[Congressional Record Volume 141, Number 86 (Tuesday, May 23, 1995)]
[Senate]
[Pages S7137-S7154]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                  CONCURRENT RESOLUTION ON THE BUDGET

  The PRESIDING OFFICER (Mr. Campbell). The Senate will resume 
consideration of Senate Concurrent Resolution 13.
  The clerk will report the pending business.
  The legislative clerk read as follows:

       A concurrent resolution (S. Con. Res. 13) setting forth the 
     congressional budget for the U.S. Government for the fiscal 
     years 1996, 1997, 1998, 1999, 2000, 2001, and 2002.

  The Senate resumed consideration of the concurrent resolution.

       Pending:
       Roth Amendment No. 1121, to express the sense of the Senate 
     that the number of Federal full-time equivalent positions 
     should be further reduced.

  Mr. EXON addressed the Chair.
  The PRESIDING OFFICER. The Senator from Nebraska.
  Mr. EXON. Mr. President, thank you. I simply say that as we open this 
very important day, it will be a very long day on the budget 
resolution. I would simply say that as usual at this particular time we 
have an inordinate number of amendments that have been suggested from 
Members on both sides of the aisle.
  I simply say that we very likely--if we are going to finish this up 
tomorrow some time, which we must, given the time constraints that we 
are under--are going to have to have some give and take today. We will 
have to begin the process very early today of trying to come to some 
specific time agreements. With the large number of amendments that we 
have to offer, we obviously are heading for one of those traditional 
situations that we do on the budget resolution where a great number of 
amendments to the bill are going to be offered and we are not going to 
have time to debate those.
  Under the rules, all amendments that are offered can be voted on if a 
rollcall vote is ordered, which indicates to me very clearly that 
tomorrow afternoon sometime we are going to have a great number--and I 
mean a great number, maybe 2 to 3 hours--of successive votes on many 
amendments that will not have been thoroughly discussed or debated at 
all in the U.S. Senate.
  Therefore, I would hope that we could all conserve time as best we 
can. Last night, the Senate completed debate on an amendment offered by 
the Senator from Delaware, on that side of the aisle. Under the usual 
procedures, the next amendment would be offered from someone on this 
side of the aisle.
  I see Senator Bradley is here to offer an appropriate amendment that 
had been scheduled for some time. Depending on what the acting majority 
leader would like to do, we are prepared to offer the amendment that 
had been scheduled to be offered by the Senator from New Jersey, unless 
there is intervening business.
  Mr. THOMAS. Mr. President, I believe the plan is to move forward with 
the amendment by Senator Bradley.
  Mr. EXON. Mr. President, I am, therefore, pleased to recognize the 
Senator from New Jersey.
  Would he please indicate to me about how much time he thinks would be 
necessary?
[[Page S7138]]

  Mr. BRADLEY. I say to the distinguished Senator from Nebraska I 
expect that we would need several hours on this amendment. I know there 
are many people who want to speak, and I will just have to see how many 
people come to the floor.
  Under the rules, we are allowed 2 hours equally divided, an hour on 
each side. We could start with that and see if there are others who 
want more time.
  Mr. EXON. I thank my friend from New Jersey, and I yield the floor.
  The PRESIDING OFFICER. The Senator from New Jersey [Mr. Bradley] is 
recognized.


                           Amendment No. 1122

(Purpose: To lessen tax increases on working families by using amounts 
                        set aside for a tax cut)

  Mr. BRADLEY. Mr. President, I send an amendment to the desk and ask 
for its immediate consideration.
  The PRESIDING OFFICER. Is there objection to laying aside the pending 
amendment?
  Without objection, it is so ordered.
  The clerk will report.
  The legislative clerk read as follows:

       The Senator from New Jersey [Mr. Bradley], for himself, Mr. 
     Breaux, and Mrs. Murray, proposes an amendment numbered 1122.

  Mr. BRADLEY. Mr. President, I ask unanimous consent that further 
reading be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

       On page 74, strike lines 12 through 24 and insert the 
     following: ``budget, the appropriate budgetary allocations, 
     aggregates, and levels shall be revised to reflect 
     $16,900,000,000 in budget authority and outlays of the 
     additional deficit reduction achieved as calculated under 
     subsection (c) for legislation that restores the full current 
     law earned income tax credit under section 32 of the Internal 
     Revenue Code of 1986.
       ``(b) Revised Allocations and Aggregates.--Upon the 
     reporting of legislation pursuant to subsection (a), and 
     again upon the submission of a conference report on such 
     legislation (if a conference report is submitted), the Chair 
     of the Committee on the Budget of the Senate may submit to 
     the Senate appropriately revised allocations under sections 
     302(a) and 602(a) of the Congressional Budget Act of 1974, 
     budgetary aggregates, and levels under this resolution, 
     revised by an amount that does not exceed the additional 
     deficit reduction specified under subsection (d).''.

  Mr. BRADLEY. Mr. President, the amendment that I have sent to the 
desk makes one simple point: Although we need to balance the Federal 
budget, we should not do it on the backs of America's working and 
middle-class families.
  The budget resolution before the Senate attempts to claim that it 
will balance the budget without raising taxes. However, buried deep in 
this budget proposal is a $20 billion tax increase--a $20 billion tax 
increase--on America's working families.
  The amendment that I have introduced on behalf of myself, Senator 
Breaux, Senator Murray, and others, would correct the numerous problems 
posed by the current earned income tax proposal in the budget 
resolution.
  The amendment would repeal the worst aspect of the $20 billion tax 
increase on working families. Specifically, the amendment would repeal 
the $12.8 billion tax increase on working families with children and 
the $4.1 billion tax increase on working Americans without children.
  At the same time, however, the amendment would ensure that we 
continue to improve the program's administration to fight against any 
potential fraud or abuse and to ensure that the benefits of this 
program go to those for whom it was intended.
  Mr. President, since its creation in 1975, the earned income tax 
credit has been one of the most important sources of support for 
working and lower-middle-class families. In 1996, the earned income tax 
credit will provide a tax cut for over 21 million workers and their 
families.
  In my own State of New Jersey, the earned income tax credit provided 
372,000 taxpayers with families with an average of over $1,000 in tax 
relief in 1993, a $1,000 tax cut for over 300,000 New Jersey families.
  The EITC helps families move off the welfare roles and into the work 
force. The incentive only goes to working families. No one on welfare 
gets this. These are working families. If you do not work, you do not 
qualify for the tax cut. It is as simple as that.
  Social Security taxes and various means-tested programs create 
disincentives for welfare recipients to work. Without the EITC's 
offsetting tax reduction, the working poor lose benefits and pay higher 
taxes for each extra dollar that they earn.
  The historic 1993 deficit reduction package expanded the earned 
income tax credit. Just as a point of reference, in my State about 
40,000 people ended up paying higher income taxes because of that 
deficit reduction package and nearly 400,000 ended up paying less taxes 
because of the earned income tax credit. So, as a result of that 
deficit reduction package, nearly 10 times more people in my State got 
a tax cut than got an income tax increase.
  When fully phased in, the credit will be available for families with 
two or more children, earning up to approximately $28,500. Two children 
and family, up to $28,500, that is roughly half the median income for a 
family of four. So what we are saying here is roughly a fourth of all 
families with two kids will qualify for the earned income tax credit. 
These are working families.
  Because the minimum wage has not kept pace with inflation, without 
these changes in the EITC many working families have fallen deeper into 
poverty as a result of higher taxes and lost benefits. The EITC works 
in a very important way for working families. For every added dollar a 
lower income working family earns, payroll taxes take 15.3 cents and 
certain other benefits drop. For example, food stamps drop 24 cents for 
every additional dollar. The EITC was intended to offset some of these 
disincentives by providing a tax reduction of 40 cents for every dollar 
earned by a working family with two children. In other words, that 
means the EITC can make a big difference in people's lives.
  Most eligible families earning between $5,500 and $15,500 will 
qualify for at least $1,000 in credits. That is another $1,000 in 
someone's pocket that can go to pay for food, for utility bills, for 
tuition to parochial school, for health insurance, or for mortgage 
payments.
  Not only does the EITC help families work their way out of poverty, 
the EITC is good for business. It puts more purchasing power in low-
income consumers' pockets and lets them keep more of what they earn. It 
also increases the effective wage rate paid by employers, providing the 
neediest Americans with an even greater incentive to go to work. By 
helping these families we also ease the burden on public services 
provided by State and local government.
  Even President Ronald Reagan recognized the value of the earned 
income tax credit. At the signing of the 1986 Tax Reform Act he stated 
that the bill's expanded EITC provisions were a very important thing. 
Ronald Reagan called the EITC provisions ``the best anti-poverty, the 
best pro-family, the best job creation measure to come out of 
Congress.''
  In addition to President Reagan, the EITC has received widespread 
bipartisan support, including that of Presidents Ford, Carter, Bush, 
and Clinton. However, the current budget proposals would repeal many of 
the gains realized under this bipartisan group of leaders during almost 
two decades.
  So, what is the impact of this tax increase on working families? In 
the face of declining real wages and Republican proposals to cut 
important aid programs, more and more American families are going to 
face increasingly tough times. These are working families who need 
every penny of the wages they earn just to make ends meet. We simply 
should not tax these families into poverty by cutting the earned income 
tax credit.
  The goal of the 1993 expansion of the EITC was to ensure that 
individuals who work full time do not have to raise their children in 
poverty. Achieving this goal is just as important today as it was 2 
years ago. By the year 2000, roughly 17.8 million taxpayers, 80 percent 
of the total recipients, would feel a tax increase as a result of the 
proposals that are embodied in this budget. On average, taxes would be 
raised for affected working families by over $600 each.
  In New Jersey, working families will face a $452 million tax 
increase. Over the next 7 years that amounts to about $1,500 for the 
297,000 recipients of the [[Page S7139]] earned income tax credit who 
are working families.
  The tax increase on working families with children amounts to $329 
million. On an average, that would raise taxes by $1,733 over 7 years 
on 190,000 New Jersey families with children. So this is a significant 
tax increase in the middle of a budget proposal that purports to have 
no tax increase.
  Who are the people who receive the earned income tax credit? Let me 
just give you a snapshot of a couple of people.
  Michael Thompson from Newark, NJ, is 32 years old, married, with two 
daughters. He earns $7.75 per hour working in a warehouse for the 
Community Food Bank in New Jersey. His wife worked over 5 years for a 
large health insurance company but was laid off in 1994 and has been 
unable to find new work. Last year the Thompsons received an earned 
income credit that they used to pay the rent and to make up back 
payments on their utility bills.
  How about Deborah Hammerstrung from Barnegat, NJ, a clerical 
supervisor for the Visiting Home Care Service in Ocean County. When 
Mrs. Hammerstrung and her ex-husband separated 2 years ago, she could 
not afford to move into an apartment on her own. Instead, she was 
forced to move back with her mother. By providing her with a small 
credit against the taxes she has paid, the EITC is helping Ms. 
Hammerstrung pay the utility hookups for her own apartment.
  And last year, Ms. Linda Bailey, of Elizabeth, NJ, received a small 
earned income tax credit. Ms. Bailey worked as a registration clerk at 
St. Elizabeth's Hospital and is the mother of two children aged 6 and 
14. She used the $1,000 credit she received to help pay her gas and 
electric bills.
  These are only a few examples. I could give you countless other 
examples in my own State of New Jersey where the earned income tax 
credit has allowed struggling families to send a child to parochial 
school, to begin to make a payment on college tuition, to fully pay the 
utility bills, and on and on. These are struggling working Americans. 
The earned income tax credit has put a little money in their pockets so 
they can get by. This is not the time to increase taxes on these 
working Americans.
  Like most other working Americans, the recipients I have described 
live from paycheck to paycheck. As a credit against taxes they paid, 
the EITC provides these families with a little breathing room.
  They are not using the EITC to pay for fancy meals out or hire high-
paid lobbyists. No, they are not using it for that. Instead they use 
the EITC to help buy clothes for their kids, to pay utility bills, and 
to put meals on the table.
  The higher taxes this budget will impose on them will make it 
increasingly more difficult for New Jersey families to meet these basic 
needs and work their way out of poverty. Of course, working families in 
New Jersey are not the only ones who will suffer as a result of the 
Republicans' proposed tax hike.
  Almost 30 percent of all taxpayers in Mississippi will lose under 
this budget. There taxes will go up. Twenty percent of the families in 
Texas will face a larger tax burden as a result of these proposals. And 
in Oklahoma, almost 215,000 working families will find it harder to 
make ends meet after the proposed tax increase by the changes in the 
earned income tax credit.
  Recently, I have heard statements that these cuts in the EITC are not 
really a tax increase because recipients do not have an income tax 
liability. Critics of the EITC would have us believe that just because 
someone receives a tax refund that person could not be paying more tax.
  Mr. President, if the Federal Government owes you a $1,000 tax refund 
and we change the Tax Code so you end up getting only a $500 refund, 
then we have raised your taxes, notwithstanding the fact that you still 
get something back.
  In addition, there are claims that this budget is not increasing 
taxes because some of the EITC recipients do not owe any income tax. 
That claim ignores all the other taxes that working families have to 
pay. When working families receive their paychecks, the stub does not 
just show how much they pay in income tax withholding. It also shows 
what was subtracted for Social Security taxes, for Medicare taxes, for 
State taxes, and others. The EITC is intended to help offset these 
taxes, as well as Federal income tax.
  Let me demonstrate this point by an example. Imagine a young married 
couple with two children. If this family earned $16,500 per year, they 
will be just above the poverty level. Although they would not owe any 
individual income tax, they would incur $2,525 in Social Security 
taxes. That is what they would have to pay. Under current law, they 
would qualify for an EITC that offsets practically all of that Social 
Security tax, $2,532, just enough to offset the Social Security tax 
liability. But under the proposal that is in this budget the EITC would 
fall, and their taxes would go up by over $300, a tax increase.
  Mr. President, it is important to recognize that the proposal in this 
budget is a straight tax increase on working families. None of the 
proposals do anything, beyond what the administration has already 
suggested, to reduce errors in the program.
  The amendment that I offer would implement the compliance provisions, 
such things as matching Social Security numbers, et cetera--there are 
many different elements of the compliance provision--and thereby build 
on our past efforts to eliminate tax fraud and ensure that the EITC 
goes on only to those most in need.
  Further, the Republican attack on the EITC stems from reports of 
fraud in the program. In a small January 1994 study the IRS found 13 
percent of all EITC refunds could be in error. It is important to note 
that many of these errors result in ordinary mistakes that taxpayers 
make on all kinds of tax returns. We have already taken a number of 
significant steps to eliminate fraud and to focus the benefits of the 
1993 tax cut on those most in need. We have also made some additional 
changes in the last year or so to narrow eligibility for the EITC.
  In the Uruguay round legislation, for example, we prohibited the EITC 
from going to undocumented aliens. We deny the tax break. Also, we 
allow the IRS to use simpler procedures with certain types of 
questionable returns. We deny it to individuals who have $2,350 in 
investment income. So the eligibility has been narrowed.
  Then there are people who argue about the planned growth of the EITC. 
They are claiming that the EITC is expanding. To bolster these claims, 
some critics have carted out graphs and charts--and we will probably 
see some here today--that show the growth of the EITC since the early 
1990's. Of course, these graphs present only a snapshot of the EITC and 
ignore the fact that the increases in the EITC are a result of a 
conscious effort by Congress and Presidents Reagan, Bush, and Clinton 
to expand the program and to provide a modicum of tax relief to 
America's working families.
  Mr. President, if I could, as this chart demonstrates, once these 
changes are fully phased in, once you make eligibility, up to $28,500 
for a family of four, the EITC will grow only at the pace of inflation 
and population growth, a straight line.
  So people on the other side who say this program is out of control 
because we tried to help lower middle-class families--and when you help 
lower middle-class families, you provide a bigger tax cut to more 
people; it is going to increase--they want to raise taxes on these very 
same people. But once the eligibility is fully phased in, it is a 
national revenue loss. In fact, beginning in 1996, if you simply took 
the EITC relative to the rest of the economy, it is on the way down.
  So, Mr. President, at the same time that we have listened to the 
other side's attempts to explain why we need to raise taxes on working 
families in order to balance the Federal budget, we have not heard a 
single word about the truly uncontrolled growth in so many other areas 
of the budget.
  Take, for example, one of the provisions in the Tax Code called 
section 29. Section 29 refers to a little known provision in the code 
that gives a handful of oil and gas producers billions of dollars' 
worth of subsidies at the cost of other taxpayers. Between 1989 and 
1994, section 29 tax subsidies grew by over 1,000 percent. This 
uncontrolled growth--uncontrolled 1,000-percent growth in 6 years--
dwarfs the planned, [[Page S7140]] controlled, and short-term growth of 
the EITC.
  So why does the Republican budget raise taxes on millions of American 
families without touching a single penny in special interest loopholes 
like section 29, that went up 1,000 percent in 6 years? The answer I 
think is fairly simple. The supporters of section 29 and a lot of the 
other special interest corporate loopholes--loopholes that are used by 
the wealthy--like these subsidies and they spend millions of dollars 
each year to hire lobbyists to insert their special provisions in the 
Tax Code.
  Mr. President, working families are too busy with their kids, trying 
to make ends meet, holding down two or three jobs, to have either the 
money or the time to come down to Washington and lobby for their 
provision in the Tax Code. As a result, taxes are raised on working 
families while special-interest loopholes proliferate.
  In 1996, spending through the Tax Code will total $380 billion. It is 
the second fastest increase of the deficit, beyond entitlements, $480 
billion, more than double the size of the projected deficit. Between 
now and 2002, tax expenditures will total more than $4 trillion.
  I support, like many Members of the Senate, some of these provisions: 
Home mortgage interest deductions, property tax deductions, charitable 
deductions. These are valuable tools. However, for every one of these 
provisions, there are numerous other loopholes, such as section 29, 
that simply benefit one industry or a few taxpayers over the large mass 
of taxpayers.
  Mr. President, reducing the budget deficit will require shared 
sacrifice. However, raising taxes on millions of working Americans 
while consciously ignoring the billions of dollars that we give away 
each year through special interest tax loopholes is not my definition 
of shared sacrifice.
  So this amendment is really just about setting priorities, 
determining how we should share the burden of balancing the budget. 
There is no serious disagreement between Democrats and Republicans on 
the need to balance the budget. In fact, this amendment would reduce 
the deficit by the exact same amount as the original budget proposal. 
The real question that this amendment raises is how we should balance 
the budget. 3
 Either we can balance the budget by raising taxes on working families, 
as contemplated in the Republican budget proposal, or we can forgo a 
small proportion of proposed tax cuts for corporations and the wealthy, 
as this proposal would do. I believe the choice is clear: Tax cuts for 
lower-middle-class working Americans and no tax giveaways to corporate 
and wealthy Americans. That is what this amendment is all about.

  The PRESIDING OFFICER. Who yields time? Does the Senator yield back 
the floor?
  Mr. THOMAS addressed the Chair.
  The PRESIDING OFFICER. The Senator from Wyoming.
  Mr. THOMAS. Mr. President, I yield myself 5 minutes.
  Mr. President, as we go forward with this debate, each day starts in 
about the same way: We should balance the budget but we should not do 
it on the backs of--fill in the blank. Every day it is a different one. 
Do not balance it on the backs--fill in the blank.
  For example, let me talk just a minute about the earned income tax 
credit. Under the Republican proposal, the budget proposal that we are 
talking about, the EITC is not cut. It is a slowing in the rate of 
growth. The EITC proposal contained in the budget plan simply reins in 
the explosion in Federal Government spending in this program. Under the 
Senate budget plan, the cost of EITC will increase from $28 billion in 
1996 to $32 billion in the year 2002. Under the current law, EITC costs 
would go to $36 billion in 2002, not exactly the flat leveling off the 
Senator had mentioned a moment ago.
  In general, the EITC is one of the fastest growing programs in the 
Federal Government. The 1994 cost was $21.8 billion, eclipsing the 
Federal cost of Aid to Families with Dependent Children, AFDC, and the 
program is fully indexed to inflation.
  Unfortunately, errors and fraud are rampant. In 1988, the IRS found 
that 42 percent of the EITC recipients received too large a credit and 
32 percent were not able to show they were entitled to any credit at 
all. Something does need to be done about it. Given the generosity of 
the program, it is not surprising the number of recipients has grown 
from 6 million in 1975 to 18 million today, and that growth continues.
  Another way to increase the number of people eligible for the EITC is 
to raise the qualifying amount. For families with one child, the 
qualifying amount will rise from in 1995 $24,396 to $30,000; families 
with two children will rise from $26,000 to $33,000 to qualify in this 
particular program.
  So, Mr. President, certainly it is hard to call this a cut when it 
goes up at this rate.
  The baseline, if we leave it, will increase 48 percent between now 
and the year 2000, from $20 billion to $30.8 billion. Instead, under 
the chairman's mark, it grows at 31 percent from $20.8 billion to $27.2 
billion.
  Also, it is interesting to point out that the chairman's mark accepts 
the proposal of President Clinton's to deny EITC to undocumented 
workers and targets EITC to working poor with children.
  Mr. President, we will go forward again today with our budget 
proposal, and we will cite, as we have in the past, the difference of 
philosophy in terms of approaching this business of cutting spending. 
And that is legitimate, to have a different view. It is appropriate to 
have a different view. The Republicans want to transform Government to 
make it more efficient, more responsible, less expensive. On the other 
hand, the other side of the aisle supports the status quo: No plan to 
balance the budget, no options to save Medicare, no welfare reform 
proposal.
  So, Mr. President, we will see a difference of opinion, and that is 
good. That gives us a choice, whether we want more Government and more 
spending or whether we want less Government and less spending.
  We should take a look, I suppose, at the track record as to how we 
got here, raising taxes and expanding Federal Government. In 1993, of 
course, we had the largest tax increase in history, $259 billion. 
President Clinton talks about only raising taxes on the rich.
  Let me tell you that gas taxes increased in my State of Wyoming, 
where we have more miles to drive than any other State other than 
Alaska, it was not a tax increase on the rich, it was a tax increase on 
those least able to pay for it. The increase in Social Security taxes 
was another change that hurt more than just the rich.
   The PRESIDING OFFICER. The Senator's 5 minutes he yielded himself 
have expired.
  Mr. THOMAS. Mr. President, if my time has expired, I will yield the 
floor.
  The PRESIDING OFFICER. Who yields time?
  Mr. BRADLEY addressed the Chair.
  The PRESIDING OFFICER. The Senator from New Jersey.
  Mr. BRADLEY. I yield 7 minutes to the distinguished Senator from 
Washington.
  The PRESIDING OFFICER. The Senator from Washington is yielded 7 
minutes.
  Mrs. MURRAY. I thank the Chair. And I thank my colleagues, the 
Senator from New Jersey [Mr. Bradley], and the Senator from Louisiana 
[Mr. Breaux], and many other Senators who are submitting this amendment 
to help correct one of the troubling aspects of the budget resolution 
before us, the tax increases on working American families.
  By cutting the earned income tax credit, by taking away a tax break 
for working families, this resolution will raise taxes an average of 
$270 for low-income families next year. That is wrong.
  Mr. President, frankly, I am amazed by this Republican proposal. The 
EITC has always received bipartisan support because it is a commonsense 
tax credit. It rewards work. It provides a real incentive, and it gives 
people the means to move from the welfare rolls to the work force.
  In 1986, Ronald Reagan praised the earned income tax credit. As you 
know, I was not here in 1986. I was at home serving on my local school 
board in the State of Washington, but I remember watching the debate 
surrounding the Tax Reform Act of 1986. We might forget sometimes under 
all these television lights that the actions we take and the words we 
say matter a great [[Page S7141]] deal to average Americans across this 
country. I cannot forget that because I remember when Congress approved 
the tax reform package that included an expansion of the EITC, and I 
remember President Reagan signing that bill into law, saying the EITC 
is the best antipoverty, the best pro-family, the best job-creation 
measure to come out of Congress. These were important words then, and 
they are important words today.
  Mr. President, many hard-working American families are just trying to 
make ends meet, send their kids to school and provide some hope for the 
future.
  Average Americans are worried about their jobs. They are anxious 
about the cost of education. And, there is genuine concern out there 
about the costs of health care. So, how does this budget respond to 
these legitimate and real concerns? It creates more fear and more 
insecurity. It takes away hope. And taking away this tax credit adds 
insult to injury.
  Mr. President, the EITC keeps people off welfare. It offsets other 
forms of Federal assistance. It gives American parents the security 
they need to enter the work force. It is astounding that the other side 
has chosen this time to cut the EITC. Cuts to Medicaid; cuts to 
education; taxes on working Americans who can least afford them.
  In my home State of Washington, more than 224,000 families earned the 
tax credit in 1993. This budget resolution will raise taxes on those 
families in my State by $1,468 over the next 7 years.
  Maybe this increase is not a big deal to some of our colleagues here 
in the Senate, Mr. President. But, believe me, these are real increases 
to average Americans. I know what it is like to drive to work every 
day, worrying about doctors' bills and school clothes. I know how it 
feels to be squeezed between caring for elderly parents and young kids. 
Maybe that is why I understand how nasty this cut is.
  Mr. President, recently, there has been a lot of talk about tax cuts 
on Capitol Hill. The House of Representatives has already passed a tax 
plan that cuts taxes on capital gains and expands IRA deductions, and I 
expect we will hear a debate on a tax cut this week in the Senate.
  A tax cut is a great idea as long as we pay for it in a sensible way, 
but a tax cut is a terrible idea if we pay for it by raising taxes on 
low-income Americans, or by raising the Medicare payments of our 
Nation's elderly.
  Mr. President, we cannot balance the budget on our working poor, our 
elderly or our children. And, we cannot justify cutting taxes for the 
wealthy while increasing taxes on our poor.
  Mr. President, I have said it many times in the past 2 weeks and I 
will say it again now, this budget has no conscience. This budget hurts 
the little guy--those who need help, those who are struggling to make a 
living and provide for their children, and, it rewards the rich. This 
budget gives Goliath an advantage.
  Let us put things back in perspective. Let us help those who really 
need our help. Let us not go back to the days of the Industrial 
Revolution; Back to survival of the fittest. Mr. President, I urge my 
colleagues to support this amendment. It tells working families that we 
are fighting in their corner. It says we are against increasing their 
taxes and we for ensuring their financial security. I urge all our 
colleagues to support this amendment.
  I yield the floor.
  The PRESIDING OFFICER. Who yields time?
  Mr. BRADLEY. Mr. President, does the other side wish to make their 
case? We are anxious to hear their defense of this tax increase. Would 
the other side at any point like to argue the tax increase?
  Mr. NICKLES addressed the Chair.
  The PRESIDING OFFICER. Does the Senator yield time?
  Mr. THOMAS. Yes, I yield 5 minutes to the Senator.
  Mr. NICKLES. Just in response to the Senator, I will make a few 
comments in just a couple of moments.
  The PRESIDING OFFICER. Who yields time?
  Mr. BRADLEY. Mr. President, I yield 8 minutes to the distinguished 
Senator from Ohio.
  The PRESIDING OFFICER. The Senator from Ohio [Mr. Glenn] is 
recognized for 8 minutes.
  Mr. GLENN. Mr. President, I rise in support of the amendment by my 
colleague from New Jersey. I think it is an extremely important 
amendment.
  You know, if we were to assign music to some of our proposals here on 
the Senate floor, I think a good theme song for this particular 
amendment would be ``Bridge Over Troubled Waters,'' because what this 
amendment does is to say that those who are in trouble economically, 
those lowest on our economic scale get a helping hand. It is a bridge 
over troubled waters for those people on welfare into productive jobs 
in a productive society.
  And for people who are paying taxes, too. That is who it is for. It 
is not just for people who are on welfare. They do not get this. It is 
for the people who are trying to get up the ladder. They are the 
poorest of the poor who may once in awhile even get more than they are 
paying in taxes because it encourages them to work, to job train, to 
try to get up that economic ladder instead of just sitting on welfare 
with little incentive to get off.
  In early April, the Governmental Affairs Committee held 2 days of 
hearings on EITC. During those hearings, I heard all of the arguments 
for and against the EITC. I left those hearings more convinced than 
ever that this tax credit is one of the most important parts of our Tax 
Code.
  It has suffered from abuse and mistakes and we have to crack down on 
fraud and be tough on the error rates. I am happy to report that IRS 
has taken on this issue, and they are making progress with this. They 
have made improvements, and are continuing to crack down on those who 
abuse the system. Unfortunately, the cuts we are talking about in the 
budget resolution have nothing to do with improving this important tax 
credit.
  Instead, the cuts seem to be all about trashing the credit. Instead 
of addressing fraud, we are going to decimate the EITC and effectively 
raise taxes on the working poor.
  I cannot imagine that any Government that says, yes, we are family 
oriented; yes, we want to help the least advantaged in our society, is 
about to raise taxes on the working poor.
  Let us not throw out the baby with the bath water. It is like cutting 
your arm to get rid of a wart on your finger. The earned income tax 
credit is too important for that.
  The EITC has enjoyed bipartisan support since Russell Long helped 
create it in 1975. Republicans and Democrats alike have viewed the EITC 
as a nonbureaucratic way to make work/pay better than welfare.
  President Reagan called the EITC ``The best anti-poverty, the best 
pro-family, the best job creation measure to come out of the 
Congress.''
  That is not someone on this Democratic side of the aisle or this 
administration, that is President Ronald Reagan.
  Senator Packwood said in 1991 that the EITC is ``a key means of 
helping low-income workers with dependent children get off and stay off 
welfare.''
  Senator Domenici said in 1990, ``The EITC is a great way to help low-
income families with the cost of raising their children. It sends 
assistance to those in need, to those who work hard and yet struggle to 
make a living and provide for their children.''
  And I agree with Senator Domenici in that statement.
  Others who have expressed especially strong support have included 
Senators Dole, Hatch, and Grassley; Representatives Armey and Petri; 
and former Representative Kemp.
  The less fortunate of our society too often find themselves fighting 
just to feed their families, pay their bills, and stay off public 
assistance. They are not crooks. They are not tax cheats. They are 
working hard to earn their tax credit. It is not some sort of a 
handout. They do not get it if there is no earned income. And it is one 
of the best tools we have to bridge the gap--bridge the gap, a bridge 
over troubled waters--between welfare and work. We all talk about 
making work. We
 all talk about making work affordable. Well, the EITC is doing just 
that. In my home State of Ohio, more than half a million working 
families are getting a little extra back from their paycheck to help 
make ends meet. I would like to share some of their stories. I think 
they will shed some light on just what the EITC is all 
about. [[Page S7142]] 

  Brenda Manders is a divorced mother of a 3 year old who lives in 
Columbus, OH. She has earned the credit for 3 years. Brenda, who works 
for Legal Services and has been training to become a legal secretary, 
this year received a total refund of $2,740. This was very fortunate, 
because after a separation from her husband, Brenda and her child were 
left with no place to live. Faced with homelessness, she was able to 
use her tax credit to pay for a security deposit and rent on an 
apartment for her and her child. Without it, Brenda and her child may 
well have wound up on the street.
  And Zorida Hart of Cleveland, OH, is a single parent who works as a 
switchboard operator at the Council for Economic Opportunities. She 
received a credit of $1,978 which she is using to pay for day care. And 
she's put $900 of that credit in the bank to save it for a rainy day. I 
wish the U.S. Congress were as pennywise as Zorida. Over the past few 
days, I have heard from a lot of Ohio parents who rely on the EITC to 
help them with child care so that they can have a job. This is a tax 
credit that is working for Americans. More importantly, it is keeping 
Americans working.
  We have heard several complaints about the EITC. I would like to 
address these one at a time, because I suspect we might hear them again 
and again. I hope we can put them to rest. First, the problems of fraud 
and error. This is a critical issue.
  I think if we learned any lesson from the hearings that the 
Governmental Affairs Committee held in April, it is that we had better 
keep pushing to prepare the IRS for the 21st century through projects 
like compliance initiative.
  Senator Simon and I will be offering an amendment on this shortly to 
ensure that this important antifraud program continues. As one of the 
witnesses at the April hearings said, the IRS is seeking to crack down 
on fraud but is hampered by antiquated systems. We need to change that 
to uphold public confidence not only in the EITC, but in our Tax Code 
generally.
  We have heard dramatic statistics about the EITC error rates. We are 
told that according to a 1994 IRS study they are as high as 35 to 45 
percent. Well, those figures are very deceiving. They deal with those 
filers whose tax returns were off by just a few dollars and filers who 
incorrectly claimed too small an amount. Mr. President, I think that 
bears repeating. These large percentages include those who actually 
claimed too little.
  The more important statistic involves not such small discrepancies, 
but rather whether the EITC was claimed in error. The IRS study found 
that about 25 percent of the EITC benefits claimed were claimed in 
error. While there was fraud, most erroneous claims were found to be 
unintentional. But this 25-percent figure still overstates the problem. 
It deals with what was claimed, not what was actually paid out, and 
that is the bottom-line question. The IRS detected many of those 
erroneous claims, corrected them, and avoided making any overpayments. 
Unfortunately, the 1994 IRS study did not determine the actual EITC 
overpayment rate.
  The error rate figure is deceivingly high for another reason. The 
1,000 returns examined in the study were not representative of the EITC 
returns filed in 1994. They were only the returns filed electronically 
during the first 2 weeks of the filing season. Error rate is likely to 
be higher among early electronic returns than among EITC returns 
overall.
  The PRESIDING OFFICER. The Senator's time has expired.
  Mr. BRADLEY. I yield 2 minutes to the Senator.
  Mr. GLENN. Mr. President, what is most important is that the IRS, in 
response to the 1994 study, has initiated tough measures to scrutinize 
EITC returns. Before sending a payment, the IRS now verifies not only 
the Social Security numbers of all adult claimants, but also the 
numbers of all children in the EITC families to make sure that the 
claims are valid and that no child is claimed twice. Also, the GATT 
legislation enacted last fall included a provision requiring for the 
first time that Social security numbers be provided for all infants. 
Several million returns have been delayed this year because of 
discrepancies with Social Security numbers.
  In addition, the IRS now pulls all EITC returns falling into error-
prone categories, sends the families a questionnaire and requires the 
families to provide additional documentation.
  So Mr. President, all the figures that we have heard, and are about 
to hear, are outdated. And given the new IRS compliance measures, they 
are not entirely relevant to the current debate. The IRS has recognized 
the problem, and its seeking to correct it.
  Do not get me wrong. I am not saying that fraud and error rates are 
OK. I am the last one who would imply such a thing. But I believe that, 
instead of seeking to reduce working people's tax credit, we should 
instead work with the IRS to reduce error rates. The IRS is making a 
lot of headway here. And we should all work to make sure it continues. 
That is progress. Increasing the tax burden on our lowest income 
working families is not something that we want to sponsor.
  Next, we have heard that the EITC is simply out of control. Well, I 
am here to tell you--it is not. The increases that we have seen in this 
tax credit have been mandated very specifically by Congress. We have 
scheduled increases by law and phased them in several years at a time.
  The first major increase in this tax credit took place under 
President Reagan in 1986. The second was initiated under President Bush 
in 1990.
  And in 1993 under President Clinton, the Congress approved this 
budget reconciliation act which very specifically sets forth the years 
that program increases will take place. These expansions took place to 
make work pay. They were done in recognition of the fact that other 
policies to assist the working poor--like the minimum wage--have become 
much weaker. And they were done so that a parent who works full time 
throughout the year would not have to raise his or her family in 
poverty. In fact, the 1993 increase was designed to do just that--it 
was designed so that a family of four in which the parent works at the 
minimum wage would be lifted to the poverty line.
  But even with these planned expansions, the disposable income of a 
working mother with two children will be up to $3,000 lower, after 
adjusting for inflation, than in 1972 before the EITC was even created.
  Mr. President, after the three expansions specifically enacted under 
Presidents Reagan, Bush, and Clinton, the tax credit will return to its 
normally low rate of growth. In fact, after 1997 it will grow at a rate 
less than the GDP. I am sure there are not many provisions you could 
say that about in the tax package that the House put together.
  We have also heard allegations that 80 percent of the EITC goes to 
those with no income tax liability at all. Well, the truth of the 
matter is that the EITC was intended to offset not only income taxes, 
but also payroll taxes and excise taxes. More than 80 percent of the 
EITC goes directly to offset all of these taxes which are being paid by 
workers who are fighting to get out, and stay out, of poverty.
  Some also say this program discourages work. The argument is that--
because the credit phases out as family income increases spouses will 
be discouraged from getting jobs. It's an interesting theoretical 
argument. But what I find more persuasive is the way the tax credit has 
enabled people to work by helping them pay for things like child care, 
transportation or work clothes. I have heard from a lot of people who 
have used the credit for these things. But I have not heard from anyone 
who turned down job opportunities because it would affect their tax 
credit. Let me give another example from Ohio. Carol and Roy Wilmonts 
of Columbus, OH received the EITC for the past 2 years. They used it to 
help pay bills. And Carol has had the flexibility to care for their 
kids--Amber, Ashley, Autumn, and Nicholas. You see, that's part of the 
equation people ignore. Some use the EITC to pay for child care. Others 
use it to provide the financial flexibility for one spouse to stay at 
home and care for the kids. It is not a work disincentive for Carol. 
Roy received a promotion and is now manager at a Muffler King. He and 
Carol no longer receive a tax credit. But they are glad that they got 
one when they really needed it most. [[Page S7143]] 
  We have also heard that you get the credit even if you work just a 
tiny little bit. Well--what do you know--then you get just a tiny 
little credit.
  And we heard that those with little earned income but a lot of 
interest income can take advantage of the system. Well, at the request 
of the Clinton administration we are putting an end to that through 
language in the self employed health care deduction bill that has now 
become law.
  Then we heard about the so-called marriage penalty. But no one 
bothered to mention that the EITC can also encourage marriages. Without 
the EITC, there is a great deal of financial risk for a mother on AFDC 
who does not work and is considering marrying someone with low 
earnings. If she marries, she and her children will become ineligible 
for AFDC and also lose some of their food stamps, not to mention the 
loss of Medicaid.
  The EITC helps to offset those losses. By tying the knot, the couple 
will gain an EITC benefit of up to $2,157 if they have one child and up 
to $3,564 if they have two or more children. This will partially, and 
in some States fully, make up for the loss of AFDC benefits. 
Encouraging single mothers who are on welfare to marry into working 
families is certainly worthwhile in my book.
  Some people may view the amount of credit that we are talking about 
as of little consequence. But let me offer an illustration provided by 
Dan Grunberg in testimony before the Governmental Affairs Committee. 
For someone who has a weekly take home pay of less than $200, the 
average EITC payment of $1,500 is almost 8 weeks pay. That makes a big 
difference.
  Mr. President, it is hard to escape the harsh irony that we are 
discussing tax increases on those fighting to escape poverty, while at 
the same time the House is proposing a massive package of tax cuts that 
will benefit the wealthiest Americans and largest corporations. Since I 
cam to the Senate, I have worked for fairness and progressivity in the 
Tax Code. The majority's EITC proposal, especially in the face of the 
House tax cut package, is neither fair nor progressive. It is Robin 
Hood in reverse.
  So, Mr. President, count me as a supporter of the EITC. We can sit 
around here all day with fancy charts, graphics, and statistics. But 
nothing will substitute for the personal experiences of real people 
like Roy and Carol Wilmonts. They are working hard to get by. They 
needed that little extra help that EITC offers. And they worked hard 
for it.
  Mr. President, I encourage my colleagues to support the Bradley 
amendment and oppose tax increases on the working poor.
  The PRESIDING OFFICER. The Senator's additional time has expired.
  Mr. GLENN. I appreciate the time.
  Mr. BRADLEY. Mr. President, we will withhold further comment on this 
side until the other side has a chance to state their case as to why 
they want a tax increase on working Americans. That is the basic 
question.
  Mr. DOMENICI addressed the Chair.
  The PRESIDING OFFICER. The Senator from New Mexico.
  Mr. DOMENICI. Who controls the time on the other side? Does Senator 
Bradley? How much time have they used so far?
  The PRESIDING OFFICER. The Senator from New Jersey has used 40 
minutes, and has 20 minutes left. The Senator from New Mexico has 55 
minutes.
  Mr. DOMENICI. The Senator from Pennsylvania, Senator Santorum, 
desires to speak for how much time?
  Mr. SANTORUM. Five minutes.
  Mr. DOMENICI. I yield 5 minutes to the Senator from Pennsylvania.
  Mr. President, I designate Senator Nickles to be the manager of the 
time remaining on this amendment in my behalf.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The PRESIDING OFFICER. The Senator from the Pennsylvania, Senator 
Santorum, is recognized for 5 minutes.
  Mr. SANTORUM. Mr. President, I rise in opposition to this amendment. 
I was struck by the arguments presented by the Senator from New Jersey 
in favor of this amendment about this Republican budget being a tax 
increase.
  Let me just first state, again, this goes without saying, all of the 
amendments that are being offered by the other side of the aisle are, 
in a sense, bogus because they take us off the path to a balanced 
budget. As a result, this money that they draw from, this $170 billion 
that is being used to pay for this amendment, does not exist because 
once you put the tax credit back in, you then throw us off the line to 
get us to a balanced budget which then, according to the Congressional 
Budget Office, gets us the $170 billion.
  So by putting this amendment on, the budget is no longer balanced, 
there is no $170 billion and, guess what? We do not have a balanced 
budget, we have no $170 billion, and we are back to the same place as 
before, which is adding to the deficit, not getting to a balanced 
budget.
  Anyone who believes that there is money here for this program--there 
just is not money here for this program. This blows the whole deal. 
This is another attempt by the other side to say we do not want a 
balanced budget because if we pass this we do not have a balanced 
budget. So let us put all this tax cut or no tax cut--that is a red 
herring. This proposal destroys the balanced budget, period. It 
destroys it, No. 1.
  No. 2, I found it absolutely amazing that the Senator from New Jersey 
would talk about all these tax cuts or tax benefits or tax 
expenditures, $480 billion in tax expenditures and then, admission 
against interest, he admitted most of those tax expenditures he 
supports. Of course, the lion's share of them, the biggest is health 
insurance; second is home mortgage deduction; and third is property 
taxes and income tax deduction.
  I am sure he does not oppose any of those. That is, by far, the 
lion's share. What does he point out as the big one? Section 29. 
Section 29. This little provision in the Tax Code for tight sands 
drilling of oil and natural gas.
  Now, let us look at section 29, this big glaring one that makes 
everything else illegitimate. Section 29 applies only to wells drilled 
prior to 1993. This thing has been phased out. It is not even around 
anymore. It is only for old wealth. This was taken care of a few years 
ago. So he is arguing we should get rid of a provision we have already 
gotten rid of.
  Mr. BRADLEY. Will the Senator yield?
  Mr. SANTORUM. I will be happy to yield.
  Mr. BRADLEY. Does the Senator deny that the provision in the 
Republican proposal will increase the tax on working families?
  Mr. SANTORUM. The Senator will admit that by reducing the rate of 
growth in this program, people will not get the tax breaks that were 
intended under the Clinton 1993 budget, yes.
  Mr. BRADLEY. Yes. So it is a tax increase on working families.
  Mr. SANTORUM. It is not a tax increase. What it says is that people 
who are--I find it absolutely amazing to suggest that people who get a 
refund, and 90 percent of the people in this program do not pay any 
income tax. Let me repeat that, almost 90 percent of the people who get 
the earned income tax credit pay no Federal income taxes.
  Mr. BRADLEY. Will the Senator yield for another question?
  Mr. SANTORUM. I have not yielded.
  Mr. BRADLEY. Will the Senator yield?
  Mr. SANTORUM. Let me finish my point. I do not know how you can say 
that it is a tax increase if 90 percent of the people receiving this 
money do not pay taxes. To me, when you are giving money back, in fact 
you are giving a negative income tax to a group of people and you are 
saying you are not going to let that increase so they can get more 
negative income tax. I do not know how you consider that a tax 
increase, an increase in taxes. What we are saying is we are not going 
to give you more money that you have not paid already.
  Mr. BRADLEY. Does the Senator agree that these working families pay 
Social Security taxes?
  Mr. SANTORUM. This is a tax credit for Federal taxes. That is what 
this program is.
  Mr. BRADLEY. I am sorry. We will hear later from the Senator from 
Louisiana, who can address the purpose of the originator, Senator Long 
of Louisiana. The point the Senator misses, and I think the other side 
admits this consistently----
  The PRESIDING OFFICER. The time of the Senator from Pennsylvania has 
expired.
[[Page S7144]]

  Mr. SANTORUM. Can I have an additional 2 minutes?
  Mr. NICKLES. I yield the Senator 2 additional minutes.
  Mr. SANTORUM. I will just suggest 90 percent of the people in this 
program do not pay any Federal income taxes, and that when you have a 
program, as the Senator from Oklahoma I know is going to point out, 
that is fraudulent to the point of--the Senator from New Jersey said 13 
percent. There are reports it is as high as 45 percent.
  I know myself, I am waiting for my tax return to come back, and the 
reason the Internal Revenue gave me, in writing, why I am 2 months 
delayed in getting my tax return back is because they are having so 
many problems in trying to track down the fraud in the earned income 
tax credit provision of the Tax Code.
 This program has a lot of problems.

  I want to get back to the original point the Senator made, how we 
have all these terrible provisions in the Tax Code that benefit 
corporate America. He points out, one, section 29, which has been 
eliminated, he supports programs like section 936.
  It is funny, the Senator from New Jersey did not comment on the 
preferential tax provision for drug companies in New Jersey, and in 
fact supported that provision as recently as the last budget go-around 
when the Clinton administration cut that program back and there was an 
amendment on the floor of the Senate to eliminate that program, and the 
Senator from New Jersey refused to eliminate it.
  Now, we can play this double standard. Because they do not have oil 
in New Jersey, they are against section 29; but if there are drug 
companies in New Jersey, they are not against section 936.
  That is the demagoguery that goes on around here. We will point to 
corporate tax cuts, unless of course, the corporation is in your State.
  Mr. BRADLEY. Would the Senator yield?
  Mr. SANTORUM. I have been very generous in yielding.
  Mr. BRADLEY. The Senator is wrong. In 1993 we cut that provision by 
40 percent. If the Senator is arguing that we should cut every other 
corporate provision by 40 percent, his argument would be consistent. I 
do not think he is arguing that.
  Mr. SANTORUM. Reclaiming my time, Mr. President.
  The PRESIDING OFFICER. The additional 2 minutes has expired.
  Mr. SANTORUM. Mr. President, 30 seconds, Mr. Chairman.
  Mr. DOMENICI. I yield 1 additional minute.
  Mr. SANTORUM. If we look at the amendment on the floor to eliminate 
section 936, the Senator from New Jersey voted against it. He voted to 
keep section 936 for drug companies, many of whom are based in New 
Jersey.
  So we can look through the entire Tax Code. There are lots of 
provisions in there that benefit specific industries, some of them for 
very good reasons, others not so good. To suggest that the entire Tax 
Code is one big loophole for corporate America belies the numbers. No. 
1, where most of the tax expenditures are, in fact, for the earned 
income tax credit, health insurance, property taxes, local income 
taxes, and the home interest deduction.
  I would just suggest, as the Senator from Oklahoma will talk about, 
this program has problems with fraud, is a very harsh program as far as 
work disincentive, and there is a lot of information out there how the 
folks in this program are, in fact, not full-time workers who are just 
above the poverty level, but in fact only part-time workers who get a 
subsidy.
  I yield the floor.
  Mr. BRADLEY. Mr. President, I find it ironic that the Senator from 
Pennsylvania is aggressively defending all the special interest 
provisions in the Tax Code, while at the same time he is for a flat 
tax.
  How can the Senator be for a flat tax and want to eliminate all the 
special interest tax provisions.
  I yield 5 minutes to the distinguished Senator from Louisiana.
  Mr. BREAUX. I thank the Senator from New Jersey for yielding.
  There is a great country and western song. I think country and 
western writers are some of the best philosophers that we will ever see 
in society. In one of the songs this guy is singing, he says, ``After 
the breakup, she got the gold mine and I got the shaft.''
  If you are a working family in America that makes $28,500 a year--
which I would point out is most of the people in my State of Louisiana 
by a huge amount--you are getting ready to get the shaft; somebody else 
is going to get the gold mine.
  Budgets are about priorities. There is no clearer priority than what 
we are talking about right now. What the budget that is pending says, 
``If you are a working family that works every day, works hard, pays 
your taxes, follows the law, and does what society tells you to do, you 
are getting ready to get the shaft.''
  We can argue about whether this is a tax cut or a tax increase, but 
the facts are very clear: What the budget proposal says, for a family 
that makes $28,500 or less with two children in this country, that 
family is getting ready to have to pay a lot more to Uncle Sam. That 
family is getting ready to have to dig into their wallet at the end of 
the year and send money to Washington that they did not have to do last 
year because of this budget.
  Now, somebody can say that is not a tax increase. But I must say, if 
a person has to pay more than they paid last year, that ``ain't'' fun. 
If a person has to pay more than they paid last year, call it anything, 
but that person is going to be hurt.
  Now, we have heard people talk about what people said, and Senator 
Domenici is on the floor, who talked about this program in the past. My 
predecessor in the U.S. Senate, Senator Russell Long, a person I have 
tremendous amount of respect for, says we have to start making work 
more attractive than welfare.
  How many times have we heard speeches on the floor, ``The problem is 
people don't work enough. We have too many people on welfare.''
  Ronald Reagan said this program, when it was passed, was ``The best 
antipoverty, the best profamily, the best job-creation measure to ever 
come out of the Congress.''
  Today, this budget says we are going to slash it, and we are going to 
give the shaft to the people of this country who are hard-working 
Americans who are trying to make ends meet, trying to send their kids 
to school, trying to make sure they do not go on welfare. We will make 
it a lot harder. That is one thing.
  Again, budgets being about priorities, what are they doing with the 
money? It is one thing to cut people who work every day really hard and 
are barely making it, can barely afford to pay the rent, and say ``We 
will take this money away from you, that we are trying to help you 
with,'' and we are going to try and give a tax cut to families that 
make up to $200,000 a year--a tax cut of about $5,000 over the next 5 
years--and wealthy taxpayers earning up to $350,000 get a tax cut of 
$20,000 when all of their tax cuts are fully phased in.
  Now, people say we do not want to get into class warfare. I am not 
talking about class warfare. I am talking about something called 
fairness. Is it fair to say to someone making $28,000, ``We will make 
you pay more,'' in order to say to people who make $200,000, ``You will 
pay less.''
  What are our priorities? Budgets are about priorities. It is one 
thing to say this program is not working exactly like it was supposed 
to. I would suggest it is. I would suggest the Senator from 
Pennsylvania who says that it only applies to offset income tax knows 
not of what he is speaking, because it is clearly not correct to say 
that. It is clearly not correct.
  This program was expanded by a bipartisan effort, I would point out, 
to include not only income taxes. We know people making that amount of 
money do not pay a lot of income taxes. But we have increased a payroll 
tax five times. These people get hit with a payroll tax, get hit with a 
gasoline tax Congress passed, get hit with excise tax, and alcohol and 
tobacco and other products. All of these taxes can be used to offset 
the earned income tax credit, not just the income tax.
  We know the figures, that a lot of the people do not pay income 
taxes, but everyone pays payroll taxes, excise taxes, gasoline taxes, 
and all the other things that get hit and keep them in the bowels of 
poverty.
  Again, who is getting the shaft and who is getting the gold mine? I 
think it [[Page S7145]] is pretty clear that this suggestion says we 
will repeal any of the increases.
  What else do they do with regard to this proposition? I think it is 
very important to know.
  Here is what the proposal does: No. 1. It repeals the 1996 increase 
in deductions that people who are working and making 28,000 a year get. 
It repeals it outright. It also repeals the workers who do not have 
children, the credit that they would get.
  Is it not fair to have people who do not have children to not be able 
to benefit in the program? In 1993 Congress added this section. In a 
bipartisan effort, under that credit, taxpayers without children would 
be eligible for some credit.
 This budget says they are out of here, forget them, we are not going 
to help them. I do not understand that. Well, you can say that is not a 
tax increase but, by golly, they are going to pay more money to the 
Federal Government. And I do not think it helps them or makes them feel 
better to say those people in Washington told me this was not a tax 
increase, but I am paying more money than the last time. How can that 
not be a tax increase? It definitely comes out of their back pocket at 
a time when Congress is saying: Get off the dole, go to work, support 
your family, follow the law and, by the way, we are going to make you 
pay more so we can give a tax cut to people making $200,000 a year. 
Priorities. It is a question of priorities.

  Now, I know some people are going to say, well, this program has 
increased so much and we have this huge increase, and it is just going 
out of control. Let me suggest that the growth rate is not explosive 
and it is not out of control. It is doing exactly what Congress 
intended it to do. It is growing because it was designed to grow 
because of expansions in the bill that were signed into law. The charts 
are going to show something that goes up like that. That is because 
Congress said, in a bipartisan manner, that in addition to income tax, 
we are going to cover things like payroll tax, which is the most 
regressive tax of all; we are going to cover the gas tax, which we have 
increased; the payroll tax, which is increased; the excise tax on 
products, which has increased several times. Of course, it has 
increased and it is starting to level off.
  The PRESIDING OFFICER. Who yields time?
  Mr. NICKLES. Mr. President, I rise in opposition to the amendment 
offered by my friends on the other side of the aisle because we need to 
restrain the growth of the earned-income tax credit. I want to make 
several comments, and I am going to insert several charts and figures 
into the Record.
  I ask unanimous consent that at the conclusion of my statement, these 
charts be printed in the Record.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (See exhibit 1.)
  Mr. NICKLES. Mr. President, my colleagues are certainly entitled to 
their own opinions, but they are not entitled to their own facts. The 
fact is that this program is growing rampantly out of control. It has 
been, without a doubt, the fastest growing entitlement program in 
Government. It is also probably the most fraudulent program we have in 
Government. I want to refute the statement I have heard almost all of 
my colleagues on the other side say--that this is a tax increase on the 
working poor. They are totally wrong.
  The changes we are talking about making in the EITC program are not a 
tax increase on anyone. What we are doing is reducing the rate of 
growth of a program that is growing in cost by leaps and bounds. We are 
not talking about tax credits. We are talking about reducing the amount 
of checks that we are writing--outlays. This is a cash benefit program. 
Eighty percent of the money in this program is written in a check at 
the end of the year.
  It is not a reduction in somebody's taxes. It is a payment; it is a 
negative income tax. In almost 99-plus percent of the cases, it is a 
check paid as a refund to people in a lump sum payment. These lump sum 
payments have been rising dramatically. My colleagues need to be aware 
of the exploding costs in this program. The numbers on this chart are 
what the Federal Government is actually spending. I will have this 
inserted into the Record so my colleagues can see it. The growth in 
this program is astronomical. I heard a couple colleagues saying Ronald 
Reagan and others were supporters of this program. Let us put their 
support in context.
  In 1980, this program's outlays were $1.4 billion. In 1986, they were 
$1.5 billion. So in 5 or 6 years, the outlays almost had no increase. 
So it was very, very small, program. In 1986, we had some increases, 
and by 1990, this program's outlays were $5.3 billion.
  Mr. BRADLEY. Will the Senator yield?
  Mr. NICKLES. I want to make a significant statement, and I will yield 
at a later time.
  That is a pretty significant growth, from $1 billion to $5 billion. 
Look at this chart to see what happened since 1990, because now we are 
talking about a program that is going to be 30 billion dollars plus. 
Again, I am just talking about outlays, what the Federal Government is 
writing a check for. I am not talking about a tax credit that somebody 
has to reduce their taxes. I am talking about what the Government is 
writing the check for--outlays where the Government is writing a check.
  These figures are exploding. In 1990, outlays were $5 billion. In 
1992, they doubled and went to $10 billion. By 1995, the outlays went 
to $20 billion, and they continue to escalate. In 1997, outlays for the 
EITC will be $23.8 billion. Again, I will have these inserted into the 
Record. The growth rate for the last several years in EITC outlays, 
beginning in 1990, was 14 percent, 55 percent, 22 percent, 21 percent, 
42 percent in 1994, and 18 percent in 1995.
  Those are increases in outlays where we are writing checks, not 
reducing someone's tax liability. Uncle Sam is writing a cash payment 
benefit. Again--this is 10 times the rate of growth of inflation over 
most of these years.
  The cost of this program now exceeds the cost for Aid for Families 
with Dependent Children. We are going to talk about welfare reform very 
soon. Senator Bradley, myself, and others are going to be working on a 
welfare markup tomorrow. We will focus on AFDC because it has been the 
largest cash assistance program for welfare dependents. The EITC 
exceeds AFDC. It did not a couple years ago.
  This chart maybe is a little more confusing, and thus needs 
explanation. You see the red, which is the outlays. The green here is 
the credit portion. So the total cost of this program, estimated by the 
year 2002, is going to be $36.2 billion. That is an unbelievable 
explosion of a program that only cost a couple of billion dollars back 
in the late 1970's and even in the early 1980's. The total cost of the 
program in 1986 was $2 billion. The total cost of the program in 1990 
was $6.9 billion. The total cost of the program in 1994 was $21.8 
billion. It tripled between 1990 and 1994--tripled; it went from less 
than $7 billion to $21.8 billion. By 1996, it goes up to $28.4 billion. 
Again, the growth rate in the total cost of this program, outlays and 
credits, is astounding. In 1991, it went up 60 percent; in 1992, 17 
percent; in 1993, 20 percent; in 1994, 40 percent; in 1995, 16 percent; 
and in 1996, 12 percent.
  Now, the cost of the EITC is growing for a lot of different reasons. 
One, Congress has increased the amount of money people are eligible 
for. But I will give you some figures. The maximum credit in 1990 for 
two or more children was $953. From 1976 through 1978, the maximum 
credit anybody could receive out of this program was $400. In 1979, all 
the way through 1984, it was $500. Then, in 1985 and 1986, it was $550. 
Then it has increased substantially every year. In 1990, a person could 
receive $953. So it basically doubled from 1979 to 1990--the maximum 
amount of credit that anybody could receive for two or more children.
  Again, keep in mind that 99 percent of the people who file returns 
for this receive a lump sum payment. So $1,000 is not a bad deal. More 
and more people found out about it and thought, hey, this is a pretty 
good deal. They can file an income tax return even though most of these 
people have income such that they are not going to pay any Federal 
income tax. Maybe they will pay some Social Security tax, but they will 
file a return and get $953. Then more and more people became eligible. 
Congress increased eligibility and people became [[Page S7146]] aware 
that it could be very easily cheated.
  The maximum amount went up dramatically. In 1995, it was $1,511. It 
went up another 50 percent over that period of time. From $953 in 1990; 
and in 1993, $1,511. In 1994, Congress made some changes in a tax bill 
that not any Republican voted for. I do not remember anybody saying we 
are going to increase the maximum amount on the income tax credit from 
$1,511 to $2,528 in 1 year. The maximum tax credit went from $1,511 to 
$2,528. In 1995, the maximum tax credit is $3,110. In a few years, we 
went from less than $1,000 to $3,110. It has tripled. No wonder the 
cost of this program is climbing up out of control.
 We went from a maximum credit for a family with two or more children 
of less than $1,000 to $3,000 in 5 years. You can see why there was an 
explosion in cost.

  Unfortunately, there was also an explosion in fraud. For my 
colleagues to defend a program that has had this kind of fraud and 
error rate I think is unbelievable. I am just looking at a GAO study 
that was given to the Senate in March 1995. It says, ``The most recent 
taxpayer compliance measurement program shows that about 42 percent of 
EIC recipients receive too large a credit and 32 percent were not able 
to show they were entitled to any credit.''
  Think of that, 32 percent of those surveyed could not show that they 
are entitled to receive any credit. One-third of the beneficiaries were 
not able to show that they were entitled to any credit? And we are 
expanding it on this kind of scale? People can receive $3,100 and one-
third could not even defend that they were entitled to receive it and 
42 percent showed an error? Maybe some of those errors were small, 
maybe some of them were large, maybe some of them were intentional, 
maybe some of them were not, but about 34 percent of EIC paid out was 
awarded erroneously.
  Mr. President, 34 percent was awarded erroneously? Wow, think of 
that. We are talking about a program that is bigger than AFDC, a 
program that is growing at this kind of rate, and it has that kind of 
fraud and error rate.
  What are these radical Republican proposals that I keep hearing about 
that we are taxing working poor? That is false. I just totally deny 
that accusation. That irritates me. What we are trying to do is stem 
the tide of a program that is totally out of control. Republicans think 
we should control it. As my colleagues know, we are not passing tax law 
on the floor of the Senate. We are not rewriting the program. We are 
saying we have a program that is out of control and we ought to contain 
its growth.
  Under the Republican package, let me mention, the total cost of this 
program grows from $25 billion in 1995 to $28 billion in 1996. It 
continues to grow about $1 billion a year to $32 billion by the year 
2002. In other words, under the proposal we are suggesting to the 
Finance Committee, EITC would continue to grow, but it would grow about 
$1 billion per year, a little over 3 or 4 percent per year, whereas 
under current law it continues to grow much faster than that.
  Let me give a couple of specific examples. As I mentioned, right now 
under the earned-income tax credit, a person with two or more children 
is able to receive $3,110. Under the plan that some of us are 
proposing, next year that person could receive $3,119 and that figure 
would continue to increase every year so by the year 2000 a person with 
two or more children could receive $3,560. So, again the maximum credit 
allowed would increase every single year. Granted, it will not increase 
as fast as provided under current law. A person could receive, again, 
lump sum payments under current law from $3,110 in 1995 to over $4,000 
by the year 2000. We allow the increase to go from about $3,110 in 1995 
to $3,560 by the year 2000. So we have smaller increases.
  The current law says let us take it up to $4,000. Again, keep in mind 
most people are receiving this as a lump sum payment. I think that is a 
great incentive for fraud. If you cheat on your tax return, not only do 
you reduce your taxes, which is what happens in most cases, but Uncle 
Sam is going to write you a check. Right now the check is $3,110. We 
found a lot of fraud when people were getting just $953. What are they 
going to do when they can get $4,000? So we think we need to curb this 
abuse. We need to eliminate the fraud. We need to slow, not expand, 
this program. We did not even freeze the program. Maybe we should have.
  A program this fraudulent probably should have been frozen. We did 
not do that. Actually, if you had frozen the program for 7 years I 
think you save $50 billion. We did not do that. We just slowed the rate 
of growth. For my colleagues to insinuate that is a tax increase on the 
working poor, I beg to differ. I think that is totally false.
  If we are ever, ever going to balance the budget, we have to curtail 
the growth of programs that are growing a lot more rapidly than 
inflation. I have already given the figures of the rapid cost of this 
program. We are trying to constrain it in our proposal. If we allow 
Uncle Sam to continue writing checks that grow from $953 in 1990 to 
$3,110 in 1995 to $4,000 in 2000, this program will not be contained. 
These numbers will continue to climb off the charts and we will have 
deficit spending. Not only will we continue to have deficit spending 
but we are going to find that too many people are eligible for this 
program--I have read in one case where 30 to 40-some-odd percent of the 
District of Columbia is now eligible for this program.
  You are going to continue to have rampant, rampant abuse, I am 
afraid, because the dollars are so large. And that would be a serious 
mistake. So I will send a second degree amendment to the desk and ask 
for its immediate consideration.
  I will postpone that. I yield the floor.
                               Exhibit 1

             EARNED INCOME TAX CREDIT--TWO OR MORE CHILDREN             
------------------------------------------------------------------------
                                               Min       Max            
                        Credit    Maximum    income    income     Zero  
         Year           percent    credit    for max   for max   credit 
                                             credit    credit    income 
------------------------------------------------------------------------
                                                                        
                               Historical                               
                                                                        
------------------------------------------------------------------------
1976.................     10.00       $400    $4,000    $4,000    $8,000
1977.................     10.00        400     4,000     4,000     8,000
1978.................     10.00        400     4,000     4,000     8,000
1979.................     10.00        500     5,000     6,000    10,000
1980.................     10.00        500     5,000     6,000    10,000
1981.................     10.00        500     5,000     6,000    10,000
1982.................     10.00        500     5,000     6,000    10,000
1983.................     10.00        500     5,000     6,000    10,000
1984.................     10.00        500     5,000     6,000    10,000
1985.................     11.00        550     5,000     6,500    11,000
1986.................     11.00        550     5,000     6,500    11,000
1987.................     14.00        851     6,080     6,920    15,432
1988.................     14.00        874     6,240     9,840    18,576
1989.................     14.00        910     6,500    10,240    19,340
1990.................     14.00        953     6,810    10,730    20,264
1991.................     17.30      1,235     7,140    11,250    21,250
1992.................     18.40      1,384     7,520    11,840    22,370
1993.................     19.50      1,511     7,750    12,200    23,049
1994.................     30.00      2,528     8,425    11,000    25,296
1995.................     36.00      3,110     8,640    11,290    26,673
------------------------------------------------------------------------
                                                                        
                                                                        
                               Current Law                              
                                                                        
------------------------------------------------------------------------
1996.................     40.00      3,564     8,910    11,630    28,553
1997.................     40.00      3,680     9,200    12,010    29,484
1998.................     40.00      3,804     9,510    12,420    30,483
1999.................     40.00      3,936     9,840    12,840    31,529
2000.................     40.00      4,068    10,170    13,280    32,596
                                                                        
------------------------------------------------------------------------
                                                                        
                          Senate GOP Proposals                          
                                                                        
------------------------------------------------------------------------
1996.................     35.00      3,119     8,910    11,630    27,720
1997.................     35.00      3,220     9,200    12,010    28,634
1998.................     35.00      3,329     9,510    12,420    29,504
1999.................     35.00      3,444     9,840    12,840    30,620
2000.................     35.00      3,560    10,170    13,280    31,656
------------------------------------------------------------------------
Provided by Senator Don Nickles, 05/18/95.                              
                                                                        
Source: Joint Committee on Taxation.                                    


                                       EARNED INCOME TAX CREDIT--ONE CHILD                                      
----------------------------------------------------------------------------------------------------------------
                                                                      Minincomefor  Maxincomefor                
                 Year                   Creditpercent  Maximumcredit    maxcredit     maxcredit   Phaseoutincome
----------------------------------------------------------------------------------------------------------------
1976..................................        10.00           $400        $4,000        $4,000         $8,000   
1977..................................        10.00            400         4,000         4,000          8,000   
1978..................................        10.00            400         4,000         4,000          8,000   
1979..................................        10.00            500         5,000         6,000         10,000   
1980..................................        10.00            500         5,000         6,000         10,000   
1981..................................        10.00            500         5,000         6,000         10,000   
1982..................................        10.00            500         5,000         6,000         10,000   
1983..................................        10.00            500         5,000         6,000         10,000   
1984..................................        10.00            500         5,000         6,000         10,000   
1985..................................        11.00            550         5,000         6,500         11,000   
1986..................................        11.00            550         5,000         6,500         11,000   
1987..................................        14.00            851         6,080         6,920         15,432   
1988..................................        14.00            874         6,240         9,840         18,576   
1989..................................        14.00            910         6,500        10,240         19,340   
1990..................................        14.00            953         6,810        10,730         20,264   
1991..................................        16.70          1,192         7,140        11,250         21,250   
1992..................................        17.60          1,324         7,520        11,840         22,370   
1993..................................        18.50          1,434         7,750        12,200         23,054   
1994..................................        26.30          2,038         7,750        11,000         23,755   
1995..................................        34.00          2,094         6,160        11,290         24,396   
                                                                                                                
----------------------------------------------------------------------------------------------------------------
                                                                                                                
                                                   Current Law                                                  
                                                                                                                
----------------------------------------------------------------------------------------------------------------
1996..................................        34.00          2,156         6,340        11,630         25,119   
1997..................................        34.00          2,227         6,550        12,010         25,946   
1998..................................        34.00          2,305         6,780        12,420         26,846   
1999..................................        34.00          2,383         7,010        12,840         27,755   
2000..................................        34.00          2,462         7,240        13,280         28,584   
                                                                                                                
----------------------------------------------------------------------------------------------------------------
                                                                                                                
                                              Senate GOP Proposals                                              
                                                                                                                
----------------------------------------------------------------------------------------------------------------
1996..................................        30.15          2,156         7,150        11,630         25,120   
1997..................................        30.15          2,225         7,380        12,010         25,934   
1998..................................        30.15          2,300         7,630        12,420         26,816   
1999..................................        30.15          2,379         7,890        12,840         27,726   
2000..................................        30.15          2,460         8,160        13,280         28,676   
----------------------------------------------------------------------------------------------------------------
Provided by Senator Don Nickles, 05/18/95.                                                                      
                                                                                                                
Source: Joint Committee on Taxation.                                                                            


                                                                                                                
[[Page S7147]]
            IMPACT OF REFORMING THE EARNED INCOME TAX CREDIT            
------------------------------------------------------------------------
                  1996   1997   1998   1999   2000   2001   2002   Total
------------------------------------------------------------------------
EITC baseline                                                           
 (CBO).........     28     30     31     32     34     35     36     226
EITC reforms...    (0)    (3)    (3)    (3)    (4)    (4)    (4)    (21)
EITC baseline                                                           
 after reforms.     28     26     28     29     30     31     32     204
------------------------------------------------------------------------
Provided by Senator Don Nickles, 05/18/95.                              
                                                                        
Source: CBO and Senate Budget Committee majority staff (billions of     
  dollars).                                                             


                                                                EARNED INCOME TAX CREDIT                                                                
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                          Revenue                    Number of                                          
       Year         Total cost    Percent     Outlay cost    Percent        cost       Percent         family        Percent      Average      Percent  
                    (billions)     growth     (billions)      growth     (billions)     growth     beneficiaries      growth       credit       growth  
--------------------------------------------------------------------------------------------------------------------------------------------------------
1975.............          1.3  ...........           0.9  ...........          0.4  ...........        6,215,000  ...........         $201  ...........
1976.............          1.3            4           0.9           -1          0.4           16        6,473,000            4          200            0
1977.............          1.1          -13           0.9           -1          0.2          -39        5,627,000          -13          200            0
1978.............          1.0           -7           0.8           -9          0.2            0        5,192,000           -8          202            1
1979.............          2.1           96           1.4           74          0.7          166        7,135,000           37          288           43
1980.............          2.0           -3           1.4           -2          0.6           -6        6,954,000           -3          286           -1
1981.............          1.9           -4           1.3           -7          0.6            3        6,717,000           -3          285            0
1982.............          1.8           -7           1.2           -4          0.6          -13        6,395,000           -5          278           -2
1983.............          1.8            1           1.3            5          0.5           -8        7,368,000           15          224          -19
1984.............          1.6           -9           1.2          -10          0.5           -6        6,376,000          -13          257           15
1985.............          2.1           27           1.5           29          0.6           24        7,432,000           17          281            9
1986.............          2.0           -4           1.5           -1          0.5          -10        7,156,000           -4          281            0
1987.............          3.9           96           2.9           98          1.0           89        8,738,000           22          450           60
1988.............          5.9           50           4.3           45          1.6           64       11,148,000           28          529           18
1989.............          6.6           12           4.6            9          2.0           20       11,696,000            5          564            7
1990.............          6.9            5           5.3           14          1.6          -17       12,612,000            8          549           -3
1991.............         11.1           60           8.2           55          2.9           78       13,700,000            9          813           48
1992.............         13.0           17          10.0           22          3.0            3       14,100,000            3          924           14
1993.............         15.6           20          12.1           21          3.5           17       15,200,000            8        1,027           11
1994.............         21.8           40          17.2           42          4.6           31       19,500,000           28        1,118            9
1995.............         25.3           16          20.3           18          5.0            9       19,800,000            2        1,283           15
1996.............         28.4           12          22.9           13          5.5           10       20,200,000            2        1,407           10
1997.............         29.6            4          23.8            4          5.8            5       20,400,000            1        1,452            3
1998.............         30.9            4          24.9            5          6.0            3       20,600,000            1        1,501            3
1999.............         32.2            4          26.0            4          6.2            3       20,800,000            1        1,548            3
2000.............         33.5            4          27.0            4          6.5            5       21,000,000            1        1,593            3
2001.............         34.8            4          28.0            4          6.8            5       21,200,000            1        1,639            3
2002.............         36.2            4          29.1            4          7.1            4       21,400,000            1        1,687            3
--------------------------------------------------------------------------------------------------------------------------------------------------------
Provided by Senator Don Nickles, 05/18/95.                                                                                                              
                                                                                                                                                        
Source: CBO.                                                                                                                                            

Mr. LEAHY. Mr. President, I rise in strong support for the amendment 
offered by the distinguished Senator from New Jersey. This amendment 
makes sense. It restores $21 billion in cuts over the next 7 years in 
the earned income tax credit in the Senate Republican budget 
resolution. Like their cuts in Medicare and education, the Republican's 
cuts in this tax credit are short-sighted and wrong.
  At a time when many working Americans are struggling to make ends 
meet, the Senate Republican budget plan would hike taxes on low-income 
workers by as much as $350 a year. It would repeal the final phase of 
the earned income tax credit expansion enacted as part of the 1993 
budget act, and it would repeal the earned income tax credit for 
workers without a child
  I do not understand the desire to cut the earned income tax credit. 
Ronald Reagan, a President that I did not always agree with, had it 
right when it came to the earned income tax credit. President Reagan 
called the earned income tax credit: ``the best antipoverty, the best 
pro-family, the best job-creation measure to come out of Congress.''
  President Reagan was right. This tax credit does reward low-income 
Americans for working. It makes a huge difference for families 
struggling to pay the rent and buy food for their kids.
  The tax credit is available to low-income workers only. If you do not 
work, you do not get the credit. The credit starts phasing out at 
$11,000 for families with children and at $5,000 for workers without 
children. It ends for families with two children at $25,296, families 
with one child at $23,755, and workers with no children at $9,000.
  In my home State of Vermont, the earned income tax credit has been a 
big success making work pay for low-income workers.
  In 1993, 25,279 working Vermonters benefited from the earned income 
tax credit. Under the Senate Republican budget resolution, however, the 
earned income tax credit in Vermont would be cut by $29 million over 
the next 7 years. The Treasury Department estimates this cut would 
increase taxes on 20,156 working Vermonters by an average of $1,433 per 
taxpayer over the next 7 years.
  Some of my colleagues on the other side of the aisle claim that these 
cuts are necessary because of some fraudulent claims involving the 
earned income tax credit. But that argument is more than a little 
disingenuous.
  An IRS study has found some error rates in the credit, but the 
Clinton administration has responded aggressively to address this 
problem. Specifically, the administration has developed 12 measures to 
ensure simplicity and verifiability of the earned income tax credit. 
And the IRS is now matching social security numbers with tax returns to 
further verify credit takers.
  The Senate Republican budget resolution, however, contains only one 
of the administration's antifraud proposals. Instead of adopting the 
administration's antifraud proposals or other antifraud measures, this 
budget resolution simply cuts the tax credit. In fact, this budget 
resolution cuts the earned income tax credit by $21 billion over the 
next 7 years because it's a quick way to collect budget-cutting dollars 
at the expense of a constituency that rarely votes--the working poor.
  Cutting the earned income tax credit and raising taxes on the working 
poor is exactly the wrong thing to do now. Unfortunately, we are 
suffering through an era of stagnant wage growth. Just last month, the 
Department of Labor reported that median weekly earnings of 
nonsupervisory workers rose just 1.9 percent over the past year. While 
at the same time, consumer prices rose 2.8 percent.
  And last year just continued the losing trend of the 1980's. During 
the 1980's, the gap between the rich and poor grew faster in the United 
States than anywhere else in the Western world. According to an April 
1995 study by Prof. Edward Wolff of New York University, three-quarters 
of the income gains during the 1980's and 100 percent of the increased 
wealth went to the top 20 percent of families. The remaining 80 percent 
of U.S. families lost in real wage power.
  Workers are treading water or worse against the rising tide of 
inflation. Now is not the time to cut a tax credit that rewards the 
poor for working, Instead, I urge my colleagues to support this 
amendment to restore the earned income tax credit.
  Mr. KOHL. Mr. President, I rise in support of the amendment offered 
by Senator Bradley to restore funding for the earned income tax credit. 
The Bradley amendment would restore the EITC by redirecting $16.9 
billion of the proposed $170 billion budget surplus to working lower 
income Americans. Simply stated, the Bradley amendment offers a clear 
choice to the Members of this body: We can impose a $16.9 billion 
[[Page S7148]] tax increase on working Americans or we can ask well-to-
do people to bear some portion of the economic sacrifice necessary to 
restore our Nation's economic vitality.
  Mr. President, tax expenditures are one of the fastest growing items 
in the Federal budget. Over the next 7 years, the U.S. Government will 
spend in excess of $4 trillion--that's right, trillion--on tax 
writeoffs, loopholes, and hidden breaks. And while there are some tax 
expenditures that help middle- and lower-income Americans, most of our 
tax expenditures end up benefiting the upper end of the economic 
ladder.
  The budget before us today does not touch tax benefits for the 
wealthy and powerful. We all know that situation exists because the 
special interests that benefit from our current tax scheme have both 
the resources and ability to protect their advantages. On the other 
hand, Americans who rely on the EITC are too busy working--or worrying 
about their childrens' health or education--or struggling to make ends 
meet in these challenging and difficult times--to know that the 
Congress is about to hit them with a hidden tax increase. Because that 
is just what a reduction in the ETIC is--a tax increase.
  Mr. President, the EITC provides a tangible economic incentive to 
lower income Americans to work for a living. In my own State of 
Wisconsin, 2,294,126 returns were filed for the 1993 tax year. Of this 
total, 189,831 returns contained earned income tax credit refunds, and 
a total of $182,548,000 in EITC refunds were paid to Wisconsin 
citizens. The average refund in Wisconsin was $961.63. Now that might 
not sound like a lot of money to some people from other parts of the 
country--or even to some in this Chamber. But make no mistake about it, 
to the Wisconsin taxpayers who qualified for those refunds, they made 
the difference between work and welfare; between hard work and a hand-
out; and between self-worth and self-doubt.
  Mr. President, I also recognize that few things in this world are 
perfect, and that includes the earned income tax credit. As a number of 
my colleagues have correctly observed, there are deficiencies in the 
current administration of this credit. In particular, Senators have 
identified problems associated with electronically filed tax returns 
that contain EITC claims. And while there is some disagreement over the 
severity of the problems, it is clear to all concerned that remedial 
action is required. The choice that we face today is whether we will 
retain the EITC and effect bipartisan reforms or whether we will 
drastically reduce one of the few tax expenditures that helps working 
class Americans.
  I would urge my colleagues to continue the bipartisan approach that 
has been the hallmark of the EITC. My colleagues may recall that 
Presidents Reagan and Bush worked with Democratic Congresses to develop 
and expand the EITC. I hope that this Congress will continue that 
bipartisan spirit.
  Mr. President, we are at an important crossroad in our history. We in 
Government have finally heard the message of the American people: That 
it is time to put our fiscal house in order. We must now decide whether 
we share the burdens that confront us equally or whether we exacerbate 
the growing disparities that exist within our society. I believe that 
the Bradley amendment is a step in the right direction. Senator 
Bradley's amendment is a fair and reasonable proposal that helps 
working Americans. I therefore urge my colleagues--on both sides of the 
asile--to support his amendment. I yield back the balance of my time.
  Mr. ROCKEFELLER. Mr. President, I rise in strong support of the 
earned income tax credit [EITC], and Senator Bradley's amendment to 
rescue one of this country's clearest incentives and rewards for hard-
working families.
  We are forced to offer this amendment to fix one of the worst parts 
of the budget offered by the other side of the aisle. Believe it or 
not, the architects of this budget are trying to cancel tax relief for 
the families in this country struggling every day to make ends meet so 
the funds--$21 billion in all--can be redirected to households and 
corporations in the upper tiers.
  They justify their attack on tax relief for working families by 
claiming that the credit--the EITC--is growing out of control. That is 
totally misleading, and deliberately so. Yes, the EITC is growing. 
That's because an economic and deficit reduction plan enacted in 1993 
included an initiative to increase this tax credit for very logical 
reasons. There is nothing to hide or apologize for. Those of us who 
voted for that budget, with $600 billion in deficit reduction and many 
cuts in spending, put our priority on hard working Americans who are 
working to make ends meet and raise their children. We wanted the EITC 
to grow because of its fundamental role in helping parents who are 
teetering on the economic edge to be able to choose work over welfare, 
independence over dependence, dignity over the indignities of the 
welfare system.
  I am proud of my vote to expand the EITC because it is needed tax 
relief for more than 100,000 West Virginia families. That may be 
another statistic, but it stands for real people and families across my 
State working as hard as they can to make it each day.
  The McCumbers of Frametown, WV, count on the EITC to make ends meet. 
She works full-time as a receptionist at the Mountaineer Food Bank, and 
her husband works full-time as a maintenance worker. They have two 
children, ages 8 and 10. For the past 4 years, the McCumbers have 
gotten tax relief thanks to the EITC. And let me tell you how they used 
that money. Three years ago, their EITC helped them make a down payment 
on a home. They also have used it to pay property taxes and homeowners 
insurance. Another year, it covered glasses for their daughter, and a 
new bed for their
 son. The McCumbers family is like many of our neighbors next door. 
Parents who work hard, but struggle to pay the bills each month.
  Let me tell you about another West Virginia family that relies on the 
EITC--the Helmicks of New Milton. He works full-time driving a truck 
for Mountain View Construction. She is a full-time homemaker caring for 
six children, ranging in age from their 15-year-old twins to a 4-year 
old. The first time this family used the EITC was when the twins were 
born and they needed extra baby furniture and twice as many supplies. 
Over the years, the EITC has helped the family buy a used truck to 
ensure Mr. Helmick had reliable transportation for work. It has helped 
them paint their home, put a concrete floor in their basement, and even 
put up a home basketball court so they could keep their teenagers close 
to home.
  Hard working families like the McCumbers and the Helmicks deserve our 
admiration and support. We should not pull the rug out from under them 
and their children by eliminating the tax relief promised to them. And 
we certainly should not take tax relief away from hard working people 
who are struggling in order to give a bonus to wealthy Americans. 
That's what this budget resolution proposes to do, believe it or not. 
That's why we should pass the Bradley amendment, and reject an idea as 
dumb and unfair as robbing struggling families to give something more 
to the well off.
  If the proponents of the Republican budget get their way on the EITC, 
it will mean that more than 80,000 West Virginia families will lose 
about $1,494 over the next 7 years that they would have gotten for 
playing by the rules and doing something called work. That would renege 
on a promise to 12 million families in West Virginia and across our 
country.
  I urge my colleague to support the Bradley amendment and the men and 
women who work hard every day, struggling to provide for themselves and 
their children.
  The other side wants to focus on all the excuses for backing away 
from a policy of rewarding work and discouraging welfare. They talk 
about error rates, fraud, other problems. Where these problems need to 
be fixed, let's fix them. Let's not hide behind excuses to walk away 
from families who deserve every reward possible in a country that says 
it values work and children above all. The McCumbers and the Helmicks 
are my guidepost in this debate. They should serve as a reminder to 
every one of my colleagues that a growing EITC is exactly where our 
priorities should be.

[[Page S7149]]

  opposing cuts to the earned income tax credit and the repeal of the 
                            davis-bacon act

  Mr. AKAKA. Mr. President, as we continue to debate the budget 
resolution, I am concerned about Republican spending proposals that 
will balance the budget on the backs of children, middle-class 
families, the working poor, and the Nation's veterans. The more I study 
it, the more I realize that the majority's budget resolution will be a 
very bitter pill for hard-working American families to swallow. The 
budget resolution preserves special interest tax loopholes and other 
forms of corporate welfare. The wealthy will continue to receive 
billions of dollars in tax breaks and the proposed budget promises an 
additional $175 billion in future tax relief.
  The most troubling feature of the Republican budget proposal is the 
$21 billion cut in the earned income tax credit. During the past 
decade, working families suffered a slow, steady erosion in their 
standard of living. Families simply had to work harder and longer to 
make ends meet. Despite their hard work and long hours, the number of 
working poor families and individuals living at or below the poverty 
line continues to grow.
  The most effective way to improve the economic well-being of the 
middle class and working poor is to promote policies that reward work 
and lessen dependency. That is why the earned income tax credit was 
established. The earned income tax credit helps parents in low-income 
families remain in the work force. It also acts as a safety net for 
middle-class families confronted with a sudden loss of income.
  Despite long-standing bipartisan support for policies that make work 
pay, the majority budget resolution would cut the earned income tax 
credit by $21 billion over 7 years. Congress recently expanded the 
earned income tax credit to lift a family of four with a full-time 
working parent to a level at least equal to the poverty line. The 
Republican budget proposal abandons this policy. Their proposed cut in 
the earned income tax credit would increase Federal income taxes on 
millions of low-income working families with children. Under the 
majority proposal, the Treasury Department estimates that 7.8 million 
working families with more than one child will see their earned income 
tax credit reduced by $270. A working family with two children earning 
$20,000 would see a $290 reduction in their credit.
  Mr. President, only $1 billion of this $21 billion cut would result 
from the adoption of the Clinton administration proposal to deny the 
earned income tax credit to undocumented workers and implement 
procedures to reduce errors and fraud in the program. The remaining $20 
billion cut represents a tax increase for millions of working families, 
many of which live just above the poverty level. Why raise taxes on 
individuals who are struggling
 to work, make ends meet, and avoid welfare? What message are we 
sending to America's working men and women? The last thing we need is a 
budget that raises the income taxes on Americans who are committed to 
work, rather than collecting welfare.

  To add insult to injury, the Republican budget proposal cuts job 
training assistance by 25 percent. This cut will make it more difficult 
for our youth and adults to receive the technical training and job 
assistance necessary to gain employment in a technology-driven, global 
marketplace. Without job training and education programs, displaced, 
first-time, and entry-level workers will be relegated to low-wage, low-
skill service sector jobs with no chance for economic or educational 
advancement. Has any consideration been given to the impact of a 25-
percent cut in job education and training on long-term productivity and 
prosperity or on blue-collar families and their communities? I don't 
think so. These cuts will deprive workers of educational opportunities 
which could increase their earning power and productivity, along with 
the productivity and prosperity of businesses and the country. A rising 
tide lifts all boats, but only if the boats are seaworthy.
  Mr. President, the budget plan also calls for the repeal of the 
Davis-Bacon Act. Repeal of Davis-Bacon would jeopardize the provision 
of fair, prevailing wages and labor standards on construction projects. 
For over six decades, the Davis-Bacon Act has assured local 
construction workers and contractors a fair opportunity to bid 
competitively on Federal construction projects. I believe dismantling 
the act would adversely impact local workers and contractors, and as a 
consequence, reduce the quality of construction on Federal projects.
  In addition, Davis-Bacon ensures that workers on low-skill, low-wage 
jobs can participate in training programs to improve their skills and 
qualifications for better paying positions. Repeal of the law would 
remove most incentives for contractors to provide these workers such 
training opportunities.
  Programs and agencies that promote safe and healthy working 
conditions and procedures also face drastic cuts. The Occupational 
Health and Safety Administration and other workplace safety agencies 
face a 50-percent reduction in funds which are necessary to ensure a 
safe working environment for working men and women.
  Mr. President, the Republican budget dismantles the safety net for 
millions of working Americans and eliminates or cuts programs that are 
investments for a brighter, more competitive, and prosperous future for 
American families and our country. It is nothing more than a promise of 
a golden parachute for our wealthy.
           targeting the poor under the gop budget resolution

  Mr. BYRD. Mr. President, the Senate, in debate on the Fiscal Year 
1996 Concurrent Resolution on the Budget, is in the process of 
considering many necessary spending reductions to achieve a balanced 
budget by the year 2002. There is a consensus in the Senate--on both 
sides of the aisle--on the need to balance the budget, and this Senator 
is committed to eliminating the Federal deficit. However, as expected, 
there exists much less unanimity on the appropriate spending cuts for 
reaching the goal of a balanced budget.
  As approved by the Budget Committee, the Budget Resolution would 
reduce funding for the earned income tax credit (EITC) by $21 billion 
over the next 7 years. Senator Bradley has proposed an amendment to the 
Budget Resolution that would restore $16.9 billion in funding for the 
EITC. Senator Bradley would fund this restoration of the EITC with 
money earmarked by the Budget Committee for a future tax cut. In 
essence, Senator Bradley's amendment seeks to repeal a tax increase on 
America's working, low-income families by reducing a future tax cut 
that--if similar to the House-passed tax-cut measure--would primarily 
benefit upper-income families. A future tax cut is promised in the 
Budget Resolution if the ``fiscal dividend'' from deficit reduction is 
scored by the Congressional Budget Office.
  Mr. President, it is important that the Senate consider the primary 
beneficiaries of the EITC, which is a refundable Federal income tax 
credit created in 1975 to supplement the earnings of low-income 
workers. The EITC primarily benefits low-income, working families--
those with incomes below $28,000--with one or more children. In light 
of the upcoming debate on welfare reform, can we in the United States 
Senate expect to provide viable alternatives for families receiving 
welfare benefits if we do not reward work for low-income families? The 
EITC does exactly that. It rewards work.
  Critics of the EITC have pointed out that the program is subject to 
fraud and that it is too expensive. In response to these and other 
concerns, President Clinton included two legislative proposals in his 
Fiscal Year 1996 Budget that seek to reduce the cost of the EITC. 
First, the President proposed denying the tax credit to otherwise 
eligible recipients if they have substantial investment income. Earlier 
this year, the Senate approved and the President signed legislation 
(Public Law 104-7) that addressed this problem. Secondly, the President 
proposed requiring a valid Social Security number for all EITC 
recipients. The Budget Resolution includes the President's proposal and 
I support it. I do not support, however, the tradeoff proposed in the 
Budget Resolution that cuts the EITC over the next 7 years to pay for a 
future tax reduction for the wealthiest [[Page S7150]] in our society. 
It is interesting, even tendentious, that the only tax expenditure 
targeted by the Republican Budget Resolution is a program that benefits 
our Nation's low-income, working families. The Joint Committee on 
Taxation estimates the total cost of the more than 120 tax expenditures 
to be $453.0 billion for Fiscal Year 1995. The EITC, by comparison, 
will cost approximately $18.6 billion this year.
  Mr. President, the Administration has estimated that a total of 
12,200,000 working taxpayers in the United States receive benefits from 
the EITC. In West Virginia alone, an estimated 101,229 families 
received approximately $99,323,000 in EITC benefits in 1994. That 
represents 14.6 percent of all West Virginia tax filers. As an elected 
representative of the people of West Virginia, I support the Bradley 
amendment because it seeks to repeal the effective tax increase on low-
income working families by reducing the Republican-promised tax cut for 
the wealthiest in our society.
  The PRESIDING OFFICER. Who yields the floor?
  Mr. BRADLEY. Mr. President, how much time is remaining on my time?
  The PRESIDING OFFICER. The Senator has 12 minutes.
  Mr. BRADLEY. Mr. President, I yield 7 minutes to the distinguished 
Senator from Nevada.
  The PRESIDING OFFICER. The Senator from Nevada is recognized for 7 
minutes.
  Mr. REID. Mr. President, the Budget Committee's mark would in effect 
raise taxes by some $21 billion for people who make less than $28,000 a 
year. That is a fact. About 7.8 million people who would benefit from 
this program, and their children, would be affected. Families with two 
or more children would be the hardest hit by the proposal that is 
coming from the other side of the aisle. Under the Budget Committee 
mark that we received, this would result in a tax increase for over 12 
million Americans.
  As the senior Senator of Nevada, I am concerned what effect this tax 
increase would have on the State of Nevada. The increase in taxes would 
affect almost 100,000 people who live in the State of Nevada. Nevada is 
a State whose large numbers of people are employed in the service 
industry. It would have a tremendous impact on them.
  Over the next 7 years, these families in Nevada can expect to pay 
over $100 billion more in taxes because of this policy. This results in 
a tax of about $1,500 more per family. It would increase the taxes of 
families with children, it would result in a dramatic increase in 
annual taxes of $250.
  This tax increase is being carried out for one purpose. That is to 
produce the crown jewel in the so called Contract With America. An 
enormous tax break for the wealthiest of this country courtesy of an 
enormous tax increase on working Americans.
  In the budget proposal we are now debating, the tax cut is 
camouflaged. In fact, it took the press a few days to pick up the fact 
that there was a $170 billion earmark in this budget proposal that 
could only go to the Finance Committee and could only be used for tax 
cuts. This is not a fiscally sensible policy and it is not morally 
right either.
  There has been some talk about fraud. It is really too bad we are 
talking about fraud as it relates to the poorest people who benefit 
from our tax policies. Why are we picking on people who are working, 
making under $28,000 a year?
  I think we should make sure there is no fraud or abuse in this 
program. There is no question about it. But why do we not look at some 
of the other problems we have. They are too numerous to mention, but 
let me talk about 73 percent of foreign corporations who do business in 
America that pay no taxes--none. We are losing tens of billions of 
dollars a year because they are not paying their fair share. Why do we 
not talk about doing something about that?
  I think it is important we talk about policies and how they affect 
individual human beings. We talk about numbers but they become just 
statistics. What would this do to people in the State of Nevada? Let us 
take, for example, a woman by the name of Denise Mayfield. She is a 
single mother with four children. She lives in Las Vegas. She began 
working at a program called Head Start in Las Vegas in 1985 as a 
teacher's aid at the lowest possible salary, minimum wage.
  She is now director of that program. Before she worked at Head Start 
she worked at the YWCA, and received welfare--Aid to Families With 
Dependent Children. This year, 1994, she received an earned-income tax 
credit of $1,530.
  She used this money to buy a washing machine for her family and 
clothes for her four children. That does not sound too unreasonable to 
me.
  Kanna White is a single mother, has one daughter, and also lives in 
Las Vegas, is going to school, has a full-time job, and she is working 
toward a degree in child development. She received $1,000 this year in 
earned income. She is using some of this money to pay for summer day 
care services. This earned income allows her to pay her bills on time 
and to do things that her daughter can now do that other families take 
for granted.
  Kyle Estrada lives in Henderson, NV, and has three young children. 
She teaches parenting skills and job preparation skills at the Head 
Start Program. She has health coverage for herself, but like many 
Americans, is underinsured. She has no insurance for her children. She 
has three. She received a $1,300 earned income tax credit in 1994. She 
has used this money to cover her rent. This program, she said, has kept 
her off welfare. How much money did she get from the earned income tax 
credit? She got $1300. She would get this much perhaps in 2 months if 
she went on AFDC. But she chose to continue working, like millions of 
Americans have done and thousands of Nevadans have done--to continue 
working rather than going on welfare. That was the purpose of this 
program. It is working well.
  I conclude by saying that these three people are just a few of the 
thousands in Nevada of hard-working people who would rather work and 
support their families than go on welfare.
  This is an example of three people in Nevada who are representative 
of tens of millions of people in America who are now working instead of 
being on welfare. We need to continue this program.
  For me, this illustration represents the difference of philosophy 
between this side of the aisle and those on the other side of the 
aisle. We do not live in a Darwinian society. We cannot expect all 
Americans to succeed and make millions, like Bill Gates in the computer 
business or Forrest Mars in the candy business. They are good, there is 
no question about it. I applaud them for being entrepreneurial 
billionaires. But they were also a little lucky. Not everyone can be 
like them. We cannot expect everyone to be like Bill Gates or Forrest 
Mars. But we can expect everybody to continue to try.
  That is what earned income is all about. On the other side of the 
aisle, they lecture about the need to eliminate handouts. What we do is 
do something to eliminate handouts.
  Mr. President, earned income reflects the Democratic philosophy 
because it involves giving a hand-up, not a hand out.
  It is unfair to raise taxes on 12 million hard-working Americans, and 
that is what this budget proposal would do.
  I think this amendment should be adopted in a bipartisan fashion.
  Mr. BRADLEY. Mr. President, how much time remains?
  The PRESIDING OFFICER. The Senator from New Jersey has 4\1/2\ minutes 
left.
  Mr. BRADLEY. I ask the distinguished Senator from Oklahoma, is it his 
intention to offer the amendment at the conclusion of all time on this 
amendment?
  Mr. NICKLES. The Senator is correct.
  Mr. BRADLEY. At which point there would be, under the rules, an hour 
of debate on the second-degree amendment; is that correct?
  The PRESIDING OFFICER (Mr. Inhofe). That is correct.
  Mr. BRADLEY. It does pertain to the earned income tax credit?
  Mr. NICKLES. That is correct.
  Mr. BRADLEY. Mr. President, other speakers will be able to speak in 
that half hour. I would simply like to make a few points in the 
remaining minutes we have before this amendment will come to the point 
of second degree.
  First, the argument that we are having is that there is an explosion 
in this program, that this program has exploded, says the opponent of 
this [[Page S7151]] amendment. Do you know why it has exploded? It has 
exploded because in 1975, if you earned over $8,000, you could not get 
this benefit. You could not get any tax relief from this. Now you can 
earn up to $28,000. There are millions more Americans that are now 
eligible for this tax cut. There are millions of Americans eligible for 
the tax cut. And, indeed, we have broadened it, as the distinguished 
Senator from Oklahoma has pointed out, from a few hundred dollars in 
the mid-1980's to $2,500 today, heading up to $3,000.
  So it is a bigger tax cut. So lo and behold, a ray of insight, a 
stroke of wisdom; if you give a bigger tax cut to more people, it will 
cost more money. That is the explosion that the Senator is talking 
about. I thought giving tax cuts was a good idea. That is all we have 
heard from the other side. We want a tax cut, a tax cut, a tax cut. 
Here is a tax cut. But no. For families earning under $28,000 a year, 
we want a tax increase. Oh no, no, no, they say. They do not pay any 
income tax.
  Just for the record, 48 percent of the people who receive the earned 
income credit with children pay income tax; just for the record, the 
facts. But that is not the point. The point is the earned income credit 
is meant to offset not only income tax but other taxes, such as Social 
Security tax, and also the loss of certain benefits as you earn more 
money so that you are not pushed farther down the ladder.
  So the fact of the matter is that this is a significant tax cut. It 
offsets not only income tax, if you pay income tax, and 48 percent of 
the families with children who are eligible for this do, but it offsets 
the Social Security tax. That is the cruelest tax on families, and it 
offsets the loss of certain benefits as you earn more income going up 
the scale.
  So there is no dispute that under the proposal before us on the other 
side, that families earning under $28,000 a year will pay more in 
taxes. They will pay more on the Social Security taxes that they do not 
have offset with this, or they will pay more in income taxes.
  Let us make a point about the Senator's data. ``Oh, what a terrible 
error rate; oh, what a terrible fraud, a waste.'' Of course, all of his 
numbers are from 1988. Well, a few things have happened since 1988 that 
tightened this program up. In fact, many things have happened since 
1988.
  For example, we repealed the supplemental credit for health 
insurance. We repealed the supplemental credit for children under the 
age of 1. We denied it to nonresident aliens. We denied it to anybody 
who is a prisoner. We required a taxpayer identification number. The 
Department of Defense is required to report both the IRS and the 
military personnel nontaxable earned income credit paid.
  We also said if you have investment income over $2,500 you do not get 
it. We said that now you have to have a Social Security number provided 
for children, as well as adults, and on and on.
  We have made major steps to correct this. This is not the time to 
increase taxes on working families.
  I am really surprised that that is the position, inconsistent as it 
is with the espousal of the other insight.
  The PRESIDING OFFICER. All of the time of the proponents has expired.
  Mr. NICKLES. Mr. President, how much time remains?
  The PRESIDING OFFICER. There are 31 minutes remaining.
  Mr. NICKLES. It will be my intention to yield the balance of my time 
as soon as we have our amendment ready.
  I continue to hear the proponents of this amendment say that our 
efforts to reduce the growth rate of EITC is a tax increase on working 
poor. I want to say that is flatly wrong. Eighty percent of the money 
in this program is going to people in lump sum, cash payments.
  My friend from Nevada gave some excellent examples of people who 
qualified for the credit. I heard him say that one person received 
$1,000, and another received $1,200.
 Under the assumptions in this budget resolution, they could receive 
more than they received last year.

  Let me repeat that. Under our proposal, they could receive more than 
they received last year. No one's payment, if they received an earned 
income tax credit and their income was the same, would be less. We did 
not roll back the program. We did not lower the credit or income 
eligibility amounts.
  Again, here are the growth rates of this program, and it has 
exploded. For its first 10 years, the EITC cost less than $2 or $3 
billion. Now the program has outlays of over $20 billion in the last 
few years. Even under our proposal, it continues to increase about $1 
billion per year.
  Granted, that is about a 3-percent growth instead of a growth rate 
that was at 20 and 40 and 55 and 60 percent. So it grows a lot more 
slowly.
  I am putting all these tables into the Record. People right now, in 
1995, can receive a $3,110 lump sum; 99 percent of the people who 
qualify for this receive the benefit in a lump sum.
  Now, my colleagues call this a tax increase, even though next year we 
would give them slightly more $3,110. We say next year the maximum 
amount under our proposal would be more than that but it would be only 
slightly more than that. My colleagues on the other side say, well, 
wait a minute, next year we want to increase that to $3,500, and in a 
few years we want to take it to $4,000. We are saying that, no, we are 
going to be more conservative; we are going to increase it to $3,560. 
So instead of giving somebody $4,000, we are going to say we will give 
you $3,560. Every year we are going to give you more than last year 
under our proposal, but our colleagues are calling this a tax increase.
  I disagree. The handouts will be a little less. The cash payments 
will be a little less under our proposal. They will be more than last 
year, but they will not continue to grow at this unaffordable rate. We 
cannot afford this. Our Government cannot afford it.
  And again I was surprised to find that the cost of this program now 
exceeds the Aid to Families with Dependent Children, the largest cash 
welfare benefit program in our Nation's history.
  The earned-income tax credit is a great name, but it does not fit 
this program. This is a negative income tax program. I have heard my 
colleagues say this affects anybody who makes under $26,000--I will put 
tables in the Record on this subject. In 1995, the figure is $26,673. 
That is the maximum amount of income you can make and still receive 
some EITC. But that figure increases. Under current law, by the year 
2000, you can receive EITC if you make up to $32,596. Under the so-
called radical assumptions in this budget, you can receive EITC if you 
make up to $31,656.
  So the EITC still goes to the same people, but we just have just 
slowed the growth of the maximum credit amount.
  What we have done, in my opinion, is respond to the studies of GAO. I 
heard my colleague say it was an old study. The IRS in 1994, in a 2-
week study on electronic returns, said that 29 percent of those audited 
received too much earned income credit. That is a total of $358 
million. They said 13 percent were judged to have intentional errors, 
outright fraud. That was $183 million.
  That was just a short, little 2-week study. In 1988, another tax 
compliance measure showed that 42 percent of EITC recipients received 
too large a credit and 32 percent were not able to show they were 
entitled to any credit. That was when the program was much smaller, and 
that was when the incentives to cheat were much less. Now we have 
tripled the amount of money that individuals can receive. Now people 
have found out that you can get a big check if you make $12,000--and it 
does not make any difference if you made $12,000 working 40 hours a 
week or if you made $12,000 working 100 hours a year. Maybe for some 
reason you are working part time, whatever. You can qualify for this 
benefit and be able to receive $3,110 dollars. And when people find 
that out, there is a lot of incentive to cheat a little bit. In the 
past people cheated to reduce their tax liability, and now we find that 
people have other incentives; if you cheat a little bit now, we are 
going to give you a check, and the check is not just a few hundred 
dollars as this program used to be. It is not just $953 as it was in 
1990. Now it is $3,110 and growing to $4,068.
  We think that is too rapid a growth. We think this program is too 
fraudulent. We think we should curtail the growth of that program. I 
tell my colleague from New Jersey, I will share with him a copy of the 
second-degree amendment I have. We are trying to [[Page S7152]] make 
sure it conforms with his amendment, and I will give that to him in 
just a moment.
  I reserve the remainder of my time.
  I suggest the absence of a quorum.
  Mr. DOMENICI addressed the Chair.
  The PRESIDING OFFICER. The Senator from New Mexico.
  Mr. DOMENICI. Will the Senator withhold the request?
  How much time remains?
  Mr. NICKLES. I withhold.
  Mr. DOMENICI. I reclaim the time on our side.
  The PRESIDING OFFICER. The Senator has 24 minutes 10 seconds.
  Mr. DOMENICI. Mr. President, let me just recap and then I would like 
a quorum call charged to our side where I can talk with Senator Nickles 
for a minute.
  Mr. BRADLEY. Will the Senator yield just for a question?
  Mr. DOMENICI. Sure.
  Mr. BRADLEY. If the Senator still has time that will be unused, I 
have people on my side who do want to use time, and while Senators are 
in conference, does the Senator mind if they speak?
  Mr. DOMENICI. Mr. President, I say to the Senator, I do not think I 
can do that because we are running up against a real shortage of 
overall time to get a lot of amendments in. We both get charged 50-50, 
or we benefit 50-50 on that time. I do not get the benefit of the whole 
20 minutes. That side gets 10 of it in the overall, but I do not think 
I would do that yet.
  Mr. EXON. Will the Senator yield?
  Mr. DOMENICI. Yes.
  Mr. EXON. Following up on this, it is pretty obvious we are coming 
down to crunch time. I am just going to make the suggestion now without 
asking for any commitment now of the chairman of the Budget Committee. 
It seems to me that after the Gramm amendment is offered, which I 
understand will be the next one up--and I am not trying to limit debate 
on that--I would suggest that we at least consider getting a unanimous-
consent agreement on both sides that after the Gramm amendment all 
amendments to follow would be limited to some timeframe, I do not know, 
half an hour, 15 minutes, equally divided, or something of that nature, 
and possibly eliminate second-degree amendments. Otherwise, we are 
going to run into a real train wreck tomorrow about noon.
  I just make the suggestion if we could consider contemplating after 
the Gramm amendment to enter into a unanimous-consent agreement on all 
amendments that would follow.
  Mr. DOMENICI. Mr. President, in the Senator's usual way of helping 
things along, the Senator has made a good suggestion. Clearly, I cannot 
agree to that at this point,
  Mr. EXON. I cannot either. I have not cleared it on this side. But we 
have to provide some leadership if we are going to allow any time at 
all to the whole stack of amendments that the Senator and I know are 
waiting on each side.
  Mr. DOMENICI. The Senator asked that we contemplate it and we will 
contemplate it.
  Mr. EXON. I thank the Senator.
  Mr. DOMENICI. We are spending a little time, Mr. President, 
incidentally, trying to find out what the President's plan is. I saw in 
the paper today he may have a plan. I have never heard of it until I 
read it in the Post today. I do not expect any Democrat on the 
Senator's side has seen it yet. But in any event, we are working a 
little bit here to see if we can find out what that might be.
  I just would like to recap this argument and then I will yield the 
time back to Senator Nickles after a brief discussion with him.
  Let me talk about this earned income tax credit this way. We would 
seek to return the earned income tax credit--that is the name it is 
given so that is the name I will use--to its original intention. Its 
original intention was that it should go to families with children, so 
it was not just an earned income tax credit. It was a family earned 
income tax credit. We return it to that: working families are entitled 
to this tax rebate in some cases or this check from the Federal 
Government in most cases.
  The concept was a good one. It still is a good one. We have expanded 
it. We think it should be returned to the concept that came about when 
President Reagan was in office, about which I have been quoted in the 
Chamber as being a strong proponent. That is for working families to 
get an incentive to work instead of quitting work.
  Now, what will happen if the assumptions in the budget resolution are 
ultimately adopted--families with one qualifying child in 1995, the 
maximum credit amount--that is, the check they get back--$2,094. That 
is the maximum. In 2002, it will be $2,630. That is a plus change, a 
positive change of $536. The maximum income eligibility for that family 
with one qualifying child is $24,396 now.
  It will increase to $30,659. That is an increase in maximum income 
eligibility of $6,263.
  Now let me just move to families with two or more qualifying 
children, remembering we are returning it to families, as was 
originally intended. So that single wage earners who are not earning 
sufficient money do not get a tax check back from the Government. This 
is intended for working families.
  For working families with two or more children, the maximum credit 
today is $3,110. In the year 2002, the tax credit will be $3,806, an 
increase of $696, almost $700. The maximum eligibility, Mr. President, 
how much money you can earn--and this all has to be earned income--
$26,673 in 1995; $33,845, for an increase of $7,172, in the year 2002.
  Frankly, there are some who might say that is not enough. There are 
some who would say it should be more because current law says it should 
be more. Well, we passed a law and now we find ourselves with a new 
responsibility and it is a very simple responsibility. And it is to 
balance the budget of the United States. That is the responsibility.
  If we were saying this good program should stop, we should take it 
out of the budget, cause it to cease and desist, then obviously we 
would be saying to working families, ``We no longer want to give you an 
incentive to stay at work.'' We are not saying that. We are saying this 
is more like what we can afford. We think it is a pretty fair increase, 
not a cut, an increase.
  Now, just to put it in perspective that this is not just a little 
program that indeed we came upon and Republicans helped put it in 
place, a President who supported it named Ronald Reagan, to say that it 
is not a significant program even after we asked for a little restraint 
in getting at a little bit or a lot of fraud--which I did not even 
mention, the Senator from Oklahoma did--this earned income tax credit 
will be a $193 billion program for the years 1996 through 2002.
  We will spend, in taxpayers' dollars--that is, we will collect money 
from taxpayers--we will give checks back to the working poor families 
in the amount of $193 billion between 1996 and 2002; hardly abolishing 
a program; hardly taking away the basic concept of a program; hardly 
increasing anybody's income taxes.
  It is taking income taxes and saying we want to help people to the 
tune of $193 billion in checks we will give back. Those are the numbers 
when we are finished, I say to my friend.
  The Senator would like it to be $230 billion.
  Mr. BRADLEY. Will the Senator yield?
  Mr. DOMENICI. I am happy to yield.
  Mr. BRADLEY. I do not dispute the numbers, but to argue that this is 
not a tax increase is a little bit like arguing that when Ronald Reagan 
wanted to phase in tax cuts over 3 years, if we did not phase in the 
third 10 percent of the tax cut, that would not have resulted in higher 
taxes.
  Mr. DOMENICI. Does the Senator have a question?
  Mr. BRADLEY. The question is, does the Senator dispute that under the 
proposal offered in the budget resolution working families will pay 
more in taxes? Does he deny that working Americans would end up paying 
more income tax or have less relief for Social Security taxes than 
under the amendment that is offered by the Senator from New Jersey?
  Mr. DOMENICI. I say to the Senator, if I might respond, I do not 
agree at all. We have decided in our wisdom to say we are going to give 
money back to certain American taxpayers. We are going to give them a 
check. We did not equate that with income taxes. We just had a whole 
litany of things saying we just would like to relieve your burden.
  You choose to call that raising the income tax. I choose to say that 
we are [[Page S7153]] not going to give a single individual a paycheck 
from other taxpayers of the United States because he does not have a 
family. We are not going to give him a $500 check.
  We are just saying this is for working families. It is an idea that 
we put some flesh into the law. Now today you are saying if we are not 
going to give it to that single person, we are taking a paycheck away 
from him. But it really is not income taxes rebated to him that he 
already paid. It is other people's income taxes that we collected and 
give to him in a paycheck. You can call it what you like. That is my 
description of it as best I understand the program.
  So we choose to do that. For those who want to spend more and give 
that person I just described either $300 or $400 or $500, fine. We 
choose to say the working family continues to get the money. And we 
just gave the numbers.
  And for those who say it goes down, the number that we intend, if the 
Finance Committee passes it--and that is the irony; they may not even 
pass it. The Senator is on the Finance Committee. You may choose to do 
something else.
  But we were compelled in the Budget Committee to tell you how we 
might get there, and this is one way we might get there.
  Mr. BRADLEY. Will the Senator yield on that point?
  Mr. DOMENICI. Yes.
  Mr. BRADLEY. You do something else. You mean to equal the amount of 
revenues that the Finance Committee will be asked to raise under this 
proposal. You mean to raise other kinds of taxes as opposed to raise 
taxes on these working people. That is what you mean.
  So, by the Senator's own admission, this is a tax increase. It is a 
requirement of the Finance Committee to raise taxes.
  Mr. DOMENICI. Mr. President, that is not what I said. I say the 
Finance Committee has a lot of options, and they can choose to do this 
the way it is scheduled here or they can choose to do it a different 
way. That is in their hands.
  We show one way to get to a balance. And this is part of the one way 
to get to a balance.
  Now, frankly, I do not believe the American people would believe that 
what we have talked about today means we are raising taxes. We have the 
prerogative and responsibility to change a program that is rampant with 
fraud that we find we cannot now afford, but we want to keep its basic 
concept.
  And for those who run to the floor on the other side, who say, 
``Well, you are cutting the millionaire's tax,'' that is not true, 
either.
  The budget resolution before us says it is the sense of the Senate--
it passed by every single vote of the Budget Committee except one--that 
any tax cuts, if they occur, will go 90 percent to people with $100,000 
worth of income or less. So speaking of red herrings, that is one. That 
is all we hear.
  Frankly, we just, every now and then, have to remind people they can 
take the budget resolution and read it and they will find it right in 
there. Senators Boxer and Brown were the proponents of it and it passed 
overwhelmingly.
  Now, Mr. President, we have some time left.
  Mr. President, I suggest the absence of a quorum on our time.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. DOMENICI. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. DOMENICI. Mr. President, I yield the remaining time to Senator 
Nickles.
  Mr. NICKLES. Mr. President, I have a couple comments I want to 
clarify for my friend from New Jersey, I was hoping we could get some 
time reduction. I understand that he was not able to get that. My guess 
is that a point of order will be made when time expires on this side.
  A couple points on this amendment. Right now we are spending a total, 
for the so-called earned income tax credit of $25.3 billion per year. 
Under the budget proposal we have before us, if you add up the next 7 
years, that total will be $204 billion. A freeze would be $176 billion. 
So we are spending about $30 billion more than a freeze. So the total 
amount of money that we spend on this cash payment program still goes 
up. Most of the beneficiaries receive a lump sum. I am tired of hearing 
people talk about tax cuts and tax increases. The EITC is primarily a 
cash payment, a lump-sum cash payment to a lot of individuals, and the 
cost of the program is going up every year. It goes up even under our 
proposal. I wanted to make that perfectly clear.
  I also want to inform people that if they received an earned income 
tax credit last year of $3,110, next year they will receive, even if 
the Finance Committee passed this as we proposed, a little more. It 
will not continue to escalate as rapidly as it has. It cannot continue 
to escalate as rapidly as it has.
  I might mention, if we do nothing, if we follow the guidelines of 
some people, the status-quo type budgets as they propose, this 
entitlement program will continue to explode, and it certainly has 
exploded. We will be spending $226 billion over the next several years.
  How can people call a program where 80 percent of the money is handed 
out in cash payments, where 99 percent of the benefits are received in 
an annual lump-sum payment, a tax cut.
  I might mention, I am going to put in the Record a chart for the 
earned income tax credit for two or more children. I also have one for 
persons with one child. The figures I was using before were two or more 
children. When a lot of people find out they are eligible for this, 
they are going to start filing. A lot of people are going to start 
working to have their income come in right on that level.
  You say, how can you do that? I tell you, in the private sector, I 
used to hire some people who were retired from other companies, and 
they wanted to work just enough so they could make a little money 
before they started losing Social Security. So people can adjust their 
incomes; they can be paid just about that much. That happens.
  Or they can work part time until they make this amount of money, and 
you do not have to work 2,000 hours to receive the maximum credit. 
There is no hour limitation. As a matter of fact, the average number of 
hours people worked in this program is 1,300. That is about 24 hours a 
week. That is not 40 hours a week. You could actually be a lobbyist or 
something and work 100 hours in a year, and if you happen to make about 
the right amount of income, you could receive a $3,100 check from Uncle 
Sam.
  We are talking about reducing the growth of these checks. We are not 
even reducing the amount, but we are saying they will not be growing as 
fast. I think that is important. Some people call that a tax increase. 
It means we are going to write smaller checks, these checks will not be 
growing as fast. It is not affecting anyone's tax cuts, tax rebates, or 
anything like that. Most of these people are receiving cash payments, 
so we are trying to curtail a program that has been growing seriously 
out of control.
  Mr. BRADLEY. Will the Senator yield on that point?
  Mr. NICKLES. Not quite yet. The growth in this program has been 
unsustainable. The people advocating this amendment want that growth to 
continue. We cannot afford it. If you are going to balance the budget, 
you are going to curtail the growth of entitlement programs. This is an 
entitlement program. This is one of the fastest growing entitlement 
program.
  I mentioned before the cost of the program totally exceeds the cost 
to Aid to Families with Dependent Children. Aid to Families with 
Dependent Children in 1995 cost $18 billion. This program in 1995 cost 
us $25.3 billion. It is past AFDC big time. AFDC provides cash 
payments; this program provides cash payments. This program provides 
cash payments for a family with two children of $3,110. With one child, 
it provides for a maximum credit of $2,094. So you get an extra $1,000 
if you have two or more children.
  Some people who are talking about changing the welfare program say 
they want to take some of the incentives away from having more 
children. This program is a big incentive for people to say, ``We want 
our income to be at this [[Page S7154]] particular level so we can get 
a nice big check from Uncle Sam.''
  I have also found that in some cases, 20, 30, maybe even 40 percent 
of the people living in a particular area could be eligible for this 
cash payment program. Then you start finding con artists who will sign 
people up who do not pay taxes and have not filed returns in the past. 
They will go on a recruiting trip and encourage people to have their 
income fall into this category, file an electronic return and maybe 
split it with them because they weren't going to do a return in the 
first place.
  There has been a lot of fraud in this program. I am quoting these 
figures from a recent GAO report. The most recent study shows 42 
percent of EITC recipients receive too large a credit, and 32 percent 
were not able to show they were entitled to any credit--wow, 32 
percent, the study showed, were not entitled to any credit. And then in 
1994, the IRS did a 2-week study on electronic returns and showed 29 
percent received too much EITC and 13 percent----
  Mr. BRADLEY. Will the Senator yield on that point?
  Mr. NICKLES. And 13 percent were judged to have intentional errors. 
That is a fraudulent program.
  I will tell my colleagues, Senator Domenici wants to save an hour of 
time so that we can consider more amendments. I do not blame him. He 
has a lot of amendments pending.
  I will tell my colleagues, I had hoped to offer a Sense-of-the-Senate 
amendment in the second-degree to tell the Finance Committee, ``Reform 
this program and in the process we think you can save some money.''
  This happens to be a program that needs to have some waste, fraud, 
and abuse taken out of it. That was the essence of the Sense-of-the-
Senate amendment I had intended to offer, saying to the Finance 
Committee, ``Preserve this program in a way that you eliminate the 
waste and the abuse and the fraud that we see now and as reported by 
the GAO.''
  That is what we should be doing. I think the Finance Committee can do 
it. GAO says one-third of this program is fraudulent. We did not even 
cut it that much. We maybe should have frozen the program until we 
eliminated the fraud. We did not do that. We allowed the program to 
grow.
  I urge my colleagues to vote against the amendment of the Senator 
from New Jersey. I will be happy to yield for a question.
  Mr. BRADLEY. The Senator said one-third fraudulent. Could the Senator 
justify that? Could he give us some documentation that says one-third 
fraud?
  Mr. NICKLES. Will the Senator hold a second?
  Mr. DOMENICI. Mr. President, could I make a request before he answers 
the question? How much time do we have remaining?
  The PRESIDING OFFICER. One minute fifty-two seconds.
  Mr. DOMENICI. Mr. President, I say to Senator Exon, I have discussed 
with Senator Nickles, and the Senator from Nebraska has discussed with 
Senator Bradley an arrangement that we might make. I am shortly going 
to make a point of order, and I understand either Senator Exon or 
Senator Bradley will move to waive it.
  I ask unanimous consent that when I make the point of order and 
Senator Exon or Senator Bradley seeks to waive it, that the time be 
limited on the motion to waive to 10 minutes a side.
  The PRESIDING OFFICER. Is there objection?
  Mr. EXON. There is no objection on this side, and just so I 
understand what the Senator is suggesting, the Senator from New Mexico 
will move to waive, we will object to that and then we will limit 
debate to 10 minutes on this side and 10 minutes on that side on that 
motion to waive; is that correct?
  Mr. DOMENICI. The Senator from Nebraska or the Senator from New 
Jersey will be making the motion to waive. The Senator is correct.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. DOMENICI. Mr. President, I yield back the remainder of our time, 
which is a minute and something.
  Pursuant to the pending amendment, the pending amendment is not 
germane to the provisions of the budget resolution. And pursuant to 
section 305(b)(2) of the Budget Act, I raise a point of order against 
the pending amendment.
  Mr. EXON. Mr. President, pursuant to section 904 of the Congressional 
Budget Act of 1974, I move to waive section 305 of that act for the 
purposes of the pending Bradley amendment.
  The PRESIDING OFFICER. Under the previous order, the debate is 20 
minutes evenly divided.
  Mr. DOMENICI. Mr. President, I ask unanimous consent that it be in 
order to ask for a rollcall vote on the motion to waive at this time.
  The PRESIDING OFFICER. The motion to waive is pending.
  Mr. DOMENICI. I ask for the yeas and nays.
  The PRESIDING OFFICER. Is there a sufficient second?
  There is a sufficient second.
  The yeas and nays were ordered.

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