[Congressional Record Volume 141, Number 73 (Thursday, May 4, 1995)]
[Senate]
[Pages S6133-S6135]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


 ONE HUNDRED DAYS OF REFORM FOR A NEW CENTURY OF RESPONSIBLE GOVERNMENT

  Mr. GRAMS. Mr. President, I am glad to have the opportunity to join 
with my fellow freshmen today to speak on the topic this week, ``100 
Days of Reform for a New Century of Responsible Government.''
  Having just returned from a series of townhall meetings in my home 
State of Minnesota, however, it would be more appropriate to refer to 
it as moving forward with the people's agenda.
  Over the Easter recess, I held town meetings in five cities, 
traveling over 1,000 miles, talking with hundreds of people across the 
State of Minnesota.
  And the mandate they delivered last November is more focused than 
ever--fix things in Washington.
  [[Page S6134]] From Austin, MN to Brainerd, their message focused on 
our $4.8 trillion debt.
  The folks I talked with agree something needs to be done now. They 
have waited long enough.
  They are not content to have a Government running deficits of 
hundreds of billions of dollars each year for as far as the eye can 
see. They are understandably frustrated by decades of Washington 
doublespeak when it comes to making the tough choices necessary to 
balance the budget.
  And most importantly, they are concerned for their children and 
grandchildren who will be forced to finance the Government's spending 
spree.
  Because of that massive $4.8 trillion debt, by the time every child 
born after 1992 enters the work force, they will face a Federal, State, 
and local tax rate between 84 and 94 percent.
  Think about it. If Washington keeps doing what it is doing, spending 
dollars it does not have and passing along the bills, every child born 
after 1992 will spend their whole life working just to pay off a 
Federal spending spree that they never even asked for.
  Fortunately, my constituents had an opportunity to voice their 
concerns during my townhall meetings in Minnesota, and today, I want to 
share what they had to say.
  I brought with me some of the charts that I took around the State 
with me in these town meetings to try to point out some of the problems 
that I think we are facing. This first chart we were talking about is 
Federal taxes as a share of the median family income.


            Federal Taxes as a Share of Median Family Income

  The percentage of income paid to the Federal Government in direct 
taxes went from 3 percent in 1948 to 24.5 percent in 1992.
  In the 5 years between 1948 and 1953, Federal taxes rose from 3 to 9 
percent of gross income.
  You have to remember this is coming out of World War II where we had 
to go into debt to help finance. Only 3 percent at that time was going 
to the Federal taxes.
  In the 8 years between 1972 and 1980, the average family saw their 
tax bill rise from 16 percent of their annual income to 23.5 percent of 
their income.
  The rise of the Social Security payroll tax and the erosion of the 
personal exemption have been the largest contributors to the reduction 
of posttax income for families.
  It is no wonder middle class families are finding it difficult to buy 
a house, put their kids through college, or put money aside for their 
retirement.
      average income families would be taxed $10,060 less per year

  Let us look at chart No. 2, the average income families would be 
taxed $10,060 less per year.
  According to the U.S. Bureau of the Census, the total pretax income 
for a family of four in 1992 was $47,787. After taxes, this same 
family's income fell to $36,915.
  Under the 1948 tax rates, the median income family of four would pay 
only $812 in taxes to the Federal Government, leaving the family with 
an after tax income of $46,975 when adjusted to 1992 dollar amounts.
  In 1992, a family of four, with the median income of $47,787, paid 
$10,060 more in direct taxes to the Federal Government than the same 
family would have if tax rates had remained at 1948 levels.
  To put that into everyday terms, the median price of a single-family 
home purchased in 1992 was $103,700. The average annual mortgage 
payment was $7,380.
  The annual family income lost to increasing Federal tax burdens 
exceeds the average annual mortgage payments for an average home by 36 
percent.
  What could you do if you could keep another $10,060 in your pockets? 
You could provide for the things your family needs without turning to 
the Federal Government and asking for more subsidies and more help. The 
dollars would remain in your pocket.
                     two-earner median income--1994

  The next chart that I was able to talk with Minnesotans about is the 
1994 two-earner median income chart.
  A median household with two breadwinners spends about $2 out of every 
$5 it earns on taxes; 40 percent of everything you bring in goes to 
State, Federal, and local taxes. The average family spends more money 
on Federal, State, and local taxes than it spends on food, clothing, 
housing, and medical care combined. This does not include sales tax or 
your Social Security, the FICA tax. That brings it up to nearly 49.6 
percent of everything an average family makes in this country which 
goes to pay for government.
  Why are Federal taxes so high today? After all, did Ronald Reagan not 
pass a massive income tax cut in 1981? Yes, Reagan did sign a 25-
percent income tax rate cut for all Americans in 1981. However, there 
have been six major tax increases since--1982, 1983, 1987, 1988, 1990, 
and 1993. These have nullified the Reagan tax cuts.
  In the early 19th century, Chief Justice John Marshall wrote in the 
Supreme Court case, McCulloch versus Maryland: ``The power to tax 
involves the power to destroy.''
  Today, this statement still rings true. Taxes are destroying the 
income of American families, leaving only 60 percent of what it earns 
to spend on life's necessities and joys.
  In 1966 the median income family of four will work until May 30 to 
pay their share of Federal, State, and local taxes--98 days.
  In 1948, the average family of four worked only 8 days to pay their 
share of Federal taxes.
  Had Congress adopted the Republican alternative budget for fiscal 
year 1995, roughly 35 million families could have deducted $500 per 
year from their tax bill per child next April 15. For the average 
family of four, that extra $1,000 would be handy.


            sources of government spending fiscal year 1995

  The budget is composed of two principal fund groups, Federal funds 
and trust funds. This is how the bills are paid in Washington.
  Federal funds carry out the general purposes of government, whereas 
trust funds, such as Social Security and Medicare, are designated by 
law and financed by specially allocated collections.
  In 1994, trust fund surpluses totaled $95 billion. Under current law, 
the sum of the trust fund surplus and Federal fund deficit equals the 
unified deficit, which is commonly referred to as simply the deficit.
  Merging these trust funds--this is what we collect in tax receipts 
from your income tax, the 1040 business taxes, and others--the trust 
funds bring in $511 billion and pay for Social Security payments, and 
others. But last year there was a $107 billion surplus in that trust 
fund which the Government also borrowed along with the green part of 
this chart, $192.5 billion.
  What I would like to say about this green and what came out of the 
trust fund is money that we are borrowing from our children. We are 
taking this out of their future accounts to supply the dollars we need 
today in order to deficit spend, and the trust fund receipts in general 
revenues will total over $1.2 trillion or 81.5 percent of the Federal 
spending.
  Unfortunately, this sum does not even begin to cover the Government's 
expenditures. The Government again will borrow from our children this 
$192 billion.
  On the next chart, in real terms, a family of five making about 
$45,000 would have 10 percent of its Federal tax burden reduced through 
the $500 per child tax credit. This chart shows where many argue this 
is a tax credit for the rich. They talk about the $200,000 a year 
income. In real terms, families making under $75,000 a year would get 
86 percent of the tax credit on $500 per child.
  If you make under $100,000, about 95 percent of the families making 
under $100,000 would receive a tax credit.
  In the next chart, the White House and congressional Democrats argue 
that a $500 per child tax credit is unnecessary because they expanded 
the earned income tax credit in the 1993 bill. But this claim ignores 
the difference between a wage subsidy and a tax cut.
  The EITC is a wage supplement for working families with children with 
incomes up to $26,000 per year. It is intended to offset the Social 
Security tax burden on these families and to increase their wages 
through a cash subsidy.
  A family of four earning $14,000 a year--slightly below the official 
poverty level--will pay no income taxes 
[[Page S6135]] but will bear a Social Security tax burden of roughly 
$2,140. Now, this family is then eligible to receive some $2,400 from 
the earned income tax credit, nearly $260 more than its entire tax 
burden.
  A family earning $28,000 a year--and not eligible for the earned 
income tax credit--would have 57 percent of its income tax bill and 17 
percent of its total Federal tax bill erased by the $500 per child tax 
credit.
  This is an important part of tax relief to these families that do not 
qualify but still make under $35,000 a year.
  Family tax relief, I believe, should not be means tested. Every 
working family in this country is overtaxed, thus every working family, 
regardless of income, should be eligible for a $500 per child tax 
credit. The Tax Code should not penalize children simply because of 
their parents' income.
  Now, along with family tax relief, the Minnesotans with whom I met 
during the past recess are demanding a balanced Federal budget with or 
without a balanced budget amendment. And if that means putting the 
Federal Government on a strict low-fat diet, then so be it.
  One thing I heard over and over again during my town meetings, from 
Minnesotans who pay their own bills and balance their own budget, is 
that if they can do it, then the Federal Government can do it as well.
  One thing is very clear: The budget can be balanced, and we can do it 
without gutting the vital programs on which millions of Americans 
depend. We will do it by containing the growth of Government while 
continuing to meet the needs of America's families, children, and 
senior citizens.
  By streamlining Federal bureaucracy and sending the money back to the 
State governments in the form of block grants, Minnesotans know that 
they will have more power, not less power, more resources, not fewer, 
and new and better opportunities.
  I have every confidence that the people of Minnesota can direct those 
resources and provide for those in need better than Washington 
bureaucrats could ever hope to do.
  That is my motivation as we move forward during these next 100 days, 
and it is my hope that every Senator remembers the messages that they 
have heard over the recess and join in the effort to enact what we call 
the people's agenda.
  We need to restrict or restrain the growth of spending in the Federal 
Government, but we also need tax relief for Minnesota families and for 
the Nation's families. We cannot have one without the other. I hope 
very strongly that as we move forward in these next 100 days we will be 
able to provide some of this long sought tax relief for middle-class 
American families.
  I thank the Chair. I would now like to turn the floor over to my 
colleague, the Senator from Missouri [Mr. Ashcroft].
  Mr. ASHCROFT addressed the Chair.
  The PRESIDING OFFICER (Mr. Faircloth). The Senator from Missouri.
  The first half hour of time which was reserved has expired, so the 
Senator has up to 5 minutes.
  Mr. ASHCROFT. Mr. President, I would ask unanimous consent that I can 
speak as if in morning business for up to 10 minutes.
  The PRESIDING OFFICER. Without objection, it is so ordered.

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