[Congressional Record Volume 141, Number 76 (Tuesday, May 9, 1995)]
[House]
[Pages H4601-H4604]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


             RETURNING FISCAL SANITY TO OUR BUDGET PROCESS

  The SPEAKER pro tempore. Under the Speaker's announced policy of 
January 4, 1995, the gentleman from Maryland [Mr. Ehrlich] is 
recognized for 60 minutes as the designee of the majority leader.
  Mr. EHRLICH. I rise, Mr. Speaker, to engage my colleague from 
California in the 5th installment of our series of colloquys. The 
gentleman from California [Mr. Radanovich] and I have in the past now 
120 days, I believe approximately, talked about the Contract With 
America, and the themes behind the Contract With America, and the 
regulatory reform, and legal reform, welfare reform, and a lot of the 
initiatives that we campaigned on that formed the Contract With 
America, and, Mr. Speaker, I have been thinking about that a lot these 
last days as now this great House turns its attention to Medicare, and 
the Federal budget, and doing what a lot of us were sent here to do, 
which is to return a sense of fiscal sanity to this country and to the 
budget process of this House. And, Mr. Speaker, as I thought about all 
this, and I thought about a lot of the rhetoric being heard around this 
town these days, I again thought about the common themes that seem to 
occur or recur every time we discuss an important issue in this House, 
and the premise, whenever comes to an economic issue, Mr. Speaker, 
seems to be all tax cuts cost the United States Treasury in direct 
proportion to the tax cuts. Tax cuts are mutually exclusive of the 
budget cuts. There is no multiplier effect when tax cuts put more money 
into the pockets of individuals and business.
  Premise number two seems to be that we ignore the accepted economic 
realities and real life experiences of tax increases on the one hand 
and tax decreases on the other, and, Mr. Speaker, I thought of all this 
in the context of Medicare and what this majority is now planning to do 
with respect to Medicare, because there is certainly a lot of talk 
these days, a lot of heat, and smoke and mirrors on this floor and 
around this town, and Mr. Speaker, in order to create a context for 
this debate I thought to myself what example could I think of in the 
recent past where good politics and bad economics came together.
  And Mr. Speaker before I get to that, I would like just to tell the 
House an example of what I am talking about. Today's message from the 
House Democrat leadership:
  GOP makes its choice. Seniors cough up $900 a year to pay for the 
wealthy's tax cut. House Republicans returned from the party conference 
last week united by a plan to cut Medicare to pay for the $345 billion 
tax cut for the wealthy. Under the pretense they will be, quote 
unquote, fixing Medicare. Republicans have identified Medicare cuts as 
the cash
 cow for their tax give away to the wealthy.
  [[Page H4602]] As I was thinking about this, Mr. Speaker, I thought 
about the debate we had in this House before the gentleman from 
California [Mr. Radanovich] and I came here. I know I was in the State 
legislature. That was the great debate concerning the luxury tax, and 
Mr. Radanovich will talk about the luxury tax in its place in the 
middle of this debate in a minute, but I see the gentleman brought some 
famous tax quotes with him today, and I ask why you brought those 
quotes.
  Mr. RADANOVICH. I say to the gentleman, ``Thank you, Mr. Ehrilich. A 
couple of past quotes from two different periods, one in 1990, then one 
in 1995, one representing the majority held by the other party, this 
1995 representing the majority that now currently exists, the 
Republican majority in the House.
  It is the same old game. Republicans are out to cut taxes, and 
strictly for the rich, for their sole benefit, and I think that nothing 
seems to change.
  The gentleman may have a quote here.
  Mr. EHRLICH. This bill is fair, it raises more money, again on a 
progressive basis, from those who can afford to pay and who have paid 
least during the decade of the 1980s. That is the quote from a Member 
of this House, the context of the debate during the luxury tax; 
correct?
  Mr. RADANOVICH. Right, and the same quote being is this sacrifice 
balanced and fair. And indeed it is. Fifty percent of the revenue 
burden falls on the wealthiest income earners in this country, and that 
is the way it should be.
  Mr. EHRLICH. Now the people of this country will remember the great 
luxury tax. It placed a 10-percent surcharge on a portion of a purchase 
price over $100,000 on private boats and yachts. Congress established 
similar taxes on furs, jewelry, cars and airplanes.
  Now, this in my view, Mr. Radanovich, is the best example I can think 
of where good class warfare politics meets economics 101, and you know 
what? Politics always loses because combined with the recession, Mr. 
Speaker, the tax nearly killed an entire industry in this country. The 
tax adversely effected every segment of the industry, manufacturers, 
retailers, and blue collar workers, and is that not the ultimate irony, 
Mr. Radanovich, that tax warfare ends up hurting blue collar workers 
because blue collar workers have the jobs that build the items that are 
now overtaxed that put them out of business?
  Mr. RADANOVICH. And history provided that example as a result of the 
yacht tax in the last 2 years; is that not right?
  Mr. EHRLICH. We have seen that every year. In fact it is very 
interesting for me to go back, check, have my staff to go back and 
check the revenue projections from the luxury tax, because obviously it 
is a static score; right? You tax something, you get more of it.
  Wrong. The new 10 percent luxury tax on boats, cars, furs, et cetera, 
was to raise $25 million, Mr. Speaker, in its first year, 1991, and 
almost $1.5 billion over 5 years, from 1991 to 1996. And you know what 
it did? Sales of boats under $100,000 purchase price dropped 12.2 
percent. Sales of boats over $100,000 dropped 52.7 percent. The sales 
of volume of boats under $100,000 of value dropped 28 percent, to $129 
million. Sales of boats over $100,000 dropped 71 percent, to $73 
million. According to the National Marine Manufacturers Association at 
the time of repeal, big boat sales were down 70 percent from peak 
levels in 1988.
  And here is the ultimate irony as we have discussed. At the time of 
the repeal, Mr. Speaker, the National Marine Manufacturers Association 
estimated that the luxury tax created a net loss of 30,000 American 
jobs and destroyed dozens of companies in the process. Other estimates 
were higher, up to $45,000. And I would direct a question to my 
colleague from California: What does this teach us?
  Mr. RADANOVICH. The big lesson is that, if you want to raise revenue, 
you have to got to cut taxes. You cannot raise revenue by raising 
taxes, and I think that is the big lesson we have learned over the last 
4 years, and I think that is what this new majority is trying to 
implement in their tax cuts.
  Now there is two arguments when the Democrats accuse the Republicans 
of gutting Medicare to benefit the wealthiest Americans. There is two 
arguments here. One is that the basic argument is that, if you cut 
taxes, if you regulate people less, and you tax them less, they are 
going to be more productive, and I think that is one basic question. 
The other basic question on Medicare is the fact that on its own 
Medicare will go bankrupt in 5 to 7 years.
  Mr. EHRLICH. And who says that? Who makes that statement?
  Mr. RADANOVICH. All you have to do is look at the books, and you will 
know that is what is going to happen with Medicare, so regardless of--
balancing the budget is not an issue with Medicare. It is fixing the 
system and doing what is necessary in order to make that system not 
only work for the people that are currently drawing benefits, but it 
also worked for people, you and I, and those that are 18 and 20 years 
old, when they come into the time of their life when they need that 
service as well.
  So there are two basic issues there that are not commingled, and the 
fact if we wanted to, if the Republicans wanted to benefit the rich, 
what they do is cut taxes and cut regulations. Then that would not only 
benefit the rich, but the middle class and the poor. Because the 
Democratic assumption that cutting taxes, for example, capital gains, 
would be a benefit to the rich is an insult to the poor because, not 
only would it make more capital available for venture capital and 
expansion to the rich, but also the middle class and the poor, and it 
is almost an insult to the poor to say they could not take advantage of 
that.
  Mr. EHRLICH. Does anyone doubt that the capital gains tax cut will 
increase revenue flowing into the Treasury? Tax cuts work. The Reagan 
tax cuts of the 80's, the greedy 80's we hear about so much, increased 
revenue into the Federal Treasury. The problem during that decade was, 
as we know, spending went out of control, and I see the 1995 quote from 
a Member of this, of this body, and this is my favorite I have to say. 
It combines a lot of different themes that we have talked about. The 
hard fact is that voodoo economics, trickle down economics too, which 
this package happens to be, referring to the tax package and the 
Contract With America, is nothing more or less than a raid on the poor, 
a slap to the rich and a benefit to those who have no need of tax 
expense, sweat it out the hides of those who have the least.
  Mr. RADANOVICH. Not so.
  Mr. EHRLICH. Why?
  Mr. RADANOVICH. It just is not true, and I think, if you pose the 
argument that if a person is taxed less and regulated less, then they 
will be more productive, is an argument that both sides of this aisle 
will buy.
                              {time}  1915

  But if you go to the next stage of the argument and say OK, how do 
they begin to regulate and tax less to the benefit of the American 
people, this side of the aisle says all right, let's go. Let's work 
this plan out.
  That side of the aisle says no. But there is no logic behind why they 
are saying no, because that side of the aisle will also agree to the 
fact that if we are taxed less and regulated less, we will be more 
productive. But their logic starts there. God knows why.
  Mr. EHRLICH. Maybe the answer is in the 1996 elections. I simply do 
not know. But is it not interesting how these quotes are so similar? A 
proposal that obviously failed miserably in 1990, they used the same 
rhetoric against the tax cuts contained in the Contract With America, 
and now, most disturbing to me and I think to you, is now the offshoot 
of class warfare. You see class warfare here, and the American people 
recognize class warfare when they see it. That is all they see.
  I know the gentleman wants to discuss it. I know the gentleman wants 
to comment on my point, which is now that with Medicare in the budget, 
we not only have class warfare, we have the offshoot, generational 
warfare. ``Let's turn the generations and not just the classes against 
each other.'' That is the most unfortunate aspect of this national 
debate occurring today.
  Mr. RADANOVICH. I would say the bottom line motive behind that 
approach from the other side of the aisle 
[[Page H4603]] is to retain more control in Washington, because the big 
debate in Washington is not necessarily balancing the budget, although 
that is very important; it is who is going to have control. Is it going 
to remain here in Washington, DC, or is it going to get down to the 
most local level possible, via the States down to local governments and 
closest to the American people in their own homes? That is really the 
threat.
  That is why you see baseless arguments like this. You see people on 
the other side of the aisle class warfare baiting, only for one reason, 
and that is to keep control in this House, in the other body, in this 
town, in Washington, DC. It is called centralized government. It is 
where you have a lot of control over a lot of people.
  Some people like that. Those of us newly elected to Washington do not 
want that. We want the American people to have the control, and that is 
what we are trying to do here in Washington.
  Mr. EHRLICH. Is it not refreshing with our class, the new leadership, 
the Speaker, we have people here who are willing to challenge 
assumptions that really have been accepted by many Americans, many 
well-meaning Americans, for the last 40 years. We are willing to 
challenge those exceptions. And we have one person in Washington right 
now, the Speaker of the House and the leadership, willing to go to the 
American people and say, look, we have got a problem. And the Speaker 
has gone out of his way to ask the President to help in a nonpartisan 
way.
  We have people who are willing to challenge assumptions and make a 
political gut check, cast tough votes, because we both know, we just 
got back from break in our districts, if we do not cast tough votes, if 
we do not follow through on our promises, honeymoons are short in 
American politics today. We will not be here for long.
  We are both freshman. This is not a bad job. We kind of like it. I 
like representing the people of the second district of Maryland, I have 
to tell you.
  Mr. RADANOVICH. I will say, us being new Members, we could remain 
here a long time, if it were not for two things, and not do the 
business of our district. In the past I think it used to be elected 
representatives would come to Washington. They would say one thing in 
their district, they would do the other thing here in Washington. For a 
long time the tolerant American people gave their elected 
representatives the benefit of the doubt that they were doing the right 
thing in Washington.
  Well, two things changed that. One is C-SPAN and the other is talk 
radio. I do not think anybody can afford to come to this body anymore 
and say one thing in their district and not do the same thing here, 
because there will be a lot to pay on election day. So that motivation 
and that way of operating is now unmasked.
  If this gentleman and this gentleman want to stay in this House for 
very long at all and serve the needs of their district, they better do 
what they say in their district here on the floor of the House. I think 
C-SPAN and talk radio are the big changes that made that possible.
  Mr. EHRLICH. I agree. When we have a tough vote, the phones and faxes 
go off immediately. The American people are tuned into what is 
happening on this floor and they know facts.
  I think the best news I brought back from our 3-week break in my 
district was the fact that this kind of stuff no longer goes over with 
the American people. They see it for what it is. It can work at times. 
It certainly worked a few years ago in the course of the Presidential 
race. But dividing people, labor-management, poor-rich-middle class-
lower middle class, young and old, is no longer the answer, not 
politically, and it has never been the answer economically, at least in 
my district.
  I would direct a question to the gentleman. In my district the people 
said look, Bob, we know we are not going to agree with you on every 
vote. But we like the fact you had an agenda, you ran on that agenda, 
you passed that agenda, and now you are willing to do the tough things 
that we sent you to Washington to do.
  Mr. RADANOVICH. I think that people in my district sent me to 
Washington to make the tough decisions. If I listen and do what I think 
is right according to the philosophy that they knew what I believed in 
when they elected me, then I have their support. If I betray any of 
that, I do not have their support. That is the way this game works. 
That is just the way it is.
  I would like to comment on a couple of things, one being Medicare, 
and the other one also being the tax cuts. If the Democrats, people on 
the other side of the aisle, are willing to sit down and have a debate, 
rather than resorting to what we call class warfare baiting, which it 
is nothing more than class warfare baiting to keep a strong centralized 
government in Washington, then let's agree on two things. Let's agree 
that the Medicare system, number one, is going bankrupt, and let's work 
together to solve that, be it cuts, additional money, anything else, 
let's solve that problem.
  The second problem that needs to be solved is let's together realize 
if people are taxed less and regulated less, they are going to be more 
productive, and let's build a tax cut structure that will allow that to 
happen in this country. If you really want a cooperative effort in this 
House, you will agree on those two things and proceed from there.
  We do not need this stuff. The American people do not buy it, we do 
not buy it, it is not true. There is no class warfare baiting here. The 
Republicans are not here for the rich. I do not know how many 
Republicans are rich anyway. I am not a rich Republican. But it just 
does not work.
  This was an article, editorial, in the Washington Times today, ``Not 
Rising to Class Warfare Battle.'' And that is exactly what Republicans 
are doing. They are not rising to the class warfare battle.
  Mr. EHRLICH. I am not going to embarrass the gentleman. We have a 
famous quiz at the bottom. I will not embarrass the gentleman by asking 
which year and which bill these quotes were directed toward. The fact 
is you see the quotes. ``Cheesy tax cut promises only make Americans 
cynical about government.''
  Can you imagine that, putting more money back in your pocket so you 
can grow, so you can take a risk, begin a business and hire people? 
That makes you cynical about government?
  I think tax fairness is an idea that all Americans understand and 
endorse irrespective of income level and party affiliation.
  Fairness. That is an interesting concept. Fairness and equity. My 
idea of fairness and equity and who is rich and who is not may not 
comport with yours. Is not that correct?
  Mr. RADANOVICH. I believe so, yes. I think that this is a smack in 
the face of every individual American in this country that wants to do 
good and be prosperous, and be personally responsible for their own 
actions. I think that first quote is right there. And you know, it does 
boil down to different viewpoints of how we treat individuals in this 
country and how this side of the aisle looks at the individual and says 
you have that responsibility, go for it, and the other side of the 
aisle looks and says you cannot do these things, we need to do it for 
you. There is a big difference between those two outlooks.
  Mr. EHRLICH. Absolutely. I agree. There is my final observation here. 
I hope that what we saw in 1990 with respect to the luxury tax, what we 
saw 2 months ago with respect to welfare and tax reform, are theories 
and strategies of the past, because one of the more frustrating parts 
of our job is when we go back home and meet with groups and they repeat 
rhetoric they hear on C-SPAN and talk radio, and read in the 
newspapers, and that rhetoric conflicts with facts.
  I know in the course of the welfare debate, in the course of school 
lunches, for instance, in the course of now the Medicare and the budget 
debate, we all want to debate ideas and numbers. We have legitimate 
differences with the other side. Reasonable people can disagree about 
our budget proposal and Medicare. And I know I join with the gentleman 
asking just one simple thing, that when the debate begins tomorrow, or 
tonight actually, that the other side uses real numbers, facts. I am 
glad to debate facts. I do not like debating rhetoric.
  Mr. RADANOVICH. And do not use class warfare baiting. It is not fair 
to say someone is for the poor any more than 
anyone else is. We are all here 
[[Page H4604]] to do good for everybody. Nor generational 
warfare.
  Mr. EHRLICH. I thank the gentleman from California. It is good to see 
him. I am sure we will revisit this issue, and maybe when we come back 
to this floor in a week or two or three, we will be able to report to 
the American people that we had a real good debate about the budget and 
about Medicare, and it never broke out into generational warfare. And 
the President actually was relevant, became part of the process as 
well. I would love to report that to the people of the Second District, 
and I would look forward to joining the gentleman again at that time.
  Mr. RADANOVICH. You bet.
  

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