) Denial of double benefit.--
       ``(A) In general.--No credit shall be allowed under 
     subsection (a) for any expense for which a deduction or 
     credit is allowable under any other provision of this 
     chapter.
       ``(B) Grants.--No credit shall be allowed under subsection 
     (a) for any expense to the extent that funds for such expense 
     are received under any Federal, State, or local 
     [[Page H4284]] program. The preceding sentence shall not 
     apply to expenses for the adoption of a child with special 
     needs.
       ``(c) Definitions.--For purposes of this section--
       ``(1) Qualified adoption expenses.--
       ``(A) In general.--The term `qualified adoption expenses' 
     means reasonable and necessary adoption fees, court costs, 
     attorney fees, and other expenses--
       ``(i) which are directly related to, and the principal 
     purpose of which is for, the legal adoption of an eligible 
     child by the taxpayer, and
       ``(ii) which are not incurred in violation of State or 
     Federal law or in carrying out any surrogate parenting 
     arrangement.
       ``(B) Expenses for adoption of spouse's child not 
     eligible.--The term `qualified adoption expenses' shall not 
     include any expenses in connection with the adoption by an 
     individual of a child who is the child of such individual's 
     spouse.
       ``(2) Eligible child.--The term `eligible child' means any 
     individual--
       ``(A) who has not attained age 18 as of the time of the 
     adoption, or
       ``(B) who is physically or mentally incapable of caring for 
     himself.
       ``(3) Child with special needs.--The term `child with 
     special needs' means any child if--
       ``(A) a State has determined that the child cannot or 
     should not be returned to the home of his parents, and
       ``(B) such State has determined that there exists with 
     respect to the child a specific factor or condition (such as 
     his ethnic background, age, or membership in a minority or 
     sibling group, or the presence of factors such as medical 
     conditions or physical, mental, or emotional handicaps) 
     because of which it is reasonable to conclude that such child 
     cannot be placed with adoptive parents without providing 
     adoption assistance.
       ``(d) Married Couples Must File Joint Returns, Etc.--Rules 
     similar to the rules of paragraphs (2), (3), and (4) of 
     section 21(e) shall apply for purposes of this section.''
       (b) Conforming Amendment.--The table of sections for 
     subpart A of part IV of subchapter A of chapter 1 is amended 
     by inserting after the item relating to section 25 the 
     following new item:

``Sec. 25A. Adoption expenses.''.

       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1995.

     SEC. 6402. CREDIT FOR TAXPAYERS WITH CERTAIN PERSONS 
                   REQUIRING CUSTODIAL CARE IN THEIR HOUSEHOLDS.

       (a) In General.--Subpart A of part IV of subchapter A of 
     chapter 1 is amended by inserting after section 25A the 
     following new section:
     ``SEC. 25B. CREDIT FOR TAXPAYERS WITH CERTAIN PERSONS 
                   REQUIRING CUSTODIAL CARE IN THEIR HOUSEHOLDS.

       ``(a) Allowance of Credit.--In the case of an individual 
     who maintains a household which includes as a member one or 
     more qualified persons, there shall be allowed as a credit 
     against the tax imposed by this chapter for the taxable year 
     an amount equal to $500 for each such person.
       ``(b) Qualified Person.--For purposes of this section, the 
     term `qualified person' means any individual--
       ``(1) who is a father or mother of the taxpayer, his 
     spouse, or his former spouse or who is an ancestor of such a 
     father or mother,
       ``(2) who is physically or mentally incapable of caring for 
     himself,
       ``(3) who has as his principal place of abode for more than 
     half of the taxable year the home of the taxpayer, and
       ``(4) whose name and TIN are included on the taxpayer's 
     return for the taxable year.

     For purposes of paragraph (1), a stepfather or stepmother 
     shall be treated as a father or mother.
       ``(c) Special Rules.--For purposes of this section, rules 
     similar to the rules of paragraphs (1), (2), (3), and (4) of 
     section 21(e) shall apply.''
       (b) Clerical Amendment.--The table of sections for subpart 
     A of part IV of subchapter A of chapter 1 is amended by 
     inserting after the item relating to section 25A the 
     following new item:

``Sec. 25B. Credit for taxpayers with certain persons requiring 
              custodial care in their households.''

       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1995.
               Subtitle E--Social Security Earnings Test

     SEC. 6501. ADJUSTMENTS IN MONTHLY EXEMPT AMOUNT FOR PURPOSES 
                   OF THE SOCIAL SECURITY EARNINGS TEST.

       (a) Increase in Monthly Exempt Amount for Individuals Who 
     Have Attained Retirement Age.--Section 203(f)(8)(D) of the 
     Social Security Act (42 U.S.C. 403(f)(8)(D)) is amended to 
     read as follows:
       ``(D)(i) Notwithstanding any other provision of this 
     subsection, the exempt amount which is applicable to an 
     individual who has attained retirement age (as defined in 
     section 216(1)) before the close of the taxable year involved 
     shall be--
       ``(I) for the taxable year beginning after 1995 and before 
     1997, $1,250.00,
       ``(II) for the taxable year beginning after 1996 and before 
     1998, $1,583.33\1/3\,
       ``(III) for the taxable year beginning after 1997 and 
     before 1999, $1,916.66\2/3\,
       ``(IV) for the taxable year beginning after 1998 and before 
     2000, $2,250.00, and
       ``(V) for the taxable year beginning after 1999 and before 
     2001, $2,500.00.
       ``(ii) For purposes of subparagraph (B)(ii)(II), the 
     increase in the exempt amount provided under clause (i)(V) 
     shall be deemed to have resulted from a determination which 
     shall be deemed to have been made under subparagraph (A) in 
     1999.''.
       (b) Conforming Amendment.--The second sentence of section 
     223(d)(4) of such Act (42 U.S.C. 423(d)(4)) is amended by 
     striking ``the exempt amount under section 203(f)(8) which is 
     applicable to individuals described in subparagraph (D) 
     thereof'' and inserting the following: ``an amount equal to 
     the exempt amount which would have been applicable under 
     section 203(f)(8), to individuals described in subparagraph 
     (D) thereof, if section 6501 of the Contract With America Tax 
     Relief Act of 1995 had not been enacted''.
       (c) Effective Date.--The amendments made by this section 
     shall apply with respect to taxable years beginning after 
     1995.
                   Subtitle F--Technical Corrections

     SEC. 6601. COORDINATION WITH OTHER SUBTITLES.

       For purposes of applying the amendments made by any 
     subtitle of this title other than this subtitle, the 
     provisions of this subtitle shall be treated as having been 
     enacted immediately before the provisions of such other 
     subtitles.

     SEC. 6602. AMENDMENTS RELATED TO REVENUE RECONCILIATION ACT 
                   OF 1990.

       (a) Amendments Related to Subtitle A.--
       (1) Subparagraph (B) of section 59(j)(3) is amended by 
     striking ``section 1(i)(3)(B)'' and inserting ``section 
     1(g)(3)(B)''.
       (2) Clause (i) of section 151(d)(3)(C) is amended by 
     striking ``joint of a return'' and inserting ``joint 
     return''.
       (b) Amendments Related to Subtitle B.--
       (1) Paragraph (1) of section 11212(e) of the Revenue 
     Reconciliation Act of 1990 is amended by striking ``Paragraph 
     (1) of section 6724(d)'' and inserting ``Subparagraph (B) of 
     section 6724(d)(1)''.
       (2)(A) Subparagraph (B) of section 4093(c)(2), as in effect 
     before the amendments made by the Revenue Reconciliation Act 
     of 1993, is amended by inserting before the period ``unless 
     such fuel is sold for exclusive use by a State or any 
     political subdivision thereof''.
       (B) Paragraph (4) of section 6427(l), as in effect before 
     the amendments made by the Revenue Reconciliation Act of 
     1993, is amended by inserting before the period ``unless such 
     fuel was used by a State or any political subdivision 
     thereof''.
       (3) Paragraph (1) of section 6416(b) is amended by striking 
     ``chapter 32 or by section 4051'' and inserting ``chapter 31 
     or 32''.
       (4) Section 7012 is amended--
       (A) by striking ``production or importation of gasoline'' 
     in paragraph (3) and inserting ``taxes on gasoline and diesel 
     fuel'', and
       (B) by striking paragraph (4) and redesignating paragraphs 
     (5) and (6) as paragraphs (4) and (5), respectively.
       (5) Subsection (c) of section 5041 is amended by striking 
     paragraph (6) and by inserting the following new paragraphs:
       ``(6) Credit for transferee in bond.--If--
       ``(A) wine produced by any person would be eligible for any 
     credit under paragraph (1) if removed by such person during 
     the calendar year,
       ``(B) wine produced by such person is removed during such 
     calendar year by any other person (hereafter in this 
     paragraph referred to as the `transferee') to whom such wine 
     was transferred in bond and who is liable for the tax imposed 
     by this section with respect to such wine, and
       ``(C) such producer holds title to such wine at the time of 
     its removal and provides to the transferee such information 
     as is necessary to properly determine the transferee's credit 
     under this paragraph,

     then, the transferee (and not the producer) shall be allowed 
     the credit under paragraph (1) which would be allowed to the 
     producer if the wine removed by the transferee had been 
     removed by the producer on that date.
       ``(7) Regulations.--The Secretary may prescribe such 
     regulations as may be necessary to carry out the purposes of 
     this subsection, including regulations--
       ``(A) to prevent the credit provided in this subsection 
     from benefiting any person who produces more than 250,000 
     wine gallons during a calendar year, and
       ``(B) to assure proper reduction of such credit for persons 
     producing more than 150,000 wine gallons of wine during a 
     calendar year.''
       (6) Paragraph (3) of section 5061(b) is amended to read as 
     follows:
       ``(3) section 5041(f),''.
       (7) Section 5354 is amended by inserting ``(taking into 
     account the appropriate amount of credit with respect to such 
     wine under section 5041(c))'' after ``any one time''.
       (c) Amendments Related to Subtitle C.--
       (1) Paragraph (4) of section 56(g) is amended by 
     redesignating subparagraphs (I) and (J) as subparagraphs (H) 
     and (I), respectively.
       (2) Subparagraph (B) of section 6724(d)(1) is amended--
       (A) by striking ``or'' at the end of clause (xii), and
       (B) by striking the period at the end of clause (xiii) and 
     inserting ``, or''.
       (3) Subsection (g) of section 6302 is amended by inserting 
     ``, 22,'' after ``chapters 21''.
       (4) The earnings and profits of any insurance company to 
     which section 11305(c)(3) of the Revenue Reconciliation Act 
     of 1990 applies shall be determined without regard to 
     [[Page H4285]] any deduction allowed under such section; 
     except that, for purposes of applying sections 56 and 902, 
     and subpart F of part III of subchapter N of chapter 1 of the 
     Internal Revenue Code of 1986, such deduction shall be taken 
     into account.
       (5) Subparagraph (D) of section 6038A(e)(4) is amended--
       (A) by striking ``any transaction to which the summons 
     relates'' and inserting ``any affected taxable year'', and
       (B) by adding at the end thereof the following new 
     sentence: ``For purposes of this subparagraph, the term 
     `affected taxable year' means any taxable year if the 
     determination of the amount of tax imposed for such taxable 
     year is affected by the treatment of the transaction to which 
     the summons relates.''.
       (6) Subparagraph (A) of section 6621(c)(2) is amended by 
     adding at the end thereof the following new flush sentence:
     ``The preceding sentence shall be applied without regard to 
     any such letter or notice which is withdrawn by the 
     Secretary.''.
       (7) Clause (i) of section 6621(c)(2)(B) is amended by 
     striking ``this subtitle'' and inserting ``this title''.
       (d) Amendments Related to Subtitle D.--
       (1) Notwithstanding section 11402(c) of the Revenue 
     Reconciliation Act of 1990, the amendment made by section 
     11402(b)(1) of such Act shall apply to taxable years ending 
     after December 31, 1989.
       (2) Clause (ii) of section 143(m)(4)(C) is amended--
       (A) by striking ``any month of the 10-year period'' and 
     inserting ``any year of the 4-year period'',
       (B) by striking ``succeeding months'' and inserting 
     ``succeeding years'', and
       (C) by striking ``over the remainder of such period (or, if 
     lesser, 5 years)'' and inserting ``to zero over the 
     succeeding 5 years''.
       (e) Amendments Related to Subtitle E.--
       (1)(A) Clause (ii) of section 56(d)(1)(B) is amended to 
     read as follows:
       ``(ii) appropriate adjustments in the application of 
     section 172(b)(2) shall be made to take into account the 
     limitation of subparagraph (A).''
       (B) For purposes of applying sections 56(g)(1) and 56(g)(3) 
     of the Internal Revenue Code of 1986 with respect to taxable 
     years beginning in 1991 and 1992, the reference in such 
     sections to the alternative tax net operating loss deduction 
     shall be treated as including a reference to the deduction 
     under section 56(h) of such Code as in effect before the 
     amendments made by section 1915 of the Energy Policy Act of 
     1992.
       (2) Clause (i) of section 613A(c)(3)(A) is amended by 
     striking ``the table contained in''.
       (3) Section 6501 is amended--
       (A) by striking subsection (m) (relating to deficiency 
     attributable to election under section 44B) and by 
     redesignating subsections (n) and (o) as subsections (m) and 
     (n), respectively, and
       (B) by striking ``section 40(f) or 51(j)'' in subsection 
     (m) (as redesignated by subparagraph (A)) and inserting 
     ``section 40(f), 43, or 51(j)''.
       (4) Subparagraph (C) of section 38(c)(2) (as in effect on 
     the day before the date of the enactment of the Revenue 
     Reconciliation Act of 1990) is amended by inserting before 
     the period at the end of the first sentence the following: 
     ``and without regard to the deduction under section 56(h)''.
       (5) The amendment made by section 1913(b)(2)(C)(i) of the 
     Energy Policy Act of 1992 shall apply to taxable years 
     beginning after December 31, 1990.
       (f) Amendments Related to Subtitle F.--
       (1)(A) Section 2701(a)(3) is amended by adding at the end 
     thereof the following new subparagraph:
       ``(C) Valuation of qualified payments where no liquidation, 
     etc. rights.--In the case of an applicable retained interest 
     which is described in subparagraph (B)(i) but not 
     subparagraph (B)(ii), the value of the distribution right 
     shall be determined without regard to this section.''
       (B) Section 2701(a)(3)(B) is amended by inserting 
     ``certain'' before ``qualified'' in the heading thereof.
       (C) Sections 2701 (d)(1) and (d)(4) are each amended by 
     striking ``subsection (a)(3)(B)'' and inserting ``subsection 
     (a)(3) (B) or (C)''.
       (2) Clause (i) of section 2701(a)(4)(B) is amended by 
     inserting ``(or, to the extent provided in regulations, the 
     rights as to either income or capital)'' after ``income and 
     capital''.
       (3)(A) Section 2701(b)(2) is amended by adding at the end 
     thereof the following new subparagraph:
       ``(C) Applicable family member.--For purposes of this 
     subsection, the term `applicable family member' includes any 
     lineal descendant of any parent of the transferor or the 
     transferor's spouse.''
       (B) Section 2701(e)(3) is amended--
       (i) by striking subparagraph (B), and
       (ii) by striking so much of paragraph (3) as precedes 
     ``shall be treated as holding'' and inserting:
       ``(3) Attribution of indirect holdings and transfers.--An 
     individual''.
       (C) Section 2704(c)(3) is amended by striking ``section 
     2701(e)(3)(A)'' and inserting ``section 2701(e)(3)''.
       (4) Clause (i) of section 2701(c)(1)(B) is amended to read 
     as follows:
       ``(i) a right to distributions with respect to any interest 
     which is junior to the rights of the transferred interest,''.
       (5)(A) Clause (i) of section 2701(c)(3)(C) is amended to 
     read as follows:
       ``(i) In general.--Payments under any interest held by a 
     transferor which (without regard to this subparagraph) are 
     qualified payments shall be treated as qualified payments 
     unless the transferor elects not to treat such payments as 
     qualified payments. Payments described in the preceding 
     sentence which are held by an applicable family member shall 
     be treated as qualified payments only if such member elects 
     to treat such payments as qualified payments.''
       (B) The first sentence of section 2701(c)(3)(C)(ii) is 
     amended to read as follows: ``A transferor or applicable 
     family member holding any distribution right which (without 
     regard to this subparagraph) is not a qualified payment may 
     elect to treat such right as a qualified payment, to be paid 
     in the amounts and at the times specified in such 
     election.''.
       (C) The time for making an election under the second 
     sentence of section 2701(c)(3)(C)(i) of the Internal Revenue 
     Code of 1986 (as amended by subparagraph (A)) shall not 
     expire before the due date (including extensions) for filing 
     the transferor's return of the tax imposed by section 2501 of 
     such Code for the first calendar year ending after the date 
     of enactment.
       (6) Section 2701(d)(3)(A)(iii) is amended by striking ``the 
     period ending on the date of''.
       (7) Subclause (I) of section 2701(d)(3)(B)(ii) is amended 
     by inserting ``or the exclusion under section 2503(b),'' 
     after ``section 2523,''.
       (8) Section 2701(e)(5) is amended--
       (A) by striking ``such contribution to capital or such 
     redemption, recapitalization, or other change'' in 
     subparagraph (A) and inserting ``such transaction'', and
       (B) by striking ``the transfer'' in subparagraph (B) and 
     inserting ``such transaction''.
       (9) Section 2701(d)(4) is amended by adding at the end 
     thereof the following new subparagraph:
       ``(C) Transfer to transferors.--In the case of a taxable 
     event described in paragraph (3)(A)(ii) involving a transfer 
     of an applicable retained interest from an applicable family 
     member to a transferor, this subsection shall continue to 
     apply to the transferor during any period the transferor 
     holds such interest.''
       (10) Section 2701(e)(6) is amended by inserting ``or to 
     reflect the application of subsection (d)'' before the period 
     at the end thereof.
       (11)(A) Section 2702(a)(3)(A) is amended--
       (i) by striking ``to the extent'' and inserting ``if'' in 
     clause (i),
       (ii) by striking ``or'' at the end of clause (i),
       (iii) by striking the period at the end of clause (ii) and 
     inserting ``, or'', and
       (iv) by adding at the end thereof the following new clause:
       ``(iii) to the extent that regulations provide that such 
     transfer is not inconsistent with the purposes of this 
     section.''
       (B)(i) Section 2702(a)(3) is amended by striking 
     ``incomplete transfer'' each place it appears and inserting 
     ``incomplete gift''.
       (ii) The heading for section 2702(a)(3)(B) is amended by 
     striking ``Incomplete transfer'' and inserting ``Incomplete 
     gift''.
       (g) Amendments Related to Subtitle G.--
       (1)(A) Subsection (a) of section 1248 is amended--
       (i) by striking ``, or if a United States person receives a 
     distribution from a foreign corporation which, under section 
     302 or 331, is treated as an exchange of stock'' in paragraph 
     (1), and
       (ii) by adding at the end thereof the following new 
     sentence: ``For purposes of this section, a United States 
     person shall be treated as having sold or exchanged any stock 
     if, under any provision of this subtitle, such person is 
     treated as realizing gain from the sale or exchange of such 
     stock.''.
       (B) Paragraph (1) of section 1248(e) is amended by striking 
     ``, or receives a distribution from a domestic corporation 
     which, under section 302 or 331, is treated as an exchange of 
     stock''.
       (C) Subparagraph (B) of section 1248(f)(1) is amended by 
     striking ``or 361(c)(1)'' and inserting ``355(c)(1), or 
     361(c)(1)''.
       (D) Paragraph (1) of section 1248(i) is amended to read as 
     follows:
       ``(1) In general.--If any shareholder of a 10-percent 
     corporate shareholder of a foreign corporation exchanges 
     stock of the 10-percent corporate shareholder for stock of 
     the foreign corporation, such 10-percent corporate 
     shareholder shall recognize gain in the same manner as if the 
     stock of the foreign corporation received in such exchange 
     had been--
       ``(A) issued to the 10-percent corporate shareholder, and
       ``(B) then distributed by the 10-percent corporate 
     shareholder to such shareholder in redemption or liquidation 
     (whichever is appropriate).

     The amount of gain recognized by such 10-percent corporate 
     shareholder under the preceding sentence shall not exceed the 
     amount treated as a dividend under this section.''
       (2) Section 897 is amended by striking subsection (f).
       (3) Paragraph (13) of section 4975(d) is amended by 
     striking ``section 408(b)'' and inserting ``section 
     408(b)(12)''.
       (4) Clause (iii) of section 56(g)(4)(D) is amended by 
     inserting ``, but only with respect to taxable years 
     beginning after December 31, 1989'' before the period at the 
     end thereof.
       (5)(A) Paragraph (11) of section 11701(a) of the Revenue 
     Reconciliation Act of 1990 (and the amendment made by such 
     paragraph) are 
     [[Page H4286]] hereby repealed, and section 7108(r)(2) of the 
     Revenue Reconciliation Act of 1989 shall be applied as if 
     such paragraph (and amendment) had never been enacted.
       (B) Subparagraph (A) shall not apply to any building if the 
     owner of such building establishes to the satisfaction of the 
     Secretary of the Treasury or his delegate that such owner 
     reasonably relied on the amendment made by such paragraph 
     (11).
       (h) Amendments Related to Subtitle H.--
       (1)(A) Clause (vi) of section 168(e)(3)(B) is amended by 
     striking ``or'' at the end of subclause (I), by striking the 
     period at the end of subclause (II) and inserting ``, or'', 
     and by adding at the end thereof the following new subclause:
       ``(III) is described in section 48(l)(3)(A)(ix) (as in 
     effect on the day before the date of the enactment of the 
     Revenue Reconciliation Act of 1990).''

       (B) Subparagraph (K) of section 168(g)(4) is amended by 
     striking ``section 48(a)(3)(A)(iii)'' and inserting ``section 
     48(l)(3)(A)(ix) (as in effect on the day before the date of 
     the enactment of the Revenue Reconciliation Act of 1990)''.
       (2) Clause (ii) of section 172(b)(1)(E) is amended by 
     striking ``subsection (m)'' and inserting ``subsection (h)''.
       (3) Sections 805(a)(4)(E), 832(b)(5)(C)(ii)(II), and 
     832(b)(5)(D)(ii)(II) are each amended by striking 
     ``243(b)(5)'' and inserting ``243(b)(2)''.
       (4) Subparagraph (A) of section 243(b)(3) is amended by 
     inserting ``of'' after ``In the case''.
       (5) The subsection heading for subsection (a) of section 
     280F is amended by striking ``Investment Tax Credit and''.
       (6) Clause (i) of section 1504(c)(2)(B) is amended by 
     inserting ``section'' before ``243(b)(2)''.
       (7) Paragraph (3) of section 341(f) is amended by striking 
     ``351, 361, 371(a), or 374(a)'' and inserting ``351, or 
     361''.
       (8) Paragraph (2) of section 243(b) is amended to read as 
     follows:
       ``(2) Affiliated group.--For purposes of this subsection:
       ``(A) In general.--The term `affiliated group' has the 
     meaning given such term by section 1504(b), except that for 
     such purposes sections 1504(b)(2), 1504(b)(4), and 1504(c) 
     shall not apply.
       ``(B) Group must be consistent in foreign tax treatment.--
     The requirements of paragraph (1)(A) shall not be treated as 
     being met with respect to any dividend received by a 
     corporation if, for any taxable year which includes the day 
     on which such dividend is received--
       ``(i) 1 or more members of the affiliated group referred to 
     in paragraph (1)(A) choose to any extent to take the benefits 
     of section 901, and
       ``(ii) 1 or more other members of such group claim to any 
     extent a deduction for taxes otherwise creditable under 
     section 901.''
       (9) The amendment made by section 11813(b)(17) of the 
     Revenue Reconciliation Act of 1990 shall be applied as if the 
     material stricken by such amendment included the closing 
     parenthesis after ``section 48(a)(5)''.
       (10) Paragraph (1) of section 179(d) is amended--
       (A) by striking ``in a trade or business'' and inserting 
     ``a trade or business'', and
       (B) by adding at the end thereof the following new 
     sentence: ``Such term shall not include any property 
     described in section 50(b) and shall not include air 
     conditioning or heating units and horses.''
       (11) Subparagraph (E) of section 50(a)(2) is amended by 
     striking ``section 48(a)(5)(A)'' and inserting ``section 
     48(a)(5)''.
       (12) The amendment made by section 11801(c)(9)(G)(ii) of 
     the Revenue Reconciliation Act of 1990 shall be applied as if 
     it struck ``Section 422A(c)(2)'' and inserted ``Section 
     422(c)(2)''.
       (13) Subparagraph (B) of section 424(c)(3) is amended by 
     striking ``a qualified stock option, an incentive stock 
     option, an option granted under an employee stock purchase 
     plan, or a restricted stock option'' and inserting ``an 
     incentive stock option or an option granted under an employee 
     stock purchase plan''.
       (14) Subparagraph (E) of section 1367(a)(2) is amended by 
     striking ``section 613A(c)(13)(B)'' and inserting ``section 
     613A(c)(11)(B)''.
       (15) Subparagraph (B) of section 460(e)(6) is amended by 
     striking ``section 167(k)'' and inserting ``section 
     168(e)(2)(A)(ii)''.
       (16) Subparagraph (C) of section 172(h)(4) is amended by 
     striking ``subsection (b)(1)(M)'' and inserting ``subsection 
     (b)(1)(E)''.
       (17) Section 6503 is amended--
       (A) by redesignating the subsection relating to extension 
     in case of certain summonses as subsection (j), and
       (B) by redesignating the subsection relating to cross 
     references as subsection (k).
       (18) Paragraph (4) of section 1250(e) is hereby repealed.
       (i) Effective Date.--Except as otherwise expressly 
     provided--
       (1) the amendments made by this section shall be treated as 
     amendments to the Internal Revenue Code of 1986 as amended by 
     the Revenue Reconciliation Act of 1993; and
       (2) any amendment made by this section shall apply to 
     periods before the date of the enactment of this section in 
     the same manner as if it had been included in the provision 
     of the Revenue Reconciliation Act of 1990 to which such 
     amendment relates.
     SEC. 6603. AMENDMENTS RELATED TO REVENUE RECONCILIATION ACT 
                   OF 1993.

       (a) Amendment Related to Section 13114.--Paragraph (2) of 
     section 1044(c) is amended to read as follows:
       ``(2) Purchase.--The taxpayer shall be considered to have 
     purchased any property if, but for subsection (d), the 
     unadjusted basis of such property would be its cost within 
     the meaning of section 1012.''
       (b) Amendments Related to Section 13142.--
       (1) Subparagraph (B) of section 13142(b)(6) of the Revenue 
     Reconciliation Act of 1993 is amended to read as follows:
       ``(B) Full-time students, waiver authority, and prohibited 
     discrimination.--The amendments made by paragraphs (2), (3), 
     and (4) shall take effect on the date of the enactment of 
     this Act.''
       (2) Subparagraph (C) of section 13142(b)(6) of such Act is 
     amended by striking ``paragraph (2)'' and inserting 
     ``paragraph (5)''.
       (c) Amendment Related to Section 13161.--
       (1) In general.--Subsection (e) of section 4001 (relating 
     to inflation adjustment) is amended to read as follows:
       ``(e) Inflation Adjustment.--
       ``(1) In general.--The $30,000 amount in subsection (a) and 
     section 4003(a) shall be increased by an amount equal to--
       ``(A) $30,000, multiplied by
       ``(B) the cost-of-living adjustment under section 1(f)(3) 
     for the calendar year in which the vehicle is sold, 
     determined by substituting `calendar year 1990' for `calendar 
     year 1992' in subparagraph (B) thereof.
       ``(2) Rounding.--If any amount as adjusted under paragraph 
     (1) is not a multiple of $2,000, such amount shall be rounded 
     to the next lowest multiple of $2,000.''
       (2) Effective date.--The amendment made by paragraph (1) 
     shall take effect on the date of the enactment of this Act.
       (d) Amendment Related to Section 13201.--Clause (ii) of 
     section 135(b)(2)(B) is amended by inserting before the 
     period at the end thereof the following: ``, determined by 
     substituting `calendar year 1989' for `calendar year 1992' in 
     subparagraph (B) thereof''.
       (e) Amendments Related to Section 13203.--Subsection (a) of 
     section 59 is amended--
       (1) by striking ``the amount determined under section 
     55(b)(1)(A)'' in paragraph (1)(A) and (2)(A)(i) and inserting 
     ``the pre-credit tentative minimum tax'',
       (2) by striking ``specified in section 55(b)(1)(A)'' in 
     paragraph (1)(C) and inserting ``specified in subparagraph 
     (A)(i) or (B)(i) of section 55(b)(1) (whichever applies)'',
       (3) by striking ``which would be determined under section 
     55(b)(1)(A)'' in paragraph (2)(A)(ii) and inserting ``which 
     would be the pre-credit tentative minimum tax'', and
       (4) by adding at the end thereof the following new 
     paragraph:
       ``(3) Pre-credit tentative minimum tax.--For purposes of 
     this subsection, the term `pre-credit tentative minimum tax' 
     means--
       ``(A) in the case of a taxpayer other than a corporation, 
     the amount determined under the first sentence of section 
     55(b)(1)(A)(i), or
       ``(B) in the case of a corporation, the amount determined 
     under section 55(b)(1)(B)(i).''
       (f) Amendment Related to Section 13221.--Sections 1201(a) 
     and 1561(a) are each amended by striking ``last sentence'' 
     each place it appears and inserting ``last 2 sentences''.
       (g) Amendments Related to Section 13222.--
       (1) Subparagraph (B) of section 6033(e)(1) is amended by 
     adding at the end thereof the following new clause:
       ``(iii) Coordination with section 527(f).--This subsection 
     shall not apply to any amount on which tax is imposed by 
     reason of section 527(f).''.
       (2) Clause (i) of section 6033(e)(1)(B) is amended by 
     striking ``this subtitle'' and inserting ``section 501''.
       (h) Amendment Related to Section 13225.--Paragraph (3) of 
     section 6655(g) is amended by striking all that follows 
     ```3rd month''' in the sentence following subparagraph (C) 
     and inserting ``, subsection (e)(2)(A) shall be applied by 
     substituting `2 months' for `3 months' in clause (i)(I), the 
     election under clause (i) of subsection (e)(2)(C) may be made 
     separately for each installment, and clause (ii) of 
     subsection (e)(2)(C) shall not apply.''.
       (i) Amendments Related to Section 13231.--
       (1) Subparagraph (G) of section 904(d)(3) is amended by 
     striking ``section 951(a)(1)(B)'' and inserting 
     ``subparagraph (B) or (C) of section 951(a)(1)''.
       (2) Paragraph (1) of section 956A(b) is amended to read as 
     follows:
       ``(1) the amount (not including a deficit) referred to in 
     section 316(a)(1) to the extent such amount was accumulated 
     in prior taxable years beginning after September 30, 1993, 
     and''.
       (3) Subsection (f) of section 956A is amended by inserting 
     before the period at the end thereof: ``and regulations 
     coordinating the provisions of subsections (c)(3)(A) and 
     (d)''.
       (4) Subsection (b) of section 958 is amended by striking 
     ``956(b)(2)'' each place it appears and inserting 
     ``956(c)(2)''.
       (5)(A) Subparagraph (A) of section 1297(d)(2) is amended by 
     striking ``The adjusted basis of any asset'' and inserting 
     ``The amount taken into account under section 1296(a)(2) with 
     respect to any asset''.
       (B) The paragraph heading of paragraph (2) of section 
     1297(d) is amended to read as follows:
       ``(2) Amount taken into account.--''.
     [[Page H4287]]   (6) Subsection (e) of section 1297 is 
     amended by inserting ``For purposes of this part--'' after 
     the subsection heading.
       (j) Amendment Related to Section 13241.--Subparagraph (B) 
     of section 40(e)(1) is amended to read as follows:
       ``(B) for any period before January 1, 2001, during which 
     the rates of tax under section 4081(a)(2)(A) are 4.3 cents 
     per gallon.''
       (k) Amendment Related to Section 13261.--Clause (iii) of 
     section 13261(g)(2)(A) of the Revenue Reconciliation Act of 
     1993 is amended by striking ``by the taxpayer'' and inserting 
     ``by the taxpayer or a related person''.
       (l) Amendment Related to Section 13301.--Subparagraph (B) 
     of section 1397B(d)(5) is amended by striking ``preceding''.
       (m) Clerical Amendments.--
       (1) Subsection (d) of section 39 is amended--
       (A) by striking ``45'' in the heading of paragraph (5) and 
     inserting ``45A'', and
       (B) by striking ``45'' in the heading of paragraph (6) and 
     inserting ``45B''.
       (2) Subparagraph (A) of section 108(d)(9) is amended by 
     striking ``paragraph (3)(B)'' and inserting ``paragraph 
     (3)(C)''.
       (3) Subparagraph (C) of section 143(d)(2) is amended by 
     striking the period at the end thereof and inserting a comma.
       (4) Clause (ii) of section 163(j)(6)(E) is amended by 
     striking ``which is a'' and inserting ``which is''.
       (5) Subparagraph (A) of section 1017(b)(4) is amended by 
     striking ``subsection (b)(2)(D)'' and inserting ``subsection 
     (b)(2)(E)''.
       (6) So much of section 1245(a)(3) as precedes subparagraph 
     (A) thereof is amended to read as follows:
       ``(3) Section 1245 property.--For purposes of this section, 
     the term `section 1245 property' means any property which is 
     or has been property of a character subject to the allowance 
     for depreciation provided in section 167 and is either--''.
       (7) Paragraph (2) of section 1394(e) is amended--
       (A) by striking ``(i)'' and inserting ``(A)'', and
       (B) by striking ``(ii)'' and inserting ``(B)''.
       (8) Subsection (m) of section 6501 (as redesignated by 
     section 6602) is amended by striking ``or 51(j)'' and 
     inserting ``45B, or 51(j)''.
       (9)(A) The section 6714 added by section 13242(b)(1) of the 
     Revenue Reconciliation Act of 1993 is hereby redesignated as 
     section 6715.
       (B) The table of sections for part I of subchapter B of 
     chapter 68 is amended by striking ``6714'' in the item added 
     by such section 13242(b)(2) of such Act and inserting 
     ``6715''.
       (10) Paragraph (2) of section 9502(b) is amended by 
     inserting ``and before'' after ``1982,''.
       (11) Subsection (a)(3) of section 13206 of the Revenue 
     Reconciliation Act of 1993 is amended by striking ``this 
     section'' and inserting ``this subsection''.
       (12) Paragraph (1) of section 13215(c) of the Revenue 
     Reconciliation Act of 1993 is amended by striking ``Public 
     Law 92-21'' and inserting ``Public Law 98-21''.
       (13) Paragraph (2) of section 13311(e) of the Revenue 
     Reconciliation Act of 1993 is amended by striking ``section 
     1393(a)(3)'' and inserting ``section 1393(a)(2)''.
       (14) Subparagraph (B) of section 117(d)(2) is amended by 
     striking ``section 132(f)'' and inserting ``section 132(h)''.
       (n) Effective Date.--Any amendment made by this section 
     shall take effect as if included in the provision of the 
     Revenue Reconciliation Act of 1993 to which such amendment 
     relates.
     SEC. 6604. MISCELLANEOUS PROVISIONS.

       (a) Application of Amendments Made by Title XII of Omnibus 
     Budget Reconciliation Act of 1990.--Except as otherwise 
     expressly provided, whenever in title XII of the Omnibus 
     Budget Reconciliation Act of 1990 an amendment or repeal is 
     expressed in terms of an amendment to, or repeal of, a 
     section or other provision, the reference shall be considered 
     to be made to a section or other provision of the Internal 
     Revenue Code of 1986.
       (b) Treatment of Certain Amounts Under Hedge Bond Rules.--
       (1) Clause (iii) of section 149(g)(3)(B) is amended to read 
     as follows:
       ``(iii) Amounts held pending reinvestment or redemption.--
     Amounts held for not more than 30 days pending reinvestment 
     or bond redemption shall be treated as invested in bonds 
     described in clause (i).''
       (2) The amendment made by paragraph (1) shall take effect 
     as if included in the amendments made by section 7651 of the 
     Omnibus Budget Reconciliation Act of 1989.
       (c) Treatment of Certain Distributions Under Section 
     1445.--
       (1) In general.--Paragraph (3) of section 1445(e) is 
     amended by adding at the end thereof the following new 
     sentence: ``Rules similar to the rules of the preceding 
     provisions of this paragraph shall apply in the case of any 
     distribution to which section 301 applies and which is not 
     made out of the earnings and profits of such a domestic 
     corporation.''
       (2) Effective date.--The amendment made by paragraph (1) 
     shall apply to distributions after the date of the enactment 
     of this Act.
       (d) Treatment of Certain Credits Under Section 469.--
       (1) In general.--Subparagraph (B) of section 469(c)(3) is 
     amended by adding at the end thereof the following new 
     sentence: ``If the preceding sentence applies to the net 
     income from any property for any taxable year, any credits 
     allowable under subpart B (other than section 27(a)) or D of 
     part IV of subchapter A for such taxable year which are 
     attributable to such property shall be treated as credits not 
     from a passive activity to the extent the amount of such 
     credits does not exceed the regular tax liability of the 
     taxpayer for the taxable year which is allocable to such net 
     income.''
       (2) Effective date.--The amendment made by paragraph (1) 
     shall apply to taxable years beginning after December 31, 
     1986.
       (e) Treatment of Dispositions Under Passive Loss Rules.--
       (1) In general.--Subparagraph (A) of section 469(g)(1) is 
     amended to read as follows:
       ``(A) In general.--If all gain or loss realized on such 
     disposition is recognized, the excess of--
       ``(i) any loss from such activity for such taxable year 
     (determined after the application of subsection (b)), over
       ``(ii) any net income or gain for such taxable year from 
     all other passive activities (determined after the 
     application of subsection (b)),
     shall be treated as a loss which is not from a passive 
     activity.''
       (2) Effective date.--The amendment made by paragraph (1) 
     shall apply to taxable years beginning after December 31, 
     1986.
       (f) Miscellaneous Amendments to Foreign Provisions.--
       (1) Coordination of unified estate tax credit with 
     treaties.--Subparagraph (A) of section 2102(c)(3) is amended 
     by adding at the end thereof the following new sentence: 
     ``For purposes of the preceding sentence, property shall not 
     be treated as situated in the United States if such property 
     is exempt from the tax imposed by this subchapter under any 
     treaty obligation of the United States.''
       (2) Treatment of certain interest paid to related person.--
       (A) In general.--Subparagraph (B) of section 163(j)(1) is 
     amended by inserting before the period at the end thereof the 
     following: ``(and clause (ii) of paragraph (2)(A) shall not 
     apply for purposes of applying this subsection to the amount 
     so treated)''.
       (B) Effective date.--The amendment made by subparagraph (A) 
     shall apply as if included in the amendments made by section 
     7210(a) of the Revenue Reconciliation Act of 1989.
       (3) Treatment of interest allocable to effectively 
     connected income.--
       (A) In general.--
       (i) Subparagraph (B) of section 884(f)(1) is amended by 
     striking ``to the extent'' and all that follows down through 
     ``subparagraph (A)'' and inserting ``to the extent that the 
     allocable interest exceeds the interest described in 
     subparagraph (A)''.
       (ii) The second sentence of section 884(f)(1) is amended by 
     striking ``reasonably expected'' and all that follows down 
     through the period at the end thereof and inserting 
     ``reasonably expected to be allocable interest.''
       (iii) Paragraph (2) of section 884(f) is amended to read as 
     follows:
       ``(2) Allocable interest.--For purposes of this subsection, 
     the term `allocable interest' means any interest which is 
     allocable to income which is effectively connected (or 
     treated as effectively connected) with the conduct of a trade 
     or business in the United States.''
       (B) Effective date.--The amendments made by subparagraph 
     (A) shall take effect as if included in the amendments made 
     by section 1241(a) of the Tax Reform Act of 1986.
       (4) Clarification of source rule.--
       (A) In general.--Paragraph (2) of section 865(b) is amended 
     by striking ``863(b)'' and inserting ``863''.
       (B) Effective date.--The amendment made by subparagraph (A) 
     shall take effect as if included in the amendments made by 
     section 1211 of the Tax Reform Act of 1986.
       (5) Repeal of obsolete provisions.--
       (A) Paragraph (1) of section 6038(a) is amended by striking 
     ``, and'' at the end of subparagraph (E) and inserting a 
     period, and by striking subparagraph (F).
       (B) Subsection (b) of section 6038A is amended by adding 
     ``and'' at the end of paragraph (2), by striking ``, and'' at 
     the end of paragraph (3) and inserting a period, and by 
     striking paragraph (4).
       (g) Treatment of Assignment of Interest in Certain Bond-
     Financed Facilities.--
       (1) In general.--Subparagraph (A) of section 1317(3) of the 
     Tax Reform Act of 1986 is amended by adding at the end 
     thereof the following new sentence: ``A facility shall not 
     fail to be treated as described in this subparagraph by 
     reason of an assignment (or an agreement to an assignment) by 
     the governmental unit on whose behalf the bonds are issued of 
     any part of its interest in the property financed by such 
     bonds to another governmental unit.''
       (2) Effective date.--The amendment made by paragraph (1) 
     shall take effect as if included in such section 1317 on the 
     date of the enactment of the Tax Reform Act of 1986.
       (h) Clarification of Treatment of Medicare Entitlement 
     Under COBRA Provisions.--
       (1) In general.--
       (A) Subclause (V) of section 4980B(f)(2)(B)(i) is amended 
     to read as follows:

       ``(V) Medicare entitlement followed by qualifying event.--
     In the case of a qualifying event described in paragraph 
     (3)(B) that occurs less than 18 months after the date the 
     covered employee became entitled to benefits under title 
     XVIII of the Social Security Act, the period of coverage for 
     qualified 
     [[Page H4288]] beneficiaries other than the covered employee 
     shall not terminate under this clause before the close of the 
     36-month period beginning on the date the covered employee 
     became so entitled.''
       (B) Clause (v) of section 602(2)(A) of the Employee 
     Retirement Income Security Act of 1974 is amended to read as 
     follows:
       ``(v) Medicare entitlement followed by qualifying event.--
     In the case of a qualifying event described in section 603(2) 
     that occurs less than 18 months after the date the covered 
     employee became entitled to benefits under title XVIII of the 
     Social Security Act, the period of coverage for qualified 
     beneficiaries other than the covered employee shall not 
     terminate under this subparagraph before the close of the 36-
     month period beginning on the date the covered employee 
     became so entitled.''
       (C) Clause (iv) of section 2202(2)(A) of the Public Health 
     Service Act is amended to read as follows:
       ``(iv) Medicare entitlement followed by qualifying event.--
     In the case of a qualifying event described in section 
     2203(2) that occurs less than 18 months after the date the 
     covered employee became entitled to benefits under title 
     XVIII of the Social Security Act, the period of coverage for 
     qualified beneficiaries other than the covered employee shall 
     not terminate under this subparagraph before the close of the 
     36-month period beginning on the date the covered employee 
     became so entitled.''
       (2) Effective date.--The amendments made by this subsection 
     shall apply to plan years beginning after December 31, 1989.
       (i) Treatment of Certain REMIC Inclusions.--
       (1) In general.--Subsection (a) of section 860E is amended 
     by adding at the end thereof the following new paragraph:
       ``(6) Coordination with minimum tax.--For purposes of part 
     VI of subchapter A of this chapter--
       ``(A) the reference in section 55(b)(2) to taxable income 
     shall be treated as a reference to taxable income determined 
     without regard to this subsection,
       ``(B) the alternative minimum taxable income of any holder 
     of a residual interest in a REMIC for any taxable year shall 
     in no event be less than the excess inclusion for such 
     taxable year, and
       ``(C) any excess inclusion shall be disregarded for 
     purposes of computing the alternative tax net operating loss 
     deduction.
     The preceding sentence shall not apply to any organization to 
     which section 593 applies, except to the extent provided in 
     regulations prescribed by the Secretary under paragraph 
     (2).''
       (2) Effective date.--The amendment made by paragraph (1) 
     shall take effect as if included in the amendments made by 
     section 671 of the Tax Reform Act of 1986 unless the taxpayer 
     elects to apply such amendment only to taxable years 
     beginning after the date of the enactment of this Act.
       (j) Exemption From Harbor Maintenance Tax for Certain 
     Passengers.--
       (1) In general.--Subparagraph (D) of section 4462(b)(1) 
     (relating to special rule for Alaska, Hawaii, and 
     possessions) is amended by inserting before the period the 
     following: ``, or passengers transported on United States 
     flag vessels operating solely within the State waters of 
     Alaska or Hawaii and adjacent international waters''.
       (2) Effective date.--The amendment made by paragraph (1) 
     shall take effect as if included in the amendments made by 
     section 1402(a) of the Harbor Maintenance Revenue Act of 
     1986.
       (k) Amendments Related to Revenue Provisions of Energy 
     Policy Act of 1992.--
       (1) Effective with respect to taxable years beginning after 
     December 31, 1990, subclause (II) of section 53(d)(1)(B)(iv) 
     is amended to read as follows:

       ``(II) the adjusted net minimum tax for any taxable year is 
     the amount of the net minimum tax for such year increased in 
     the manner provided in clause (iii).''

       (2) Subsection (g) of section 179A is redesignated as 
     subsection (f).
       (3) Subparagraph (E) of section 6724(d)(3) is amended by 
     striking ``section 6109(f)'' and inserting ``section 
     6109(h)''.
       (4)(A) Subsection (d) of section 30 is amended--
       (i) by inserting ``(determined without regard to subsection 
     (b)(3))'' before the period at the end of paragraph (1) 
     thereof, and
       (ii) by adding at the end thereof the following new 
     paragraph:
       ``(4) Election to not take credit.--No credit shall be 
     allowed under subsection (a) for any vehicle if the taxpayer 
     elects to not have this section apply to such vehicle.''
       (B) Subsection (m) of section 6501 (as redesignated by 
     section 6602) is amended by striking ``section 40(f)'' and 
     inserting ``section 30(d)(4), 40(f)''.
       (5) Subclause (III) of section 501(c)(21)(D)(ii) is amended 
     by striking ``section 101(6)'' and inserting ``section 
     101(7)'' and by striking ``1752(6)'' and inserting 
     ``1752(7)''.
       (6) Paragraph (1) of section 1917(b) of the Energy Policy 
     Act of 1992 shall be applied as if ``at a rate'' appeared 
     instead of ``at the rate'' in the material proposed to be 
     stricken.
       (7) Paragraph (2) of section 1921(b) of the Energy Policy 
     Act of 1992 shall be applied as if a comma appeared after 
     ``(2)'' in the material proposed to be stricken.
       (8) Subsection (a) of section 1937 of the Energy Policy Act 
     of 1992 shall be applied as if ``Subpart B'' appeared instead 
     of ``Subpart C''.
       (l) Treatment of Qualified Football Coaches Plan.--
       (1) In general.--Section 1022 of title II of the Employee 
     Retirement Income Security Act of 1974 is amended by adding 
     at the end thereof the following new subsection:
       ``(l) Qualified Football Coaches Plan.--For purposes of 
     determining the qualified plan status of a qualified football 
     coaches plan, section 3(37)(F) shall be treated as part of 
     this title and a qualified football coaches plan shall be 
     treated as a multiemployer collectively bargained plan for 
     purposes of the Internal Revenue Code of 1986.''
       (2) Effective date.--The amendment made by paragraph (1) 
     shall apply to years beginning after the date of the 
     enactment of Public Law 100-202.
       (m) Determination of Unrecovered Investment in Annuity 
     Contract.--
       (1) In general.--Subparagraph (A) of section 72(b)(4) is 
     amended by inserting ``(determined without regard to 
     subsection (c)(2))'' after ``contract''.
       (2) Effective date.--The amendment made by paragraph (1) 
     shall take effect as if included in
      the amendments made by section 1122(c) of the Tax Reform Act 
     of 1986.
       (n) Modifications to Election To Include Child's Income on 
     Parent's Return.--
       (1) Eligibility for election.--Clause (ii) of section 
     1(g)(7)(A) (relating to election to include certain unearned 
     income of child on parent's return) is amended to read as 
     follows:
       ``(ii) such gross income is more than the amount described 
     in paragraph (4)(A)(ii)(I) and less than 10 times the amount 
     so described,''.
       (2) Computation of tax.--Subparagraph (B) of section 
     1(g)(7) (relating to income included on parent's return) is 
     amended--
       (A) by striking ``$1,000'' in clause (i) and inserting 
     ``twice the amount described in paragraph (4)(A)(ii)(I)'', 
     and
       (B) by amending subclause (II) of clause (ii) to read as 
     follows:
       ``(II) for each such child, 15 percent of the lesser of the 
     amount described in paragraph (4)(A)(ii)(I) or the excess of 
     the gross income of such child over the amount so described, 
     and''.

       (3) Minimum tax.--Subparagraph (B) of section 59(j)(1) is 
     amended by striking ``$1,000'' and inserting ``twice the 
     amount in effect for the taxable year under section 
     63(c)(5)(A)''.
       (4) Effective date.--The amendments made by this subsection 
     shall apply to taxable years beginning after December 31, 
     1994.
       (o) Miscellaneous Clerical Amendments.--
       (1) Subclause (II) of section 56(g)(4)(C)(ii) is amended by 
     striking ``of the subclause'' and inserting ``of subclause''.
       (2) Paragraph (2) of section 72(m) is amended by inserting 
     ``and'' at the end of subparagraph (A), by striking 
     subparagraph (B), and by redesignating subparagraph (C) as 
     subparagraph (B).
       (3) Paragraph (2) of section 86(b) is amended by striking 
     ``adusted'' and inserting ``adjusted''.
       (4)(A) The heading for section 112 is amended by striking 
     ``combat pay'' and inserting ``combat zone compensation''.
       (B) The item relating to section 112 in the table of 
     sections for part III of subchapter B of chapter 1 is amended 
     by striking ``combat pay'' and inserting ``combat zone 
     compensation''.
       (C) Paragraph (1) of section 3401(a) is amended by striking 
     ``combat pay'' and inserting ``combat zone compensation''.
       (5) Clause (i) of section 172(h)(3)(B) is amended by 
     striking the comma at the end thereof and inserting a period.
       (6) Clause (ii) of section 543(a)(2)(B) is amended by 
     striking ``section 563(c)'' and inserting ``section 563(d)''.
       (7) Paragraph (1) of section 958(a) is amended by striking 
     ``sections 955(b)(1) (A) and (B), 955(c)(2)(A)(ii), and 
     960(a)(1)'' and inserting ``section 960(a)(1)''.
       (8) Subsection (g) of section 642 is amended by striking 
     ``under 2621(a)(2)'' and inserting ``under section 
     2621(a)(2)''.
       (9) Section 1463 is amended by striking ``this subsection'' 
     and inserting ``this section''.
       (10) Subsection (k) of section 3306 is amended by inserting 
     a period at the end thereof.
       (11) The item relating to section 4472 in the table of 
     sections for subchapter B of chapter 36 is amended by 
     striking ``and special rules''.
       (12) Paragraph (2) of section 4978(b) is amended by 
     striking the period at the end of subparagraph (A) and 
     inserting a comma, and by striking the period and quotation 
     marks at the end of subparagraph (B) and inserting a comma.
       (13) Paragraph (3) of section 5134(c) is amended by 
     striking ``section 6662(a)'' and inserting ``section 
     6665(a)''.
       (14) Paragraph (2) of section 5206(f) is amended by 
     striking ``section 5(e)'' and inserting ``section 105(e)''.
       (15) Paragraph (1) of section 6050B(c) is amended by 
     striking ``section 85(c)'' and inserting ``section 85(b)''.
       (16) Subsection (k) of section 6166 is amended by striking 
     paragraph (6).
       (17) Subsection (e) of section 6214 is amended to read as 
     follows:
       ``(e) Cross Reference.--

  ``For provision giving Tax Court jurisdiction to order a refund of an 
overpayment and to award sanctions, see section 6512(b)(2).''

[[Page H4289]]

       (18) The section heading for section 6043 is amended by 
     striking the semicolon and inserting a comma.
       (19) The item relating to section 6043 in the table of 
     sections for subpart B of part III of subchapter A of chapter 
     61 is amended by striking the semicolon and inserting a 
     comma.
       (20) The table of sections for part I of subchapter A of 
     chapter 68 is amended by striking the item relating to 
     section 6662.
       (21)(A) Section 7232 is amended--
       (i) by striking ``lubricating oil,'' in the heading, and
       (ii) by striking ``lubricating oil,'' in the text.
       (B) The table of sections for part II of subchapter A of 
     chapter 75 is amended by striking ``lubricating oil,'' in the 
     item relating to section 7232.
       (22) Paragraph (1) of section 6701(a) of the Omnibus Budget 
     Reconciliation Act of 1989 is amended by striking ``subclause 
     (IV)'' and inserting ``subclause (V)''.
       (23) Clause (ii) of section 7304(a)(2)(D) of such Act is 
     amended by striking ``subsection (c)(2)'' and inserting 
     ``subsection (c)''.
       (24) Paragraph (1) of section 7646(b) of such Act is 
     amended by striking ``section 6050H(b)(1)'' and inserting 
     ``section 6050H(b)(2)''.
       (25) Paragraph (10) of section 7721(c) of such Act is 
     amended by striking ``section 6662(b)(2)(C)(ii)'' and 
     inserting ``section 6661(b)(2)(C)(ii)''.
       (26) Subparagraph (A) of section 7811(i)(3) of such Act is 
     amended by inserting ``the first place it appears'' before 
     ``in clause (i)''.
       (27) Paragraph (10) of section 7841(d) of such Act is 
     amended by striking ``section 381(a)'' and inserting 
     ``section 381(c)''.
       (28) Paragraph (2) of section 7861(c) of such Act is 
     amended by inserting ``the second place it appears'' before 
     ``and inserting''.
       (29) Paragraph (1) of section 460(b) is amended by striking 
     ``the look-back method of paragraph (3)'' and inserting ``the 
     look-back method of paragraph (2)''.
       (30) Subparagraph (C) of section 50(a)(2) is amended by 
     striking ``subsection (c)(4)'' and inserting ``subsection 
     (d)(5)''.
       (31) Subparagraph (B) of section 172(h)(4) is amended by 
     striking the material following the heading and preceding 
     clause (i) and inserting ``For purposes of subsection 
     (b)(2)--''.
       (32) Subparagraph (A) of section 355(d)(7) is amended by 
     inserting ``section'' before ``267(b)''.
       (33) Subparagraph (C) of section 420(e)(1) is amended by 
     striking ``mean'' and inserting ``means''.
       (34) Paragraph (4) of section 537(b) is amended by striking 
     ``section 172(i)'' and inserting ``section 172(f)''.
       (35) Subparagraph (B) of section 613(e)(1) is amended by 
     striking the comma at the end thereof and inserting a period.
       (36) Paragraph (4) of section 856(a) is amended by striking 
     ``section 582(c)(5)'' and inserting ``section 582(c)(2)''.
       (37) Sections 904(f)(2)(B)(i) and 907(c)(4)(B)(iii) are 
     each amended by inserting ``(as in effect on the day before 
     the date of the enactment of the Revenue Reconciliation Act 
     of 1990)'' after ``section 172(h)''.
       (38) Subsection (b) of section 936 is amended by striking 
     ``subparagraphs (D)(ii)(I)'' and inserting ``subparagraphs 
     (D)(ii)''.
       (39) Subsection (c) of section 2104 is amended by striking 
     ``subparagraph (A), (C), or (D) of section 861(a)(1)'' and 
     inserting ``section 861(a)(1)(A)''.
       (40) Subparagraph (A) of section 280A(c)(1) is amended to 
     read as follows:
       ``(A) as the principal place of business for any trade or 
     business of the taxpayer,''.
       (41) Section 6038 is amended by redesignating the 
     subsection relating to cross references as subsection (f).
       (42) Clause (iv) of section 6103(e)(1)(A) is amended by 
     striking all that follows ``provisions of'' and inserting 
     ``section 1(g) or 59(j);''.
       (43) The subsection (f) of section 6109 of the Internal 
     Revenue Code of 1986 which was added by section 2201(d) of 
     Public Law 101-624 is redesignated as subsection (g).
       (44) Subsection (b) of section 7454 is amended by striking 
     ``section 4955(e)(2)'' and inserting ``section 4955(f)(2)''.
       (45) Subsection (d) of section 11231 of the Revenue 
     Reconciliation Act of 1990 shall be applied as if ``comma'' 
     appeared instead of ``period'' and as if the paragraph (9) 
     proposed to be added ended with a comma.
       (46) Paragraph (1) of section 11303(b) of the Revenue 
     Reconciliation Act of 1990 shall be applied as if 
     ``paragraph'' appeared instead of ``subparagraph'' in the 
     material proposed to be stricken.
       (47) Subsection (f) of section 11701 of the Revenue 
     Reconciliation Act of 1990 is amended by inserting 
     ``(relating to definitions)'' after ``section 6038(e)''.
       (48) Subsection (i) of section 11701 of the Revenue 
     Reconciliation Act of 1990 shall be applied as if 
     ``subsection'' appeared instead of ``section'' in the 
     material proposed to be stricken.
       (49) Subparagraph (B) of section 11801(c)(2) of the Revenue 
     Reconciliation Act of 1990 shall be applied as if ``section 
     56(g)'' appeared instead of ``section 59(g)''.
       (50) Subparagraph (C) of section 11801(c)(8) of the Revenue 
     Reconciliation Act of 1990 shall be applied as if 
     ``reorganizations'' appeared instead of ``reorganization'' in 
     the material proposed to be stricken.
       (51) Subparagraph (H) of section 11801(c)(9) of the Revenue 
     Reconciliation Act of 1990 shall be applied as if ``section 
     1042(c)(1)(B)'' appeared instead of ``section 
     1042(c)(2)(B)''.
       (52) Subparagraph (F) of section 11801(c)(12) of the 
     Revenue Reconciliation Act of 1990 shall be applied as if 
     ``and (3)'' appeared instead of ``and (E)''.
       (53) Subparagraph (A) of section 11801(c)(22) of the 
     Revenue Reconciliation Act of 1990 shall be applied as if 
     ``chapters 21'' appeared instead of ``chapter 21'' in the 
     material proposed to be stricken.
       (54) Paragraph (3) of section 11812(b) of the Revenue 
     Reconciliation Act of 1990 shall be applied by not executing 
     the amendment therein to the heading of section 42(d)(5)(B).
       (55) Clause (i) of section 11813(b)(9)(A) of the Revenue 
     Reconciliation Act of 1990 shall be applied as if a comma 
     appeared after ``(3)(A)(ix)'' in the material proposed to be 
     stricken.
       (56) Subparagraph (F) of section 11813(b)(13) of the 
     Revenue Reconciliation Act of 1990 shall be applied as if 
     ``tax'' appeared after ``investment'' in the material 
     proposed to be stricken.
       (57) Paragraph (19) of section 11813(b) of the Revenue 
     Reconciliation Act of 1990 shall be applied as if ``Paragraph 
     (20) of section 1016(a), as redesignated by section 11801,'' 
     appeared instead of ``Paragraph (21) of section 1016(a)''.
       (58) Paragraph (5) section 8002(a) of the Surface 
     Transportation Revenue Act of 1991 shall be applied as if 
     ``4481(e)'' appeared instead of ``4481(c)''.
       (59) Section 7872 is amended--
       (A) by striking ``foregone'' each place it appears in 
     subsections (a) and (e)(2) and inserting ``forgone'', and
       (B) by striking ``Foregone'' in the heading for subsection 
     (e) and the heading for paragraph (2) of subsection (e) and 
     inserting ``Forgone''.
       (60) Paragraph (7) of section 7611(h) is amended by 
     striking ``approporiate'' and inserting ``appropriate''.
       (61) The heading of paragraph (3) of section 419A(c) is 
     amended by striking ``severence'' and inserting 
     ``severance''.
       (62) Clause (ii) of section 807(d)(3)(B) is amended by 
     striking ``Commissoners' '' and inserting ``Commissioners' 
     ''.
       (63) Subparagraph (B) of section 1274A(c)(1) is amended by 
     striking ``instument'' and inserting ``instrument''.
       (64) Subparagraph (B) of section 724(d)(3) by striking 
     ``Subparagaph'' and inserting ``Subparagraph''.
       (65) The last sentence of paragraph (2) of section 42(c) is 
     amended by striking ``of 1988''.
       (66) Paragraph (1) of section 9707(d) is amended by 
     striking ``diligence,'' and inserting ``diligence''.
       (67) Subsection (c) of section 4977 is amended by striking 
     ``section 132(i)(2)'' and inserting ``section 132(h)''.
       (68) The last sentence of section 401(a)(20) is amended by 
     striking ``section 211'' and inserting ``section 521''.
       (69) Subparagraph (A) of section 402(g)(3) is amended by 
     striking ``subsection (a)(8)'' and inserting ``subsection 
     (e)(3)''.
       (70) The last sentence of section 403(b)(10) is amended by 
     striking ``an direct'' and inserting ``a direct''.
       (71) Subparagraph (A) of section 4973(b)(1) is amended by 
     striking ``sections 402(c)'' and inserting ``section 
     402(c)''.
       (72) Paragraph (12) of section 3405(e) is amended by 
     striking ``(b)(3)'' and inserting ``(b)(2)''.
       (73) Paragraph (41) of section 521(b) of the Unemployment 
     Compensation Amendments of 1992 shall be applied as if 
     ``section'' appeared instead of ``sections'' in the material 
     proposed to be stricken.
       (74) Paragraph (27) of section 521(b) of the Unemployment 
     Compensation Amendments of 1992 shall be applied as if 
     ``Section 691(c)(5)'' appeared instead of ``Section 691(c)''.
       (75) Paragraph (5) of section 860F(a) is amended by 
     striking ``paragraph (1)'' and inserting ``paragraph (2)''.
       (76) Paragraph (1) of section 415(k) is amended by adding 
     ``or'' at the end of subparagraph (C), by striking 
     subparagraphs (D) and (E), and by redesignating subparagraph 
     (F) as subparagraph (D).
       (77) Paragraph (2) of section 404(a) is amended by striking 
     ``(18),''.
       (78) Clause (ii) of section 72(p)(4)(A) is amended to read 
     as follows:
       ``(ii) Special rule.--The term `qualified employer plan' 
     shall not include any plan which was (or was determined to 
     be) a qualified employer plan or a government plan.''
       (79) Sections 461(i)(3)(C) and 1274(b)(3)(B)(i) are each 
     amended by striking ``section 6662(d)(2)(C)(ii)'' and 
     inserting ``section 6662(d)(2)(C)(iii)''.
       (80) Subsection (a) of section 164 is amended by striking 
     the paragraphs relating to the generation-skipping tax and 
     the environmental tax imposed by section 59A and by inserting 
     after paragraph (3) the following new paragraphs:
       ``(4) The GST tax imposed on income distributions.
       ``(5) The environmental tax imposed by section 59A.''
       Subtitle G--Tax Reduction Contingent on Deficit Reduction

     SEC. 6701. TAX REDUCTION CONTINGENT ON DEFICIT REDUCTION.

       Notwithstanding any other provision of this title and any 
     amendment made by this title, no provision of this title 
     shall take effect unless--
       [[Page H4290]] (1) the concurrent resolution on the budget 
     for fiscal year 1996, as agreed to, provides that the budget 
     of the United States will be in balance by fiscal year 2002, 
     and
       (2) the conference report, as agreed to, on the 
     reconciliation bill for that resolution--
       (A) achieves the aggregate amount of deficit reduction to 
     effectuate the reconciliation instructions required for the 
     years covered by that resolution necessary to so balance the 
     budget, and
       (B) contains a statement, based on estimates made by the 
     Director of the Congressional Budget Office, that such 
     conference report does so comply.

     SEC. 6702. MONITORING.

       The Committees on the Budget of the House of 
     Representatives and the Senate shall each monitor progress on 
     achieving a balanced budget consistent with the most recently 
     agreed to concurrent resolution on the budget for fiscal year 
     1996 or any subsequent fiscal year (and the reconciliation 
     Act for that resolution) or the most recently agreed to 
     concurrent resolution on the budget that would achieve a 
     balanced budget by fiscal year 2002 (and the reconciliation 
     Act for that resolution). After consultation with the 
     Director of the Congressional Budget Office, each such 
     committee shall submit a report of its findings to its House 
     and the President on or before December 15, 1995, and 
     annually thereafter. Each such report shall contain the 
     following:
       (1) Estimates of the deficit levels (based on legislation 
     enacted through the date of the report) for each fiscal year 
     through fiscal year 2002.
       (2) An analysis of the variance (if any) between those 
     estimated deficit levels and the levels set forth in the 
     concurrent resolution on the budget for fiscal year 1996 or 
     the most recently agreed to concurrent resolution on the 
     budget that would achieve a balanced budget by fiscal year 
     2002.
       (3) Policy options to achieve the additional levels of 
     deficit reduction necessary to balance the budget of the 
     United States by fiscal year 2002.

     SEC. 6703. CONGRESSIONAL ACTION.

       Each House of Congress shall incorporate the policy options 
     included in the report of its Committee on the Budget under 
     section 6702(a)(3) (or other policy options) in developing a 
     concurrent resolution on the budget for any fiscal year that 
     achieves the additional levels of deficit reduction necessary 
     to balance the budget of the United States by fiscal year 
     2002.

     SEC. 6704. PRESIDENTIAL ACTION.

       If the President submits a budget under section 1105(a) of 
     title 31, United States Code, that does not provide for a 
     balanced budget for the United States by fiscal year 2002, 
     then the President shall include with that submission a 
     complete budget that balances the budget by that fiscal year.
  The CHAIRMAN. No amendment to the amendment in the nature of a 
substitute is in order except the further amendment in the nature of a 
substitute printed in part 2 of the report, which may be offered only 
by the gentleman from Missouri [Mr. Gephardt], or his designee, is 
considered as having been read, is debatable for one hour, equally 
divided and controlled by the proponent and an opponent of the 
amendment, and is not subject to amendment.


    Amendment in the Nature of a Substitute Offered by Mr. GEPHARDT

  Mr. GEPHARDT. Mr. Chairman, I offer an amendment in the nature of a 
substitute made in order under the rule.
  The CHAIRMAN. The Clerk will designate the amendment.
  The text of the amendment is the nature of a substitute is as 
follows:

       Amendment in the nature of a substitute offered by Mr. 
     Gephardt.
       Strike all after the enacting clause and insert the 
     following:

     SECTION 1. SHORT TITLE; TABLE CONTENTS.

       (a) Short Title.--This Act may be cited as the ``School Act 
     of 1995''.
       (b) Table of Contents.--

Sec. 1. Short title; table of contents.

         TITLE I--INCENTIVES FOR INVESTMENT IN HIGHER EDUCATION

Sec. 101. Deduction for higher education expenses.
Sec. 102. Deduction for interest on loans for higher education.
Sec. 103. Expansion of education saving bond program.
Sec. 104. Deduction for IRA contributions available to all middle-
              income taxpayers.
Sec. 105. Distributions from individual retirement plans may be used 
              without penalty to pay higher education expenses.
Sec. 106. Spousal IRA computed on basis of compensation of both 
              spouses.

    TITLE II--NONDEDUCTIBLE TAX-FREE INDIVIDUAL RETIREMENT ACCOUNTS

Sec. 201. Establishment of nondeductible tax-free individual retirement 
              accounts.

          TITLE III--TAX BENEFITS CONTINGENT ON FEDERAL BUDGET

Sec. 301. Effective dates of tax benefits delayed until Federal budget 
              projected to be in balance.
Sec. 302. Termination of tax benefits if Federal budget deficit 
              reduction targets are not met.

TITLE IV--REVISIONS TO DISCRETIONARY SPENDING LIMITS AND BUDGET PROCESS

Sec. 401. Short title.
Sec. 402. Discretionary spending limits.
Sec. 403. General statement and definitions.
Sec. 404. Enforcing discretionary spending limits.
Sec. 405. Enforcing pay-as-you-go.
Sec. 406. Reports and orders.
Sec. 407. Technical correction.
Sec. 408. Effective date.
Sec. 409. Savings from provisions of this title reducing discretionary 
              spending to be added to pay-as-you-go scorecard.
Sec. 410. Clarification of order in which adjustments to discretionary 
              spending limits are to be made.

         TITLE V--PROVISIONS RELATING TO INTERNATIONAL TAXATION

Sec. 501. Revision of tax rules on expatriation.
Sec. 502. Improved information reporting on foreign trusts.
Sec. 503. Modification of rules relating to foreign trusts having one 
              or more United States beneficiaries.
Sec. 504. Foreign persons not to be treated as owners under grantor 
              trust rules.
Sec. 505. Gratuitous transfers by partnerships and foreign 
              corporations.
Sec. 506. Information reporting regarding large foreign gifts.
Sec. 507. Modification of rules relating to foreign trusts which are 
              not grantor trusts.
Sec. 508. Residence of estates and trusts.

 TITLE VI--EXTENSION OF AUTHORITY OF FEDERAL COMMUNICATIONS COMMISSION 
                       TO USE COMPETITIVE BIDDING

Sec. 601. Extension of authority.

  TITLE VII--PRIVATIZATION OF THE UNITED STATES ENRICHMENT CORPORATION

Sec. 701. Short title and reference.
Sec. 702. Production facility.
Sec. 703. Definitions.
Sec. 704. Employees of the corporation.
Sec. 705. Marketing and contracting authority.
Sec. 706. Privatization of the corporation.
Sec. 707. Periodic certification of compliance.
Sec. 708. Licensing of other technologies.
Sec. 709. Conforming amendments.
         TITLE I--INCENTIVES FOR INVESTMENT IN HIGHER EDUCATION

     SEC. 101. DEDUCTION FOR HIGHER EDUCATION EXPENSES.

       (a) Deduction Allowed.-- Part VII of subchapter B of 
     chapter 1 of the Internal Revenue Code of 1986 (relating to 
     additional itemized deductions for individuals) is amended by 
     redesignating section 220 as section 221 and by inserting 
     after section 219 the following new section:
     ``SEC. 220. HIGHER EDUCATION TUITION AND FEES.

       ``(a) Allowance of Deduction.--In the case of an 
     individual, there shall be allowed as a deduction the amount 
     of qualified higher education expenses paid by the taxpayer 
     during the taxable year.
       ``(b) Limitations.--
       ``(1) Dollar limitation.--
       ``(A) In general.--The amount allowed as a deduction under 
     subsection (a) for any taxable year shall not exceed $10,000.
       ``(B) Phase-in.--In the case of taxable years beginning in 
     1996, 1997, or 1998, `$5,000' shall be substituted for 
     `$10,000' in subparagraph (A).
       ``(2) Limitation based on modified adjusted gross income.--
       ``(A) In general.--The amount which would (but for this 
     paragraph) be taken into account under paragraph (1) shall be 
     reduced (but not below zero) by the amount determined under 
     subparagraph (B).
       ``(B) Amount of reduction.--The amount determined under 
     this subparagraph equals the amount which bears the same 
     ratio to the amount which would be so taken into account as--
       ``(i) the excess of--

       ``(I) the taxpayer's modified adjusted gross income for 
     such taxable year, over
       ``(II) $50,000 ($75,000 in the case of a joint return), 
     bears to

       ``(ii) $10,000.
       ``(C) Modified adjusted gross income.--The term `modified 
     adjusted gross income' means the adjusted gross income of the 
     taxpayer for the taxable year determined--
       ``(i) without regard to this section and sections 911, 931, 
     and 933, and
       ``(ii) after the application of sections 86, 135, 219 and 
     469.

     For purposes of sections 86, 135, 219, and 469, adjusted 
     gross income shall be determined without regard to the 
     deduction allowed under this section.
       ``(c) Qualified Higher Education Expenses.--For purposes of 
     this section--
       ``(1) Qualified higher education expenses.--
       ``(A) In general.--The term `qualified higher education 
     expenses' means tuition and fees charged by an educational 
     institution and required for the enrollment or attendance 
     of--
       ``(i) the taxpayer,
     [[Page H4291]]   ``(ii) the taxpayer's spouse, or
       ``(iii) any dependent of the taxpayer with respect to whom 
     the taxpayer is allowed a deduction under section 151,

     as an eligible student at an institution of higher education.
       ``(B) Exception for education involving sports, etc.--Such 
     term does not include expenses with respect to any course or 
     other education involving sports, games, or hobbies, unless 
     such expenses--
       ``(i) are part of a degree program, or
       ``(ii) are deductible under this chapter without regard to 
     this section.
       ``(C) Exception for nonacademic fees.--Such term does not 
     include any student activity fees, athletic fees, insurance 
     expenses, or other expenses unrelated to a student's academic 
     course of instruction.
       ``(D) Eligible student.--For purposes of subparagraph (A), 
     the term `eligible student' means a student who--
       ``(i) meets the requirements of section 484(a)(1) of the 
     Higher Education Act of 1965 (20 U.S.C. 1091(a)(1)), as in 
     effect on the date of the enactment of this section, and
       ``(ii)(I) is carrying at least one-half the normal full-
     time work load for the course of study the student is 
     pursuing, as determined by the institution of higher 
     education, or
       ``(II) is enrolled in a course which enables the student to 
     improve the student's job skills or to acquire new job 
     skills.
       ``(E) Identification requirement.--No deduction shall be 
     allowed under subsection (a) to a taxpayer with respect to an 
     eligible student unless the taxpayer includes the name, age, 
     and taxpayer identification number of such eligible student 
     on the return of tax for the taxable year.
       ``(2) Institution of higher education.--The term 
     `institution of higher education' means an institution 
     which--
       ``(A) is described in section 481 of the Higher Education 
     Act of 1965 (20 U.S.C. 1088), as in effect on the date of the 
     enactment of this section, and
       ``(B) is eligible to participate in programs under title IV 
     of such Act.
       ``(d) Special Rules.--
       ``(1) No double benefit.--
       ``(A) In general.--No deduction shall be allowed under 
     subsection (a) for qualified higher education expenses with 
     respect to which a deduction is allowable to the taxpayer 
     under any other provision of this chapter unless the taxpayer 
     irrevocably waives his right to the deduction of such 
     expenses under such other provision.
       ``(B) Dependents.--No deduction shall be allowed under 
     subsection (a) to any individual with respect to whom a 
     deduction under section 151 is allowable to another taxpayer 
     for a taxable year beginning in the calendar year in which 
     such individual's taxable year begins.
       ``(C) Savings bond exclusion.--A deduction shall be allowed 
     under subsection (a) for qualified higher education expenses 
     only to the extent the amount of such expenses exceeds the 
     amount excludable under section 135 for the taxable year.
       ``(2) Limitation on taxable year of deduction.--
       ``(A) In general.--A deduction shall be allowed under 
     subsection (a) for any taxable year only to the extent the 
     qualified higher education expenses are in connection with 
     enrollment at an institution of higher education during the 
     taxable year.
       ``(B) Certain prepayments allowed.--Subparagraph (A) shall 
     not apply to qualified higher education expenses paid during 
     a taxable year if such expenses are in connection with an 
     academic term beginning during such taxable year or during 
     the 1st 3 months of the next taxable year.
       ``(3) Adjustment for certain scholarships and veterans 
     benefits.--The amount of qualified higher education expenses 
     otherwise taken into account under subsection (a) with 
     respect to the education of an individual shall be reduced 
     (before the application of subsection (b)) by the sum of the 
     amounts received with respect to such individual for the 
     taxable year as--
       ``(A) a qualified scholarship which under section 117 is 
     not includable in gross income,
       ``(B) an educational assistance allowance under chapter 30, 
     31, 32, 34, or 35 of title 38, United States Code, or
       ``(C) a payment (other than a gift, bequest, devise, or 
     inheritance within the meaning of section 102(a)) for 
     educational expenses, or attributable to enrollment at an 
     eligible educational institution, which is exempt from income 
     taxation by any law of the United States.
       ``(4) No deduction for married individuals filing separate 
     returns.--If the taxpayer is a married individual (within the 
     meaning of section 7703), this section shall apply only if 
     the taxpayer and the taxpayer's spouse file a joint return 
     for the taxable year. The preceeding sentence shall not apply 
     if the taxpayer lives apart from his spouse at all times 
     during the taxable year.
       ``(5) Nonresident aliens.--If the taxpayer is a nonresident 
     alien individual for any portion of the taxable year, this 
     section shall apply only if such individual is treated as a 
     resident alien of the United States for purposes of this 
     chapter by reason of an election under subsection (g) or (h) 
     of section 6013.
       ``(6) Regulations.--The Secretary may prescribe such 
     regulations as may be necessary or appropriate to carry out 
     this section, including regulations requiring recordkeeping 
     and information reporting.''
       (b) Deduction Allowed in Computing Adjusted Gross Income.--
     Section 62(a) of such Code is amended by inserting after 
     paragraph (15) the following new paragraph:
       ``(16) Higher education tuition and fees.--The deduction 
     allowed by section 220.''
       (c) Conforming Amendment.--The table of sections for part 
     VII of subchapter B of chapter 1 of such Code is amended by 
     striking the item relating to section 220 and inserting:

``Sec. 220. Higher education tuition and fees.
``Sec. 221. Cross reference.''

       (d) Effective Date.--The amendments made by this section 
     shall apply to payments made after December 31, 1995.

     SEC. 102. DEDUCTION FOR INTEREST ON LOANS FOR HIGHER 
                   EDUCATION.

       (a) In General.--Paragraph (2) of section 163(h) of the 
     Internal Revenue Code of 1986 (defining personal interest) is 
     amended by striking ``and'' at the end of subparagraph (D), 
     by redesignating subparagraph (E) as subparagraph (F), and by 
     inserting after subparagraph (D) the following new 
     subparagraph:
       ``(E) any interest on a qualified higher education loan, 
     and''.
       (b) Qualified Higher Education Loan Defined.--Paragraph (5) 
     of section 163(h) of such Code (relating to phase-in of 
     limitations) is amended to read as follows:
       ``(5) Qualified higher education loan.--For purposes of 
     this subsection--
       ``(A) In general.--The term `qualified higher education 
     loan' means any loan incurred by the taxpayer under a State 
     or Federal student loan program to pay qualified higher 
     education expenses (as defined in section 220(c))--
       ``(i) which are paid or incurred within a reasonable period 
     of time before or after the indebtedness is incurred, and
       ``(ii) which are attributable to education furnished during 
     a period during which the recipient was an eligible student 
     (as defined in such section).

     Such term includes indebtedness used to refinance 
     indebtedness which qualifies as a qualified higher education 
     loan.
       ``(B) Reduction of benefit for higher income taxpayers.--
       ``(i) In general.--The amount of interest which would (but 
     for this subparagraph) be taken into account under paragraph 
     (2)(E) for the taxable year shall be reduced (but not below 
     zero) by the amount which bears the same ratio to the amount 
     of such interest as--

       ``(I) the excess of the taxpayer's modified adjusted gross 
     income for such taxable year over $50,000 ($75,000 in the 
     case of a joint return), bears to
       ``(II) $10,000.

       ``(ii) Modified adjusted gross income.--For purposes of 
     clause (i), the term `modified adjusted gross income' means 
     the adjusted gross income of the taxpayer for the taxable 
     year determined--

       ``(I) without regard to paragraph (2)(E) and sections 911, 
     931, and 933, and
       ``(II) after the application of sections 86, 135, 219, 220, 
     and 469.

     For purposes of sections 86, 135, 219, 220, and 469, adjusted 
     gross income shall be determined without regard to the 
     deduction allowed by reason of paragraph (2)(E).
       ``(C) Coordination with limitation on home equity 
     indebtedness.--Any qualified higher education loan shall not 
     be taken into account for purposes of applying the limitation 
     of paragraph (3)(C)(ii).
       ``(D) Coordination with savings bond exclusion.--The amount 
     of qualified higher education expenses for any taxable year 
     otherwise taken into account under subparagraph (A) shall be 
     reduced by any amount excludable from gross income under 
     section 135 for such taxable year.
       ``(E) Other rules to apply.--Rules similar to the rules of 
     subparagraphs (B) and (C) of paragraph (1), and paragraphs 
     (3), (4), and (5), of section 220(d), shall apply for 
     purposes of this section.''
       (c) Deduction Allowed in Computing Adjusted Gross Income.--
     Section 62(a) of such Code is amended by inserting after 
     paragraph (16) the following new paragraph:
       ``(17) Interest on loans for higher education.--The 
     deduction allowed by section 163 to the extent attributable 
     to any qualified higher education loan (as defined in section 
     163(h)(5)).''
       (d) Effective Date.--The amendments made by this section 
     shall apply to amounts paid or accrued after December 31, 
     1995.

     SEC. 103. EXPANSION OF EDUCATION SAVING BOND PROGRAM.

       (a) Higher Yield on Guaranteed Education Plan Bonds.--
     Subsection (b) of section 3101 of title 31, United States 
     Code, is amended by adding at the end the following new 
     paragraph:
       ``(3)(A) The Secretary shall issue savings bonds which are 
     designated as Guaranteed Education Plan Bonds.
       ``(B)(i) Except as provided in clause (ii) or by the 
     Secretary, Guaranteed Education Plan Bonds shall have the 
     same terms and conditions as other savings bonds.
       ``(ii) Guaranteed Education Plan Bonds, if redeemed under 
     circumstances such that the Secretary is reasonably certain 
     that the redemption proceeds will be used to pay the 
     qualified higher education expenses (as defined in section 
     135 of the Internal Revenue Code of 1986) of the individual 
     holding the bond, shall have an investment yield which is 
     materially greater than the investment yield when not so 
     used.''
       (b) Reduction of Age Limit on Individual To Whom Bond 
     Issued.--Subparagraph (B) of 
     [[Page H4292]] section 135(b)(1) is amended by striking ``age 
     24'' and inserting ``age 21''.
       (c) Taxpayer Need Not Be Purchaser of Bond.--Nothing in 
     section 135 of the Internal Revenue Code of 1986 shall be 
     construed to require that, in order for a savings bond to be 
     a qualified United States savings bond under such section, 
     the purchaser of the bond must be the individual to whom the 
     bond is issued.
       (d) Limitation on Inflation Adjustment.--Subparagraph (B) 
     of section 135(b)(2) is amended by adding at the end the 
     following new flush sentence:

     ``In no event shall be adjustment under this subparagraph 
     increase the $40,000 amount to more than $50,000 or the 
     $60,000 amount to more than $70,000.''
       (e) Effective Date.--
       (1) In general.--Except as provided in paragraph (2), the 
     amendments made by this section shall apply to bonds issued 
     after the date of the enactment of this Act.
       (2) Subsection (d).--The amendment made by subsection (d) 
     shall apply to taxable years beginning after December 31, 
     1995.
       (e) Authorization of Appropriations.--There are authorized 
     to be appropriated for the administrative expenses of the 
     Department of the Treasury to carry out the amendment made by 
     subsection (a)--
       (1) $650,000 for the fiscal year beginning after the date 
     of the enactment of this Act, and
       (2) $11,900,000 for each following fiscal year.

     SEC. 104. DEDUCTION FOR IRA CONTRIBUTIONS AVAILABLE TO ALL 
                   MIDDLE-INCOME TAXPAYERS.

       (a) In General.--Subparagraph (B) of section 219(g)(3) of 
     the Internal Revenue Code of 1986 is amended--
       (1) by striking ``$40,000'' in clause (i) and inserting 
     ``$75,000'', and
       (2) by striking ``$25,000'' in clause (ii) and inserting 
     ``$50,000''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to contributions for taxable years beginning 
     after December 31, 1995.

     SEC. 105. DISTRIBUTIONS FROM INDIVIDUAL RETIREMENT PLANS MAY 
                   BE USED WITHOUT PENALTY TO PAY HIGHER EDUCATION 
                   EXPENSES.

       (a) In General.--Paragraph (2) of section 72(t) of the 
     Internal Revenue Code of 1986 (relating to exceptions to 10-
     percent additional tax on early distributions from qualified 
     retirement plans) is amended by adding at the end thereof the 
     following new subparagraph:
       ``(D) Distributions from individual retirement plans for 
     higher educational expenses.--Distributions to an individual 
     from an individual retirement plan to the extent such 
     distributions during the taxable year do not exceed the 
     amount allowed as a deduction under section 220 to the 
     taxpayer for such taxable year.''
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to distributions after December 31, 1995.

     SEC. 106. SPOUSAL IRA COMPUTED ON BASIS OF COMPENSATION OF 
                   BOTH SPOUSES.

       (a) In General.--Subsection (c) of section 219 of the 
     Internal Revenue Code of 1986 (relating to special rules for 
     certain married individuals) is amended to read as follows:
       ``(c) Special Rules for Certain Married Individuals.--
       ``(1) In general.--In the case of an individual to whom 
     this paragraph applies for the taxable year, the limitation 
     of subsection (b)(1) shall be equal to the lesser of--
       ``(A) $2,000, or
       ``(B) the sum of--
       ``(i) the compensation includible in such individual's 
     gross income for the taxable year, plus
       ``(ii) the compensation includible in the gross income of 
     such individual's spouse for the taxable year reduced by the 
     amount allowable as a deduction under subsection (a) to such 
     spouse for such taxable year.
       ``(2) Individuals to whom paragraph (1) applies.--Paragraph 
     (1) shall apply to any individual if--
       ``(A) such individual files a joint return for the taxable 
     year, and
       ``(B) the amount of compensation (if any) includible in 
     such individual's gross income for the taxable year is less 
     than the compensation includible in the gross income of such 
     individual's spouse for the taxable year.
       ``(3) Phasein of benefit.--The amount determined under 
     paragraph (1)(B)(ii) for any taxable year beginning in a 
     calendar year shall not exceed the sum of--
       ``(A) $250, plus
       ``(B) the product of $250 and the number of calendar years 
     which such calendar year is after 1996.''
       (b) Technical Amendment.--Paragraph (2) of section 219(f) 
     of such Code (relating to other definitions and special 
     rules) is amended by striking ``subsections (b) and (c)'' and 
     inserting ``subsection (b)''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to contributions for taxable years beginning 
     after December 31, 1995.
    TITLE II--NONDEDUCTIBLE TAX-FREE INDIVIDUAL RETIREMENT ACCOUNTS

     SEC. 201. ESTABLISHMENT OF NONDEDUCTIBLE TAX-FREE INDIVIDUAL 
                   RETIREMENT ACCOUNTS.

       (a) In General.--Subpart A of part I of subchapter D of 
     chapter 1 of the Internal Revenue Code of 1986 (relating to 
     pension, profit-sharing, stock bonus plans, etc.) is amended 
     by inserting after section 408 the following new section:

     ``SEC. 408A. SPECIAL INDIVIDUAL RETIREMENT ACCOUNTS.

       ``(a) General Rule.--Except as provided in this chapter, a 
     special individual retirement account shall be treated for 
     purposes of this title in the same manner as an individual 
     retirement plan.
       ``(b) Special Individual Retirement Account.--For purposes 
     of this title, the term `special individual retirement 
     account' means an individual retirement plan which is 
     designated at the time of establishment of the plan as a 
     special individual retirement account.
       ``(c) Treatment of Contributions.--
       ``(1) No deduction allowed.--No deduction shall be allowed 
     under section 219 for a contribution to a special individual 
     retirement account.
       ``(2) Contribution limit.--The aggregate amount of 
     contributions for any taxable year to all special individual 
     retirement accounts maintained for the benefit of an 
     individual shall not exceed the excess (if any) of--
       ``(A) the maximum amount allowable as a deduction under 
     section 219 with respect to such individual for such taxable 
     year, over
       ``(B) the amount so allowed.
       ``(3) Special rules for qualified transfers.--
       ``(A) In general.--No rollover contribution may be made to 
     a special individual retirement account unless it is a 
     qualified transfer.
       ``(B) Limit not to apply.--The limitation under paragraph 
     (2) shall not apply to a qualified transfer to a special 
     individual retirement account.
       ``(d) Tax Treatment of Distributions.--
       ``(1) In general.--Except as provided in this subsection, 
     any amount paid or distributed out of a special individual 
     retirement account shall not be included in the gross income 
     of the distributee.
       ``(2) Exception for earnings on contributions held less 
     than 5 years.--
       ``(A) In general.--Any amount distributed out of a special 
     individual retirement account which consists of earnings 
     allocable to contributions made to the account during the 5-
     year period ending on the day before such distribution shall 
     be included in the gross income of the distributee for the 
     taxable year in which the distribution occurs.
       ``(B) Ordering rule.--
       ``(i) First-in, first-out rule.--Distributions from a 
     special individual retirement account shall be treated as 
     having been made--

       ``(I) first from the earliest contribution (and earnings 
     allocable thereto) remaining in the account at the time of 
     the distribution, and
       ``(II) then from other contributions (and earnings 
     allocable thereto) in the order in which made.
       ``(ii) Allocations between contributions and earnings.--Any 
     portion of a distribution allocated to a contribution (and 
     earnings allocable thereto) shall be treated as allocated 
     first to the earnings and then to the contribution.
       ``(iii) Allocation of earnings.--Earnings shall be 
     allocated to a contribution in such manner as the Secretary 
     may by regulations prescribe.
       ``(iv) Contributions in same year.--Except as provided in 
     regulations, all contributions made during the same taxable 
     year may be treated as 1 contribution for purposes of this 
     subparagraph.
       ``(C) Cross reference.--

  ``For additional tax for early withdrawal, see section 72(t).

       ``(3) Qualified transfer.--
       ``(A) In general.--Paragraph (2) shall not apply to any 
     distribution which is transferred in a qualified transfer to 
     another special individual retirement account.
       ``(B) Contribution period.--For purposes of paragraph (2), 
     the special individual retirement account to which any 
     contributions are transferred shall be treated as having held 
     such contributions during any period such contributions were 
     held (or are treated as held under this subparagraph) by the 
     special individual retirement account from which transferred.
       ``(4) Special rules relating to certain transfers.--
       ``(A) In general.--Notwithstanding any other provision of 
     law, in the case of a qualified transfer to a special 
     individual retirement account from an individual retirement 
     plan which is not a special individual retirement account--
       ``(i) there shall be included in gross income any amount 
     which, but for the qualified transfer, would be includible in 
     gross income, but
       ``(ii) section 72(t) shall not apply to such amount.
       ``(B) Time for inclusion.--In the case of any qualified 
     transfer which occurs before January 1, 1997, any amount 
     includible in gross income under subparagraph (A) with 
     respect to such contribution shall be includible ratably over 
     the 4-taxable year period beginning in the taxable year in 
     which the amount was paid or distributed out of the 
     individual retirement plan.
       ``(e) Qualified Transfer.--For purposes of this section--
       ``(1) In general.--The term `qualified transfer' means a 
     transfer to a special individual retirement account from 
     another such account or from an individual retirement plan 
     but only if such transfer meets the requirements of section 
     408(d)(3).
       ``(2) Limitation.--A transfer otherwise described in 
     paragraph (1) shall not be treated 
     [[Page H4293]] as a qualified transfer if the taxpayer's 
     adjusted gross income for the taxable year of the transfer 
     exceeds the sum of--
       ``(A) the applicable dollar amount, plus
       ``(B) the dollar amount applicable for the taxable year 
     under section 219(g)(2)(A)(ii).
     This paragraph shall not apply to a transfer from a special 
     individual retirement account to another special individual 
     retirement account.
       ``(3) Definitions.--For purposes of this subsection, the 
     terms `adjusted gross income' and `applicable dollar amount' 
     have the meanings given such terms by section 219(g)(3), 
     except subparagraph (A)(ii) thereof shall be applied without 
     regard to the phrase `or the deduction allowable under this 
     section'.''
       (b) Early Withdrawal Penalty.--Section 72(t) of such Code 
     is amended by adding at the end the following new paragraph:
       ``(6) Rules relating to special individual retirement 
     accounts.--In the case of a special individual retirement 
     account under section 408A--
       ``(A) this subsection shall only apply to distributions out 
     of such account which consist of earnings allocable to 
     contributions made to the account during the 5-year period 
     ending on the day before such distribution, and
       ``(B) paragraph (2)(A)(i) shall not apply to any 
     distribution described in subparagraph (A).''
       (c) Excess Contributions.--Section 4973(b) of such Code is 
     amended by adding at the end the following new sentence: 
     ``For purposes of paragraphs (1)(B) and (2)(C), the amount 
     allowable as a deduction under section 219 shall be computed 
     without regard to section 408A.''
       (d) Conforming Amendment.--The table of sections for 
     subpart A of part I of subchapter D of chapter 1 of such Code 
     is amended by inserting after the item relating to section 
     408 the following new item:

``Sec. 408A. Special individual retirement accounts.''

       (e) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1995.
          TITLE III--TAX BENEFITS CONTINGENT ON FEDERAL BUDGET
     SEC. 301. EFFECTIVE DATES OF TAX BENEFITS DELAYED UNTIL 
                   FEDERAL BUDGET PROJECTED TO BE IN BALANCE.

       (a) In General.--Notwithstanding any provision of title I 
     or II of this Act and any amendment made by such titles, 
     except as otherwise provided in this section--
       (1) any reference in this such titles (or in any amendment 
     made by such titles) to 1995 shall be treated as a reference 
     to the calendar year ending in the first successful deficit 
     reduction year, and
       (2) any reference in such titles (or in any amendment made 
     by such titles) to any later calendar year shall be treated 
     as a reference to the calendar year which is the same number 
     of years after such first calendar year as such later year is 
     after 1995.
       (b) First Successful Deficit Reduction Year.--For purposes 
     of this section and section 302--
       (1) In general.--The term ``first successful deficit 
     reduction year'' means the first fiscal year beginning after 
     the date of the enactment of this Act with respect to which 
     there is an OMB certification before the beginning of such 
     fiscal year that the budget of the United States will be in 
     balance by fiscal year 2002 based upon estimates of enacted 
     legislation, including the amendments made by this Act.
       (2) OMB certification.--The term ``OMB certification'' 
     means a written certification by the Director of the Office 
     of Management and Budget to the President and the Congress.
       (c) Certification During 1995.--Subsection (a) shall not 
     apply if there is an OMB certification made during 1995 that 
     the budget of the United States will be in balance by fiscal 
     year 2002 based upon estimates of enacted legislation, 
     including the amendments made by this Act.

     SEC. 302. TERMINATION OF TAX BENEFITS IF FEDERAL BUDGET 
                   DEFICIT REDUCTION TARGETS ARE NOT MET.

       (a) No Credits, Deductions, Exclusions, Preferential Rate 
     of Tax, Etc.--No tax benefit provided by any provision of the 
     Internal Revenue Code of 1986 added by title I or II of this 
     Act shall apply to any taxable year beginning after the 
     calendar year in which the first failed deficit reduction 
     year ends.
       (b) First Failed Deficit Reduction Year.--For purposes of 
     this section, the term ``first failed deficit reduction 
     year'' means the first fiscal year (beginning after the 
     earliest date on which any amendment made by title I or II 
     takes effect) with respect to which there is an OMB 
     certification during the 3-month period after the close of 
     such fiscal year that the actual deficit in the budget of the 
     United States for such fiscal year was greater than the 
     deficit target for such fiscal year specified in the 
     following table:

                                                     The deficit target
``In the case of fiscal year:                         (in billions) is:
  1996............................................................ $150
  1997............................................................  125
  1998............................................................  100
  1999............................................................   75
  2000............................................................   50
  2001............................................................   25
  2002 or thereafter..............................................   0.
TITLE IV--REVISIONS TO DISCRETIONARY SPENDING LIMITS AND BUDGET PROCESS

     SEC. 401. SHORT TITLE.

       This title may be cited as the ``Discretionary Spending 
     Reduction and Control Act of 1995''.

     SEC. 402. DISCRETIONARY SPENDING LIMITS.

       (a) Limits.--Section 601(a)(2) of the Congressional Budget 
     Act of 1974 is amended by striking subparagraphs (A), (B), 
     (C), (D), and (F), by redesignating subparagraph (E) as 
     subparagraph (A) and by striking ``and'' at the end of that 
     subparagraph, and by inserting after subparagraph (A) the 
     following new subparagraphs:
       ``(B) with respect to fiscal year 1996, for the 
     discretionary category: $516,478,000,000 in new budget 
     authority and $549,054,000,000 in outlays;
       ``(C) with respect to fiscal year 1997, for the 
     discretionary category: $522,894,000,000 in new budget 
     authority and $544,051,000,000 in outlays;
       ``(D) with respect to fiscal year 1998, for the 
     discretionary category: $528,810,000,000 in new budget 
     authority and $545,548,000,000 in outlays;
       ``(E) with respect to fiscal year 1999, for the 
     discretionary category: $527,753,000,000 in new budget 
     authority and $544,402,000,000 in outlays; and
       ``(F) with respect to fiscal year 2000, for the 
     discretionary category: $527,040,000,000 in new budget 
     authority and $543,357,000,000 in outlays;''.
       (b) Committee Allocations and Enforcement.--Section 602 of 
     the Congressional Budget Act of 1974 is amended--
       (1) in subsection (c), by striking ``1995'' and inserting 
     ``2000'' and by striking its last sentence; and
       (2) in subsection (d), by striking ``1992 to 1995'' in the 
     side heading and inserting ``1995 to 2000'' and by striking 
     ``1992 through 1995'' and inserting ``1995 through 2000''.
       (c) Five-Year Budget Resolutions.--Section 606 of the 
     Congressional Budget Act of 1974 is amended--
       (1) in subsection (a), by striking ``1992, 1993, 1994, or 
     1995'' and inserting ``1995, 1996, 1997, 1998, 1999, or 
     2000''; and
       (2) in subsection (d)(1), by striking ``1992, 1993, 1994, 
     and 1995'' and inserting ``1995, 1996, 1997, 1998, 1999, and 
     2000'', and by striking ``(i) and (ii)''.
       (d) Effective Date.--Section 607 of the Congressional 
     Budget Act of 1974 is amended by striking ``1991 to 1998'' 
     and inserting ``1995 to 2000''.
       (e) Sequestration Regarding Crime Trust Fund.--Section 
     251A(b)(1) of the Balanced Budget and Emergency Deficit 
     Control Act of 1985 is amended by striking its last sentence 
     and inserting the following:
       ``(E) For fiscal year 1999, $5,639,000,000.
       ``(F) For fiscal year 2000, $6,225,000,000.

     SEC. 403. GENERAL STATEMENT AND DEFINITIONS.

       (a) General Statement.--Section 250(b) of the Balanced 
     Budget and Emergency Deficit Control Act of 1985 is amended 
     by striking the first sentence and inserting the following: 
     ``This part provides for the enforcement of deficit reduction 
     through discretionary spending limits and pay-as-you-go 
     requirements for fiscal years 1995 through 2000.''.
       (b) Definitions.--Section 250(c) of the Balanced Budget and 
     Emergency Deficit Control Act of 1985 is amended--
       (1) by striking paragraph (4) and inserting the following:
       ``(4) The term `category' means all discretionary 
     appropriations.'';
       (2) by striking paragraph (6) and inserting the following:
       ``(6) The term `budgetary resources' means new budget 
     authority, unobligated balances, direct spending authority, 
     and obligation limitations.'';
       (3) in paragraph (9), by striking ``1992'' and inserting 
     ``1995'';
       (4) in paragraph (14), by striking ``1995'' and inserting 
     ``2000''; and
       (5) by striking paragraph (17) and by redesignating 
     paragraphs (18) through (21) as paragraphs (17) through (20), 
     respectively.

     SEC. 404. ENFORCING DISCRETIONARY SPENDING LIMITS.

       Section 251 of the Balanced Budget and Emergency Deficit 
     Control Act of 1985 is amended--
       (1) in the side heading of subsection (a), by striking 
     ``1991-1998'' and inserting ``1995-2000'';
       (2) in the first sentence of subsection (b)(1), by striking 
     ``1992, 1993, 1994, 1995, 1996, 1997 or 1998'' and inserting 
     ``1995, 1996, 1997, 1998, 1999, or 2000'' and by striking 
     ``through 1998'' and inserting ``through 2000'';
       (3) in subsection (b)(1), by striking subparagraphs (B) and 
     (C) and by striking ``the following:'' and all that follows 
     through ``The adjustments'' and inserting ``the following: 
     the adjustments'';
       (4) in subsection (b)(2), by striking ``1991, 1992, 1993, 
     1994, 1995, 1996, 1997, or 1998'' and inserting ``1995, 1996, 
     1997, 1998, 1999, or 2000'' and by striking ``through 1998'' 
     and inserting ``through 2000'';
       (5) by striking subparagraphs (A), (B), and (C) of 
     subsection (b)(2);
       (6) in subsection (b)(2)(E), by striking clauses (i), (ii), 
     and (iii) and by striking ``(iv) if, for fiscal years 1994, 
     1995, 1996, 1997, and 1998'' and inserting ``If, for fiscal 
     years 1995, 1996, 1997, 1998, 1999, and 2000''; and
       (7) in subsection (b)(2)(F), strike everything after ``the 
     adjustment in outlays'' and insert ``for a category for a 
     fiscal year shall not exceed 0.5 percent of the adjusted 
     discretionary spending limit on outlays for that fiscal year 
     in fiscal year 1996, 1997, 1998, 1999, or 2000.''.
     [[Page H4294]] SEC. 405. ENFORCING PAY-AS-YOU-GO.

       Section 252 of the Balanced Budget and Emergency Deficit 
     Control Act of 1985 is amended--
       (1) in the side heading of subsection (a), by striking 
     ``1992-1998'' and inserting ``1995-2000'';
       (2) in subsection (d), by striking ``1998'' each place it 
     appears and inserting ``2000''; and
       (3) in subsection (e), by striking ``1991 through 1998'' 
     and inserting ``1995 through 2000'' and by striking ``through 
     1995'' and inserting ``through 2000''.

     SEC. 406. REPORTS AND ORDERS.

       Section 254 of the Balanced Budget and Emergency Deficit 
     Control Act of 1985 is amended--
       (1) in subsection (d)(2), by striking ``1998'' and 
     inserting ``2000''; and
       (2) in subsection (g), by striking ``1998'' each place it 
     appears and inserting ``2000''.

     SEC. 407. TECHNICAL CORRECTION.

       Section 258 of the Balanced Budget and Emergency Deficit 
     Control Act of 1985, entitled ``Modification of Presidential 
     Order'', is repealed.

     SEC. 408. EFFECTIVE DATE.

       (a) Expiration.--Section 275(b) of the Balanced Budget and 
     Emergency Deficit Control Act of 1985 is amended by striking 
     ``1995'' and inserting ``2000''.
       (b) Expiration.--Section 14002(c)(3) of the Omnibus Budget 
     Reconciliation Act of 1993 (2 U.S.C. 900 note; 2 U.S.C. 665 
     note) is repealed.
     SEC. 409. SAVINGS FROM PROVISIONS OF THIS TITLE REDUCING 
                   DISCRETIONARY SPENDING TO BE ADDED TO PAY-AS-
                   YOU-GO SCORECARD.

       (a)(1) The net change in outlays for any fiscal year 
     through fiscal year 2000 estimated to result from provisions 
     of this title revising or extending limits on discretionary 
     spending and spending from the Violent Crime Reduction Trust 
     Fund shall be considered a change in direct spending for 
     purposes of section 252 of the Balanced Budget and Emergency 
     Deficit Control Act of 1985.
       (2) In applying paragraph (1), the change in outlays 
     resulting from provisions of this title revising and 
     extending the limits on discretionary spending set forth in 
     section 601(a)(2) of the Congressional Budget Act of 1974 
     shall be computed as follows:
       (A) For fiscal years 1996 through 1998, by comparing the 
     outlay limit resulting from this title for each year with the 
     outlay limit for that year in effect immediately prior to 
     enactment of this Act.
       (B) For fiscal years 1999 and 2000, by comparing the outlay 
     limit resulting from this title for each year with the limit 
     for fiscal year 1998 in effect immediately prior to enactment 
     of this Act.
       (3) In applying paragraph (1), the change in outlays 
     resulting from provisions of this title extending the limits 
     on spending from the Violent Crime Reduction Trust Fund set 
     forth in section 251A(b)(1) of the Balanced Budget and 
     Emergency Deficit Control Act of 1985 shall be computed by 
     comparing the outlay limit resulting from this title for each 
     year with the level of outlays for that year referred to in 
     the last 2 sentences of section 251A(b)(1) of such Act as in 
     effect immediately before the enactment of this Act.
       (b) Except as provided in subsection (a), no statutory 
     reduction in the discretionary spending limits shall be 
     counted in estimates under section 252(d) of the Balanced 
     Budget and Emergency Deficit Control Act of 1985.

     SEC. 410. CLARIFICATION OF ORDER IN WHICH ADJUSTMENTS TO 
                   DISCRETIONARY SPENDING LIMITS ARE TO BE MADE.

       In the OMB final sequestration report for fiscal year 
     1996--
       (1) all adjustments required by section 251(b)(2) made 
     after the preview report for fiscal year 1996 shall be made 
     to the discretionary spending limits set forth in 601(a)(2) 
     of the Congressional Budget Act of 1974 as amended by section 
     402; and
       (2) all statutory changes in the discretionary spending 
     limits made by the Personal Responsibility Act of 1995 or by 
     the Act entitled ``An Act making emergency supplemental 
     appropriations for additional disaster assistance and making 
     rescissions for the fiscal year ending September 30, 1995, 
     and for other purposes'' shall be made to those limits.
         TITLE V--PROVISIONS RELATING TO INTERNATIONAL TAXATION
     SEC. 501. REVISION OF TAX RULES ON EXPATRIATION.

       (a) In General.--Subpart A of part II of subchapter N of 
     chapter 1 of the Internal Revenue Code of 1986 is amended by 
     inserting after section 877 the following new section:

     ``SEC. 877A. TAX RESPONSIBILITIES OF EXPATRIATION.

       ``(a) General Rules.--For purposes of this subtitle--
       ``(1) Citizens.--If any United States citizen relinquishes 
     his citizenship during a taxable year, all property held by 
     such citizen at the time immediately before such 
     relinquishment shall be treated as sold at such time for its 
     fair market value and any gain or loss shall be taken into 
     account for such taxable year.
       ``(2) Certain residents.--If any long-term resident of the 
     United States ceases to be subject to tax as a resident of 
     the United States for any portion of any taxable year, all 
     property held by such resident at the time of such cessation 
     shall be treated as sold at such time for its fair market 
     value and any gain or loss shall be taken into account for 
     the taxable year which includes the date of such cessation.
       ``(b) Exclusion for Certain Gain.--The amount which would 
     (but for this subsection) be includible in the gross income 
     of any taxpayer by reason of subsection (a) shall be reduced 
     (but not below zero) by $600,000.
       ``(c) Property Treated as Held.--For purposes of this 
     section, except as otherwise provided by the Secretary, an 
     individual shall be treated as holding--
       ``(1) all property which would be includible in his gross 
     estate under chapter 11 were such individual to die at the 
     time the property is treated as sold,
       ``(2) any other interest in a trust which the individual is 
     treated as holding under the rules of section 679(e) 
     (determined by treating such section as applying to foreign 
     and domestic trusts), and
       ``(3) any other interest in property specified by the 
     Secretary as necessary or appropriate to carry out the 
     purposes of this section.
       ``(d) Exceptions.--The following property shall not be 
     treated as sold for purposes of this section:
       ``(1) United states real property interests.--Any United 
     States real property interest (as defined in section 
     897(c)(1)), other than stock of a United States real property 
     holding corporation which does not, on the date the 
     individual relinquishes his citizenship or ceases to be 
     subject to tax as a resident, meet the requirements of 
     section 897(c)(2).
       ``(2) Interest in certain retirement plans.--
       ``(A) In general.--Any interest in a qualified retirement 
     plan (as defined in section 4974(d)), other than any interest 
     attributable to contributions which are in excess of any 
     limitation or which violate any condition for tax-favored 
     treatment.
       ``(B) Foreign pension plans.--
       ``(i) In general.--Under regulations prescribed by the 
     Secretary, interests in foreign pension plans or similar 
     retirement arrangements or programs.
       ``(ii) Limitation.--The value of property which is treated 
     as not sold by reason of this subparagraph shall not exceed 
     $500,000.
       ``(e) Definitions.--For purposes of this section--
       ``(1) Relinquishment of citizenship.--A citizen shall be 
     treated as relinquishing his United States citizenship on the 
     date the United States Department of State issues to the 
     individual a certificate of loss of nationality or on the 
     date a court of the United States cancels a naturalized 
     citizen's certificate of naturalization.
       ``(2) Long-term resident.--
       ``(A) In general.--The term `long-term resident' means any 
     individual (other than a citizen of the United States) who is 
     a lawful permanent resident of the United States and, as a 
     result of such status, has been subject to tax as a resident 
     in at least 10 taxable years during the period of 15 taxable 
     years ending with the taxable year during which the sale 
     under subsection (a) is treated as occurring.
       ``(B) Special rule.--For purposes of subparagraph (A), 
     there shall not be taken into account--
       ``(i) any taxable year during which any prior sale is 
     treated under subsection (a) as occurring, or
       ``(ii) any taxable year prior to the taxable year referred 
     to in clause (i).
       ``(f) Termination of Deferrals, Etc.--On the date any 
     property held by an individual is treated as sold under 
     subsection (a)--
       ``(1) any period deferring recognition of income or gain 
     shall terminate, and
       ``(2) any extension of time for payment of tax shall cease 
     to apply and the unpaid portion of such tax shall be due and 
     payable.
       ``(g) Election by Expatriating Residents.--Solely for 
     purposes of determining gain under subsection (a)--
       ``(1) In general.--At the election of a resident not a 
     citizen of the United States, property--
       ``(A) which was held by such resident on the date the 
     individual first became a resident of the United States 
     during the period of long-term residency to which the 
     treatment under subsection (a) relates, and
       ``(B) which is treated as sold under subsection (a),

     shall be treated as having a basis on such date of not less 
     than the fair market value of such property on such date.
       ``(2) Election.--Such an election shall apply to all 
     property described in paragraph (1), and, once made, shall be 
     irrevocable.
       ``(h) Deferral of Tax on Closely Held Business Interests.--
     The District Director may enter into an agreement with any 
     individual which permits such individual to defer payment for 
     not more than 5 years of any tax imposed by subsection (a) by 
     reason of holding any interest in a closely held business (as 
     defined in section 6166(b)) other than a United States real 
     property interest described in subsection (d)(1).
       ``(i) Regulations.--The Secretary shall prescribe such 
     regulations as may be necessary or appropriate to carry out 
     the purposes of this section.
       ``(j) Cross Reference.--

  ``For termination of United States citizenship for tax purposes, see 
section 7701(a)(47).''

       (b) Definition of Termination of United States 
     Citizenship.--Section 7701(a) of such Code is amended by 
     adding at the end the following new paragraph:
       ``(47) Termination of united states citizenship.--An 
     individual shall not cease to be treated as a United States 
     citizen before the 
     [[Page H4295]] date on which the individual's citizenship is 
     treated as relinquished under section 877A(e)(1).''
       (c) Conforming Amendments.--
       (1) Section 877 of such Code is amended by adding at the 
     end the following new subsection:
       ``(f) Termination.--This section shall not apply to any 
     individual who is subject to the provisions of section 
     877A.''
       (2) Paragraph (10) of section 7701(b) of such Code is 
     amended by adding at the end the following new sentence: 
     ``This paragraph shall not apply to any individual who is 
     subject to the provisions of section 877A.''
       (d) Clerical Amendment.--The table of sections for subpart 
     A of part II of subchapter N of chapter 1 of such Code is 
     amended by inserting after the item relating to section 877 
     the following new item:

``Sec. 877A. Tax responsibilities of expatriation.''

       (e) Effective Date.--The amendments made by this section 
     shall apply to--
       (1) United States citizens who relinquish (within the 
     meaning of section 877A(e)(1) of the Internal Revenue Code of 
     1986, as added by this section) United States citizenship on 
     or after February 6, 1995, and
       (2) long-term residents (as defined in such section) who 
     cease to be subject to tax as residents of the United States 
     on or after such date.

     SEC. 502. IMPROVED INFORMATION REPORTING ON FOREIGN TRUSTS.

       (a) In General.--Section 6048 of the Internal Revenue Code 
     of 1986 (relating to returns as to certain foreign trusts) is 
     amended to read as follows:
     ``SEC. 6048. INFORMATION WITH RESPECT TO CERTAIN FOREIGN 
                   TRUSTS.

       ``(a) Notice of Certain Events.--
       ``(1) General rule.--On or before the 90th day (or such 
     later day as the Secretary may prescribe) after any 
     reportable event, the responsible party shall--
       ``(A) notify each trustee of the trust of the requirements 
     of subsection (b), and
       ``(B) provide written notice of such event to the Secretary 
     in accordance with paragraph (2).
       ``(2) Contents of notice.--The notice required by paragraph 
     (1)(B) shall contain such information as the Secretary may 
     prescribe, including--
       ``(A) the amount of money or other property (if any) 
     transferred to the trust in connection with the reportable 
     event,
       ``(B) the identity of the trust and of each trustee and 
     beneficiary (or class of beneficiaries) of the trust, and
       ``(C) a statement that each trustee of the trust has been 
     informed of the requirements of subsection (b).
       ``(3) Reportable event.--For purposes of this subsection, 
     the term `reportable event' means--
       ``(A) the creation of any foreign trust by a United States 
     person,
       ``(B) the transfer of any money or property to a foreign 
     trust by a United States person, including a transfer by 
     reason of death,
       ``(C) a domestic trust becoming a foreign trust,
       ``(D) the death of a citizen or resident of the United 
     States who is a grantor of a foreign trust, and
       ``(E) the residency starting date (within the meaning of 
     section 7701(b)(2)(A)) of a grantor of a foreign trust 
     subject to tax under section 679(a)(3).

     Subparagraphs (A) and (B) shall not apply with respect to a 
     trust described in section 404(a)(4) or 404A.
       ``(4) Responsible party.--For purposes of this subsection, 
     the term `responsible party' means--
       ``(A) the grantor in the case of a reportable event 
     described in subparagraph (A) or (E) of paragraph (3),
       ``(B) the transferor in the case of a reportable event 
     described in paragraph (3)(B) other than a transfer by reason 
     of death,
       ``(C) the trustee of the domestic trust in the case of a 
     reportable event described in paragraph (3)(C), and
       ``(D) the executor of the decedent's estate in the case of 
     a transfer by reason of death.
       ``(b) Trust Reporting Requirements.--If a foreign trust, at 
     any time during a taxable year of such trust--
       ``(1) has a grantor who is a United States person and--
       ``(A) such grantor is treated as the owner of any portion 
     of such trust under the rules of subpart E of part I of 
     subchapter J of chapter 1, or
       ``(B) any portion of such trust would be included in the 
     gross estate of such grantor if the grantor were to die at 
     such time, or
       ``(2) directly or indirectly distributes, credits, or 
     allocates money or property to any United States person 
     (whether or not the trust has a grantor described in 
     paragraph (1)),

     then such trust shall meet the requirements of subsection (c) 
     (relating to trust information and agent) and subsection (d) 
     (relating to annual return).
       ``(c) Contents of Section 6048 Statement.--
       ``(1) In general.--The requirements of this subsection are 
     met if the trust files with the Secretary a statement which 
     contains such information as the Secretary may prescribe and 
     which--
       ``(A) identifies a United States person who is the trust's 
     limited agent to provide the Secretary with such information 
     that reasonably should be available to the trust for purposes 
     of applying sections 7602, 7603, and 7604 with respect to any 
     request by the Secretary to examine trust records or produce 
     testimony related to any transaction by the trust or with 
     respect to any summons by the Secretary for such records or 
     testimony, and
       ``(B) contains an agreement to comply with the requirements 
     of subsection (d).
       ``(2) Special rule.--A foreign trust which appoints an 
     agent described in paragraph (1)(A) shall not be considered 
     to have an office or a permanent establishment in the United 
     States solely because of the activities of such agent 
     pursuant to this section. For purposes of this section, the 
     appearance of persons or production of records by reason of 
     the creation of the agency shall not subject such persons or 
     records to legal process for any purpose other than 
     determining the correct treatment under this title of the 
     activities and operations of the trust.
       ``(d) Annual Returns and Statements.--The requirements of 
     this subsection are met if--
       ``(1) the trust makes a return for the taxable year which 
     sets forth a full and complete accounting of all trust 
     activities and operations for the taxable year, and contains 
     such other information as the Secretary may prescribe; and
       ``(2) the trust furnishes such information as the Secretary 
     may prescribe to each United States person--
       ``(A) who is treated as the owner of any portion of such 
     trust under the rules of subpart E of part I of subchapter J 
     of chapter 1,
       ``(B) to whom any item with respect to the taxable year is 
     credited or allocated, or
       ``(C) who receives a distribution from such trust with 
     respect to the taxable year.
       ``(e) Time and Manner of Filing Information.--Any notice, 
     statement, or return required under this section shall be 
     made at such time and in such manner as the Secretary shall 
     prescribe.
       ``(f) Modification of Return Requirements.--The Secretary 
     is authorized to suspend or modify any requirement of this 
     section if the Secretary determines that the United States 
     has no significant tax interest in obtaining the required 
     information.''
       (b) Penalties.--Section 6677 of such Code (relating to 
     failure to file information returns with respect to certain 
     foreign trusts) is amended to read as follows:

     ``SEC. 6677. FAILURE TO FILE INFORMATION WITH RESPECT TO 
                   CERTAIN FOREIGN TRUSTS.

       ``(a) Failure To Report Certain Events.--
       ``(1) In general.--In the case of a reportable event 
     described in any subparagraph of section 6048(a)(3) for which 
     a responsible party does not file a written notice meeting 
     the requirements of section 6048(a)(2) within the time 
     specified in section 6048(a)(1), the responsible party shall 
     pay a penalty of $10,000. If any failure described in the 
     preceding sentence continues for more than 90 days after the 
     day on which the Secretary mails notice of such failure to 
     the responsible party, such party shall pay a penalty (in 
     addition to the $10,000 amount) of $10,000 for each 30-day 
     period (or fraction thereof) during which such failure 
     continues after the expiration of such 90-day period.
       ``(2) 35-percent penalty.--In the case of a reportable 
     event described in subparagraph (A), (B), or (C) of section 
     6048(a)(3) (other than a transfer by reason of death), the 
     aggregate amount of the penalties under paragraph (1) shall 
     not be less than an amount equal to 35 percent of the gross 
     value of the property involved in such event (determined as 
     of the date of the event).
       ``(3) Responsible party.--For purposes of this subsection, 
     the term `responsible party' has the meaning given to such 
     term by section 6048(a)(4).
       ``(b) Failure To Make Certain Statements and Returns.--
       ``(1) In general.--In the case of any failure to meet the 
     requirements of section 6048(b), the appropriate tax 
     treatment of any trust transactions or operations shall be 
     determined by the Secretary in the Secretary's sole 
     discretion from the Secretary's own knowledge or from such 
     information as the Secretary may obtain through testimony or 
     otherwise.
       ``(2) Monetary penalty.--In the case of any failure to meet 
     the requirements of section 6048(b) with respect to a trust 
     described in such section by reason of paragraph (1) thereof, 
     the grantor described in such paragraph (1) shall pay a 
     penalty of $10,000 for each taxable year with respect to 
     which the foreign trust fails to meet such requirements. If 
     any failure described in the preceding sentence continues for 
     more than 90 days after the day on which the Secretary mails 
     notice of such failure to such grantor, such grantor shall 
     pay a penalty (in addition to any other penalty) of $10,000 
     for each 30-day period (or fraction thereof) during which 
     such failure continues after the expiration of such 90-day 
     period.
       ``(c) Reasonable Cause Exception.--No penalty shall be 
     imposed by this section on any failure which is shown to be 
     due to reasonable cause and not due to willful neglect. The 
     fact that a foreign jurisdiction would impose a civil or 
     criminal penalty on the taxpayer (or any other person) for 
     disclosing the requested documentation is not reasonable 
     cause.
       ``(d) Deficiency Procedures Not To Apply.--Subchapter B of 
     chapter 63 (relating to deficiency procedures for income, 
     estate, gift, and certain excise taxes) shall not apply in 
     respect of the assessment or collection of any penalty 
     imposed by this section.''
       (c) Clerical Amendments.--
     [[Page H4296]]   (1) The table of sections for subpart B of 
     part III of subchapter A of chapter 61 of such Code is 
     amended by striking the item relating to section 6048 and 
     inserting the following new item:

``Sec. 6048. Information with respect to certain foreign trusts.''

       (2) The table of sections for part I of subchapter B of 
     chapter 68 of such Code is amended by striking the item 
     relating to section 6677 and inserting the following new 
     item:

``Sec. 6677. Failure to file information with respect to certain 
              foreign trusts.''

       (d) Effective Dates.--
       (1) In general.--The amendments made by this section shall 
     apply--
       (A) to reportable events occurring on or after February 6, 
     1995, and
       (B) to the extent such amendments require reporting for any 
     taxable year under section 6048(b) of the Internal Revenue 
     Code of 1986 (as added by this section), to taxable years 
     beginning after the date of the enactment of this Act.
       (2) Notices.--For purposes of section 6048(a) of such Code, 
     the 90th day referred to therein shall in no event be treated 
     as being earlier than the 90th day after the date of the 
     enactment of this Act.
     SEC. 503. MODIFICATION OF RULES RELATING TO FOREIGN TRUSTS 
                   HAVING ONE OR MORE UNITED STATES BENEFICIARIES.

       (a) In General.--Section 679 of the Internal Revenue Code 
     of 1986 (relating to foreign trusts having one or more United 
     States beneficiaries) is amended to read as follows:
     ``SEC. 679. FOREIGN TRUSTS HAVING ONE OR MORE UNITED STATES 
                   BENEFICIARIES.

       ``(a) Transferor Treated as Owner.--
       ``(1) In general.--A United States person who directly or 
     indirectly transfers property to a foreign trust (other than 
     a trust described in section 404(a)(4) or section 404A) shall 
     be treated as the owner for his taxable year of the portion 
     of such trust attributable to such property if for such year 
     there is a United States beneficiary of such trust.
       ``(2) Exception.--
       ``(A) In general.--Paragraph (1) shall not apply to any 
     sale or exchange of property to a trust if--
       ``(i) the trust pays fair market value for such property, 
     and
       ``(ii) all of the gain to the transferor is recognized at 
     the time of transfer.
       ``(B) Certain obligations not taken into account.--For 
     purposes of subparagraph (A), in determining whether the 
     transferor received fair market value, there shall not be 
     taken into account--
       ``(i) any obligation of--

       ``(I) the trust,
       ``(II) any grantor or beneficiary of the trust, or
       ``(III) any person who is related (within the meaning of 
     section 643(i)(3)) to any grantor or beneficiary of the 
     trust, and

       ``(ii) except as provided in regulations, any obligation 
     which is guaranteed by a person described in clause (i).
       ``(C) Treatment of deemed sale election under section 
     1057.--For purposes of subparagraph (A), a transfer with 
     respect to which an election under section 1057 is made shall 
     not be treated as a sale or exchange.
       ``(3) Special rules applicable to foreign grantor who later 
     becomes a united states person.--A nonresident alien 
     individual who becomes a United States resident within 5 
     years after directly or indirectly transferring property to a 
     foreign trust shall be treated for purposes of this section 
     and section 6048 as having transferred such property, and any 
     undistributed income (including all realized and unrealized 
     gains) attributable thereto, to the foreign trust immediately 
     after becoming a United States resident. For this purpose, a 
     nonresident alien shall be treated as becoming a resident of 
     the United States on the residency starting date (within the 
     meaning of section 7701(b)(2)(A)).
       ``(b) Beneficiaries Treated as Transferors in Certain 
     Cases.--For purposes of this section and section 6048, if--
       ``(1) a citizen or resident of the United States who is 
     treated as the owner of any portion of a trust under 
     subsection (a) dies,
       ``(2) property is transferred to a foreign trust by reason 
     of the death of a citizen or resident of the United States, 
     or
       ``(3) a domestic trust to which any United States person 
     made a transfer becomes a foreign trust,

     then, except as otherwise provided in regulations, the trust 
     beneficiaries shall be treated as having transferred to such 
     trust (as of the date of the applicable event under paragraph 
     (1), (2), or (3)) their respective interests (as determined 
     under subsection (e)) in the property involved.
       ``(c) Trusts Acquiring United States Beneficiaries.--If--
       ``(1) subsection (a) applies to a trust for the 
     transferor's taxable year, and
       ``(2) subsection (a) would have applied to the trust for 
     the transferor's immediately preceding taxable year but for 
     the fact that for such preceding taxable year there was no 
     United States beneficiary for any portion of the trust,

     then, for purposes of this subtitle, the transferor shall be 
     treated as having received as an accumulation distribution 
     taxable under subpart D an amount equal to the undistributed 
     net income (as determined under section 665(a) as of the 
     close of such immediately preceding taxable year) 
     attributable to the portion of the trust referred to in 
     subsection (a).
       ``(d) Trusts Treated as Having a United States 
     Beneficiary.--
       ``(1) In general.--For purposes of this section, a trust 
     shall be treated as having a United States beneficiary for 
     the taxable year unless--
       ``(A) under the terms of the trust, no part of the income 
     or corpus of the trust may be paid or accumulated during the 
     taxable year to or for the benefit of a United States person, 
     and
       ``(B) if the trust were terminated at any time during the 
     taxable year, no part of the income or corpus of such trust 
     could be paid to or for the benefit of a United States 
     person.

     To the extent provided by the Secretary, for purposes of this 
     subsection, the term `United States person' includes any 
     person who was a United States person at any time during the 
     existence of the trust.
       ``(2) Attribution of ownership.--For purposes of paragraph 
     (1), an amount shall be treated as paid or accumulated to or 
     for the benefit of a United States person if such amount is 
     paid to or accumulated for a foreign corporation, foreign 
     partnership, or foreign trust or estate, and--
       ``(A) in the case of a foreign corporation, more than 50 
     percent of the total combined voting power of all classes of 
     stock of such corporation entitled to vote is owned (within 
     the meaning of section 958(a)) or is considered to be owned 
     (within the meaning of section 958(b)) by United States 
     shareholders (as defined in section 951(b)),
       ``(B) in the case of a foreign partnership, a United States 
     person is a partner of such partnership, or
       ``(C) in the case of a foreign trust or estate, such trust 
     or estate has a United States beneficiary (within the meaning 
     of paragraph (1)).
       ``(e) Determination of Beneficiaries' Interests in Trust.--
       ``(1) General rule.--For purposes of this section, a 
     beneficiary's interest in a foreign trust shall be based upon 
     all relevant facts and circumstances, including the terms of 
     the trust instrument and any letter of wishes or similar 
     document, historical patterns of trust distributions, and the 
     existence of and functions performed by a trust protector or 
     any similar advisor.
       ``(2) Special rule.--In the case of beneficiaries whose 
     interests in a trust cannot be determined under paragraph 
     (1)--
       ``(A) the beneficiary having the closest degree of kinship 
     to the grantor shall be treated as holding the remaining 
     interests in the trust not determined under paragraph (1) to 
     be held by any other beneficiary, and
       ``(B) if 2 or more beneficiaries have the same degree of 
     kinship to the grantor, such remaining interests shall be 
     treated as held equally by such beneficiaries.
       ``(3) Constructive ownership.--If a beneficiary of a 
     foreign trust is a corporation, partnership, trust, or 
     estate, the shareholders, partners, or beneficiaries shall be 
     deemed to be the trust beneficiaries for purposes of this 
     section.
       ``(4) Taxpayer return position.--A taxpayer shall clearly 
     indicate on its income tax return--
       ``(A) the methodology used to determine that taxpayer's 
     trust interest under this section, and
       ``(B) if the taxpayer knows (or has reason to know) that 
     any other beneficiary of such trust is using a different 
     methodology to determine such beneficiary's trust interest 
     under this section.
       ``(f) Regulations.--The Secretary shall prescribe such 
     regulations as may be necessary or appropriate to carry out 
     the purposes of this section.''
       (b) Effective Date.--
       (1) In general.--Except as otherwise provided in this 
     subsection, the amendments made by
      this section shall apply to taxable years ending on or after 
     February 6, 1995.
       (2) Section 679(a).--Paragraphs (2) and (3) of section 
     679(a) of the Internal Revenue Code of 1986 (as added by this 
     section) shall apply to--
       (A) any trust created on or after February 6, 1995, and
       (B) the portion of any trust created before such date which 
     is attributable to actual transfers of property to the trust 
     on or after such date.
       (3) Section 679(b).--
       (A) In general.--Paragraphs (1) and (2) of section 679(b) 
     of such Code (as so added) shall apply to--
       (i) any trust created on or after the date of the enactment 
     of this Act, and
       (ii) the portion of any trust created before such date 
     which is attributable to actual transfers of property to the 
     trust on or after such date.
       (B) Section 679(b)(3).--Section 679(b)(3) of such Code (as 
     so added) shall take effect on February 6, 1995, without 
     regard to when the property was transferred to the trust.
     SEC. 504. FOREIGN PERSONS NOT TO BE TREATED AS OWNERS UNDER 
                   GRANTOR TRUST RULES.

       (a) In General.--So much of section 672(f) of the Internal 
     Revenue Code of 1986 (relating to special rule where grantor 
     is foreign person) as precedes paragraph (2) is amended to 
     read as follows:
       ``(f) Subpart Not To Result in Foreign Ownership.--
     [[Page H4297]]   ``(1) In general.--Notwithstanding any other 
     provision of this subpart, this subpart shall apply only to 
     the extent such application results in an amount being 
     included (directly or through 1 or more entities) in the 
     gross income of a citizen or resident of the United States or 
     a domestic corporation. The preceding sentence shall not 
     apply to any portion of an investment trust if such trust is 
     treated as a trust for purposes of this title and the grantor 
     of such portion is the sole beneficiary of such portion.''
       (b) Credit for Certain Taxes.--Paragraph (2) of section 
     665(d) of such Code is amended by adding at the end the 
     following new sentence: ``Under rules or regulations 
     prescribed by the Secretary, in the case of any foreign trust 
     of which the settlor or another person would be treated as 
     owner of any portion of the trust under subpart E but for 
     section 672(f), the term `taxes imposed on the trust' 
     includes the allocable amount of any income, war profits, and 
     excess profits taxes imposed by any foreign country or 
     possession of the United States on the settlor or such other 
     person in respect of trust income.''
       (c) Distributions by Certain Foreign Trusts Through 
     Nominees.--
       (1) Section 643 of such Code is amended by adding at the 
     end the following new subsection:
       ``(h) Distributions by Certain Foreign Trusts Through 
     Nominees.--For purposes of this part, any amount paid to a 
     United States person which is derived directly or indirectly 
     from a foreign trust of which the payor is not the grantor 
     shall be deemed in the year of payment to have been directly 
     paid by the foreign trust to such United States person.''
       (2) Section 665 of such Code is amended by striking 
     subsection (c).
       (d) Effective Date.--The amendments made by this section 
     shall take effect on the date of the enactment of this Act.
       (e) Transitional Rule.--If--
       (1) by reason of the amendments made by this section, any 
     person other than a United States person ceases to be treated 
     as the owner of a portion of a domestic trust, and
       (2) before January 1, 1996, such trust becomes a foreign 
     trust, or the assets of such trust are transferred to a 
     foreign trust,
     no tax shall be imposed by section 1491 of the Internal 
     Revenue Code of 1986 by reason of such trust becoming a 
     foreign trust or the assets of such trust being transferred 
     to a foreign trust.
     SEC. 505. GRATUITOUS TRANSFERS BY PARTNERSHIPS AND FOREIGN 
                   CORPORATIONS.

       (a) In General.--Subchapter C of chapter 80 of the Internal 
     Revenue Code of 1986 (relating to provisions affecting more 
     than one subtitle) is amended by adding at the end the 
     following new section:
     ``SEC. 7874. PURPORTED GIFTS BY PARTNERSHIPS AND FOREIGN 
                   CORPORATIONS.

       ``(a) In General.--Any property (including money) that is 
     purportedly a direct or indirect gift by a partnership or a 
     foreign corporation to a person who is not a partner of the 
     partnership or a shareholder of the corporation, 
     respectively, may be rechar- acterized by the Secretary to 
     prevent the avoidance of tax. The Secretary may not 
     recharacterize gifts made for bona fide business or 
     charitable purposes.
       ``(b) Statements on Recipient's Return.--A taxpayer who 
     receives a purported gift subject to subsection (a) shall 
     attach a statement to his income tax return for the year of 
     receipt that identifies the property received and describes 
     fully the circumstances surrounding the purported gift.
       ``(c) Exemption.--Subsection (a) shall not apply to 
     purported gifts received by any person during any taxable 
     year if the amount thereof is less than $2,500.
       ``(d) Regulations.--The Secretary may prescribe such rules 
     as may be necessary or appropriate to carry out the purposes 
     of this section.''
       (b) Clerical Amendment.--The table of sections for such 
     subchapter C is amended by adding at the end the following 
     new item:

``Sec. 7874. Purported gifts by partnerships and foreign 
              corporations.''

       (c) Effective Date.--The amendments made by this section 
     shall apply to amounts received after the date of the 
     enactment of this Act.
     SEC. 506. INFORMATION REPORTING REGARDING LARGE FOREIGN 
                   GIFTS.

       (a) In General.--Subpart A of part III of subchapter A of 
     chapter 61 of the Internal Revenue Code of 1986 is amended by 
     inserting after section 6039E the following new section:

     ``SEC. 6039F. NOTICE OF LARGE GIFTS RECEIVED FROM FOREIGN 
                   PERSONS.

       ``(a) In General.--If the value of the aggregate foreign 
     gifts received by a United States person (other than an 
     organization described in section 501(c) and exempt from tax 
     under section 501(a)) during any taxable year exceeds 
     $100,000, such United States person shall furnish (at such 
     time and in such manner as the Secretary shall prescribe) 
     such information as the Secretary may prescribe regarding 
     each foreign gift received during such year.
       ``(b) Foreign Gift.--For purposes of this section, the term 
     `foreign gift' means any amount received from a person other 
     than a United States person which the recipient treats as a 
     gift or bequest. Such term shall not include any qualified 
     transfer (within the meaning of section 2503(e)(2)).
       ``(c) Penalty for Failure To File Information.--
       ``(1) In general.--If a United States person fails to 
     furnish the information required by subsection (a) with 
     respect to any foreign gift within the time prescribed 
     therefor (including extensions)--
       ``(A) the tax consequences of the receipt of such gift 
     shall be determined by the Secretary in the Secretary's sole 
     discretion from the Secretary's own knowledge or from such 
     information as the Secretary may obtain through testimony or 
     otherwise, and
       ``(B) such United States person shall pay (upon notice and 
     demand by the Secretary and in the same manner as tax) an 
     amount equal to 5 percent of the amount of such foreign gift 
     for each month for which the failure continues (not to exceed 
     25 percent of such amount in the aggregate).
       ``(2) Reasonable cause exception.-- Paragraph (1) shall not 
     apply to any failure to report a foreign gift if the United 
     States person shows that the failure is due to reasonable 
     cause and not due to willful neglect.
       ``(d) Regulations.--The Secretary shall prescribe such 
     regulations as may be necessary to carry out the purposes of 
     this section.''.
       (b) Clerical Amendment.--The table of sections for such 
     subpart is amended by inserting after the item relating to 
     section 6039E the following new item:

``Sec. 6039F. Notice of large gifts received from foreign persons.''

       (c) Effective Date.--The amendments made by this section 
     shall apply to amounts received after the date of the 
     enactment of this Act in taxable years ending after such 
     date.
     SEC. 507. MODIFICATION OF RULES RELATING TO FOREIGN TRUSTS 
                   WHICH ARE NOT GRANTOR TRUSTS.

       (a) Modification of Interest Charge on Accumulation 
     Distributions.--Subsection (a) of section 668 of the Internal 
     Revenue Code of 1986 (relating to interest charge on 
     accumulation distributions from foreign trusts) is amended to 
     read as follows:
       ``(a) General Rule.--For purposes of the tax determined 
     under section 667(a)--
       ``(1) Sum of interest charges for each throwback year.--The 
     interest charge (determined under paragraph (2)) with respect 
     to any distribution is the sum of the interest charges for 
     each of the throwback years to which such distribution is 
     allocated under section 666(a).
       ``(2) Interest charge for year.--Except as provided in 
     paragraph (6), the interest charge for any throwback year on 
     such year's allocable share of the partial tax computed under 
     section 667(b) with respect to any distribution shall be 
     determined for the period--
       ``(A) beginning on the due date for the throwback year, and
       ``(B) ending on the due date for the taxable year of the 
     distribution,
     by using the rates and method applicable under section 6621 
     for underpayments of tax for such period. For purposes of the 
     preceding sentence, the term `due date' means the date 
     prescribed by law (determined without regard to extensions) 
     for filing the return of the tax imposed by this chapter for 
     the taxable year.
       ``(3) Allocable partial tax.--For purposes of paragraph 
     (2), a throwback year's allocable share of the partial tax is 
     an amount equal to such partial tax multiplied by the 
     fraction--
       ``(A) the numerator of which is the amount deemed by 
     section 666(a) to be distributed on the last day of such 
     throwback year, and
       ``(B) the denominator of which is the accumulation 
     distribution taken into account under section 666(a).
       ``(4) Throwback year.--For purposes of this subsection, the 
     term `throwback year' means any taxable year to which a 
     distribution is allocated under section 666(a).
       ``(5) Periods of nonresidence.--The period under paragraph 
     (2) shall not include any portion thereof during which the 
     beneficiary was not a citizen or resident of the United 
     States.
       ``(6) Throwback years before 1996.--In the case of any 
     throwback year beginning before 1996--
       ``(A) interest for the portion of the period described in 
     paragraph (2) which occurs before the first taxable year 
     beginning after 1995 shall be determined by using an interest 
     rate of 6 percent and no compounding, and
       ``(B) interest for the remaining portion of such period 
     shall be determined as if the partial tax computed under 
     section 667(b) for the throwback year were increased (as of 
     the beginning of such first taxable year) by the amount of 
     the interest determined under subparagraph (A).''
       (b) Rule When Information Not Available.--Subsection (d) of 
     section 666 of such Code is amended by adding at the end the 
     following: ``In the case of a distribution from a foreign 
     trust to which section 6048(b) applies, adequate records 
     shall not be considered to be available for purposes of the 
     preceding sentence unless such trust meets the requirements 
     referred to in such section. If a taxpayer is not able to 
     demonstrate when a trust was created, the Secretary may use 
     any reasonable approximation based on available evidence.''
       (c) Abusive Transactions.--Section 643(a) of such Code is 
     amended by inserting after paragraph (6) the following new 
     paragraph:
     [[Page H4298]]   ``(7) Abusive transactions.--The Secretary 
     shall prescribe such regulations as may be necessary or 
     appropriate to carry out the purposes of this part, including 
     regulations to prevent avoidance of such purposes.''
       (d) Treatment of Use of Trust Property.--Section 643 of 
     such Code (relating to definitions applicable to subparts A, 
     B, C, and D) is amended by adding at the end the following 
     new subsection:
       ``(i) Use of Foreign Trust Property.--
       ``(1) General rule.--For purposes of subparts B, C, and D, 
     if, during a taxable year of a foreign trust a trust 
     participant of such trust directly or indirectly uses any of 
     the trust's property, the use value for such taxable year 
     shall be treated as an amount paid to such participant (other 
     than from income for the taxable year) within the meaning of 
     sections 661(a)(2) and section 662(a)(2).
       ``(2) Exemption.--Paragraph (1) shall not apply to any 
     trust participant as to whom the aggregate use value during 
     the taxable year does not exceed $2,500.
       ``(3) Definitions and special rules.--For purposes of this 
     subsection--
       ``(A) Use value.--Except as provided in subparagraph (B), 
     the term `use value' means the fair market value of the use 
     of property reduced by any amount paid for such use by the 
     trust participant or by any person who is related to such 
     participant.
       ``(B) Special rule for cash and cash equivalent.--A direct 
     or indirect loan of cash, or cash equivalent, by a foreign 
     trust shall be treated as a use of trust property by the 
     borrower and the full amount of the loan principal shall be 
     the use value.
       ``(C) Use by related party.--
       ``(i) Use by a person who is related to a trust participant 
     shall be treated as use by the participant.
       ``(ii) If property is used by any person who is a related 
     person with respect to more than one trust participant, then 
     the property shall be treated as used by the trust 
     participant most closely related, by blood or otherwise, to 
     such person.
       ``(D) Property includes cash and cash equivalents.--The 
     term `property' includes cash and cash equivalents.
       ``(E) Trust participant.--The term `trust participant' 
     means each grantor and beneficiary of the trust.
       ``(F) Related person.--A person is related to a trust 
     participant if the relationship between such persons would 
     result in a disallowance of losses under section 267(b) or 
     707(b). In applying section 267 for purposes of the preceding 
     sentence--
       ``(i) section 267(e) shall be applied as if such person or 
     the trust participant were a pass-thru entity,
       ``(ii) section 267(b) shall be applied by substituting `at 
     least 10 percent' for `more than 50 percent' each place it 
     appears, and
       ``(iii) in determining the family of an individual under 
     section 267(c)(4), such section shall be treated as including 
     the spouse (and former spouse) of such individual and of each 
     other person who is treated under such section as being a 
     member of the family of such individual or spouse.
       ``(G) Subsequent transactions regarding loan principal.--If 
     any loan described in subparagraph (B) is taken into account 
     under paragraph (1), any subsequent transaction between the 
     trust and the original borrower regarding the principal of 
     the loan (by way of complete or partial repayment, 
     satisfaction, cancellation, discharge, or otherwise) shall be 
     disregarded for purposes of this title.''
       (e) Effective Dates.--
       (1) In general.--Except as provided in paragraph (2), the 
     amendments made by this section shall apply to taxable years 
     beginning after the date of the enactment of this Act.
       (2) Interest charge.--The amendment made by subsection (a) 
     shall apply to interest for throwback years beginning before, 
     on, or after the date of the enactment of this Act.
     SEC. 508. RESIDENCE OF ESTATES AND TRUSTS.

       (a) Treatment as United States Person.--Paragraph (30) of 
     section 7701(a) of the Internal Revenue Code of 1986 is 
     amended by striking subparagraph (D) and by inserting after 
     subparagraph (C) the following:
       ``(D) any estate or trust if--
       ``(i) a court within the United States is able to exercise 
     primary supervision over the administration of the estate or 
     trust, and
       ``(ii) in the case of a trust, one or more United States 
     fiduciaries have the authority to control all substantial 
     decisions of the trust.''
       (b) Conforming Amendment.--Paragraph (31) of section 
     7701(a) of such Code is amended to read as follows:
       ``(31) Foreign estate or trust.--The term `foreign estate' 
     or `foreign trust' means any estate or trust other than an 
     estate or trust described in section 7701(a)(30)(D).''
       (c) Effective Date.--The amendments made by this section 
     shall apply--
       (1) to taxable years beginning after December 31, 1996, and
       (2) at the election of the trustee of a trust, to taxable 
     years beginning after the date of the enactment of this Act 
     and on or before December 31, 1996.
     Such an election, once made, shall be irrevocable.
 TITLE VI--EXTENSION OF AUTHORITY OF FEDERAL COMMUNICATIONS COMMISSION 
                       TO USE COMPETITIVE BIDDING

     SEC. 601. EXTENSION OF AUTHORITY.

       Section 309(j)(11) of the Communications Act of 1934 (47 
     U.S.C. 309(j)(11)) is amended by striking ``September 30, 
     1998'' and inserting ``September 30, 2000''.
  TITLE VII--PRIVATIZATION OF THE UNITED STATES ENRICHMENT CORPORATION

     SEC. 701. SHORT TITLE AND REFERENCE.

       (a) Short Title.--This title may be cited as the ``USEC 
     Privatization Act''.
       (b) Reference.--Except as otherwise expressly provided, 
     whenever in this title an amendment or repeal is expressed in 
     terms of an amendment to, or repeal of, a section or other 
     provision, the reference shall be considered to be made to a 
     section or other provision of the Atomic Energy Act of 1954 
     (42 U.S.C. 2011 et seq.).

     SEC. 702. PRODUCTION FACILITY.

       Paragraph v. of section 11 (42 U.S.C. 2014 v.) is amended 
     by striking ``or the construction and operation of a uranium 
     enrichment production facility using Atomic Vapor Laser 
     Isotope Separation technology''.

     SEC. 703. DEFINITIONS.

       Section 1201 (42 U.S.C. 2297) is amended--
       (1) in paragraph (4), by inserting before the period the 
     following: ``and any successor corporation established 
     through privatization of the Corporation'';
       (2) by redesignating paragraphs (10) through (13) as 
     paragraphs (14) through (17), respectively, and by inserting 
     after paragraph (9) the following new paragraphs:
       ``(10) The term `low-level radioactive waste' has the 
     meaning given such term in section 102(9) of the Low-Level 
     Radioactive Waste Policy Amendments Act of 1985 (42 U.S.C. 
     2021b(9)).
       ``(11) The term `mixed waste' has the meaning given such 
     term in section 1004(41) of the Solid Waste Disposal Act (42 
     U.S.C. 6903(41)).
       ``(12) The term `privatization' means the transfer of 
     ownership of the Corporation to private investors pursuant to 
     chapter 25.
       ``(13) The term `privatization date' means the date on 
     which 100 percent of ownership of the Corporation has been 
     transferred to private investors.'';
       (3) by inserting after paragraph (17) (as redesignated) the 
     following new paragraph:
       ``(18) The term `transition date' means July 1, 1993.''; 
     and
       (4) by redesignating the unredesignated paragraph (14) as 
     paragraph (19).

     SEC. 704. EMPLOYEES OF THE CORPORATION.

       (a) Paragraph (2).--Paragraphs (1) and (2) of section 
     1305(e) (42 U.S.C. 2297b-4(e)(1)(2)) are amended to read as 
     follows:
       ``(1) In general.--It is the purpose of this subsection to 
     ensure that the privatization of the Corporation shall not 
     result in any adverse effects on the pension benefits of 
     employees at facilities that are operated, directly or under 
     contract, in the performance of the functions vested in the 
     Corporation.
       ``(2) Applicability of existing collective bargaining 
     agreement.--The Corporation shall abide by the terms of the 
     collective bargaining agreement in effect on the 
     privatization date at each individual facility.''.
       (b) Paragraph (4).--Paragraph (4) of section 1305(e) (42 
     U.S.C. 2297b-4(e)(4)) is amended--
       (1) by striking ``and detailees'' in the heading;
       (2) by striking the first sentence;
       (3) in the second sentence, by inserting ``from other 
     Federal employment'' after ``transfer to the Corporation''; 
     and
       (4) by striking the last sentence.

     SEC. 705. MARKETING AND CONTRACTING AUTHORITY.

       (a) Marketing Authority.--Section 1401(a) (42 U.S.C. 
     2297c(a)) is amended effective on the privatization date (as 
     defined in section 1201(13) of the Atomic Energy Act of 
     1954)--
       (1) by amending the subsection heading to read ``Marketing 
     Authority.--''; and
       (2) by striking the first sentence.
       (b) Transfer of Contracts.--Section 1401(b) (42 U.S.C. 
     2297c(b)) is amended--
       (1) in paragraph (2)(B), by adding at the end the 
     following: ``The privatization of the Corporation shall not 
     affect the terms of, or the rights or obligations of the 
     parties to, any such power purchase contract.''; and
       (2) by adding at the end the following:
       ``(3) Effect of transfer.--
       ``(A) As a result of the transfer pursuant to paragraph 
     (1), all rights, privileges, and benefits under such 
     contracts, agreements, and leases, including the right to 
     amend, modify, extend, revise, or terminate any of such 
     contracts, agreements, or leases were irrevocably assigned to 
     the Corporation for its exclusive benefit.
       ``(B) Notwithstanding the transfer pursuant to paragraph 
     (1), the United States shall remain obligated to the parties 
     to the contracts, agreements, and leases transferred pursuant 
     to paragraph (1) for the performance of the obligations of 
     the United States thereunder during the term thereof. The 
     Corporation shall reimburse the United States for any amount 
     paid by the United States in respect of such obligations 
     arising after the privatization date to the extent such 
     amount is a legal and valid obligation of the Corporation 
     then due.
       ``(C) After the privatization date, upon any material 
     amendment, modification, extension, revision, replacement, or 
     termination of any contract, agreement, or lease transferred 
     under paragraph (1), the United States shall be released from 
     further obligation under such contract, agreement, or lease, 
     except that such action shall not release the United States 
     from obligations arising under 
     [[Page H4299]] such contract, agreement, or lease prior to 
     such time.''.
       (c) Pricing.--Section 1402 (42 U.S.C. 2297c-1) is amended 
     to read as follows:

     ``SEC. 1402. PRICING.

       ``The Corporation shall establish prices for its products, 
     materials, and services provided to customers on a basis that 
     will allow it to attain the normal business objectives of a 
     profitmaking corporation.''.
       (d) Leasing of Gaseous Diffusion Facilities of 
     Department.--Effective on the privatization date (as defined 
     in section 1201(13) of the Atomic Energy Act of 1954), 
     section 1403 (42 U.S.C. 2297c-2) is amended by adding at the 
     end the following:
       ``(h) Low-Level Radioactive Waste and Mixed Waste.--
       ``(1) Responsibility of the department; costs.--
       ``(A) With respect to low-level radioactive waste and mixed 
     waste generated by the Corporation as a result of the 
     operation of the facilities and related property leased by 
     the Corporation pursuant to subsection (a) or as a result of 
     treatment of such wastes at a location other than the 
     facilities and related property leased by the Corporation 
     pursuant to subsection (a) the Department, at the request of 
     the Corporation, shall--
       ``(i) accept for treatment or disposal of all such wastes 
     for which treatment or disposal technologies and capacities 
     exist, whether within the Department or elsewhere; and
       ``(ii) accept for storage (or ultimately treatment or 
     disposal) all such wastes for which treatment and disposal 
     technologies or capacities do not exist, pending development 
     of such technologies or availability of such capacities for 
     such wastes.
       ``(B) All low-level wastes and mixed wastes that the 
     Department accepts for treatment, storage, or disposal 
     pursuant to subparagraph (A) shall, for the purpose of any 
     permits, licenses, authorizations, agreements, or orders 
     involving the Department and other Federal agencies or State 
     or local governments, be deemed to be generated by the 
     Department and the Department shall handle such wastes in 
     accordance with any such permits, licenses, authorizations, 
     agreements, or orders. The Department shall obtain any 
     additional permits, licenses, or authorizations necessary to 
     handle such wastes, shall amend any such agreements or orders 
     as necessary to handle such wastes, and shall handle such 
     wastes in accordance therewith.
       ``(C) The Corporation shall reimburse the Department for 
     the treatment, storage, or disposal of low-level radioactive 
     waste or mixed waste pursuant to subparagraph (A) in an 
     amount equal to the Department's costs but in no event 
     greater than an amount equal to that which would be charged 
     by commercial, State, regional, or interstate compact 
     entities for treatment, storage, or disposal of such waste.
       ``(2) Agreements with other persons.--The Corporation may 
     also enter into agreements for the treatment, storage, or 
     disposal of low-level radioactive waste and mixed waste 
     generated by the Corporation as a result of the operation of 
     the facilities and related property leased by the Corporation 
     pursuant to subsection (a) with any person other than the 
     Department that is authorized by applicable laws and 
     regulations to treat, store, or dispose of such wastes.''.
       (e) Liabilities.--
       (1) Subsection (a) of section 1406 (42 U.S.C. 2297c-5(a)) 
     is amended--
       (A) by inserting ``and Privatization'' after ``Transition'' 
     in the heading; and
       (B) by adding at the end the following: ``As of the 
     privatization date, all liabilities attributable to the 
     operation of the Corporation from the transition date to the 
     privatization date shall be direct liabilities of the United 
     States.''.
       (2) Subsection (b) of section 1406 (42 U.S.C. 2297c-5(b)) 
     is amended--
       (A) by inserting ``and Privatization'' after ``Transition'' 
     in the heading; and
       (B) by adding at the end the following: ``As of the 
     privatization date, any judgment entered against the 
     Corporation imposing liability arising out of the operation 
     of the Corporation from the transition date to the 
     privatization date shall be considered a judgment against the 
     United States.''.
       (3) Subsection (d) of section 1406 (42 U.S.C. 2297c-5(d)) 
     is amended--
       (A) by inserting ``and Privatization'' after ``Transition'' 
     in the heading; and
       (B) by striking ``the transition date'' and inserting ``the 
     privatization date (or, in the event the privatization date 
     does not occur, the transition date)''.
       (f) Transfer of Uranium.--Title II (42 U.S.C. 2297 et seq.) 
     is amended by redesignating section 1408 as section 1409 and 
     by inserting after section 1407 the following:

     ``SEC. 1408. TRANSFER OF URANIUM.

       ``The Secretary may, before the privatization date, 
     transfer to the Corporation without charge raw uranium, low-
     enriched uranium, and highly enriched uranium.''.

     SEC. 706. PRIVATIZATION OF THE CORPORATION.

       (a) Establishment of Private Corporation.--Chapter 25 (42 
     U.S.C. 2297d et seq.) is amended by adding at the end the 
     following new section:

     ``SEC. 1503. ESTABLISHMENT OF PRIVATE CORPORATION.

       ``(a) Establishment.--
       ``(1) In general.--In order to facilitate privatization, 
     the Corporation may provide for the establishment of a 
     private corporation organized under the laws of any of the 
     several States. Such corporation shall have among its 
     purposes the following:
       ``(A) To help maintain a reliable and economical domestic 
     source of uranium enrichment services.
       ``(B) To undertake any and all activities as provided in 
     its corporate charter.
       ``(2) Authorities.--The corporation established pursuant to 
     paragraph (1) shall be authorized to--
       ``(A) enrich uranium, provide for uranium to be enriched by 
     others, or acquire enriched uranium (including low-enriched 
     uranium derived from highly enriched uranium);
       ``(B) conduct, or provide for conducting, those research 
     and development activities related to uranium enrichment and 
     related processes and activities the corporation considers 
     necessary or advisable to maintain itself as a commercial 
     enterprise operating on a profitable and efficient basis;
       ``(C) enter into transactions regarding uranium, enriched 
     uranium, or depleted uranium with--
       ``(i) persons licensed under section 53, 63, 103, or 104 in 
     accordance with the licenses held by those persons;
       ``(ii) persons in accordance with, and within the period 
     of, an agreement for cooperation arranged under section 123; 
     or
       ``(iii) persons otherwise authorized by law to enter into 
     such transactions;
       ``(D) enter into contracts with persons licensed under 
     section 53, 63, 103, or 104, for as long as the corporation 
     considers necessary or desirable, to provide uranium or 
     uranium enrichment and related services;
       ``(E) enter into contracts to provide uranium or uranium 
     enrichment and related services in accordance with, and 
     within the period of, an agreement for cooperation arranged 
     under section 123 or as otherwise authorized by law; and
       ``(F) take any and all such other actions as are permitted 
     by the law of the jurisdiction of incorporation of the 
     corporation.
       ``(3) Transfer of assets.--For purposes of implementing the 
     privatization, the Corporation may transfer some or all of 
     its assets and obligations to the corporation established 
     pursuant to this section, including--
       ``(A) all of the Corporation's assets, including all 
     contracts, agreements, and leases, including all uranium 
     enrichment contracts and power purchase contracts;
       ``(B) all funds in accounts of the Corporation held by the 
     Treasury or on deposit with any bank or other financial 
     institution;
       ``(C) all of the Corporation's rights, duties, and 
     obligations, accruing subsequent to the privatization date, 
     under the power purchase contracts covered by section 
     1401(b)(2)(B); and
       ``(D) all of the Corporation's rights, duties, and 
     obligations, accruing subsequent to the privatization date, 
     under the lease agreement between the Department and the 
     Corporation executed by the Department and the Corporation 
     pursuant to section 1403.
       ``(4) Merger or consolidation.--For purposes of 
     implementing the privatization, the Corporation may merge or 
     consolidate with the corporation established pursuant to 
     subsection (a)(1) if such action is contemplated by the plan 
     for privatization approved by the President under section 
     1502(b). The Board shall have exclusive authority to approve 
     such merger or consolidation and to take all further actions 
     necessary to consummate such merger or consolidation, and no 
     action by or in respect of shareholders shall be required. 
     The merger or consolidation shall be effected in accordance 
     with, and have the effects of a merger or consolidation 
     under, the laws of the jurisdiction of incorporation of the 
     surviving corporation, and all rights and benefits provided 
     under this title to the Corporation shall apply to the 
     surviving corporation as if it were the Corporation.
       ``(5) Tax treatment of privatization.--
       ``(A) Transfer of assets or merger.--No income, gain, or 
     loss shall be recognized by any person by reason of the 
     transfer of the Corporation's assets to, or the Corporation's 
     merger with, the corporation established pursuant to 
     subsection (a)(1) in connection with the privatization.
       ``(B) Cancellation of debt and common stock.--No income, 
     gain, or loss shall be recognized by any person by reason of 
     any cancellation of any obligation or common stock of the 
     Corporation in connection with the privatization.
       ``(b) OSHA Requirements.--For purposes of the regulation of 
     radiological and nonradiological hazards under the 
     Occupational Safety and Health Act of 1970, the corporation 
     established pursuant to subsection (a)(1) shall be treated in 
     the same manner as other employers licensed by the Nuclear 
     Regulatory Commission. Any interagency agreement entered into 
     between the Nuclear Regulatory Commission and the 
     Occupational Safety and Health Administration governing the 
     scope of their respective regulatory authorities shall apply 
     to the corporation as if the corporation were a Nuclear 
     Regulatory Commission licensee.
       ``(c) Legal Status of Private Corporation.--
       ``(1) Not federal agency.--The corporation established 
     pursuant to subsection (a)(1) shall not be an agency, 
     instrumentality, or establishment of the United States 
     Government and shall not be a Government corporation or 
     Government-controlled corporation.
       ``(2) No recourse against united states.--Obligations of 
     the corporation established 
     [[Page H4300]] pursuant to subsection (a)(1) shall not be 
     obligations of, or guaranteed as to principal or interest by, 
     the Corporation or the United States, and the obligations 
     shall so plainly state.
       ``(3) No claims court jurisdiction.--No action under 
     section 1491 of title 28, United States Code, shall be 
     allowable against the United States based on the actions of 
     the corporation established pursuant to subsection (a)(1).
       ``(d) Board of Director's Election After Public Offering.--
     In the event that the privatization is implemented by means 
     of a public offering, an election of the members of the board 
     of directors of the Corporation by the shareholders shall be 
     conducted before the end of the 1-year period beginning the 
     date shares are first offered to the public pursuant to such 
     public offering.
       ``(e) Adequate Proceeds.--The Secretary of Energy shall not 
     allow the privatization of the Corporation unless before the 
     sale date the Secretary determines that the estimated sum of 
     the gross proceeds from the sale of the Corporation will be 
     an adequate amount.''.
       (b) Ownership Limitations.--Chapter 25 (as amended by 
     subsection (a)) is amended by adding at the end the following 
     new section:

     ``SEC. 1504. OWNERSHIP LIMITATIONS.

       ``(a) Securities Limitation.--In the event that the 
     privatization is implemented by means of a public offering, 
     during a period of 3 years beginning on the privatization 
     date, no person, directly or indirectly, may acquire or hold 
     securities representing more than 10 percent of the total 
     votes of all outstanding voting securities of the 
     Corporation.
       ``(b) Application.--Subsection (a) shall not apply--
       ``(1) to any employee stock ownership plan of the 
     Corporation,
       ``(2) to underwriting syndicates holding shares for resale, 
     or
       ``(3) in the case of shares beneficially held for others, 
     to commercial banks, broker-dealers, clearing corporations, 
     or other nominees.
       ``(c) No director, officer, or employee of the Corporation 
     may acquire any securities, or any right to acquire 
     securities, of the Corporation--
       ``(1) in the public offering of securities of the 
     Corporation in the implementation of the privatization,
       ``(2) pursuant to any agreement, arrangement, or 
     understanding entered into before the privatization date, or
       ``(3) before the election of directors of the Corporation 
     under section 1503(d) on any terms more favorable than those 
     offered to the general public.''.
       (c) Exemption From Liability.--Chapter 25 (as amended by 
     subsection (b)) is amended by adding at the end the following 
     new section:

     ``SEC. 1505. EXEMPTION FROM LIABILITY.

       ``(a) In General.--No director, officer, employee, or agent 
     of the Corporation shall be liable, for money damages or 
     otherwise, to any party if, with respect to the subject 
     matter of the action, suit, or proceeding, such person was 
     fulfilling a duty, in connection with any action taken in 
     connection with the privatization, which such person in good 
     faith reasonably believed to be required by law or vested in 
     such person.
       ``(b) Exception.--The privatization shall be subject to the 
     Securities Act of 1933 and the Securities Exchange Act of 
     1934. The exemption set forth in subsection (a) shall not 
     apply to claims arising under such Acts or under the 
     Constitution or laws of any State, territory, or possession 
     of the United States relating to transactions in securities, 
     which claims are in connection with a public offering 
     implementing the privatization.''.
       (d) Resolution of Certain Issues.--Chapter 25 (as amended 
     by subsection (c)) is amended by adding at the end the 
     following new section:
     ``SEC. 1506. RESOLUTION OF CERTAIN ISSUES.

       ``(a) Corporation Actions.--Notwithstanding any provision 
     of any agreement to which the Corporation is a party, the 
     Corporation shall not be considered to be in breach, default, 
     or violation of any such agreement because of any provision 
     of this chapter or any action the Corporation is required to 
     take under this chapter.
       ``(b) Right To Sue Withdrawn.--The United States hereby 
     withdraws any stated or implied consent for the United 
     States, or any agent or officer of the United States, to be 
     sued by any person for any legal, equitable, or other relief 
     with respect to any claim arising out of, or resulting from, 
     acts or omissions under this chapter.''.
       (e) Application of Privatization Proceeds.--Chapter 25 (as 
     amended by subsection (d)) is amended by adding at the end 
     the following new section:

     ``SEC. 1507. APPLICATION OF PRIVATIZATION PROCEEDS.

       ``The proceeds from the privatization shall be included in 
     the budget baseline required by the Balanced Budget and 
     Emergency Deficit Control Act of 1985 and shall be counted as 
     an offset to direct spending for purposes of section 252 of 
     such Act, notwithstanding section 257(e) of such Act.''.
       (f) Conforming Amendment.--The table of contents for 
     chapter 25 is amended by inserting after the item for section 
     1502 the following:

``Sec. 1503. Establishment of Private Corporation.
``Sec. 1504. Ownership Limitations.
``Sec. 1505. Exemption from Liability.
``Sec. 1506. Resolution of Certain Issues.
``Sec. 1507. Application of Privatization Proceeds.''.

       (g) Section 193 (42 U.S.C. 2243) is amended by adding at 
     the end the following:
       ``(f) Limitation.--If the privatization of the United 
     States Enrichment Corporation results in the Corporation 
     being--
       ``(1) owned, controlled, or dominated by a foreign 
     corporation or a foreign government, or
       ``(2) otherwise inimical to the common defense or security 
     of the United States,

     any license held by the Corporation under sections 53 and 63 
     shall be terminated.''.
       (h) Period for Congressional Review.--Section 1502(d) (42 
     U.S.C. 2297d-1(d)) is amended by striking ``less than 60 days 
     after notification of the Congress'' and inserting ``less 
     than 60 days after the date of the report to Congress by the 
     Comptroller General under subsection (c)''.

     SEC. 707. PERIODIC CERTIFICATION OF COMPLIANCE.

       Section 1701(c)(2) (42 U.S.C. 2297f(c)(2)) is amended by 
     striking ``Annual application for certificate of 
     compliance.--The Corporation shall apply at least annually to 
     the Nuclear Regulatory Commission for a certificate of 
     compliance under paragraph (1).'' and inserting ``Periodic 
     application for certificate of compliance.--The Corporation 
     shall apply to the Nuclear Regulatory Commission for a 
     certificate of compliance under paragraph (1) periodically, 
     as determined by the Nuclear Regulatory Commission, but not 
     less than every 5 years.''.

     SEC. 708. LICENSING OF OTHER TECHNOLOGIES.

       Subsection (a) of section 1702 (42 U.S.C. 2297f-1(a)) is 
     amended by striking ``other than'' and inserting 
     ``including''.

     SEC. 709. CONFORMING AMENDMENTS.

       (a) Repeals in Atomic Energy Act of 1954 as of the 
     Privatization Date.--
       (1) Repeals.--As of the privatization date (as defined in 
     section 1201(13) of the Atomic Energy Act of 1954), the 
     following sections (as in effect on such privatization date) 
     of the Atomic Energy Act of 1954 are repealed:
       (A) Section 1202.
       (B) Sections 1301 through 1304.
       (C) Sections 1306 through 1316.
       (D) Sections 1404 and 1405.
       (E) Section 1601.
       (F) Sections 1603 through 1607.
       (2) Conforming amendment.--The table of contents of such 
     Act is amended by repealing the items referring to sections 
     repealed by paragraph (1).
       (b) Statutory Modifications.--As of such privatization 
     date, the following shall take effect:
       (1) For purposes of title I of the Atomic Energy Act of 
     1954, all references in such Act to the ``United States 
     Enrichment Corporation'' shall be deemed to be references to 
     the corporation established pursuant to section 1503 of the 
     Atomic Energy Act of 1954 (as added by section 6(a)).
       (2) Section 1018(1) of the Energy Policy Act of 1992 (42 
     U.S.C. 2296b-7(1)) is amended by striking ``the United 
     States'' and all that follows through the period and 
     inserting ``the corporation referred to in section 1201(4) of 
     the Atomic Energy Act of 1954.''.
       (3) Section 9101(3) of title 31, United States Code, is 
     amended by striking subparagraph (N), as added by section 
     902(b) of Public Law 102-486.
       (c) Revision of Section 1305.--As of such privatization 
     date, section 1305 of the Atomic Energy Act of 1954 (42 U.S.C 
     2297b-4) is amended--
       (1) by repealing subsections (a), (b), (c), and (d), and
       (2) in subsection (e)--
       (A) by striking the subsection designation and heading,
       (B) by redesignating paragraphs (1) and (2) (as added by 
     section 4(a)) as subsections (a) and (b) and by moving the 
     margins 2-ems to the left,
       (C) by striking paragraph (3), and
       (D) by redesignating paragraph (4) (as amended by section 
     4(b)) as subsection (c), and by moving the margins 2-ems to 
     the left.

  The CHAIRMAN. Pursuant to the rule, the gentleman from Missouri [Mr. 
Gephardt] will be recognized for 30 minutes, and a Member opposed will 
be recognized for 30 minutes.
  The Chair recognizes the gentleman from Missouri [Mr. Gephardt].
  Mr. GEPHARDT. Mr. Chairman, I yield myself such time as I may 
consume.
  Mr. Chairman, I come before you today not to engage in partisan 
finger pointing, but to appeal to basic common sense and to common 
decency.
  This Republican tax bill is wrong. It awards billions of dollars to 
the wealthiest Americans, and it pays for it by cutting school lunches, 
child nutrition, and heat for low income elderly, hurting the very 
people that we should be helping.
  For 16 years all but the top fifth of Americans have seen their wages 
fall and their standard of living decay. We have the ability tonight to 
do something about that, to offer a modest amount of tax relief to 
families that are struggling to simply stay in place. And we have more 
than the ability. We have the obligation to do something about it.
  [[Page H4301]] Each of us was elected to serve the greater good, not 
to come here and line the pockets of the most powerful Americans. But 
that is exactly what the Republican bill does. More than half of its 
benefits go to families earning $100,000 or more.
  Think about the struggling young couple, trying to get by on $20,000 
or $25,000 a year. Under the Republican plan they get a $5 a week tax 
cut. But they lose school lunch subsidies, low income heat assistance, 
food stamps, and summer jobs for their children. On balance, this 
Republican bill hurts them and it means that they may never have a 
chance at a better future. But for the most privileged and powerful, 
people earning $200,000 a year and above, the Republican plan gives 
them a massive $11,000 tax break.
  Mr. Chairman, you and I both know that America does not want that, 
and I dare say that most Members of Congress do not want that. More 
than 100 Members of the Republican Party even tried to buck their own 
leadership to make this tax plan fairer to the middle class, but they 
lost that fight. And the Republican leadership is forcing them to vote 
for it anyway.
  I believe that we should be voting our conscience, our principles, 
not our party registration. I believe the day that we put blind party 
loyalty ahead of what is right for the American people is a sad day for 
the U.S. Congress.
  We can do better. We can pass the Democratic tax plan, which gives 
every penny, every penny of this plan, to families who earn less than 
$100,000 a year. It gives big tax breaks for education, so struggling 
families can lift themselves up and build our country and our economy. 
It lets middle income families deduct up to $10,000 a year in 
educational expenses. It lets students deduct interest payments on 
their student loans, because an investment in education is an 
investment in America's future, and we should reward it.
  It establishes a new guaranteed education plan bond, so that families 
can put aside as little as $25 a month to save as much as $16,000 
dollars for their children's education when they need it. And, above 
all, it is built on the profoundly moral principle that in a just, 
decent society, we do not take away from those who need our help to 
give it to those who need nothing at all.
  It is not too late for us to come together tonight on this tax plan, 
to stand for fairness, to stand for the middle class, Republicans and 
Democrats alike. It is not too late to say to America we stand for that 
young struggling family and the privileged can take care of themselves.
  The Republican bill is wrong, but we can make it right. And would 
that not be a proud moment for the
 American people, the moment we said we can change our minds and work 
together for the good of the country; the day we put our people ahead 
of our party.

  Support this substitute; reject the Republican tax bill; and just 
this one time, let us vote as one party for tax fairness and justice 
for all.
  Mr. ARCHER. Mr. Chairman, I rise in opposition to the amendment.
  The CHAIRMAN. The gentleman from Texas [Mr.  Archer] IS recognized 
for 30 minutes.
  Mr. ARCHER. Mr. Chairman, I yield myself such time as I may consume.
  Mr. Chairman, I will try not to speak in chivalrous adjectives or 
rhetoric, but I would like to speak in fact about this proposal. After 
all, it is the third version of the Gephardt tax proposal that we have 
seen in recent times. In December, the minority leader offered a $66 
billion tax relief plan. Last week, it had been cut in half. Today, the 
House is debating his substitute, which contains little tax relief, and 
with it tax increases of nearly $3 billion.
  Yet with all of that, under CBO scoring, the substitute does not 
reduce the deficit at all, compared to a reduction in the deficit under 
H.R. 1215 of $30 billion.
  It also seems strange to me that the gentleman is the leader of the 
Democrat Party in the House of Representatives, and yet has not chosen 
to offer the President's own tax proposal. His substitute offers 
benefits that affect far fewer families than in H.R. 1215. Moreover, 
the substitute is conspicuously silent on capital gains tax reduction, 
relief for small business, and incentives for job creation.
  It does not contain a family tax credit. In fact, the only tax break 
in the substitute will benefit less than 4 percent of families with 
dependent children, compared to our family tax credit which benefits 75 
percent of families with children. The substitute in actuality gives 
zero help to families with children in elementary and secondary 
schools.
  The Gephardt substitute does embrace several provisions already 
contained in H.R. 1215, namely, the spousal IRA and nondeductible IRA 
provisions. We believe in both of those. Unfortunately, the savings 
provisions in the Gephardt substitute are less effective and more 
complicated than in the base bill, and, unlike H.R. 1215, the Gephardt 
substitute allows a $2,000 contribution to deductible or nondeductible 
IRA's but not both as the base bill does.
  For those who like to gamble, the substitute offers a cheap crap 
shoot: Namely, all bets are off for a tax reduction if the OMB Director 
estimates Congress has not precisely met the deficit reduction targets 
set in the law. If the Congress fails to meet them by only a small 
amount, the taxes go away.
  Imagine a family trying to pick an affordable college under this on-
again, off-again tax policy.
 Worse yet, imagine a student halfway through the school year finding 
out the tax break is now gone. Many Americans simply will not take the 
risk and the supposed benefits of the proposal will vanish.

  Under these conditions, why would savers establish an IRA knowing 
they might suddenly find themselves with taxable income? OMB will be 
under tremendous pressure to fudge on the deficit numbers in order to 
prevent the ensuing chaos caused by this proposal. So in the end we 
will see the worst of all worlds, a combination of phony deficit 
estimates, no benefit for taxpayers, and more business for tax 
consultants.
  This substitute does not deserve further debate. The Contract With 
America is the real thing, accept no substitutes. I urge my colleagues 
to reject this third and inferior rendition by the minority leader.
  Mr. Chairman, I reserve the balance of my time.
  Mr. GEPHARDT. Mr. Chairman, I ask unanimous consent that the 
gentleman from Michigan [Mr. Bonior] be permitted to manage the 
remainder of my time on this substitute.
  The CHAIRMAN. Is there objection to the request of the gentleman from 
Missouri?
  There was no objection.
  Mr. BONIOR. Mr. Chairman, I yield 2\1/2\ minutes to the distinguished 
chairman of the Democratic Caucus, the gentleman from California [Mr. 
Fazio].
                              {time}  2015

  Mr. FAZIO of California. Mr. Chairman, I rise in support of the 
Gephardt substitute, because the Republican proposal hurts us as a 
country in too many ways. It creates more problems down the road by 
adding to the deficit, and it divides the middle class from the wealthy 
by sacrificing long-term investment in education and training for a 
short-term gain for far too many who do not need it.
  Instead of helping the middle class, Republicans are helping big 
corporations. Instead of helping families send their kids to college, 
they are giving people earning $200,000 a year a $500 per child tax 
credit.
  This package includes a new form of the Individual Retirement Account 
and raises the portion of an inheritance tax that is exempt up to 
$750,000. Ninety-five percent of the benefits of this new IRA would go 
to the wealthiest 20 percent of Americans.
  The family earning $35,000 a year will not have the savings to invest 
in an Individual Retirement Account. They do not have a $750,000 estate 
to pass along to their children. They do not have stocks to sell. They 
do not need a $500 tax credit. They need a college student loan to 
build their future.
  We are helping these big corporations and wealthy individuals at what 
cost? This country will suffer revenue losses of $180 billion over 5 
years, mushrooming to $630 billion over 10 years, a real balloon 
payment for all American taxpayers.
  What I do not support in this kind of legislation is the sort of 
thing that we cannot afford when in fact we are having to cut school 
lunches, student 
[[Page H4302]] loans and job training to make available tax cuts for 
the very wealthy.
  This package is much more costly than mere dollar figures. It comes 
at the price of this country's future. It takes away the very tools 
that will help to turn our children into productive adults. The 
Gephardt substitute will provide that future.
  Let's invest in the long-term goals with lasting benefits. Let's 
educate our children while making sure they receive proper nutrition in 
school. Let's train our workers for a changing world marketplace that 
requires high-tech skills. Let's reduce the deficit which will 
accomplish much more to put money in the pockets of the middle class 
through lower interest rates for every American family.
  Under this bill, households earning $200,000 a year would receive an 
average tax cut of $11,000, while those earning under $30,000 would 
receive just $124. That is compounding the class warfare that has been 
waged on the middle class for far too long. Let's support the Gephardt 
alternative and defeat this bill.
  Mr. ARCHER. Mr. Chairman, I yield 5 minutes to the gentleman from 
Texas [Mr. DeLay], the majority whip.
  Mr. DeLAY. Mr. Chairman, I want to congratulate the chairman of the 
Committee on Ways and Means for an excellent job in bringing real tax 
relief to the American citizens of this country, to allow American 
families to keep more of what they earn.
  Right now, Mr. Chairman, 53 percent of the American families' income 
goes to government. If you add up the taxes of the local, State and 
Federal Government, you add to that the cost of litigation and 
regulation, 53 percent, 53 cents out of every dollar that the American 
family earns today, goes to the governments.
  And what the minority leader and the Democrats want to do is to 
protect their ability to confiscate the income of the American family 
to pay for their failed welfare state.
  I want to talk about their substitute. First off, they have no 
intention of offering a budget that gets us to balance by the year 
2002. Yet they offer a so-called tax cut that depends on a balanced 
budget. This substitute provides income tax deductions for interest 
payments on student loans and education expenses up to $5,000 and 
$10,000 thereafter.
  So if you are an American family that does not have a child in 
college or a child going to vocational school, you get no relief. You 
still pay for the failed welfare state. Deductions will be phased out. 
Class warfare. Between $50,000 and $60,000 for individuals and between 
$75,000 and $85,000 for couples. Marriage penalty.
  In our bill, we try to lessen the marriage penalty, because in the 
present Tax Code, you are penalized for creating and starting a family.
  The Democrat substitute allows penalty-free IRA withdrawal for 
education and creates new education savings bonds.
  Education is a very laudable goal, and that is what we ought to be 
striving for. But the problem is that the Democrats are putting up this 
sham that they are giving tax relief as long as you have children in 
college or are participating in education. The phaseout of this 
deduction will increases the marginal income tax rate by 50 percent, 
from 28 percent to 42 percent for those in the income phaseout range. 
More class warfare.
  Deductions for education are contingent on OMB certifying that the 
Federal budget will be balanced by the year 2002, yet they are not even 
going to offer us a budget that does balance. Since the Democrat 
leadership has not announced any plans to offer a balanced budget, we 
can only assume that their tax cuts will never take effect.
  Even if the tax cuts do take effect, they would be repealed in any 
subsequent year in which annual deficit targets are not met. In other 
words, the Democrats, who claim to care so much about students, would 
hold these very same students hostages every year to Congress's ability 
to meet deficit targets that they will not even offer.
  If Congress misses those targets, who gets punished? Not Congress. 
Not the big spenders. Not the people that want to continue making 
Americans dependent on government. No, it will be the very students 
that they claim they want to help.
  Finally, the Gephardt substitute contains the expatriation tax. I ask 
the minority leader, did the minority leader vote for Jackson-Vanik? 
Did he vote and condemn Russia for charging such a huge exit tax that 
Russian Jews could not get out of Russia?
  Where is freedom in this country? We just throw freedom aside, as if 
it means nothing. When an American citizen wants to leave this country, 
they want to charge a tax. That is what this is all about. They want to 
charge a tax. They care nothing for freedom. What we care about is the 
American family, the American family holding onto their own income. 
What they want to do is charge Americans for leaving America. Yet they 
want Russians to stay there.
  Mr. BONIOR. Mr. Chairman, I yield 1 minute to the gentleman from 
Florida [Mr. Gibbons], the distinguished ranking member of the 
committee, to talk a little bit about this issue.
  Mr. GIBBONS. Mr. Chairman, I get a little resentful when I hear 
Members of Congress comparing the United States, my United States, your 
United States----
  Mr. DeLAY. Mr. Chairman, will the gentleman yield?
  Mr. GIBBONS. I have only got a minute. You get time from the 
gentleman from Texas [Mr. Archer].
  Mr. DeLAY. Did the gentleman vote for Jackson-Vanik?
  Mr. GIBBONS. Will you shut up and listen while I talk?
  The CHAIRMAN. The gentleman from Florida has the time.
  Mr. GIBBONS. Please respect that. I respect your time.
  But you insult me, you insult this Congress, you insult the American 
Government when you compare this Government to the Government of Russia 
You ought to be ashamed of yourself.
  Mr. ARCHER. Mr. Chairman, I yield 1 minute to the gentleman from 
Texas [Mr. DeLay].
  Mr. DeLAY. I appreciate the gentleman's yielding time.
  Mr. Chairman, I ask the distinguished ranking member, did he vote for 
Jackson-Vanik or not?
  The gentleman has left the floor. He does not want to answer the 
question. Because I am sure the gentleman as well as many Members of 
this Congress were outraged at the notion that the Soviet Union charged 
their people huge taxes to leave the government that they so despised.
  The problem with people leaving this Government is that the welfare 
state and the taxes charged and the regulations charged in this country 
have forced people to leave.
  Mr. BONIOR. Mr. Chairman, I yield myself 1 minute.
  I address my comments to my friend, and he is my friend from Texas. I 
do so because I really want to set the record straight for those who 
are listening.
  What this issue that we are talking about is all about, there was a 
provision that was brought to this House of Representatives very 
recently, last Thursday, concerning very wealthy individuals in America 
who are renouncing their U.S. citizenship in order to avoid paying 
taxes. As incredible as that may seem, these are the people who used 
the security of this country to gain their wealth, who used the 
workers, the men and women of this country, to gain their wealth.
  When it came time for them to pay their fair share, they said, ``No, 
I am going to renounce my U.S. citizenship so I can avoid paying 
taxes.''
  You know what that cost the American taxpayers over 10 years, 
estimated? $3.6 billion a year. And for my friend from Texas to compare 
that to Jackson-Vanik and what happens with those in Russia who are 
trying to emigrate from Russia, this is just an outrage. There is no 
comparison at all. It is just the opposite.
  I commend my friend, the gentleman from Florida, for taking a strong 
stand on this issue.
  Mr. ARCHER. Mr. Chairman, I yield 1 minute to the gentleman from 
Florida [Mr. Weldon].
  Mr. WELDON of Florida. Mr. Chairman, while Republicans take positive 
steps to reduce the marriage penalty, Democrats are giving America's 
families one more incentive not to stay together. Under their 
substitute, a family making $75,000 can deduct up to $5,000 per year 
for educational expenses. However, a divorced couple or 
[[Page H4303]] an unmarried couple living together, each earning 
$50,000 or $100,000 combined, can deduct up to $5,000 each, or a total 
of $10,000. In other words, Mr. Chairman, Democrats reward families 
that stay together with a $5,000 tax penalty.
  Anti-family policies like this one, simply put, are destructive to 
families and should be rejected. I urge that we vote ``no'' on the 
substitute.
  Mr. BONIOR. Mr. Chairman, I yield 1\1/2\ minutes to the distinguished 
gentleman from Massachusetts [Mr. Neal].
  (Mr. NEAL of Massachusetts asked and was given permission to revise 
and extend his remarks.)
  Mr. NEAL of Massachusetts. Mr. Chairman, let me say at the outset, 
this is a Member on the Democratic side who favored a targeted capital 
gains package, who has been the author with the gentleman from 
California [Mr. Thomas] of the Individual Retirement Account, its tax 
advantage restoration, and who favors the idea of allowing seniors to 
earn and keep more despite Social Security obligations.
  Most of the Members on this side would have voted for those 
provisions tonight if it was not an all-or-nothing package. But let me 
get to the point at hand. The favorite refrain heard on this side of 
the aisle these days is this: I did not write the contract. The second 
most well-heard refrain on this side of the aisle these days is, ``The 
Senate will correct it.''
  Let me say tonight, there are 133,000 students in Massachusetts, and 
I represent an area with some of the finest colleges in America who are 
going to begin to pay a lot more at the end of this contractual day for 
their student loans when this House gets done.
  We had an opportunity in this House to find middle ground on most of 
these issues where most of the Members on both sides rest.
  Don't heed my warning tonight. Heed the warning of George Bush who 
called it voodoo economics. And heed the warning of David Stockman who 
said it was the triumph of politics.
  Let me close on this note. There is one thing that Newt Gingrich, 
Richie Neal, Dick Armey, and Phil Gramm all have in common. We all had 
student loans guaranteed by the Federal Government, and it has paid a 
huge dividend for the American people. Do not deny the next generation 
that same opportunity.
                              {time}  2030

  Mr. ARCHER. Mr. Chairman, I yield 6 minutes to a respected Member, 
the gentleman from California [Mr. Thomas], chairman of the Health 
Subcommittee of the Committee on Ways and Means.
  (Mr. THOMAS asked and was given permission to revise and extend his 
remarks.)
  Mr. THOMAS. Mr. Chairman, the American people in November decided to 
put their trust in our party in this House after 40 years. In large 
part I believe it was because we told them what we were for. We offered 
a contract with the American people. They know what we are for.
  We know what you are against. You have indicated that over and over 
and over. We know what you are against.
  The 2 great parties in this county should be for something. The 
American people know where we are. We have our contract. Let us try to 
determine where the Democrats are.
  Following the November election the President of the United States 
went on television and told the American people, and this is from the 
administration's revenue proposals, Department of the Treasury, it says 
``tax relief for middle class families has been and continues to be an 
important goal of this Administration.'' The proposal: ``A 
nonrefundable tax credit granted for only those children under 13 to 
ultimately reach $500 per child.'' Marvelous new idea. I wonder where 
the President got it?
  When we debated this bill in the Committee on Ways and Means, and the 
Democrats had an opportunity to offer a substitute at the end of the 
debate in the Committee on Ways and Means over our middle-class tax 
proposal, this was the amendment that the Democrats offered. The 
amendment in its entirety as a substitute for our proposal laid out to 
the American people before the election was not what the President said 
he was for. Their amendment as a substitute in toto was one word, one 
word: Insert after section 1 the following new section, section 2, 
``sunset.'' ``It is not that we are against what you are proposing,'' 
the Democrats said in the Committee on Ways and Means, we just do not 
think it ought to be open-ended for the American people. We think it 
ought to be sunsetted, stopped at a given time, should not apply after 
January 1, 2001.
  The President said he has been for a long time for middle-class tax 
relief. The Democrats said, yeah well, it is okay, but sunset it.
  And then we have in front of us tonight the minority leader's 
substitute. Does it look like the President's bill as he said he wanted 
it and as the gentleman from Missouri [Mr. Gephardt] introduced along 
with the gentleman from Florida [Mr. Gibbons] in February called H.R. 
980 which had the middle-class tax cut in it? No. What this proposal 
has in it is one of the most onerous provisions that has ever come to 
this floor.
  We heard the gentleman from Michigan give a representation about this 
business of taxing people because they have decided to give up their 
United States citizenship. Many people in this country are born here 
and get citizenship by birth, others acquire it after birth. It is 
something that you can get, and it has always been something that you 
can give up.
  We have had a law on the books for years that says if you are going 
to give up your citizenship to avoid paying taxes, then there are 
actions that can be taken. That is not what is in the proposal by the 
minority leader, and let me turn to the testimony in the Oversight 
Subcommittee of just a few short days ago when Chairman Johnson, the 
gentlewoman from Connecticut, inquired of the Treasury representative, 
Mr. Guttentag, What is it that you are proposing, how many people have 
given up their citizenship? Mr. Guttentag then went through numbers 
over the last several years, several hundred people. She then said, How 
many of them have given up their citizenship to avoid taxes? The 
representative of the administration of the Department of Treasury 
said, ``We do not know''.
  She then said, ``How in the world can you have a revenue estimate 
about how much money you are going to make if in fact you do not know 
how many people voluntarily gave up their citizenship to avoid taxes?'' 
Listen to the reply of the Administration's representative, and see if 
it is not chilling. ``The Clinton-Gephardt proposal,'' he indicated, 
``does not require an intent to avoid taxes.''
  He said, ``The Administration's proposal does not require an intent 
to avoid taxes.'' The fact that you would have the audacity to decide 
that you were voluntarily giving up your citizenship would result in 
tax penalties and we have heard these Members taking the floor saying 
there is no way you can compare yourself with the Soviet Union. 
Outrageous to do that. The Soviet Union used to make people pay a 
penalty for leaving their country voluntarily. You had to pay through 
the nose.
  We have historically said if you are trying to avoid taxes, then we 
are going to get you. What this proposal says, and which is included in 
the new substitute, is we are going to get you even if it is not to 
avoid taxes.
  We have lost the high moral ground. Do not let this substitute pass 
with this onerous provision.
  Mr. BONIOR. Mr. Chairman, I yield 1\1/2\ minutes to the distinguished 
gentleman from Maryland [Mr. Mfume].
  Mr. MFUME. Mr. Chairman, I said earlier that Ringling Brothers and 
Barnum & Bailey came to town today and put on a great performance of 
elephants and clowns outside of this building, but it does not come 
close to the high wire act that is being performed here by the 
daredevils of the high wire of this legislation who are attempting 
through blue smoke and mirrors to pull a rabbit out of a hat and dangle 
the American taxpayer from the high trapeze bar, suggesting that this 
bill somehow will achieve deficit reduction.
  For the average Federal employee earning $40,000 a year the 
Republican proposal imposes an additional $1,000 in taxes resulting 
from increased contributions to their pension system, and I have yet to 
hear somebody on the 
[[Page H4304]] other side talk about the plight of Federal employees 
regarding this.
  More than half of the tax benefits will go to families with incomes 
between $100,000 and $200,000. Is $200,000 a year middle class? You go 
figure.
  If you earn $100,000 you get $11,000 in tax reductions, but if you 
earn $30,000 you get $124 in tax reductions.
  This bill increases the deficit. It rewards the wealthy, it punishes 
working Americans, and I do not care what people say, when you take 
money out of their pocket, $1,000 per Federal employee, that is a 
punishment.
  So in the end, the difference between last year's Republican rhetoric 
and this year's Republican rhetoric is a matter of Tweedledee and 
Tweedledum. The party that gave us voodoo economics is now giving us 
Robin Hood in reverse. I said it earlier, so let me repeat it for those 
who did not hear. The giant sucking sound we will hear from now on will 
not be NAFTA, it will be AFTA, angry, frustrated Americans who are 
carrying the brunt of this and carrying the biggest weight as a result 
of what I consider to be foolishness on the part of those who have 
designed it.
  Mr. ARCHER. Mr. Chairman, I yield 3 minutes to the gentleman from 
Illinois [Mr. Hastert].
  Mr. HASTERT. Mr. Chairman, I thank the gentleman from Texas for 
yielding me the time.
  Mr. Chairman, I am amazed here to sit and listen to this debate here 
tonight and see how fact and fiction is twisted and turned and twisted. 
I would like to set the record straight.
  First of all, I have a letter here from Abraham Chayes who is a 
professor of law at Harvard University. He says:

       I am writing to express my concern about the current 
     proposal before the U.S. House to impose a tax on persons 
     leaving the United States who renounce their citizenship. I 
     understand this proposal is now in the House in debate. I am 
     the Felix Frankfurther Professor of Law emeritus at Harvard 
     Law School where I teach international law. From 1961 to 
     1964, I was the Legal Adviser to the department of State.
       In my opinion, the proposed expatriation tax raises serious 
     questions under the Constitution and international law 
     involving the fundamental right of voluntary expatriation and 
     immigration. As you may know, the International Law Section 
     of the ABA in its statement of March 8, concluded that the 
     proposed expatriation tax ``may be an illegal restriction on 
     the fundamental right to emigrate.''

  I go on.

       The proposed tax, which applies without regard to the 
     individual's motivation, imposes much more than a nominal 
     penalty on citizens who wish to emigrate. Thus, it has 
     serious human rights implications and is inconsistent with 
     longstanding U.S. policies with respect to the right of free 
     emigration expressed in the Jackson-Vanik Amendment to the 
     Trade Act of 1974.

  And he goes on, and it is signed sincerely, Abraham Chayes, Harvard 
School of Law.
  Mr. Chairman, I include for the Record the letter in its entirety

                                           Harvard Law School,

                                        Cambridge, March 30, 1995.
     Hon. Nancy L. Thompson,
     U.S. House of Representatives,
     Washington, DC.
       Dear Congressman Johnson: I am writing to express my 
     concern about the current proposal in the Senate version of 
     H.R. 831 to impose a tax on persons leaving the United States 
     who renounce their citizenship. I understand this proposal is 
     now in House-Senate conference. I am the Felix Frankfurter 
     Professor of Law emeritus at Harvard Law School where I teach 
     international law. From 1961 to 1964, I was the Legal Adviser 
     to the Department of State.
       In my opinion, the proposed expatriation tax raises serious 
     questions under the Constitution and international law 
     involving the fundamental right of voluntary expatriation and 
     emigration. As you may know, the International Law Section of 
     the ABA in its statement of March 8, concluded that the 
     proposed expatriation tax ``may be an illegal restriction on 
     the fundamental right to emigrate.'' It also appears to 
     burden the constitutionally based right of voluntary 
     expatriation. See Richards v. Secretary of State, 752 F.2d 
     1413, 1422 (9th Cir. 1985).
       The proposed tax, which applies without regard to the 
     individual's motivation, imposes much more than a nominal 
     penalty on citizens who wish to emigrate. Thus, it has 
     serious human rights implications and is inconsistent with 
     long-standing. U.S. policies with respect to the right of 
     free emigration expressed in the Jackson-Vanick Amendment to 
     the Trade Act of 1974 and elsewhere. Indeed, this policy was 
     a centerpiece of our effective opposition to the Soviet Union 
     during the 1970s and 1980s. If the United States now adopts 
     this restrictive approach, it will give oppressive foreign 
     governments an excuse to retain or erect barriers to 
     expatriation and emigration.
       I strongly urge you to protect these important freedoms by 
     rejecting the proposed expatriation tax in the Conference 
     Committee.
           Sincerely,
                                                     Abram Chayes.

  You know, Mr. Chairman, after 40 years of Democrat rule, the people 
need a break from high taxes, higher spending and hyperbole. Last 
November they got that break. They voted in a Republican majority that 
promised change and in this tax bill we have delivered this change.
  I ask for a negative vote on this piece of legislation. The Gephardt 
substitute is not change. It is the same old story. It contains no real 
tax relief for middle-class Americans, it contains no real breaks for 
senior citizens, it contains no incentives for job creation.
  It is as if the Democrats do not really believe that the American 
people have had enough of tax-and-spend politics for the last 40 years.
  Well, I have news for the Democrat leadership. The American people 
are sick and tired of being taxed and spent to death. The Gephardt 
substitute proves a point I have believed for some time. The Democrat 
leadership wants to raise taxes. The Republican Party wants to cut 
taxes. I urge my colleagues on both sides of the aisle to vote against 
the Gephardt substitute and vote for tax fairness and deficit 
reduction.
  Mr. BONIOR. Mr. Chairman, I yield 1\1/2\ minutes to the distinguished 
gentleman from the State of Rhode Island [Mr. Kennedy].
  (Mr. KENNEDY of Rhode Island asked and was given permission to revise 
and extend his remarks.)
  Mr. KENNEDY of Rhode Island. Mr. Chairman, I want to thank the 
gentleman from Michigan for yielding time to me.
  Mr. Chairman, the debate is about students, students and their 
futures. The cost of a college education is rising faster than middle-
income families can afford. In fact, paying for college now ranks 
second only to buying a home as the most expensive investment for the 
average family.
  Last week in my State of Rhode Island, three colleges announced once 
again that they were raising their tuition. In the last 5 years the 
University of Rhode Island has raised tuition 83 percent. Rhode Island 
College and the Community College of Rhode Island tuition has gone up 
67 percent and 66 percent respectively since 1990.
  What makes matters worse, the balance of aid that students have used 
in the past to help them afford these rising costs has shifted. In the 
early 1980s it was 75 percent grants and 25 percent loans. Today, the 
reverse is true. It is 75 percent loans and 25 percent grants.

                              {time}  2045

  And the Republicans now want to eliminate the interest subsidy for 
student loans. That compounds the already difficult problem that 
middle-class families are having in affording an education because of 
the elimination on the deduction on student loans that was put through 
in the 1980's.
  Mr. Chairman, ladies and gentleman of the House, I ask my colleagues 
to support the Gephardt substitute, because the Republicans keep 
talking about jobs, but they are not going to be able to get the high-
paying jobs without a high-skills education that they are going to need 
if they do not go to college.
  Mr. Chairman, the question before us today is what kind of tax relief 
are we going to give to the American people? Are we going to hand out 
huge tax breaks to the wealthiest Americans, open loopholes so big some 
of our most profitable companies will be able to avoid paying any tax 
at all, or are we going to give some help to middle income Americans, 
to young people who are struggling to pay for their education? The 
choice is clear--it is between the past and the future. The Contract 
plan is a return to the failed, unfair policies of the past. The 
Democratic alternative is about investing in our future. It is about 
making sure we have the high skill workers for the high skill, high 
wage jobs of tomorrow.
  Middle income families need the tax relief offered by the Democratic 
alternative. The cost of post-secondary education is rising faster than 
middle income families can afford. In fact, paying for college now 
ranks second only to buying a home as the most expensive investment for 
the average family. Last week, in my State of Rhode Island, three 
different colleges announced once again that they were 
[[Page H4305]] raising their tuition. In the last 5 years the 
University of Rhode Island has raised its tuition 83 percent. At Rhode 
Island College, and the Community College of Rhode Island, tuition has 
gone up 67 percent and 66 percent, respectively since 1990. What makes 
matters worse, the balance of aid that students have used in the past 
to help afford these rising costs has shifted. Fifteen years ago the 
mix of Federal student financial aid was 75 percent grants and 25 
percent loans. In 1995 those figures are reversed. I submit to my 
colleagues, that if the Federal Government does not take some course of 
action, the middle class will soon be shut out of higher education. 
These are the people who need tax relief, not the Fortune 500 singled 
out in the GOP proposal.
  The Republican party offers tax cuts that will send more than 58 
percent of total capital gains tax breaks to those making more than 
$200,000 a year--the top 2.6 percent of all tax fliers. Households 
earning $200,000 would receive an average cut of over $11,000 a year, 
whereas those under $30,000 would receive less than $150 per year. The 
Contract On America tax bill will cost the American people almost $700 
billion over the next 10 years. It is clear what interests the 
Republicans represent.
  Under the Republicans, who is going to pay? Students--our future. 
They give loopholes to the rich and roadblocks to students. Simply put, 
they are standing on the backs of students to support the wealthy. In 
addition to their tax cut, the Republicans plan to severely cut aid to 
students.
  Fact: The GOP is poised to eliminate the interest-deferral on the 
Stafford Loan program. Currently, the interest on the Stafford Loan is 
deferred until 6 months after graduation. Under the Republican plan, 
interest would begin accruing on the loan immediately.
  Fact: By removing the interest deferral, American students will face 
a $9.6 billion increase in the cost of post-secondary education over 
the next 5 years. That's over $4,000 added to the loan repayments for 
each student.
  Fact: The GOP is poised to eliminate the Perkins Loan program. Post-
secondary institutions use the Perkins program to help low income 
students take out low interest loans to pay for college. Eliminating 
this program will add $785 million to the cost of going to college over 
the next 5 years.
  In short, the Republican plan will kill the dream of higher education 
for thousands of middle income students. The Democrats however, have a 
plan that will help that dream come true. The Democratic plan 
identifies our students as our Nation's most precious commodity. It 
helps them achieve their goals by creating incentives to save and 
methods by which students will find it easier to payback their loan 
debts.
  During the last Congress, President Clinton's Direct Lending Program 
took an important step in helping young adults realize their education 
dreams. The Direct Lending program made it easier for students to take 
on the cost of higher education by simplifying the loan process and 
creating new ways for students to payback their loans. Ultimately, 
Direct Lending is a step in the right direction but it falls short of 
easing the burden of paying back the loans. For this reason I 
introduced the Student Loan Affordability Act of 1995. This bill grants 
a deduction for the payment of interest on student loans. Just like 
that provided for mortgage interest. Today, I am proud to say that 
Democratic Leader Gephardt has incorporated this idea into his 
education tax cut plan for the middle class citizens of this country.
  The Democratic alternative is affordable, and does not explode the 
deficit. Moreoever, it does not simply cut taxes, but it represents a 
real investment for the American taxpayer. Last year the Government 
paid out an estimated $2 billion to cover defaulted student loan costs. 
This is money that we can never retrieve and results in higher costs to 
the taxpayers. The Democratic proposal encourages students to work 
within the system, payback their loans, and one day make additional 
investments in the economy.
  I urge my colleagues to vote for the plan that represents real 
savings for the middle class of this country. Eighty-nine percent of 
the American people oppose cuts to student financial aid programs. They 
want their children to pursue higher education and achieve their 
dreams. The Republicans offer a tax cut to the rich and then try to pay 
for it on the backs of students. We can't afford trickle down 2. 
Support the tax cut that invests in our future--not the one which 
repeats the mistakes of the past. Support the plan that opens doors for 
our students--not the plan that shuts them out. Support the Democratic 
substitute and invest in the future of those who will lead America 
tomorrow.
  Mr. BONIOR. Mr. Chairman, I yield 1\1/2\ minutes to the gentleman 
from New Mexico [Mr. Richardson], the distinguished chief deputy whip.
  (Mr. RICHARDSON asked and was given permission to revise and extend 
his remarks.)
  Mr. RICHARDSON. Mr. Chairman, the Democratic substitute is about 
investing in people and education.
  Too many Americans between the ages of 25 and 40 are not able to 
invest extra money or buy a house because they have to repay school 
loans. Our best-educated citizens are handed diplomas and then pushed 
into a huge pool of debt.
  We are bombarded with calls from the private sector to educate a work 
force that can compete in the global arena, yet we are unwilling to 
provide any tax incentives for education. Instead, we offer General 
Motors generous value-added tax writeoffs to guarantee returns on their 
investments.
  Mr. Chairman, the Democratic substitute stands for middle-class 
families, for education benefit, a $10,000 deduction per family for 
education expenses, making student loans deductible, an IRA plan for 
education expenses, education plan savings bond, and it is paid for. It 
is paid for through savings in government reform and closing 
billionaires' loopholes.
  Unlike the Republicans fig leaf, the Democratic tax benefits would 
not be provided until deficit targets have been achieved.
  Mr. Chairman, let us have tax cuts, but let us be responsible. Let us 
pay for them. Let us give them to those Americans that deserve them, 
that have been shouldering the blame and expense for the last 50 years. 
Let us not give it to millionaires and corporations.
  We stand for the middle class, and they are the ones that should 
benefit.
  Mr. BONIOR. Mr. Chairman, I yield 1\1/2\ minutes to the distinguished 
gentleman from Louisiana [Mr. Jefferson].
  Mr. JEFFERSON. Mr. Chairman, I thank the gentleman for yielding time 
to me.
  Mr. Chairman, I wish to rise in support of the Gephardt amendment and 
to voice concern regarding the Republican tax bill.
  One of the immutable principles of tax law is fairness. 
Unfortunately, the only place fairness appears in this Republican tax 
bill is in the title.
  Tax fairness would mean that the so-called reform bill before us 
would benefit not just the privileged few but the majority of American 
taxpayers by providing for an across-the-board set of sacrifices 
shouldered proportionately by every taxpayer based on his or her 
ability to pay. In this regard, with regard to unfairness, the 
Republican tax bill is doubly guilty. First, it pays for the $630 
billion cost on the small shoulders of the most vulnerable Americans, 
our Nation's children, through cuts in programs that support children 
and families.
  Secondly, the Republican bill hands its tax benefits over to the 
wealthiest Americans.
  Finally, it disregards our responsibility to reduce the Federal 
deficit.
  Mr. Chairman, the Gephardt amendment sets things right. It represents 
a more uniform way to help eliminate the current budget deficit. It is 
fair to the middle-class taxpayer and promotes education and savings 
and is overall good for our families, and it will ensure that deficit 
reduction is made before any tax cuts take effect.
  Finally, Mr. Chairman, America needs the Gephardt amendment. It has 
no hidden set of agendas. It singles out no special-interest group. 
Giving tax breaks to the middle class while reducing our deficit, 
keeping intact programs for our children and for the elderly, for 
students, and for families is why Gephardt makes sense.
  I urge you to approve the Gephardt amendment.
  Mr. ARCHER. Mr. Chairman, I yield myself such time as I may consume.
  Mr. Chairman, this body has heard over and over again the programmed 
rhetoric that clearly is assigned to every Democrat Member of the 
House, that the benefits of these taxes go to the wealthy.
  The benefits of these taxes go to senior citizens who have retirement 
income of $34,000. Is that wealthy?
  When we reduce the 85-percent tax on their Social Security benefits 
put on by the Clinton budget in 1993, I say, is that wealthy?
  Seventy-five percent of the child tax credit goes to family income of 
less than $75,000. That can be wage earners. 
[[Page H4306]] Is that wealthy? That is 75 percent. I say, is that 
wealthy?
  Adoption tax credits go to all taxpayers up to a limited amount. Is 
that wealthy. No. It is not.
  The overwhelming majority of the tax benefits in this bill go to 
working Americans who are not wealthy.
  Mr. Chairman, I reserve the balance of my time.
  Mr. BONIOR. Mr. Chairman, I yield 1 minute to the distinguished 
gentleman from New Jersey [Mr. Menendez].
  (Mr. MENENDEZ asked and was given permission to revise and extend his 
remarks.)
  Mr. MENENDEZ. Mr. Chairman, it is clear everyone here would like to 
be able to pass a tax cut, but with a deficit looming, tax cuts cannot 
simply be distributed as free gifts that have no costs. The costs hang 
on all of our necks as an albatross until the deficit has been brought 
under control.
  Cuts, if any, should be given to those in need, and clearly families 
earning the median income, in my district, as an example, are in need. 
We can help them with the Gephardt substitute.
  The tax cuts in the Republican bill would be paid for by putting 
families in my district out on the street when their public housing 
crumbles from neglect and by snatching away hot lunches from their 
children. In return, the bill affords them an average tax cut of $10 a 
month, $10 a month.
  By contrast, families earning $200,000 or more will reach nearly 
$1,000 a month in cuts. Mr. Chairman, that is clearly a raw deal.
  And as for seniors, if they are going to lose their housing, senior 
housing repairs, their security patrols, their home energy assistance, 
their Medicaid being slashed, that is not a good deal for them either.
  The family vote, the 13th District vote in New Jersey, the one that 
makes sense and does not hang on the deficit is the Gephardt 
substitute.
  Mr. BONIOR. Mr. Chairman, I yield 1\1/2\ minutes to the distinguished 
gentleman from Pennsylvania [Mr. Klink].
  Mr. KLINK. Mr. Chairman, we have often heard those who do not learn 
from history are doomed to repeat it. Usually there is a lot more time 
that passes than just 14 years.
  But for those of us that remember 1981 and that famous Reagan tax cut 
that was going to bring us all prosperity, that trickle-down economics, 
we remember later that David Stockman said it was a Trojan horse just 
designed to bring down the top rate. I would suggest, if that was a 
Trojan horse, then the Republican tax cut bill we are faced with 
tonight is a Trojan elephant.
  I can remember the results in the Pittsburgh area and much of the 
industrial Northeast of trickle-down economics. I remember standing 
outside plant gates when plants were shutting down and tens of 
thousands of workers were put out in the street. Now we are coming back 
for a second bite. We have got a tax-reduction bill that they are 
calling that in my State of Pennsylvania will cause 343,000 college 
students to pay more for college loans, that will cause 473 school 
districts across Pennsylvania to lose money for safe schools and drug-
free schools, that will cause 68,000 Pennsylvania kids to lose summer 
jobs. That is what the Republican proposal is about. It is about 1 
million kids in Pennsylvania that will lose their school lunches. It is 
about 311,000 Pennsylvania senior citizens that will not get help 
paying their electric bill and may have to freeze and may have to make 
some hard choices.
  This is not about a Republican tax break. This is about a Republican 
rape of the poor and the middle class in order to reward the wealthy.
  Mr. BONIOR. Mr. Chairman, I yield 1 minute to the distinguished 
gentleman from New York [Mr. Engel].
  Mr. ENGEL. Mr. Chairman, I rise in strong support of the Gephardt 
bill which embraces middle-class values and middle-class families.
  While the Republicans are trying to cut and eliminate student loans, 
this bill will enable more middle-class college students to go to 
college.
  You know, it reminds me of Robin Hood; at least, Robin Hood stole 
from the rich to give to the poor. This steals from the poor and the 
middle class to give to the rich, and let us call it the way it is.
  This Gephardt substitute is the only substitute or amendment that was 
allowed. The Republicans would not allow any other amendments, because 
they know that it would pass.
  What I would like to know is how 102 of my Republican colleagues can 
sign a letter saying no tax breaks for the wealthy and they just fold 
under the Speaker's juggernaut, how 30 Members on the other side of the 
aisle, 30 Republican Members, say there must be deficit reduction 
before there are tax cuts, and then they just fold and vote for the 
rule and vote for the bill.
  This bill says all tax breaks, this substitute, all tax breaks are 
revoked if deficit targets are not met. That is what we should do.
  And look how we are beating up on Federal workers. It is bad enough 
we have no respect for ourselves apparently. But why beat up on the 
Federal workers? I guess if you are wealthy and you are millionaires, 
it does not matter. But most of America is not.
  Support the Gephardt substitute. It helps the middle class.
  Mr. ARCHER. Mr. Chairman, I yield 1 minute to the gentleman from 
Pennsylvania [Mr. Walker].
  Mr. WALKER. Mr. Chairman, the real truth is that Democrats do not 
like this bill because Democrats like to tax nearly everything, and 
they love taxes.
  And I found just an absolutely fascinating quote from a senior member 
of the Democratic Party who was on the floor last night speaking to us, 
and the gentleman gives us a quote here that I think is absolutely 
fascinating. He is prepared to tax the air we breathe.
  Let me quote to you from what he says. He says,

       Technology has brought us to this point. The technology was 
     produced by the genius of people over many, many years, but 
     it has brought us to the point where suddenly the atmosphere 
     above or heads is valuable. It is worth a great deal of 
     money. Let us find a way to tax that for the benefit of all 
     Americans. That is just one of the taxes.

  That is right, Democrats have suddenly realized they may be able to 
tax the air we breathe. No wonder they do not want tax cuts. They want 
more taxes.
  Mr. BONIOR. Mr. Chairman, I yield such time as he may consume to the 
gentleman from Texas [Mr. Coleman].
  (Mr. COLEMAN asked and was given permission to revise and extend his 
remarks.)
  Mr. COLEMAN. Mr. Chairman, I rise in opposition to the tax, cutting 
off the air we breathe.
  Mr. Chairman, I rise to state my strong opposition to the Republican 
tax cut bill that is being considered today.
  Mr. Chairman, this bill will increase interest payments on the 
national debt and shackle our economy. It will add to the mountain of 
debt which our children will inherit.
  There are a few popular tax benefits in the Republican plan, namely 
the tax credit for children, the repeal of the marriage tax, the 
capital gains tax cut, and the raising of the earnings limit for 
elderly Americans. I only regret that they are attached to such a bad 
bill.
  I do believe that American families deserve tax relief. The tax 
credit for children is a laudable goal. I also believe that the 
marriage penalty in our current tax laws is something that we should 
eliminate. Current law adds a disincentive for couples to stay together 
and become contributors to American society. I was a cosponsor of 
various measures in the last Congress which would have rectified this. 
I also support a capital gains tax cut because I believe, and studies 
show, that it spurs economic growth, especially in depressed areas. But 
this cut at this time is a mistake. Finally, I also believe that the 
earnings limit on elderly Americans should be raised. I have supported 
these provisions before and will gladly do so again.
  However, these popular segments far from balance the massive cost of 
this tax package, $189 billion in spending cuts over 5 years. During 
this time of high deficits, we cannot continue to add to the debt. Our 
children will suffer later when they will be forced to pay for our 
spending. In addition, working families will bear the brunt of these 
cuts needed to pay for the wealthy's tax breaks.
  This bill is like a hand grenade with the pin pulled out. While it 
gives away almost $189 billion in the first 5 years, the Treasury 
Department estimates it will actually cost $630 billion over a 10-year 
period. That will be a true explosion.
  Mr. Chairman, the tax cuts the bill calls for mainly benefit the 
rich. A Treasury Department study shows that a working family making 
between $30,000 and $50,000 a year would receive $569 in tax relief 
under this bill. This 
[[Page H4307]] pales in comparison to the $11,266 in tax relief the 
legislation gives to a family with an income over $200,000. The 
Treasury Department also estimates that corporations and only the top 
12 percent of the wealthiest
 taxpayers would get more than half of the tax break. Seventy-six 
percent of the $31 billion, 5-year cost of the capital gains tax cut 
would go to families making over $100,000. In my district these 
families are not considered middle class, Mr. Chairman.

  This bill is also tough on Federal employees numbering about 30,000 
in the El Paso area, which I represent. This bill will increase the 
payroll withholding for older Federal employees by 33 percent and for 
newer Federal employees by 313 percent. Under this legislation, middle-
class Federal employees will pay an additional $905 in taxes to receive 
$125 in tax cuts.
  The Republicans failed to obtain approval of this retirement 
contribution change in the committee of jurisdiction; the Government 
Reform and Oversight Committee. Thus, they subverted the legislative 
process and inserted this change in the Rules Committee. The 
leadership's promises to address this in later legislation is simply a 
fig leaf that we have seen before such as the lock-box/deficit-
reduction mechanism in the welfare reform debate.
  There are other ways in which middle- and low-income working families 
will pay if we enact this bill. For example, there will be large cuts 
in the welfare system and in nutrition programs which will 
significantly reduce benefits of 2.8 million needy families by the year 
2000 according to the CBO; and higher Medicare costs will be borne by 
millions of older Americans.
  I also want to remind my colleagues of the illustrative list of 
spending cuts released by Budget Committee Chairman Kasich the other 
day for the express purpose of paying for today's tax cuts. As you 
know, the Budget Committee reported legislation that cuts discretionary 
spending by $100 billion over the next 5 years (H.R. 1219). Yet, these 
suggested cuts do not even cover the $189 billion cost of this tax cut 
bill. Again, these cuts are aimed at working American families. These 
include; elimination of the Low Income Heating Program [LIHEAP], 
elimination of many job training programs including those aimed at 
displaced workers like the Trade Adjustment Assistance and NAFTA 
Adjustment Assistance, elimination of summer youth jobs programs, 
reduced funding for school-to-work programs and Goals 2000, elimination 
of Federal efforts in vocational and adult education, elimination of 
the Legal Services Corporation, elimination of PBS, and repealing the 
Davis-Bacon Act.
  Even more, these illustrative cuts include several programs that are 
cut or eliminated in the 1995 rescission bill. This means the cuts 
already made in the rescission package are not available to meet the 
new $100 billion cut. Therefore, this is double-counting, Mr. Chairman. 
Like Reagan-era budget wizards of yesteryear the other party is once 
again engaging in funny math.
  Under the Republican tax cut bill, these cuts will only be used to 
pay for the tax benefits going to mostly upper income Americans and the 
business community. The proposed spending reductions do nothing to 
reduce the Federal deficit. That means additional and even deeper cuts 
will come later in the year.
  Mr. Chairman, the American people are looking at the Congress today 
and they see two incongruous goals: tax cuts and reducing the deficit. 
They have been rightly critical of Congress in the last few years. We 
must reject this bill because of the mixed message we continue to send 
to the American people.
  In the 103d Congress, the Democrats and the President put before the 
American people tough and painful choices that were necessary to reduce 
the deficit. We imposed tough spending and entitlement caps. As a 
result, we will reduce the annual deficits of 1994-95 by more than $600 
billion over 5 years. The economy has responded to our medicine by 
giving us one of the largest post WWII expansions in history. Some say 
the Democrats paid a high price for what we did in last November; if 
so, then so be it. Our country is better for it.
  Finally, Mr. Chairman, the actions we are taking by approving this 
tax cut plan will send shudders around world financial markets. The 
dollar continues its downward slide. Americans are still uneasy about 
the future. Approval of this tax cut bill could send our economy into a 
tailspin.
  Mr. Chairman, this is not the jewel our Speaker constantly refers to, 
but rather fools gold. This represents a return to the failed supply-
side economics of Ronald Reagan--trickle-down economics. Well, Mr. 
Chairman, America has been trickled on quite enough. I urge my 
colleagues to resist this invitation to fiscal and economic disaster. 
Oppose the Republican tax cut bill.
  Mr. BONIOR. Mr. Chairman, I yield 1 minute to the distinguished 
gentleman from Maine [Mr. Baldacci].
  (Mr. BALDACCI asked and was given permission to revise and extend his 
remarks.)
  Mr. BALDACCI. Mr. Chairman, I support the Gephardt substitute which 
provides $31.6 billion in tax relief to American families earning 
primarily between $20,000 and $85,000 per year, and encourages 
investments in education and training to strengthen our economy. This 
is a responsible, fully paid for, and carefully targeted plan, and I 
applaud the efforts of the Democratic leader in bringing this to the 
House today.
  I am opposed to the underlying deficit-busting tax legislation 
proposed by our Republican colleagues. It hurts middle- and low-income 
families, businesses, many States, and children. It benefits the 
wealthiest Americans instead of those who need relief the most. It 
costs too much and will likely add billions to our Nation's deficit and 
debt.
  H.R. 1215 is simply another tax giveaway for the well-off. Under this 
legislation, households earning $200,000 a year would receive an 
average tax cut of $11,266, while those earning under $30,000 a year 
would receive on average only $124. This is patently unfair.
  H.R. 1215 hurts middle- and low-income American families. They are 
unlikely to see any significant benefits from the bill's provisions. In 
fact, because the bill's centerpiece--a $500 tax credit for each 
child--is nonrefundable, it is estimated that 24 million children would 
not qualify for the credit because their families' income is too low to 
have any tax liability.
  Contrary to our colleagues' claims, this bill will not necessarily 
help small business. In fact, because this plan may lead to increases 
in interest rates, the plan may in fact hurt small businesses. Higher 
interest rates make the loans needed for expansion, upgrading 
equipment, or making other infrastructure improvements more expensive 
for businesses.
  H.R. 1215 will hurt the States. Many States, including Maine, use 
Federal adjusted gross income to calculate taxable income for State 
income tax purposes. Unless States cease to conform to Federal 
depreciation and capital gains provisions, they will be faced with 
enormous revenue losses. In Maine, those losses are estimated to be 
$370 million. It is ironic that this legislation is offered by the 
party that also offered legislation to curb unfunded mandates. This is 
just another example of how some of our colleagues are willing to say 
one thing and then do another for the sake of political expediency.
  Finally, H.R. 1215 will hurt our children, our Nation's most precious 
natural resource. The bill uses savings achieved at the expense of 
schools lunches, WIC, and other programs which benefit children to help 
fund tax breaks for those earning more than $100,000. This bill will 
lead to cuts in student financial aid, public housing, and education.
  Moreover, this bill is a budget-buster. The Congressional Budget 
Office estimates that it will cost our country $630 billion over the 
next 10 years. The proposed spending cuts don't even come close to 
paying for this cost explosion. The result, or course, will be even 
higher deficits and debts. Once again, we are mortgaging our children's 
future.
  Mr. Chairman, H.R. 1215 is irresponsible. It fails to target the 
families that have been overburdened by taxes for too long. Instead, it 
gives tremendous tax breaks to wealthy Americans and to corporations. 
It hurts middle- and low-income families, small businesses, the States, 
and our children. It ignores our deficit and debt, and explodes in cost 
after 5 years.
  We need tax relief. But we need responsible, targeted tax relief. I 
urge my colleagues to support the Gephardt substitute, and to vote down 
the Republican alternative which threatens to balloon our Nation's 
deficits and make it much harder to ever balance the Federal budget and 
get our fiscal house in order.
  Mr. BONIOR. Mr. Chairman, I yield 1 minute to the distinguished 
gentleman from Kentucky [Mr. Ward].

                              {time}  2100

  Mr. WARD. Mr. Chairman, earlier today I heard a supporter of this 
unfair tax bill say that, no, they were not really cutting school loan 
programs. Why he said with a straight face, a straight face, that a 
person could take their $500 tax break that is being given, put it in a 
savings account that is going to be created with this bill. They say, 
``Take that $500 and have $14,000--$14,000 are waiting.''
  [[Page H4308]] I could not understand it. Well, it was $14,000, 18 
years after they put that money in the bank.
  Well, I told that to a high school senior from my State today, and he 
just laughed at me. He said, ``You know, it's going to cost $8,000 next 
year just to go to the University of Kentucky for 1 year.''
  He said, Mr. Chairman, it is going to cost over $8,000 to attend the 
University of Kentucky for 1 year, so in 18 years $14,000 is not going 
to do a thing for them.
  Mr. Chairman, that is why this bill is wrong. I urge its defeat.
  Mr. BONIOR. Mr. Chairman, I yield such time as she may consume to the 
gentlewoman from Texas [Ms. Jackson-Lee].
  (Ms. JACKSON-LEE asked and was given permission to revise and extend 
her remarks.
  Ms. JACKSON-LEE. Mr. Chairman, I rise to support a real tax bill, one 
that in fact saves student loans, and I support the Gephardt bill.
  Mr. ARCHER. Mr. Chairman, I make the point of order that a quorum is 
not present.
  The CHAIRMAN. Evidently a quorum is not present.
  Members will record their presence by electronic device.
  The call was taken by electronic device, and the following Members 
responded to their names:

                             [Roll No. 291]

     Abercrombie
     Ackerman
     Allard
     Andrews
     Archer
     Armey
     Bachus
     Baesler
     Baker (CA)
     Baker (LA)
     Baldacci
     Ballenger
     Barcia
     Barr
     Barrett (NE)
     Barrett (WI)
     Bartlett
     Barton
     Bass
     Bateman
     Becerra
     Beilenson
     Bentsen
     Bereuter
     Bevill
     Bilbray
     Bilirakis
     Bishop
     Bliley
     Blute
     Boehlert
     Boehner
     Bonilla
     Bonior
     Bono
     Borski
     Browder
     Brown (CA)
     Brown (FL)
     Brown (OH)
     Brownback
     Bryant (TN)
     Bunn
     Bunning
     Burr
     Burton
     Buyer
     Callahan
     Calvert
     Camp
     Canady
     Cardin
     Castle
     Chabot
     Chambliss
     Chenoweth
     Christensen
     Chrysler
     Clay
     Clayton
     Clement
     Clinger
     Clyburn
     Coble
     Coburn
     Coleman
     Collins (GA)
     Collins (IL)
     Collins (MI)
     Combest
     Condit
     Conyers
     Cooley
     Costello
     Cox
     Coyne
     Crane
     Crapo
     Cremeans
     Cubin
     Cunningham
     Davis
     de la Garza
     Deal
     DeFazio
     DeLauro
     DeLay
     Dellums
     Deutsch
     Diaz-Balart
     Dickey
     Dicks
     Dingell
     Dixon
     Doggett
     Dooley
     Doolittle
     Dornan
     Doyle
     Dreier
     Duncan
     Dunn
     Durbin
     Edwards
     Ehlers
     Ehrlich
     Emerson
     Engel
     English
     Ensign
     Eshoo
     Evans
     Everett
     Ewing
     Farr
     Fattah
     Fawell
     Fazio
     Fields (LA)
     Fields (TX)
     Filner
     Flake
     Flanagan
     Foglietta
     Foley
     Forbes
     Ford
     Fowler
     Fox
     Franks (CT)
     Franks (NJ)
     Frelinghuysen
     Frisa
     Frost
     Funderburk
     Furse
     Gallegly
     Ganske
     Gejdenson
     Gekas
     Gephardt
     Geren
     Gibbons
     Gilchrest
     Gillmor
     Gilman
     Gonzalez
     Goodlatte
     Goodling
     Gordon
     Goss
     Graham
     Green
     Greenwood
     Gunderson
     Gutierrez
     Gutknecht
     Hall (OH)
     Hall (TX)
     Hamilton
     Hancock
     Hansen
     Harman
     Hastert
     Hastings (FL)
     Hastings (WA)
     Hayes
     Hayworth
     Hefley
     Hefner
     Heineman
     Herger
     Hilleary
     Hilliard
     Hinchey
     Hobson
     Hoekstra
     Hoke
     Holden
     Horn
     Hostettler
     Houghton
     Hoyer
     Hunter
     Hutchinson
     Hyde
     Inglis
     Istook
     Jackson-Lee
     Jacobs
     Jefferson
     Johnson (CT)
     Johnson (SD)
     Johnson, E. B.
     Johnson, Sam
     Johnston
     Jones
     Kanjorski
     Kaptur
     Kasich
     Kelly
     Kennedy (MA)
     Kennedy (RI)
     Kennelly
     Kildee
     Kim
     King
     Kingston
     Klink
     Klug
     Knollenberg
     Kolbe
     LaFalce
     LaHood
     Lantos
     Largent
     Latham
     LaTourette
     Laughlin
     Lazio
     Leach
     Levin
     Lewis (CA)
     Lewis (GA)
     Lewis (KY)
     Lightfoot
     Lincoln
     Linder
     Lipinski
     Livingston
     LoBiondo
     Lofgren
     Longley
     Lowey
     Lucas
     Luther
     Maloney
     Manton
     Manzullo
     Markey
     Martinez
     Martini
     Mascara
     Matsui
     McCarthy
     McCollum
     McCrery
     McDade
     McDermott
     McHale
     McHugh
     McInnis
     McIntosh
     McKeon
     McKinney
     McNulty
     Meehan
     Meek
     Menendez
     Metcalf
     Meyers
     Mfume
     Mica
     Miller (CA)
     Miller (FL)
     Mineta
     Minge
     Mink
     Moakley
     Molinari
     Mollohan
     Montgomery
     Moorhead
     Moran
     Morella
     Murtha
     Myers
     Myrick
     Nadler
     Neal
     Nethercutt
     Neumann
     Ney
     Norwood
     Nussle
     Oberstar
     Obey
     Olver
     Ortiz
     Owens
     Packard
     Pallone
     Parker
     Paxon
     Payne (NJ)
     Payne (VA)
     Peterson (FL)
     Peterson (MN)
     Petri
     Pickett
     Pombo
     Pomeroy
     Porter
     Portman
     Poshard
     Pryce
     Quillen
     Quinn
     Radanovich
     Rahall
     Ramstad
     Rangel
     Reed
     Regula
     Richardson
     Rivers
     Roberts
     Roemer
     Rogers
     Rohrabacher
     Ros-Lehtinen
     Rose
     Roth
     Roukema
     Roybal-Allard
     Royce
     Rush
     Sabo
     Salmon
     Sanders
     Sanford
     Sawyer
     Saxton
     Scarborough
     Schaefer
     Schiff
     Schroeder
     Schumer
     Scott
     Sensenbrenner
     Serrano
     Shadegg
     Shaw
     Shays
     Shuster
     Sisisky
     Skaggs
     Skeen
     Skelton
     Slaughter
     Smith (MI)
     Smith (NJ)
     Smith (TX)
     Smith (WA)
     Solomon
     Souder
     Spence
     Spratt
     Stearns
     Stenholm
     Stockman
     Stokes
     Studds
     Stump
     Stupak
     Talent
     Tanner
     Tate
     Tauzin
     Taylor (MS)
     Taylor (NC)
     Tejeda
     Thomas
     Thompson
     Thornberry
     Thornton
     Thurman
     Tiahrt
     Torkildsen
     Torres
     Torricelli
     Towns
     Traficant
     Tucker
     Upton
     Velazquez
     Vento
     Visclosky
     Volkmer
     Vucanovich
     Waldholtz
     Walker
     Walsh
     Wamp
     Ward
     Waters
     Watt (NC)
     Watts (OK)
     Weldon (FL)
     Weldon (PA)
     Weller
     White
     Whitfield
     Wicker
     Williams
     Wilson
     Wise
     Wolf
     Woolsey
     Wyden
     Wynn
     Yates
     Young (AK)
     Young (FL)
     Zeliff
     Zimmer

                              {time}  2118

  The CHAIRMAN. Four hundred sixteen Members have answered to their 
names, a quorum is present, and the Committee will resume its business.
  The gentleman from Michigan [Mr. Bonior] has 7 minutes remaining, and 
the gentleman from Texas [Mr. Archer] has 8 minutes remaining.
  The Chair recognizes the gentleman from Michigan [Mr. Bonior].
  Mr. BONIOR. Mr. Chairman, I yield such time as he may consume to the 
gentleman from New York [Mr. Owens].
  (Mr. OWENS asked and was given permission to revise and extend his 
remarks.)
  Mr. OWENS. Mr. Chairman, I rise in strong opposition to H.R. 1215 and 
in support of the Democratic substitute.
  Mr. Chairman, last weekend, we moved our clocks forward to begin 
daylight savings time. I was shocked that the Republicans allowed that 
to occur. After watching the action in this chamber for the past three 
months, I thought that our clocks only moved backward.
  Today, the Republican leadership brings to the floor yet another bill 
that takes us back in time. H.R. 1215 takes us back to the 1980's when 
Reagan-Bush policies created a huge chasm between the rich and poor. 
This bill sets out to make that gap even wider and drive a wedge 
between the ``haves'' and ``have-nots'' of our society.
  ``Republican tax fairness'' is as much an oxymoron as ``you have to 
be cruel to be kind.'' In the name of deficit reduction, House 
Republicans have slashed programs serving the nation's most needy by 
$76 billion, while preparing to dish out $189 billion in tax breaks, 
mostly to the nation's wealthiest Americans.
  Releasting $189 billion to the American people would not be so bad if 
it were done equitably, but equity and this bill are far from 
synonymous. The average tax cut for the top 1% of income-earning 
families would be $20,362 under the Republican proposal. But for 
families in the bottom one-fifth, the average tax cut would be a mere 
$36. So while wealthy families are out purchasing expensive, foreign 
cars, poor families will be buying a couple of tanks of gas.
  The Republican bill also takes us back to the early 1980's when giant 
corporations were tax freeloaders. Through massive corporate 
depreciation loopholes and the repeal of the corporate ``alternative 
minimum tax,'' H.R. 1215 would guarantee that more than half of the 
largest companies in America would pay no taxes at all, just as they 
did prior to enactment of the 1986 tax reform package.
  Additionally, Republicans are leading us in the wrong direction on 
capital gains tax policy. Capital gains already enjoy preferential 
treatment--a lower rate than earned income. That sends a message to 
hard-working Americans trying to move up the economic ladder that we 
value the small minority of people who own most of the nation's wealth 
more than we value the large majority of people who work at back-
breaking jobs for barely a living wage. Mr. Speaker, that is the wrong 
message.
  Instead, we should be rewarding people who earn their income through 
hard work the most while rewarding those who earn their income 
passively the least; for the latter group already owns the wealth they 
need to take care of themselves--they are already at the top of the 
economic ladder.
  I have a bill that would lead us in this direction, the right
   direction. H.R. 538, the ``Citizens' Tax Relief Act of 1995,'' would 
lower the first income tax bracket from 15 percent to 
[[Page H4309]] 12.5 percent, giving every American a tax cut. To pay 
for it, a huge tax loophole would be eliminated--the favorable tax 
treatment of inherited property. To be equitable, the bill also would 
exempt from taxes the first $250,000 of capital gains on the sale of 
inherited homes (which is currently available only to individuals over 
the age of 55 and only for the first $125,000) and provide lower 
capital gains tax rates on the inherited property of heirs who pay the 
tax in the first four years after enactment of the bill.
  Currently, when a person dies and leaves property to a family member, 
the amount by which that property increased in value during the 
person's lifetime is never taxed. Such a policy is fundamentally unfair 
considering that if the same person sells the property before dying, 
the individual is taxed on the gain. My bill would reverse that policy.
  A study conducted by two Cornell University professors showed that 
more than $10 trillion worth of property will be inherited over the 
next 45 years. That means that there will be several trillion dollars 
of capital gains that should be taxed. If Congress takes advantage of 
this opportunity, we would have more than enough money to pay for my 
proposed tax cut, so that the bill actually would increase the revenues 
of the federal government. With the money left over, we could invest in 
job creation and job training programs so that every American who is 
willing and able to work would have the opportunity to do so.
  H.R. 1215 and other Republican proposals do very little to create 
jobs for those who need them. In fact, the combination of tax cuts and 
budget cuts is proving to be a one-two punch for America's poor. The 
bottom 26 percent of families who have incomes below $20,000 a year 
would receive less than 2 percent of the Republican tax cut benefits. 
Meanwhile, most of the budget reductions proposed by House Republicans 
have been in programs targeted to the poor. These reductions are only a 
small fraction of those needed to balance the budget over the next 7 
years, which means that more bitter pills are on their way.
  Republicans have offered nothing to poor and working class Americans 
this session and have taken much away. Now they are proposing to make 
federal employees pay, on average, an additional $905 a year to 
participate in the federal retirement program. That will effectively 
wipe out any benefit federal employees might have received from the tax 
cut.
  Republicans, however, have offered sweetheart tax deals to the 
wealthiest corporations and sweetheart tax breaks for the wealthiest 
individuals. One of these individuals is Rupert Murdoch, a special 
friend of the Speaker of the House. The Republican leadership made sure 
that tax incentives for media conglomerates to sell broadcasting 
properties to minorities were eliminated from the law, but at the same 
time made sure that Rupert Murdoch's $150 million deal was untouched.
  Mr. BONIOR. Mr. Chairman, I yield myself such time as I may consume.
  Mr. Chairman, some day when historians look back on the first 100 
days of this Congress, I think they may borrow that phrase from Charles 
Dickens, ``It was the best of times, it was the worst of times.'' If 
you are a Fortune 500 company looking for a big tax cut, if you are a 
billionaire Benedict Arnold sitting on a Caribbean beach, if you are a 
Rupert Murdoch sitting pretty with a $38 million tax break, it is the 
best of times, because the Republicans are looking out for you.
  But if you are a kid looking for a school lunch, if you are a senior 
looking for a little heating assistance, if you are a student looking 
for a school loan, it may be the worst of times, because you are not 
part of the Gingrich revolution.
  Time and time again this past 6 months we have heard Republicans talk 
about renewing American civilization. We have heard our Speaker talk 
about renewing American civilization. But they do not seem to 
understand that you cannot renew American civilization by taking Big 
Bird from a 5-year-old, school lunch from a 10-year-old, summer jobs 
from a 15-year-old, school loans from a 20-year-old, in order to pay 
for a tax cut for the privileged few in our society. And that is 
exactly what this bill that we will be voting on tonight does. And 
everybody knows it.
  I say to my Republican friends, do not come to this floor tonight and 
tell us this is not a tax bill for the wealthy, because 106 Members of 
your own caucus signed a letter that said it was a tax bill for the 
wealthy. It was not a Democrat who said, ``Most people in my district 
do not consider someone making over $200,000 a year middle class.'' 
That, my friends, was a Republican.
  Now, this bill operates under the old Republican theory that the best 
way to feed the birds is to give more oats to the horses. And do not 
tell us you are looking out for the next generation either, because you 
cannot save the children of the next generation by punishing the 
children of this generation.
  Now, Republicans have come to the floor all afternoon and all evening 
and they kept saying they are making history today. But I say they are 
repeating history. I was here in 1981. I was here in 1981, when one of 
the worst votes of the history of this country were cast. Republicans 
came to the floor back then and said they had this magic solution. We 
are going to cut taxes. We are going to increase defense spending, and 
magically we are going to balance the budget.
  Well, we know what happened. The rich got richer, the poor got 
poorer, the middle class got squeezed, and the deficit exploded. And 
now Republicans are ready to do it all over again, and once again when 
we ask for the details, all they say is ``Trust us. Trust us.''
  Well, fool me once, shame on you; fool me twice, shame on me. It is 
no secret why the polls are telling you do not do this tonight. The 
American people will not be fooled again. Newt Gingrich calls this bill 
the crown jewel of the contract. Well, it may be the crown jewel for 
the wealthy, but for the rest of America it is nothing but fool's gold.
  Mr. Chairman, let us do something today for middle class families for 
a change. Do you realize that since we began working on this contract, 
we have met for nearly 100 days, we have cast about 250 votes, we have 
not adopted one amendment that deals with jobs, one amendment that 
deals with income, one amendment
 that deals with health care, one amendment that deals with education, 
one amendment that deals with job training. Not one. Let us do 
something that targets the middle class for a change, 100 percent. 100 
percent of the benefits in the Gephardt substitute go to working middle 
class families. It will help them send their kids to school, it will 
not cut student loans, it will let them deduct student loans. And, 
above all, it will help parents save for their children's education.

  Mr. Chairman, this debate really comes down to one very simple 
question: Whose side are you on? Are you on the side of middle class 
families, or are you on the side of the privileged few? And if you 
think the problem in America is that the wealthy need more tax breaks, 
then vote against this substitute. But if you really want to do 
something to help middle income families in this country and make this 
country stronger, I urge my colleagues, vote for the Gephardt 
amendment, and give the next generation a fighting chance.

                              {time}  2130

  Mr. ARCHER. Mr. Chairman, to close on the substitute, I yield the 
balance of my time to the gentleman from Texas [Mr. Armey], the 
majority leader.
  Mr. ARMEY. I thank the gentleman for yielding me the time.
  Mr. Chairman, we are not passing this tax relief bill tonight because 
it is in the Contract With America. It is in the Contract With America 
because it is needed by the American people.
  When we wrote the Contract With America, we said we agree with the 
American people that the Federal Government is too big and takes too 
much of their hard-earned money. The average family today pays more in 
taxes than it does in food, shelter, and clothing combined. Most 
households have a second wage earner not to support the family but to 
support the government.
  Mr. Chairman, starting today, relief is on the way. Mr. Chairman, we 
have relief for the families, relief for the elderly, relief for the 
small business entrepreneur, relief for savers, and relief for 
investors.
  Mr. Chairman, there are many provisions in this bill that do not get 
much attention, but they make real differences in the lives of real 
people. There is, for example, in this bill an adoption tax credit to 
make it easier for loving couples to provide homes
 for precious children.

  There is an IRA for education, medical expenses, first-time home 
purchases and retirement, and it is available to the work-at-home 
parent as well.
  [[Page H4310]] Our bill has a tax credit for families who take care 
of their elderly parents at home. It has a home office deduction so 
more people can work at home and spend more time with their children.
  This tax relief will benefit all Americans just like the capital 
gains tax cut will, despite the tired class warfare rhetoric we have 
heard today.
  Let me explain what capital gains means to a working American, as 
told to me by a machinist on the plant floor in Irving, Texas.
  When he showed me his new machine with which he worked, he said, 
``Congressman, with this machine I can do better work. I can reach 
higher levels of tolerance than I've ever done before. I produce a 
better quality, and we have more satisfied customers. My productivity 
goes up, and my wages have gone up.''
  He said, ``Congressman, this machine cost $1 million. I could work 
all my life and not buy this machine. And I appreciate those savers who 
made that money available so that machine can be there and I can have 
my job.''
  When we reduce the cost of capital and reward savers so more 
investments are made and more people have more and better jobs, the 
economy will grow, and we will receive more tax revenue. I don't care 
what the scorekeepers say.
  Mr. Chairman, for too long we have been taking too much money away 
from working Americans and sending it to Washington. It is time tonight 
that we send more of that money back to working Americans.
  It is time to shift decisions away from the hallowed halls of 
Washington and back to the more hallowed kitchen tables of America. It 
is time for us to vote for our constituents, vote for the real families 
in their real homes back in our real America, vote against the Gephardt 
substitute and vote the Contract tax provision. Then we will come back 
and we will, in fact, give America a real balanced budget that really 
gets there without touching Social Security.
  Mr. Chairman, I, too, have read Dickens. When we are done doing all 
of this for the children of America, they, too, like Pip, can have once 
again in America great expectations.
  Mr. REED. Mr. Chairman, I rise in support of the Gephardt education 
tax deduction legislation and in strong opposition to the ill-conceived 
Republican tax bill.
  I am opposed to the Contract on America tax bill because it is a 
return to the failed policies of the 1980's, it provides much for the 
well-to-do and little for the middle-class, and it will massively 
increase the deficit. It is also interesting to note that this tax cut 
bill actually would raise taxes on Federal workers.
  In the 1980's the American people were told that tax cuts for the 
wealthy would trickle down to the average American. They didn't. The 
American people were also told that the deficit would be cut. Well it 
wasn't. Regrettably, the Republicans are ready to try this experiment 
again today.
  Proponents of the Contract tax bill claim it will help the American 
middle-class. Well, it won't. Indeed, it is estimated that 51 percent 
of the benefits from this bill go to the top 12 percent of earners. For 
the average family most of us would consider middle-class, those making 
$30,000 to $50,000, would get a tax break of $569, but a family making 
over $200,000 gets $11,266.
  If this isn't unfair enough to make someone question this bill, the 
repeal of the Alternative Minimum Tax, which President Reagan 
introduced, further tilts the balance against working Americans. The 
AMT ensures that large corporations have to pay at least some tax. 
Prior to President Reagan's introduction of the AMT, large, profitable 
companies paid no tax and in some cases actually got rebates. For 
example, AT&T got a $636 million rebate, even though its profits were 
$24.9 billion. DuPont got a $179 million rebate, but made $3.8 billion. 
GE didn't get a rebate, it just didn't pay taxes for 3 years between 
1982 and 1985. How does this help middle-class families?
  Not only does the Contract tax bill do little for the middle-class, 
it also swells the deficit. Over the first 5 years, the Contract tax 
bill would cost roughly $200 billion which the majority has paid for by 
cutting child nutrition programs and tightening the caps on 
discretionary spending. However, the total cost over 10 years would be 
almost $700 billion. I believe this is why many in the Senate, like 
Senator Chafee, are opposed to the Contract's tax cuts.
  If the Republicans follow through with their pledge to protect Social 
Security and defense spending while balancing the budget, this tax bill 
will require 30 percent cuts in all other domestic programs like 
student loans, transportation, and job training. Cutting the deficit 
further than we did in 1993 will be a tough job, but the Contract tax 
bill makes achieving a balanced budget all the more difficult, if not 
impossible. I would also like to remind my colleagues on the other side 
of the aisle that they promised to pass specific spending cuts before 
they passed any tax cuts.
  I know many of my Republican colleagues share this concern over the 
deficit impact of their party's tax bill. Indeed, many of them tried to 
add a provision to the bill to prohibit tax cuts before the deficit is 
eliminated. However, their party's leadership was not willing to 
support that proposal. Instead, the Contract tax bill only requires an 
annual report on progress in balancing the budget. However, the 
Democratic alternative requires that all tax cuts would be revoked, if 
deficit targets are not achieved. This Democratic provision guarantees 
that deficit reduction comes before any tax cuts.
  I support cutting Congressional pensions and bringing them in line 
with private sector pensions which a provision of this bill will 
partially do. However, I am disappointed that this initiative was 
included in this mistaken tax bill solely for political effect.
  In response, I wrote and urged Minority Leader Gephardt to include 
Congressional pension reform in the only amendment allowed by the 
Republicans. Therefore, I am glad that the motion to recommit includes 
Congressional pension reform, and I plan to support this motion which 
requires that the Ways and Means Committee fix Congressional pensions. 
However, I cannot support fixing Congressional pensions as part of this 
spurious Republican tax bill.
  Mr. Chairman, the Contract tax bill would also require the new 
Governor of Rhode Island to make-up the loss of $280 million in 
revenues over 10 years. Rhode Island already faces a budget crisis and 
unfortunately this bill just compounds this problem. But Rhode Island's 
Governor might be lucky compared with New Jersey's Governor Whitman 
whose State loses $3 billion over 10 years.
  In contrast, the Democratic alternative provides fair, reasonable, 
and targeted tax benefits aimed at helping middle-class families make a 
productive investment in their children's education. The Democratic tax 
fairness bill provides a $10,000 tuition deduction. It expands the 
number of Americans who are eligible for a tax deductible IRA which 
will increase our savings rate. The Democratic alternative would create 
new U.S. savings bond which would help middle-class families save money 
for their children's education. It would also allow students to deduct 
the interest on their loans. The Democratic alternative is geared 
toward education because education is an investment in our future. 
Education means an increased earning potential, greater global 
competitiveness, and self-sufficiency.
  Of course, there are other proposals that the minority leader's 
substitute might have included, But, to the alternative bill's credit 
it maintains deficit reduction as the major focus of Congress.
  Mr. Chairman, this debate did not have to be them against us. The 
Republicans could have worked with Democrats to develop an affordable, 
fair, bi-partisan tax bill. Indeed, there are many items in the 
Contract tax bill that I support and wish we could have worked together 
to pass. First, I am in favor of reducing taxes for families making 
under $100,000. Second, I have voted for targeted capital gains tax 
breaks in the past in order to spur productive investments in jobs, not 
just for Wall Street billionaires. Third, I would like to see a repeal 
or modification of the change in the amount of Social Security that is 
subject to taxation. However, I am concerned that Republicans would 
change this tax by cutting funds for the Medicare trust fund. Fourth, I 
would be glad to support a bipartisan change in the Social Security 
earnings limit. Fifth, I believe we need to correct the home office 
deduction. Finally, I am sure there are a number of tax provisions we 
could all agree on, but the Republicans decided against a bipartisan 
approach.
  Mr. Chairman, I wish the majority had decided on a bipartisan 
approach and developed a sensible tax bill that truly helps America's 
struggling families. Instead, they chose to favor those least in need 
and cut programs for society's most vulnerable members--children.
  Ms. ESHOO. Mr. Chairman, the Gephardt alternative is about 
opportunity, growth, and the future.
  [[Page H4311]] While the Republicans are busy gutting nutrition 
programs and student loans to finance tax cuts for the rich, we have a 
different approach.
  We believe that education is the seed corn which allows our Nation to 
harvest a trained work force, scientific breakthroughs, and greater 
prosperity in the years ahead.
  Our substitute provides incentives for middle class Americans to 
invest in higher education and gives them the opportunity to save 
sufficiently for this investment.
  We know the 21st century will demand higher skills from our people. 
The only way our country can remain competitive is to invest in our 
human capital. That means investing in educating our children.
  The Republican agenda is not about growth and opportunity, it's about 
helping the rich at the expense of the middle class. It's about eating 
our seed corn instead of planting it.
  The Gephardt substitute is a common sense cut and invest proposal 
targeted at the middle class. Hard-working Americans deserve more than 
being shafted in the fine print of the Contract With America. This 
package provides them with the much-needed relief they and this country 
deserve.
  The CHAIRMAN. The question is on the amendment in the nature of a 
substitute offered by the gentleman from Missouri [Mr. Gephardt].
  The question was taken; and the Chairman announced that the noes 
appeared to have it.


                             recorded vote

  Mr. BONIOR. Mr. Chairman, I demand a recorded vote.
  A recorded vote was ordered.
  The vote was taken by electronic device, and there were--ayes 119, 
noes 313, not voting 2, as follows:
                             [Roll No 292]

                               AYES--119

     Abercrombie
     Ackerman
     Andrews
     Baldacci
     Barcia
     Bevill
     Bonior
     Borski
     Boucher
     Browder
     Brown (FL)
     Brown (OH)
     Clay
     Clayton
     Clement
     Clyburn
     Coleman
     Collins (IL)
     Collins (MI)
     Conyers
     Cramer
     Danner
     de la Garza
     DeLauro
     Dingell
     Dixon
     Durbin
     Edwards
     Engel
     Eshoo
     Evans
     Farr
     Fattah
     Fazio
     Filner
     Flake
     Foglietta
     Ford
     Frank (MA)
     Frost
     Gejdenson
     Gephardt
     Gonzalez
     Gordon
     Gutierrez
     Hastings (FL)
     Hefner
     Hinchey
     Holden
     Jackson-Lee
     Jefferson
     Johnson (SD)
     Johnson, E. B.
     Johnston
     Kennedy (RI)
     Kennelly
     Lantos
     Levin
     Lewis (GA)
     Lofgren
     Lowey
     Maloney
     Manton
     Markey
     Martinez
     Mascara
     Matsui
     McHale
     Meek
     Menendez
     Miller (CA)
     Mineta
     Mink
     Moakley
     Moran
     Nadler
     Neal
     Oberstar
     Obey
     Olver
     Owens
     Pallone
     Payne (NJ)
     Peterson (MN)
     Pomeroy
     Rahall
     Reed
     Richardson
     Rose
     Rush
     Sabo
     Sanders
     Sawyer
     Schroeder
     Schumer
     Serrano
     Slaughter
     Spratt
     Stokes
     Studds
     Stupak
     Tanner
     Thompson
     Thornton
     Torres
     Torricelli
     Towns
     Traficant
     Tucker
     Velazquez
     Vento
     Volkmer
     Ward
     Waxman
     Wise
     Woolsey
     Wyden
     Wynn
     Yates

                               NOES--313

     Allard
     Archer
     Armey
     Bachus
     Baesler
     Baker (CA)
     Baker (LA)
     Ballenger
     Barr
     Barrett (NE)
     Barrett (WI)
     Bartlett
     Barton
     Bass
     Bateman
     Becerra
     Beilenson
     Bentsen
     Bereuter
     Berman
     Bilbray
     Bilirakis
     Bishop
     Bliley
     Blute
     Boehlert
     Boehner
     Bonilla
     Bono
     Brewster
     Brown (CA)
     Brownback
     Bryant (TN)
     Bryant (TX)
     Bunn
     Bunning
     Burr
     Burton
     Buyer
     Callahan
     Calvert
     Camp
     Canady
     Cardin
     Castle
     Chabot
     Chambliss
     Chapman
     Chenoweth
     Christensen
     Chrysler
     Clinger
     Coble
     Coburn
     Collins (GA)
     Combest
     Condit
     Cooley
     Costello
     Cox
     Coyne
     Crane
     Crapo
     Cremeans
     Cubin
     Cunningham
     Davis
     Deal
     DeFazio
     DeLay
     Dellums
     Deutsch
     Diaz-Balart
     Dickey
     Dicks
     Doggett
     Dooley
     Doolittle
     Dornan
     Doyle
     Dreier
     Duncan
     Dunn
     Ehlers
     Ehrlich
     Emerson
     English
     Ensign
     Everett
     Ewing
     Fawell
     Fields (LA)
     Fields (TX)
     Flanagan
     Foley
     Forbes
     Fowler
     Fox
     Franks (CT)
     Franks (NJ)
     Frelinghuysen
     Frisa
     Funderburk
     Furse
     Gallegly
     Ganske
     Gekas
     Geren
     Gibbons
     Gilchrest
     Gillmor
     Gilman
     Goodlatte
     Goodling
     Goss
     Graham
     Green
     Greenwood
     Gunderson
     Gutknecht
     Hall (OH)
     Hall (TX)
     Hamilton
     Hancock
     Hansen
     Harman
     Hastert
     Hastings (WA)
     Hayes
     Hayworth
     Hefley
     Heineman
     Herger
     Hilleary
     Hilliard
     Hobson
     Hoekstra
     Hoke
     Horn
     Hostettler
     Houghton
     Hoyer
     Hunter
     Hutchinson
     Hyde
     Inglis
     Istook
     Jacobs
     Johnson (CT)
     Johnson, Sam
     Jones
     Kanjorski
     Kaptur
     Kasich
     Kelly
     Kennedy (MA)
     Kildee
     Kim
     King
     Kingston
     Kleczka
     Klink
     Klug
     Knollenberg
     Kolbe
     LaFalce
     LaHood
     Largent
     Latham
     LaTourette
     Laughlin
     Lazio
     Leach
     Lewis (CA)
     Lewis (KY)
     Lightfoot
     Lincoln
     Linder
     Lipinski
     Livingston
     LoBiondo
     Longley
     Lucas
     Luther
     Manzullo
     Martini
     McCarthy
     McCollum
     McCrery
     McDade
     McDermott
     McHugh
     McInnis
     McIntosh
     McKeon
     McKinney
     McNulty
     Meehan
     Metcalf
     Meyers
     Mfume
     Mica
     Miller (FL)
     Minge
     Molinari
     Mollohan
     Montgomery
     Moorhead
     Morella
     Murtha
     Myers
     Myrick
     Nethercutt
     Neumann
     Ney
     Norwood
     Nussle
     Ortiz
     Orton
     Oxley
     Packard
     Parker
     Pastor
     Paxon
     Payne (VA)
     Peterson (FL)
     Petri
     Pickett
     Pombo
     Porter
     Portman
     Poshard
     Pryce
     Quillen
     Quinn
     Radanovich
     Ramstad
     Rangel
     Regula
     Riggs
     Rivers
     Roberts
     Roemer
     Rogers
     Rohrabacher
     Ros-Lehtinen
     Roth
     Roukema
     Roybal-Allard
     Royce
     Salmon
     Sanford
     Saxton
     Scarborough
     Schaefer
     Schiff
     Scott
     Seastrand
     Sensenbrenner
     Shadegg
     Shaw
     Shays
     Shuster
     Sisisky
     Skaggs
     Skeen
     Skelton
     Smith (MI)
     Smith (NJ)
     Smith (TX)
     Smith (WA)
     Solomon
     Souder
     Spence
     Stark
     Stearns
     Stenholm
     Stockman
     Stump
     Talent
     Tate
     Tauzin
     Taylor (MS)
     Taylor (NC)
     Tejeda
     Thomas
     Thornberry
     Thurman
     Tiahrt
     Torkildsen
     Upton
     Visclosky
     Vucanovich
     Waldholtz
     Walker
     Walsh
     Wamp
     Waters
     Watt (NC)
     Watts (OK)
     Weldon (FL)
     Weldon (PA)
     Weller
     White
     Whitfield
     Wicker
     Williams
     Wilson
     Wolf
     Young (AK)
     Young (FL)
     Zeliff
     Zimmer

                             NOT VOTING--2

     Pelosi
     Reynolds
       

                              {time}  2152

  Mr. BISHOP, Ms. McKINNEY, and Mr. PASTOR changed their vote from 
``aye'' to ``no.''
  Mr. WYNN changed his vote form ``no'' to ``aye.''
  So the amendment in the nature of a substitute was rejected.
  The result of the vote was announced as above recorded.
  The CHAIRMAN. The question is on the amendment in the nature of a 
substitute, as modified, made in order by the rule.
  The amendment in the nature of a substitute, as modified, was agreed 
to.
  The CHAIRMAN. Under the rule, the Committee rises.
  Accordingly, the Committee rose; and the Speaker pro tempore [Mr. 
Dreier] having assumed the chair, Mr. Boehner, Chairman of the 
Committee of the Whole House on the State of the Union, reported that 
that committee, having had under consideration the bill (H.R. 1215) to 
amend the Internal Revenue Code of 1986 to strengthen the American 
family and create jobs, pursuant to House Resolution 128, he reported 
the bill back to the House with an amendment adopted by the Committee 
of the Whole.
  The SPEAKER pro tempore. Under the rule, the previous question is 
ordered.
  The question is on the amendment.
  The amendment was agreed to.
  The SPEAKER pro tempore. The question is on the engrossment and third 
reading of the bill.
  The bill was ordered to be engrossed and read a third time, and was 
read the third time.


               motion to recommit offered by mr. gephardt

  Mr. GEPHARDT. Mr. Speaker, I offer a motion to recommit with 
instructions.
  The SPEAKER pro tempore. Is the gentleman opposed to the bill?
  Mr. GEPHARDT. Yes; I am opposed to the bill in its present form, Mr. 
Speaker.
  The SPEAKER pro tempore. The Clerk will report the motion to 
recommit.
  The Clerk read as follows:

       Mr. Gephardt moves to recommit the bill H.R. 1215 to the 
     Committee on Ways and Means with instructions to report the 
     same back to the House forthwith with the following 
     amendments:
       In paragraph (1) of section 4003(a), strike all 
     subparagraphs except subparagraph (C) (and make the necessary 
     conforming grammatical changes).
       Strike paragraph (2) of section 4003(a) and insert the 
     following:
       (2) Deductions.--Section 8334(a) is amended by adding after 
     paragraph (3) (as added by 
     [[Page H4312]] paragraph (3)(A) of this subsection) the 
     following:
       (4) Effective with respect to service after December 31, 
     1995, in the case of a Member, the employing agency shall 
     (instead of the percentage otherwise applicable under the 
     first sentence of paragraph (1)) deduct and withhold from 
     basic pay of the Member the percentage of basic pay 
     applicable under subsection (c).''.
       In paragraph (3) of section 8334(a) of title 5, United 
     States Code (as proposed to be amended by section 
     4003(a)(3)(A)) insert ``, in the case of a Member,'' after 
     ``shall''.
       Strike paragraph (4) of section 4003(a).
       Strike subsection (b) of section 4003 and insert the 
     following:
       (b) FERS.--
       (1) In general.--Section 8422(a) is amended by adding at 
     the end the following:
       ``(3) In applying the provisions of paragraph (2)(B) in the 
     case of a Member, `7\1/2\' in clause (i) thereof shall, for 
     purposes of applying such provisions with respect to basic 
     pay for service performed--
       ``(A) in calendar year 1996, be deemed to read `8\1/2\';
       ``(B) in calendar year 1997, be deemed to read `9';
       ``(C) after calendar year 1997, be deemed to read `9\1/2\';
       (2) Technical amendment.--Paragraph (1) of section 8422(a) 
     is amended by striking ``paragraph (2).'' and inserting 
     ``paragraphs (2) and (3).''.
       Strike subsection (c) of section 4003 and redesignate 
     subsection (d) thereof accordingly.
       In section 8339a(a) of title 5, United States Code (as 
     proposed to be inserted by section 4004(a)(1)) and section 
     8461a(a) of such title (as proposed to be inserted by section 
     4004(b)(1)), strike ``a separation'' and insert ``the 
     separation of a Member''.
       In section 4005(a), strike paragraph (2) and conform 
     paragraph (1) accordingly.
       In section 4005(b), strike ``Members.--'' in paragraph (1) 
     and insert ``In general.--'', strike paragraph (2), and 
     redesignate paragraph (3) as paragraph (2).
       In subparagraph (B) of section 4005(b)(2) (as so 
     redesignated), strike ``and by striking `Congressional 
     employee,'''.
       In paragraph (3) of section 8415(g) of title 5, United 
     States Code, as proposed to be added by section 4005(b)(2) 
     (as so redesignated), strike ``or Congressional employee'' 
     each place it appears, and strike ``or (c)''.
       Strike title V of the bill.
       Strike subtitle A of title VI of the bill (other than 
     section 6101).
       In section 23 of the Internal Revenue Code of 1986 (as 
     proposed to be added by section 6101)--
       (1) insert ``(or, in the case of taxable years beginning 
     before January 1, 2001, the amount specified in subsection 
     (e))'' after ``$500'',
       (2) strike ``$200,000'' each place it appears and insert 
     ``$60,000'',
       (3) strike ``100 times'' in subsection (b)(2) of such 
     section 23 and insert ``70 times'',
       (4) strike ``1996'' and ``1995'' in subsection (d) of such 
     section 23 and insert ``2001'' and ``2000'', respectively, 
     and
       (5) redesignate subsection (e) of such section 23 as 
     subsection (f) and insert after subsection (d) the following 
     new subsection:
       ``(e) Phase in of Amount of Credit.--In the case of taxable 
     years beginning before January 1, 2001, subsection (a) shall 
     be applied by substituting for `$500'--
       ``(1) `$100' in the case of taxable years beginning after 
     December 31, 1996, and before January 1, 1999, and
       ``(2) `$300' in the case of taxable years beginning after 
     December 31, 1998.
       In section 6101(c) of the bill, strike ``1995'' and insert 
     ``1996''.
       Strike subtitles B, C, D, and E of title VI.
       After subtitle A of title VI, insert the following new 
     subtitles:

          Subtitle B--Tax Benefit Contingent on Federal Budget

     SEC. 6201. EFFECTIVE DATE OF TAX BENEFIT DELAYED UNTIL 
                   FEDERAL BUDGET PROJECTED TO BE IN BALANCE.

       (a) In General.--Solely for purposes of subtitle A, 
     notwithstanding any provision of subtitle A, and any 
     amendment made by such subtitle, except as otherwise provided 
     in this section--
       (1) any reference in such subtitle (or in any amendment 
     made by such subtitle) to 1996 shall be treated as a 
     reference to the calendar year ending in the first successful 
     deficit reduction year, and
       (2) any reference in such subtitle (or in any amendment 
     made by such subtitle) to any later calendar year shall be 
     treated as a reference to the calendar year which is the same 
     number of years after such first calendar year as such later 
     year is after 1996.
       (b) First Successful Deficit Reduction Year.--For purposes 
     of this section--
       (1) In general.--The term ``first successful deficit 
     reduction year'' means the first fiscal year beginning after 
     the date of the enactment of this Act with respect to which 
     there is an OMB certification before the beginning of such 
     fiscal year that the budget of the United States will be in 
     balance by fiscal year 2002 based upon estimates of enacted 
     legislation, including the amendments made by this Act.
       (2) OMB certification.--The term ``OMB certification'' 
     means a written certification made solely for purposes of 
     this subtitle by the Director of the Office of Management and 
     Budget to the President and the Congress.
       (c) Certifications Before 1997.--Subsection (a) shall not 
     apply if there is an OMB certification made during 1995 or 
     1996 that the budget of the United States will be in balance 
     by fiscal year 2002 based upon estimates of enacted 
     legislation, including the amendments made by this Act.

     SEC. 6202. TERMINATION OF TAX BENEFIT IF FEDERAL BUDGET 
                   DEFICIT REDUCTION TARGETS ARE NOT MET.

       (A) Termination of Credit.--No credit shall be allowed by 
     section 23 of the Internal Revenue Code of 1986 (added by 
     subtitle A) for any taxable year beginning after
      the calendar year in which the first failed deficit 
     reduction year ends.
       (b) First Failed Deficit Reduction Year.--For purposes of 
     this section, the term ``first failed deficit reduction 
     year'' means the first fiscal year (beginning after the 
     earliest date on which any amendment made by subtitle A takes 
     effect) with respect to which there is an OMB certification 
     during the 3-month period after the close of such fiscal year 
     that the actual deficit in the budget of the United States 
     for such fiscal year was greater than the deficit target for 
     such fiscal year specified in the following table:

``In the case of fiscal year:      The deficit target (in billions) is:
  1996.............................................................$150
  1997..............................................................125
  1998..............................................................100
  1999...............................................................75
  2000...............................................................50
  2001...............................................................25
  2002 or thereafter.................................................0.
           Subtitle C--Revision of Tax Rules on Expatriation

     SEC. 6301. REVISION OF TAX RULES ON EXPATRIATION.

       (a) In General.--Subpart A of part II of subchapter N of 
     chapter 1 of the Internal Revenue Code of 1986 is amended by 
     inserting after section 877 the following new section:

     ``SEC. 877A. TAX RESPONSIBILITIES OF EXPATRIATION.

       ``(a) General Rules.--For purposes of this subtitle--
       ``(1) Citizens.--If any United States citizen relinquishes 
     his citizenship during a taxable year, all property held by 
     such citizen at the time immediately before such 
     relinquishment shall be treated as sold at such time for its 
     fair market value and any gain or loss shall be taken into 
     account for such taxable year.
       ``(2) Certain residents.--If any long-term resident of the 
     United States ceases to be subject to tax as a resident of 
     the United States for any portion of any taxable year, all 
     property held by such resident at the time of such cessation 
     shall be treated as sold at such time for its fair market 
     value and any gain or loss shall be taken into account for 
     the taxable year which includes the date of such cessation.
       ``(b) Exclusion for Certain Gain.--The amount which would 
     (but for this subsection) be includible in the gross income 
     of any taxpayer by reason of subsection (a) shall be reduced 
     (but not below zero) by $600,000.
       ``(c) Property Treated as Held.--For purposes of this 
     section, except as otherwise provided by the Secretary, an 
     individual shall be treated as holding--
       ``(1) all property which would be includible in his gross 
     estate under chapter 11 were such individual to die at the 
     time the property is treated as sold,
       ``(2) any other interest in a trust which the individual is 
     treated as holding under the rules of section 679(e) 
     (determined by treating such section as applying to foreign 
     and domestic trusts), and
       ``(3) any other interest in property specified by the 
     Secretary as necessary or appropriate to carry out the 
     purposes of this section.
       ``(d) Exceptions.--The following property shall not be 
     treated as sold for purposes of this section:
       ``(1) United states real property interests.--Any United 
     States real property interest (as defined in section 
     897(c)(1)), other than stock of a United States real property 
     holding corporation which does not, on the date the 
     individual relinquishes his citizenship or ceases to be 
     subject to tax as a resident, meet the requirements of 
     section 897(c)(2).
       ``(2) Interest in certain retirement plans.--
       ``(A) In general.--Any interest in a qualified retirement 
     plan (as defined in section 4974(d)), other than any interest 
     attributable
      to contributions which are in excess of any limitation or 
     which violate any condition for tax-favored treatment.
       ``(B) Foreign pension plans.--
       ``(i) In general.--Under regulations prescribed by the 
     Secretary, interests in foreign pension plans or similar 
     retirement arrangements or programs.
       ``(ii) Limitation.--The value of property which is treated 
     as not sold by reason of this subparagraph shall not exceed 
     $500,000.
       ``(e) Definitions.--For purposes of this section--
       ``(1) Relinquishment of citizenship.--A citizen shall be 
     treated as relinquishing his United States citizenship on the 
     date the United States Department of State issues to the 
     individual a certificate of loss of nationality or on the 
     date a court of the United States cancels a naturalized 
     citizen's certificate of naturalization.
       ``(2) Long-term resident.--
       ``(A) In general.--The term `long-term resident' means any 
     individual (other than a citizen of the United States) who is 
     a lawful permanent resident of the United States and, 
     [[Page H4313]] as a result of such status, has been subject 
     to tax as a resident in at least 10 taxable years during the 
     period of 15 taxable years ending with the taxable year 
     during which the sale under subsection (a) is treated as 
     occurring.
       ``(B) Special rule.--For purposes of subparagraph (A), 
     there shall not be taken into account--
       ``(i) any taxable year during which any prior sale is 
     treated under subsection (a) as occurring, or
       ``(ii) any taxable year prior to the taxable year referred 
     to in clause (i).
       ``(f) Termination of Deferrals, Etc.--On the date any 
     property held by an individual is treated as sold under 
     subsection (a)--
       ``(1) any period deferring recognition of income or gain 
     shall terminate, and
       ``(2) any extension of time for payment of tax shall cease 
     to apply and the unpaid portion of such tax shall be due and 
     payable.
       ``(g) Election by Expatriating Residents.--Solely for 
     purposes of determining gain under subsection (a)--
       ``(1) In general.--At the election of a resident not a 
     citizen of the United States, property--
       ``(A) which was held by such resident on the date the 
     individual first became a resident of the United States 
     during the period of long-term residency to which the 
     treatment under subsection (a) relates, and
       ``(B) which is treated as sold under subsection (a),
     shall be treated as having a basis on such date of not less 
     than the fair market value of such property on such date.
       ``(2) Election.--Such an election shall apply to all 
     property described in paragraph (1), and, once made, shall be 
     irrevocable.
       ``(h) Deferral of Tax on Closely Held Business Interests.--
     The District Director may enter into an agreement with any 
     individual which permits such individual to defer payment for 
     not more than 5 years of any tax imposed by subsection (a) by 
     reason of holding any interest in a closely held business (as 
     defined in section 6166(b)) other than a United States real 
     property interest described in subsection (d)(1).
       ``(i) Regulations.--The Secretary shall prescribe such 
     regulations as may be necessary or appropriate to carry out 
     the purposes of this section.
       ``(j) Cross Reference.--

``For termination of United States citizenship for tax purposes, see 
              section 7701(a)(47).''

       (b) Definition of Termination of United States 
     Citizenship.--Section 7701(a) of such Code is amended by 
     adding at the end the following new paragraph:
       ``(47) Termination of United States Citizenship.--An 
     individual shall not cease to be treated as a United States 
     citizen before the date on which the individual's citizenship 
     is treated as relinquished under section 877A(e)(1).''
       (c) Conforming Amendments.--
       (1) Section 877 of such Code is amended by adding at the 
     end of the following new subsection:
       ``(f) Termination.--This section shall not apply to any 
     individual who is subject to the provisions of section 
     877A.''
       (2) Paragraph (10) of section 7701(b) of such Code is 
     amended by adding at the end the following new sentence: 
     ``This paragraph shall not apply to any individual who is 
     subject to the provisions of section 877A.''
       (d) Clerical Amendment.--The table of sections for subpart 
     A of part II of subchapter N of chapter 1 of such Code is 
     amended by inserting after the item relating to section 877 
     the following new item:

``Sec. 877A. Tax responsibilities of expatriation.''

       (e) Effective Date.--The amendments made by this section 
     shall apply to--
       (1) United States citizens who relinquish (within the 
     meaning of section 877A(e)(1) of the Internal Revenue Code of 
     1986, as added by this section) United States citizenship on 
     or after October 1, 1996, and
       (2) Long-term residents (as defined in such section) who 
     cease to be subject to tax as residents of the United States 
     on or after such date.
       At the end of the bill insert the following new title:

TITLE VII--HOUSE BUDGET COMMITTEE TO REPORT NEW DISCRETIONARY SPENDING 
                                 LIMITS

     SEC. 701. HOUSE BUDGET COMMITTEE TO REPORT NEW DISCRETIONARY 
                   SPENDING LIMITS.

       Not later than 20 days after the date of the enactment of 
     this Act, the Committee on the Budget of the House of 
     Representatives shall report legislation which provides 
     general discretionary spending limits as follows:
       (1) With respect to fiscal year 1996: $514,998,000,000 in 
     new budget authority and $547,245,000,000 in outlays.
       (2) With respect to fiscal year 1997: $521,281,000,000 in 
     new budget authority and $542,111,000,000 in outlays.
       (3) With respect to fiscal year 1998: $528,024,000,000 in 
     new budget authority and $544,594,000,000 in outlays.
       (4) With respect to fiscal year 1999: $527,051,000,000 in 
     new budget authority and $543,130,000,000 in outlays.
       (5) With respect to fiscal year 2000: $525,091,000,000 in 
     new budget authority and $541,082,000,000 in outlays.
       Make necessary conforming changes in title and section 
     designations and in the tables of contents.

  Mr. GEPHARDT (during the reading). Mr. Speaker, I ask unanimous 
consent that the motion to recommit be considered as read and printed 
in the Record.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Missouri?
  Mr. ARCHER. Mr. Speaker, we have only just received a copy of this 
motion to recommit and I think for the benefit of all of the House 
Members, unless it is extremely lengthy, we should have it read so we 
will know what we are voting on.
  The SPEAKER pro tempore. Does the gentleman object?
  Mr. ARCHER. I object, Mr. Speaker.
  The SPEAKER pro tempore. The Clerk will read.
  The Clerk continued the reading of the motion.

                              {time}  2200

  Mr. ARCHER (during the reading). Mr. Speaker, we have now had 
additional time to read the motion to recommit, and I ask unanimous 
consent that the motion be considered as read and printed in the 
Record.
  The SPEAKER pro tempore (Mr. Dreier). Is there objection to the 
request of the gentleman from Texas?
  There was no objection.
  Mr. ARCHER. Mr. Speaker, let me state we have had only a short time 
to look at it. We do believe that it is subject to a point of order. 
However, considering the gentleman's results on his substitute, we 
think he should have an opportunity on his motion to recommit. We will 
not urge the point of order.
  The SPEAKER pro tempore. The Chair recognizes the gentleman from 
Missouri [Mr. Gephardt] for 5 minutes.
  Mr. GEPHARDT. Mr. Speaker, this motion to recommit is very simple.
  A lot of Members have said that this tax bill ought to be directed to 
middle-income families. One of the features of the Republican bill that 
Members have talked a lot about is the credit for children, a $1,000 
credit, $500 credit for children. A family of two would get $1,000.
  But as you know, in the Republican bill the families who can enjoy 
this credit go up to family incomes of $200,000 a year.
  Over 100 Members wrote their own leadership and said that they would 
like to have that amount dropped to $95,000. I agree with them. I think 
over 100 Republicans get it right, and that is that we ought to give a 
tax cut to middle-income families and not to families at the top.
  If you take all of the provisions of the Republican bill together, 
half of their tax cuts go to families who earn $100,00 a year or more.
  We can remedy that tonight with this motion to recommit. It does four 
simple things. It substitutes for their bill. First, it says that 
family tax credit should be limited to families making $95,000 a year 
or less.
  Second, it puts into effect the retirement changes that are in the 
Republican bill applying to all Federal employees including Members of 
Congress; in this motion to recommit, we make those changes, lowering 
the amount of the Federal retirement but only for Members of Congress. 
We do not in this motion to recommit lower the benefits or raise the 
taxes on Federal employees or staffs of the Congress.
  Third, the motion to recommit closes this egregious loophole allowing 
people to renounce their American citizenship in order to avoid paying 
taxes. Our friends on the other side may say that it is a human right 
to be able to leave America and not pay your taxes. I say it is 
America's right that everybody ought to pay their taxes to this 
country.
  And finally, we have included the language of the so-called Browder 
amendment that says none of this tax cut will go into effect until we 
are on the road to a balanced budget, and we will not keep this tax cut 
for people unless we stay on the road to a balanced budget.
  Mr. BROWDER. Mr. Speaker, will the gentleman yield?
  Mr. GEPHARDT. I am happy to yield to the gentleman from Alabama.
  Mr. BROWDER. Mr. Minority Leader, let me clarify this, please. Are 
you saying that this has hard numbers for deficit reduction over the 
next 7 years?
  Mr. WISE. Regular order, Mr. Speaker; regular order, Mr. Speaker.
  [[Page H4314]] The SPEAKER pro tempore. The House will be in order. 
The gentleman from Missouri controls the time.
  Mr. GEPHARDT. I yield to the gentleman from Alabama.
  Mr. BROWDER. For a point of clarification, do you tell me that this 
motion to recommit includes the hard numbers that were in the Browder-
Castle-Orton-Upton-Martini amendment for deficit reduction?
  Mr. GEPHARDT. That is correct. As you know, in the Republican bill it 
got changed so that you did not look back every year to make sure you 
are on the road to a balanced budget. That is what you had in your 
amendment, and that is what is in this amendment, and that is a good 
amendment.
  Mr. BROWDER. Thank you, Mr. Leader.
  Mr. GEPHARDT. Let me sum up and say that this is a choice that we 
have to make tonight.
  Are we willing to give half of the tax cut to families who earn 
$100,000 a year or more, or are we willing to focus this tax cut at the 
hard-working, hard-pressed, squeezed middle-income people of this 
country? I know what my vote is for, and I hope your vote will be for 
the middle-income people of this country.
  Vote for this motion to recommit.
  The SPEAKER pro tempore. The time of the gentleman from Missouri [Mr. 
Gephardt] has expired.
  The Chair recognizes the gentleman from Texas [Mr. Archer] for 5 
minutes in opposition to the motion to recommit.
  Mr. ARCHER. Mr. Speaker, I yield my 5 minutes to the Speaker of the 
House of Representatives, the gentleman from Georgia [Mr. Gingrich].
  Mr. GINGRICH. Mr. Speaker, let me say first of all that on this 91st 
day, I want to thank everyone on both sides of the aisle. This has been 
an immense amount of work. And despite the occasional rancor directed 
at me personally, I think frankly everything has gone about as well as 
we could have hoped.
  And I think that the transfer of power which is one of the great acts 
of majesty in our system, the willingness to work together, getting 
through a lot of tough decisions, a lot of tough things, that the 
American people can be proud of the U.S. House for what we have done 
together in 91 days, and I thank every Member on both sides for the 
spirit, sometimes deeply disagreeing, sometimes voting unanimously, but 
working together very long hours for a very long time.
  I find, standing here tonight, a truly historic and at the same time 
a truly personal experience.
  Two years ago we were debating a tax increase, and all of our friends 
on the other side of the aisle were saying, ``It will be OK,'' and by a 
one-vote margin, they passed it. But the country said it was not OK to 
raise taxes, that Government was too big, it spends too much, and it 
needs to be brought under control.
  We were given an opportunity to try to be helpful. On the opening 
day, we spent 14 hours together, and we passed nine reforms. We applied 
to the Congress every law which applies to the rest of the country. We 
cut the congressional committee staffs by 30 percent, and we came back 
later and cut the congressional committee budgets by 30 percent, and we 
have begun a process of changing the Congress.
  We committed ourselves to a contract, and to be fair, an awful lot of 
Democrats helped us on key votes. I stood on this floor and looked up 
when litigation reform for strike law firms passed by 330 to 99, and I 
was proud of that bipartisan majority. I stood on this floor and looked 
in amazement as 300 Members voted for a balanced budget amendment to 
the Constitution, a strong bipartisan commitment.
  We have had votes on nine items. We passed eight. We lost on term 
limits, but it was the first time in the history of the Congress that 
it had been brought to a vote, and I was proud that this institution 
debated it honestly and passionately with Members on both sides 
speaking for their conscience, and we had a recorded vote.
  And now we come, after great work, to a welfare reform bill that 
emphasizes work and family. All of the things we have done, and now we 
come to tonight, and let me say first, the motion to recommit is 16 
pages that very few Members understand, that has not been scored, that 
is an appropriate effort for a minority to try to score a coup, but is 
not serious legislation. I urge a ``no'' vote.
  And on final passage, what is your choice, a $500 tax credit that 
says about children we would rather parents have the money than 
bureaucrats? And an adoption tax credit to help children get into a 
loving family, a repeal of the tax increase on Social Security so 
senior citizens can keep their money, an increase in the amount that 
senior citizens can earn up to $39,000 a year without being penalized, 
an American dream savings account that allows every family to save, to 
buy a house, for an illness, to take care of education, for retirement, 
individual retirement accounts extended to spouses so if you stay home 
to raise your children you are not deprived of the right to save money, 
tax credit for long-term care, and a capital gains tax cut and indexing 
to create jobs.
  This is a good bill. It is paid for. It helps create jobs. It 
strengthens families. It does what we ought to be doing. It is the last 
step in the Contract.
  I thank all of my friends on both sides of the aisle who have worked 
with us to get this far. I urge every Member to look at this and ask 
yourself, in your constituents' lives, will not a little less money for 
Government and a little more money for those families be a good thing? 
And is not that what this Congress was elected to do?
  I urge a ``no'' vote on recommittal and a ``yes'' vote on final 
passage.
  The SPEAKER pro tempore. Without objection, the previous question is 
ordered on the motion to recommit.
  There was no objection.
  The SPEAKER pro tempore. The question is on the motion to recommit.
  The question was taken; and the Speaker pro tempore announced that 
the noes appeared to have it.


                             recorded vote

  Mr. GEPHARDT. Mr. Speaker, I demand a recorded vote.
  A recorded vote was ordered.
  The vote was taken by electronic device, and there were--ayes 168, 
noes 265, not voting 1, as follows:
                             [Roll No. 293]

                               AYES--168

     Abercrombie
     Ackerman
     Andrews
     Baldacci
     Barcia
     Barrett (WI)
     Beilenson
     Bentsen
     Berman
     Bevill
     Bishop
     Bonior
     Borski
     Boucher
     Browder
     Brown (FL)
     Brown (OH)
     Bryant (TX)
     Chapman
     Clay
     Clayton
     Clement
     Clyburn
     Coleman
     Collins (IL)
     Collins (MI)
     Condit
     Conyers
     Costello
     Cramer
     Danner
     de la Garza
     DeLauro
     Dellums
     Deutsch
     Dicks
     Dingell
     Dixon
     Doggett
     Doyle
     Durbin
     Edwards
     Engel
     Eshoo
     Evans
     Farr
     Fattah
     Fazio
     Fields (LA)
     Filner
     Flake
     Foglietta
     Ford
     Frank (MA)
     Frost
     Furse
     Ganske
     Gejdenson
     Gephardt
     Gonzalez
     Gordon
     Green
     Gutierrez
     Harman
     Hastings (FL)
     Hayes
     Hefner
     Hilliard
     Hinchey
     Holden
     Jackson-Lee
     Jacobs
     Jefferson
     Johnson (SD)
     Johnson, E. B.
     Johnston
     Kennedy (MA)
     Kennedy (RI)
     Kennelly
     Kildee
     LaFalce
     Lantos
     Levin
     Lewis (GA)
     Lincoln
     Lofgren
     Lowey
     Luther
     Maloney
     Manton
     Markey
     Martinez
     Mascara
     Matsui
     McCarthy
     McDermott
     McHale
     McKinney
     Meehan
     Meek
     Menendez
     Mfume
     Miller (CA)
     Mineta
     Minge
     Mink
     Moakley
     Moran
     Nadler
     Neal
     Oberstar
     Obey
     Olver
     Ortiz
     Owens
     Pallone
     Pastor
     Payne (NJ)
     Pelosi
     Peterson (MN)
     Pomeroy
     Poshard
     Rahall
     Rangel
     Reed
     Richardson
     Rivers
     Rose
     Roybal-Allard
     Rush
     Sabo
     Sanders
     Sawyer
     Schroeder
     Schumer
     Scott
     Serrano
     Skelton
     Slaughter
     Spratt
     Stokes
     Studds
     Stupak
     Tanner
     Taylor (MS)
     Tejeda
     Thompson
     Thornton
     Thurman
     Torres
     Torricelli
     Towns
     Traficant
     Tucker
     Velazquez
     Vento
     Visclosky
     Volkmer
     Ward
     Waters
     Watt (NC)
     Waxman
     Williams
     Wise
     Woolsey
     Wyden
     Wynn
     Yates

                               NOES--265

     Allard
     Archer
     Armey
     Bachus
     Baesler
     Baker (CA)
     Baker (LA)
     Ballenger
     Barr
     Barrett (NE)
     Bartlett
     Barton
     Bass
     Bateman
     Becerra
     Bereuter
     Bilbray
     Bilirakis
     Bliley
     Blute
     Boehlert
     Boehner
     Bonilla
     Bono
     Brewster
     Brown (CA)
     Brownback
     Bryant (TN)
     Bunn
     Bunning
     Burr
     Burton
     Buyer
     Callahan
     Calvert
     Camp
     Canady
     Cardin
     Castle
     Chabot
     Chambliss
     Chenoweth
     [[Page H4315]] Christensen
     Chrysler
     Clinger
     Coble
     Coburn
     Collins (GA)
     Combest
     Cooley
     Cox
     Coyne
     Crane
     Crapo
     Cremeans
     Cubin
     Cunningham
     Davis
     Deal
     DeFazio
     DeLay
     Diaz-Balart
     Dickey
     Dooley
     Doolittle
     Dornan
     Dreier
     Duncan
     Dunn
     Ehlers
     Ehrlich
     Emerson
     English
     Ensign
     Everett
     Ewing
     Fawell
     Fields (TX)
     Flanagan
     Foley
     Forbes
     Fowler
     Fox
     Franks (CT)
     Franks (NJ)
     Frelinghuysen
     Frisa
     Funderburk
     Gallegly
     Gekas
     Geren
     Gibbons
     Gilchrest
     Gillmor
     Gilman
     Goodlatte
     Goodling
     Goss
     Graham
     Greenwood
     Gunderson
     Gutknecht
     Hall (OH)
     Hall (TX)
     Hamilton
     Hancock
     Hansen
     Hastert
     Hastings (WA)
     Hayworth
     Hefley
     Heineman
     Herger
     Hilleary
     Hobson
     Hoekstra
     Hoke
     Horn
     Hostettler
     Houghton
     Hoyer
     Hunter
     Hutchinson
     Hyde
     Inglis
     Istook
     Johnson (CT)
     Johnson, Sam
     Jones
     Kanjorski
     Kaptur
     Kasich
     Kelly
     Kim
     King
     Kingston
     Kleczka
     Klink
     Klug
     Knollenberg
     Kolbe
     LaHood
     Largent
     Latham
     LaTourette
     Laughlin
     Lazio
     Leach
     Lewis (CA)
     Lewis (KY)
     Lightfoot
     Linder
     Lipinski
     Livingston
     LoBiondo
     Longley
     Lucas
     Manzullo
     Martini
     McCollum
     McCrery
     McDade
     McHugh
     McInnis
     McIntosh
     McKeon
     McNulty
     Metcalf
     Meyers
     Mica
     Miller (FL)
     Molinari
     Mollohan
     Montgomery
     Moorhead
     Morella
     Murtha
     Myers
     Myrick
     Nethercutt
     Neumann
     Ney
     Norwood
     Nussle
     Orton
     Oxley
     Packard
     Parker
     Paxon
     Payne (VA)
     Peterson (FL)
     Petri
     Pickett
     Pombo
     Porter
     Portman
     Pryce
     Quillen
     Quinn
     Radanovich
     Ramstad
     Regula
     Riggs
     Roberts
     Roemer
     Rogers
     Rohrabacher
     Ros-Lehtinen
     Roth
     Roukema
     Royce
     Salmon
     Sanford
     Saxton
     Scarborough
     Schaefer
     Schiff
     Seastrand
     Sensenbrenner
     Shadegg
     Shaw
     Shays
     Shuster
     Sisisky
     Skaggs
     Skeen
     Smith (MI)
     Smith (NJ)
     Smith (TX)
     Smith (WA)
     Solomon
     Souder
     Spence
     Stark
     Stearns
     Stenholm
     Stockman
     Stump
     Talent
     Tate
     Tauzin
     Taylor (NC)
     Thomas
     Thornberry
     Tiahrt
     Torkildsen
     Upton
     Vucanovich
     Waldholtz
     Walker
     Walsh
     Wamp
     Watts (OK)
     Weldon (FL)
     Weldon (PA)
     Weller
     White
     Whitfield
     Wicker
     Wilson
     Wolf
     Young (AK)
     Young (FL)
     Zeliff
     Zimmer

                             NOT VOTING--1

       
     Reynolds
       

                              {time}  2231

  Mr. GIBBONS and Mr. STARK changed their vote from ``aye'' to ``no.''
  So the motion to recommit was rejected.
  The results of the vote was announced as above recorded.
                        parliamentary inquiries

  Mr. MORAN. Mr. Speaker, I have a parliamentary inquiry.
  The SPEAKER pro tempore. The gentleman will state it.
  Mr. MORAN. Mr. Speaker, in my opinion there are two Federal income 
tax increases in this bill before us. There is an indirect tax increase 
on Federal employees of $4,525 over the next 5 years through a 313 
percent increase in their retirement contribution, and there is a 
second more direct income tax rate increase in this bill.
  Mr. Speaker, my parliamentary inquiry is directed at the clear, 
unequivocal Federal income tax rate increase. Does clause 5(c) of rule 
XXI that was passed in the first day of this session require a three-
fifths majority for any increase in the Federal income tax rate?
  The SPEAKER pro tempore. It is the opinion of the Chair that it does 
not apply in this case.
  Ms. MORAN. Mr. Speaker, that was not the question.
  The SPEAKER pro tempore. The rule requires a three-fifths vote if the 
bill contains a Federal income tax rate increase, and this bill does 
not.
  Mr. MORAN. Mr. Speaker, further parliamentary inquiry. It would 
appear to me then that clause 5(c) of rule XXI is meaningless, since we 
have never changed any income tax rate, increased it or decreased it, 
without first striking the prevailing tax rate and inserting a new tax 
rate. I understand that the ruling of the Chair is based upon a 
conclusion by the Joint Tax Commission that the provision we passed in 
the first day of this session does not apply to effective tax rate 
changes, and that in fact the change from the capital gains rate of 28 
percent to 39.6 percent does not apply because we first struck the 28 
percent before imposing the 39.6 percent as it applies to capital 
gains.
  Mr. Speaker, that is the way we have done every tax rate change. You 
first have to strike the existing change and then impose a new one. 
That means that subsequently, if this ruling prevails, that this body 
is able to increase tax rates anytime it wants simply by striking the 
existing rate, putting in a new rate, or, if it chooses, to say that 
the taxes will now apply to 110 percent of income without changing the 
tax rates. Mr. Speaker, this is a very dangerous precedent.
  Mr. Speaker, in light of the fact I have a letter from the Treasury 
Department that says this is a Federal tax rate increase, and I have a 
letter from the Small business Committee identifying the taxpayers and 
small businesses that will have to pay the 36 percent increase in the 
effective income tax rate that applies to investors in small 
businesses, I would ask the Speaker what clause 5(c) of rule XXI 
actually means if it does not apply to this income tax rate increase? 
Is the Speaker suggesting that any time there is an effective tax rate 
change, that what we passed does not apply? When would it ever apply, 
if it does not apply in this instance, Mr. Speaker?
  The Speaker pro tempore. The Chair is not in a position to answer 
hypothetical questions. It has been the determination of the Chair that 
this measure does not include a Federal income tax rate increase.
  The Chair would like to inquire if the gentleman from Texas [Mr. 
Archer], wishes to be heard on the point of order?
  Mr. ARCHER. Mr. Speaker, I do.
  Mr. WALKER. Mr. Speaker, has a point of order been made?
  Mr. Speaker, I have a parliamentary inquiry. I do
   not believe there is a point of order before the House.

  The SPEAKER pro tempore. The gentleman from Virginia has stated a 
point of order.
  Mr. MORAN. Mr. Speaker, I made a parliamentary inquiry, but I would 
state a point of order that any vote on this bill should require a 
three-fifths vote. If it does not require that, then I would appeal the 
ruling of the Chair.
  The SPEAKER pro tempore. Does the gentleman from Texas [Mr. Archer] 
desire to be heard on the point of order?
  Mr. ARCHER. Mr. Speaker, I understood the gentleman from Virginia 
made a point of order and the Chair ruled against the point of order. 
Am I correct?
  The SPEAKER pro tempore. The chair will continue to listen to an 
argument that is provided by the chairman of the Committee on Ways and 
Means before finally ruling.
  Mr. ARCHER. Mr. Speaker, I would be pleased to try to help the Chair 
to support his ruling.
  First, as a result of the enactment of the 50 percent exclusion 
applicable generally, taxpayers, other than those described in the 
following two paragraphs, would have a tax rate lower than 28 percent. 
Thus, the 28 percent maximum rate of section 1(h) of current law would 
not cause a reduction in tax liability as compared with that under 
current law; that is, as relates to current law liability, the 
provision would be inoperative.
  No. 2, the 50 percent exclusion would not apply to collectibles. 
Under H.R. 1215, for this group of taxpayers the maximum rate of 28 
percent is retained in H.R. 1215.
  No. 3, a question has been raised as to the potential application of 
the 28 percent maximum rate under current law for taxpayers currently 
qualifying for the special rules of existing section of the law, 1202. 
In light of the fact that this provision would be repealed by 1215, the 
maximum rate of 28 percent would have no further application. Moreover, 
it should be noted that the special rules in section 1202 are an 
exclusion provision rather than a rate provision.
  Further, it should be noted that concerns as to whether repeal of 
current law, section 1202, in conjunction with the repeal of current 
law, section 1(h), constitutes a rate increase, are focused on the 
effective rate impact rather than the occurrence of any income tax rate 
increase.
  The House rule in question is not intended to apply to effective rate 
changes.
  [[Page H4316]] The SPEAKER pro tempore. Does the gentleman from 
Virginia [Mr. Moran] wish to be heard further on his point of order?
  Mr. MORAN. Mr. Speaker, I would like to underscore the last comment 
that was made by the distinguished chairman of the Committee on Ways 
and Means that the House rule in question is not intended to apply to 
effective tax rate changes. There was never any reference to effective 
rate changes. In fact, it was any income tax rate increase. I read the 
debate again that occurred on the first day of this session. We are now 
making a distinction between effective rate changes apparently and 
statutory rate changes, although both apply here. I do have a letter 
from the Treasury Department explaining that this is a tax rate 
increase.
  How it occurred, Mr. Speaker, is in the 1993 Omnibus Budget 
Reconciliation Act we did pass a capital gains tax rate reduction. What 
it said is that when people invest in small capitalized firms for five 
years, their capital gains tax is reduced by 50 percent. What this bill 
did was to strike the capital gains rate of 28 percent, raise it to 
39.6 percent, and then apply the 50 percent preference for capital 
gains investment. What that means is that the effective capital gains 
rate is 19.8 percent if this bill were to pass, whereas today there are 
investors getting a 14 percent tax rate on capital gains investments.
  Now, this is not an obscure provision. It is a $725 million capital 
gains provision that was passed in the 1993 Budget Reconciliation Act. 
What we have done is for some investors who have invested hundreds of 
millions of dollars in small capitalized firms, is increased their tax 
rate from 14 percent to 19.8 percent. That is an increase in the income 
tax rate. It is both a statutory increase, in that we remove the 28 
percent level and put in 39.6 percent. It is also an effective rate 
increase because it changes from 14 percent to 19.8 percent. That is 
what the letter from both the Treasury Department and the Small 
Business Committee underscores, that in fact investors would be paying 
a higher capital gains rate.
  Mr. THOMAS. Mr. Speaker, the gentleman did not mean to say the Small 
Business Committee. I believe he meant to say the Small Business 
Administration.
  Mr. MORAN. The Small Business Administration. I thank the gentleman 
from California for clarifying that.
  The SPEAKER pro tempore. Does the gentleman from Maryland [Mr. 
Cardin] wish to be recognized on the point of order?
  Mr. CARDIN. Mr. Speaker, I do.
  Mr. Speaker, this is a very important ruling. It is the first one 
that the Chair has had to make on the new rule XXI that requires an 
extraordinary vote on a tax rate increase. The language, as I 
understand it, is when the Federal tax rate increase applies we need a 
three-fifths vote.
  If I understand the potential ruling of the Chair, if the Chair rules 
that this bill does not raise a rate and therefore does not need an 
extraordinary vote, what the Chair is saying is that legislation which 
subjects a larger percentage of a taxpayer's income to an existing tax 
rate would not be a tax rate increase under the provisions of rule XXI. 
That would mean that we could effectively raise tax rates in this 
country by just subjecting a larger amount of a person's income to the 
tax rate, thereby accomplishing the effect of a tax rate increase under 
the potential ruling of the Chair without raising the rate.
  I just really want to point that out to the Chair before he makes his 
ruling, because effectively if he rules against the gentleman from 
Virginia [Mr. Moran] rule XXI is meaningless.

                              {time}  2245


                         parliamentary inquiry

  Mr. MFUME. Mr. Speaker, I have a parliamentary inquiry.
  The SPEAKER pro tempore (Mr. Dreier). The gentleman will state his 
inquiry.
  Mr. MFUME. Mr. Speaker, we have a ruling from the joint committee, an 
explanation. We have two explanations, one from Treasury, one from 
Small Business, both of which are very detailed in terms of their 
justification of their position.
  This Member is at a loss with respect to the ruling of the Chair and 
questions whether or not the Chair's ruling, pending ruling, is 
discretionary or is it based in fact. And if it is based in fact, could 
the Chair kindly advise the Member how the Chair reached that and to 
suggest also that it was not discretionary?
  The SPEAKER pro tempore. The Chair is prepared to rule on this.
  Mr. SKAGGS. Mr. Speaker, I would like to be heard on the point of 
order.
  The SPEAKER pro tempore. The gentleman is recognized.
  Mr. SKAGGS. Mr. Speaker, one further point I
   think needs to be made on this.

  During the debate on opening day, it was touted that this rules 
change was remedial in nature. It was to be viewed expansively as 
remedying a propensity of the House that needed to be curtailed. A 
narrow reading such as is advocated by the chairman of the Committee on 
Ways and Means a few minutes ago flies in the face of all of the 
advocacy, the legislative history, if you will, of this rules change, 
which is the only basis that the House has and that the Chair has for 
informing a ruling.
  To take a provision that was intended to be remedial, and therefore 
viewed expansively, and interpret it narrowly belies the absurdity of 
the rules change to begin with.
  The SPEAKER pro tempore. Does the gentleman from Washington [Mr. 
McDermott] wish to be heard on the point of order?
  Mr. McDERMOTT. Yes, Mr. Speaker.
  Mr. Speaker, if I understand the ruling the Chair is about to make, 
you are saying for those who do not understand arcane tax law, if we 
raise taxes on people but we do it in a sneaky, kind of back-door way 
of doing it, that, Mr. Speaker, if we do it in a legislatively, 
carefully crafted way, we can get away with it. If we do it straight 
out and say to small business, your taxes go from 14 percent to 19 
percent just like that, that would require a 60-percent vote. But if we 
can find some way parliamentarily to swing around it, whatever the 
effect on people is does not make any difference.
  Is that what the Chair is saying?
  The SPEAKER pro tempore. The gentleman from Georgia [Mr. Linder] is 
recognized on the point of order.
  Mr. LINDER. Mr. Speaker, this does not seem all that complicated. It 
does not change any rates of taxation of capital gains. It excludes 50 
percent of the gain. Therefore, you are taxed at the 39.6-percent tax 
rate. Fifty percent of any gain would be excluded, giving an effective 
rate of 19.8 percent, a lower effective rate.
  If you happen to be taxed at a 35-percent tax rate, 50 percent of the 
gain would be excluded, giving you a 17.5-percent tax. It lowers the 
effective rate in every instance by excluding half of the gain from any 
taxation at all.
  The SPEAKER pro tempore. Does the gentleman from Michigan [Mr. Levin] 
wish to be heard on the point of order?
  Mr. LEVIN. Yes, Mr. Speaker.
  I just want to say to the gentleman from Georgia, the reason the 
gentleman from Virginia [Mr. Moran] is right is because you are simply 
wrong.
  The SPEAKER pro tempore. The Chair is prepared to rule.


                         parliamentary inquiry

  Mr. OBEY. Parliamentary inquiry, Mr. Speaker.
  The SPEAKER pro tempore. The gentleman will state his parliamentary 
inquiry.
  Mr. OBEY. Mr. Speaker, I really do not wish to draw this out. I would 
like to go home as much as anybody else.
  But in light of the statement made by the previous gentleman in the 
well in which he asserted in his advice to the Chair that this was a 
simple question because tax rates were not being raised, we were simply 
expanding the percentage of income being taxed at that rate, does that 
mean----
  Mr. LINDER. If the gentleman will yield, I said precisely the 
opposite. I said we are reducing the amount of income that is going to 
be taxed or the percentage of income by excluding half the gain.
  Mr. OBEY. Mr. Speaker, may I finish my parliamentary inquiry?
  The SPEAKER pro tempore. The gentleman is recognized.
  Mr. OBEY. Does that rationale mean that when it was suggested that 
there was a tax increase on Social Security recipients last year simply 
because the percentage of income that was being 
[[Page H4317]] taxed was being broadened, does that mean that the 
Republican Party is now changing their opinion that that was a tax 
increase? Are they not taking it back?
  The SPEAKER pro tempore. The Chair is prepared to rule.
  In deference to the specialized expertise that has been provided, the 
Chair rules that this bill does not include a Federal income tax rate 
increase.
  Mr. MFUME. Mr. Speaker, is the ruling discretionary? Mr. Speaker, is 
it a discretionary ruling?
  Mr. MORAN. Mr. Speaker, I respectfully appeal the ruling of the 
Chair.
                 motion to table offered by mr. archer

  Mr. ARCHER. Mr. Speaker, I offer a motion.
  The SPEAKER pro tempore. The Clerk will report the motion.
  The Clerk read as follows:

       Mr. ARCHER moves to lay the appeal on the table.

  The SPEAKER pro tempore. The question is on the motion offered by the 
gentleman from Texas [Mr. Archer] to lay on the table the appeal of the 
ruling of the Chair.
  The question was taken; and the Speaker pro tempore announced that 
the noes appeared to have it.


                             recorded vote

  Mr. MFUME. Mr. Speaker, I demand a recorded vote.
  A recorded vote was ordered.
  The vote was taken by electronic device, and there were--ayes 228, 
noes 204, not voting 3, as follows:

                             [Roll No. 294]

                               AYES--228

     Allard
     Archer
     Armey
     Bachus
     Baker (CA)
     Baker (LA)
     Ballenger
     Barr
     Barrett (NE)
     Bartlett
     Barton
     Bass
     Bateman
     Bereuter
     Bilbray
     Bilirakis
     Bliley
     Blute
     Boehlert
     Boehner
     Bonilla
     Bono
     Brownback
     Bryant (TN)
     Bunn
     Bunning
     Burr
     Burton
     Buyer
     Callahan
     Calvert
     Camp
     Canady
     Castle
     Chabot
     Chambliss
     Chenoweth
     Christensen
     Chrysler
     Clinger
     Coble
     Coburn
     Collins (GA)
     Combest
     Cooley
     Cox
     Crane
     Crapo
     Cremeans
     Cubin
     Cunningham
     Davis
     DeLay
     Diaz-Balart
     Dickey
     Doolittle
     Dornan
     Dreier
     Duncan
     Dunn
     Ehlers
     Ehrlich
     Emerson
     English
     Ensign
     Everett
     Ewing
     Fawell
     Fields (TX)
     Flanagan
     Foley
     Forbes
     Fowler
     Fox
     Franks (CT)
     Frelinghuysen
     Frisa
     Funderburk
     Gallegly
     Ganske
     Gekas
     Gilchrest
     Gillmor
     Gilman
     Gingrich
     Goodlatte
     Goodling
     Goss
     Graham
     Greenwood
     Gunderson
     Gutknecht
     Hancock
     Hansen
     Hastert
     Hastings (WA)
     Hayworth
     Hefley
     Heineman
     Herger
     Hilleary
     Hobson
     Hoekstra
     Hoke
     Horn
     Hostettler
     Houghton
     Hunter
     Hutchinson
     Hyde
     Inglis
     Istook
     Johnson (CT)
     Johnson, Sam
     Jones
     Kasich
     Kelly
     Kim
     King
     Kingston
     Klug
     Knollenberg
     Kolbe
     LaHood
     Largent
     Latham
     LaTourette
     Lazio
     Leach
     Lewis (CA)
     Lewis (KY)
     Lightfoot
     Linder
     Livingston
     LoBiondo
     Longley
     Lucas
     Manzullo
     Martini
     McCollum
     McCrery
     McDade
     McHugh
     McInnis
     McIntosh
     McKeon
     Metcalf
     Meyers
     Mica
     Miller (FL)
     Molinari
     Moorhead
     Morella
     Myers
     Myrick
     Nethercutt
     Neumann
     Ney
     Norwood
     Nussle
     Oxley
     Packard
     Paxon
     Petri
     Pombo
     Porter
     Portman
     Pryce
     Quillen
     Quinn
     Radanovich
     Ramstad
     Regula
     Riggs
     Roberts
     Rogers
     Rohrabacher
     Ros-Lehtinen
     Roth
     Roukema
     Royce
     Salmon
     Sanford
     Saxton
     Scarborough
     Schaefer
     Schiff
     Seastrand
     Sensenbrenner
     Shadegg
     Shaw
     Shays
     Shuster
     Skeen
     Smith (MI)
     Smith (NJ)
     Smith (TX)
     Smith (WA)
     Solomon
     Spence
     Stearns
     Stockman
     Stump
     Talent
     Tate
     Taylor (NC)
     Thomas
     Thornberry
     Tiahrt
     Torkildsen
     Upton
     Vucanovich
     Waldholtz
     Walker
     Walsh
     Wamp
     Watts (OK)
     Weldon (FL)
     Weldon (PA)
     Weller
     White
     Whitfield
     Wicker
     Wolf
     Young (AK)
     Young (FL)
     Zeliff
     Zimmer

                               NOES--204

     Abercrombie
     Ackerman
     Andrews
     Baesler
     Baldacci
     Barcia
     Barrett (WI)
     Becerra
     Beilenson
     Bentsen
     Berman
     Bevill
     Bishop
     Bonior
     Borski
     Boucher
     Brewster
     Browder
     Brown (CA)
     Brown (FL)
     Brown (OH)
     Bryant (TX)
     Cardin
     Chapman
     Clay
     Clayton
     Clement
     Clyburn
     Coleman
     Collins (IL)
     Collins (MI)
     Condit
     Conyers
     Costello
     Coyne
     Cramer
     Danner
     de la Garza
     Deal
     DeFazio
     DeLauro
     Dellums
     Deutsch
     Dicks
     Dingell
     Dixon
     Doggett
     Dooley
     Doyle
     Durbin
     Edwards
     Engel
     Eshoo
     Evans
     Farr
     Fattah
     Fazio
     Fields (LA)
     Filner
     Flake
     Foglietta
     Ford
     Frank (MA)
     Frost
     Furse
     Gejdenson
     Gephardt
     Geren
     Gibbons
     Gonzalez
     Gordon
     Green
     Gutierrez
     Hall (OH)
     Hall (TX)
     Hamilton
     Harman
     Hastings (FL)
     Hayes
     Hefner
     Hilliard
     Hinchey
     Holden
     Hoyer
     Jackson-Lee
     Jacobs
     Jefferson
     Johnson (SD)
     Johnson, E.B.
     Johnston
     Kanjorski
     Kaptur
     Kennedy (MA)
     Kennedy (RI)
     Kennelly
     Kildee
     Kleczka
     Klink
     LaFalce
     Lantos
     Laughlin
     Levin
     Lewis (GA)
     Lincoln
     Lipinski
     Lofgren
     Lowey
     Luther
     Maloney
     Manton
     Markey
     Martinez
     Mascara
     Matsui
     McCarthy
     McDermott
     McHale
     McKinney
     McNulty
     Meehan
     Meek
     Menendez
     Mfume
     Miller (CA)
     Mineta
     Minge
     Mink
     Moakley
     Mollohan
     Montgomery
     Moran
     Murtha
     Nadler
     Neal
     Oberstar
     Obey
     Olver
     Ortiz
     Orton
     Owens
     Pallone
     Parker
     Pastor
     Payne (NJ)
     Payne (VA)
     Pelosi
     Peterson (FL)
     Peterson (MN)
     Pickett
     Pomeroy
     Poshard
     Rahall
     Rangel
     Reed
     Richardson
     Rivers
     Roemer
     Rose
     Roybal-Allard
     Rush
     Sabo
     Sanders
     Sawyer
     Schroeder
     Schumer
     Scott
     Serrano
     Sisisky
     Skaggs
     Skelton
     Slaughter
     Spratt
     Stark
     Stenholm
     Stokes
     Studds
     Stupak
     Tanner
     Tauzin
     Taylor (MS)
     Tejeda
     Thompson
     Thornton
     Thurman
     Torres
     Torricelli
     Towns
     Traficant
     Tucker
     Velazquez
     Vento
     Visclosky
     Volkmer
     Ward
     Waters
     Watt (NC)
     Waxman
     Williams
     Wilson
     Wise
     Woolsey
     Wyden
     Wynn
     Yates

                             NOT VOTING--3

     Franks (NJ)
     Reynolds
     Souder

                              {time}  2307

  So the motion to lay on the table the appeal of the ruling of the 
Chair was agreed to.
  The result of the vote was announced as above recorded.
  

                          ____________________