[Congressional Record Volume 141, Number 104 (Friday, June 23, 1995)]
[Senate]
[Pages S8979-S8989]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                    THE BUDGET RESOLUTION AGREEMENT

  Mr. FEINGOLD. Mr. President, I would like to say a few words about 
what has happened with regard to the concurrent budget resolution. The 
Republican leadership have unveiled their final conference budget 
proposal. I just have to say that I am appalled at the fiscal 
irresponsibility that it represents.
  I, for one, disagree with some other Democrats in that I am glad the 
President came in with a budget that had a date certain for balancing 
the budget. I am glad that the Republicans are working on a date 
certain to balance the budget. I happen to think both of them wait too 
long. I think it can be done before the year 2000, if you really put 
everything on the table.
  I recognize that the President himself has proposed a tax cut--
certainly, a much more modest tax cut than the various Republican 
proposals. I happen to disagree with any tax cut at this time if we are 
going to balance the budget as fast as we can, Mr. President. But this 
agreement last night really takes the cake. It includes a massive, $245 
billion tax cut--not the $50 or $60 billion the President was talking 
about, or $90 billion that some said the process would end up with, but 
really an unbelievably high figure, at a time when this country has a 
$5 trillion debt. A $245 billion tax cut over the next 7 years.
  Mr. President, such a tax cut at this time is so fiscally 
irresponsible as to be downright reckless. To me, Mr. President, this 
is not just a budget compromise, it is a compromising of the economic 
health of the American people. It could not come at a worse time. It 
could not be more irresponsible. This is a deal cut in the back room by 
members of one party, which sacrifices the whole principle of fiscal 
discipline for very shallow political ends, Mr. President. I am afraid 
the Senate budget conferees have totally caved in to political 
gamesmanship, Presidential politics, and the Contract With America.
  I was watching TV this morning. On the Today Show, I saw the 
Speaker's comment when the reporters asked him what this deal was all 
about. With a wink, the Speaker said, ``You are going to have more 
take-home pay. You will like it.'' He knows what he is doing. He is 
trying to tell the American people they can have their cake and eat it, 
too. They can have a $245 billion tax cut and a balanced budget by 
2002.
  But the American people know better. They know that cannot be done. 
In fact, I would almost understand it if this deal was based on a 
political understanding of what the people in America really want. But 
I cannot find anywhere in the State of Wisconsin, which I represent, 
people clamoring for a tax cut. I have been watching this

[[Page S8980]]

carefully every day since last November. The people of my State, 
whether Republicans or Democrats, millionaires or working-class people, 
are not clamoring for tax cuts. They know you cannot have a $245 
billion tax cut and balance the budget by 2002 or 2005, or any time in 
the foreseeable future.
  So I find this hard to understand. It does not seem to fit politics. 
It certainly does not fit policy, and certainly does not fit in with 
our economic needs and the goal of eliminating the deficit. I remember 
a few months ago that the chair of the other body's Budget Committee 
went to a town meeting in his district, and he got confirmation that 
the American people in his district want a balanced budget. He said, 
``You folks want a tax cut, too, do you not?'' Guess what, the crowd 
overwhelmingly told the budget chair in the other body they did not 
want a tax cut because we need to balance the budget now. Well, the 
chair of that committee completely ignored the wishes of the people at 
his town meeting, and he went ahead and joined in this deal to take 
$245 billion that could be used for deficit reduction and give it 
particularly to those who are the wealthiest among us.
  Mr. President, the proposed tax cut jeopardizes not only an 
opportunity to eliminate the Federal deficit and balance our books, it 
risks our Nation's economy. Mr. Greenspan and the Federal Reserve may 
be considering lowering interest rates because of the possibility now 
of some sort of recession. But a fiscally irresponsible tax cut of $245 
billion could put any plans to lower interest rates on hold, and might 
even lead to an interest rate increase.
  To accommodate this unnecessary tax cut and to accommodate an 
unjustified increase of $58 billion, to an already bloated defense 
budget, this document that was cooked up in the last few days adds to 
defense and forces draconian cuts in the most important programs in the 
budget. There are stark parallels between the level of the tax cuts, 
also, and the proposed cuts to Medicare, Mr. President. The tax cut 
figure from last night is $245 billion. The Medicare cuts that the 
Republicans say we have to have is $270 billion. It is not hard to 
conclude, Mr. President, a very simple proposition: Medicare cuts are 
being made to fund tax cuts, especially for upper income people.
  I happen to be one who has said on this floor repeatedly that some 
cuts in Medicare can be made. Certainly, we can make some cuts in 
administrative aspects, in some formula-driven overpayments, and other 
areas. But what this tax cut means is that the very harsh Medicare cuts 
included in the budget agreement have to happen. They could be reduced 
significantly, cut in half, or almost completely eliminated, if we did 
not have this $245 billion tax cut. The same goes for the Medicaid 
cuts. There has been a lot of talk about Medicare, but what about the 
impact on the poor because of these $180 billion in Medicaid cuts? You 
could completely wipe out that cut and still have $65 billion left over 
if you did not do this irresponsible tax cut.
  The Senator from Massachusetts has prepared a list here of what the 
priorities really are represented by the decision to do tax cuts 
instead of having an earlier balanced budget while taking care of 
people. The priorities for the Republican agenda here with this big tax 
are slashing Medicare, slashing education, reducing college 
opportunities that are already very thin, and lowering wages for 
working families.

  Mr. President, we do not even have to have most of the Medicare cuts. 
We do not have to have the Medicaid cuts. We do not have to have the 
cuts in student loans, if we use a little willpower and resist the 
temptation to hand out goodies to people in the form of tax cuts they 
do not want anyway.
  Mr. President, this budget imposes devastating cuts to essential 
programs in order to fund increases to the defense industry. In fact, 
the way I like to talk about it, there are at least three sacred cows 
protected by this budget resolution: The first one is the tax cut; a 
$245 billion sacred cow that could help solve our problems and should 
be taken care of and eliminated.
  Second, corporate tax loopholes, growing at a rate of 24 percent, 
second only to entitlements at 27 percent, are not touched. They are 
completely protected by this budget resolution.
  Finally, almost unbelievable to my constituents, the third sacred 
cow--the Defense Department budget, which not only is not cut, it is 
actually increased. Everybody in this game at this point says, ``Gee, 
we have to increase the defense budget at a time when we are trying to 
balance the Federal budget.''
  More important than Medicaid, education, and college is protecting 
tax loopholes, protecting tax cuts, and giving up more money to the 
Defense Department.
  Mr. President, possibly an even greater tragedy of this budget 
agreement is that it missed an opportunity. This compromise missed 
maybe the opportunity to set forth the plan to balance the budget that 
would have had bipartisan support in Congress, and more importantly, 
broad-based support from the American people.
  I suppose there is a tiny hope that this budget agreement still could 
be prevented. I do not hold much hope for it, but there is a chance, 
nevertheless, if we defeat this irresponsible budget agreement, we 
could go back to the drawing board.
  I know we could fashion a budget plan that would have the support of 
the majority of this body, and in this case the Members on both sides 
of the aisle. It would be a plan that could achieve a balanced budget 
not only by the year 2002 or 2000, but even earlier; a plan that would 
have a very good chance of enacting all the ensuing appropriations and 
reconciliation bills into law. Most importantly, Mr. President, it 
would be a plan that would have the support of the American people.
  I know the votes are there. In their hearts, I think many of my 
colleagues on both sides of the aisle know it, too. If the leadership 
would allow Senators to do it, I bet we could have a plan drawn up and 
passed within a week.
  Of course, that is almost certainly not going to happen. The 
leadership will not permit Members to vote their conscience. There are 
many Members in this body on the other side of the aisle who know and 
have said to me that tax cuts do not make sense at this time.
  Whatever happened to the charade in the Senate during the budget 
resolution debate? We heard Members on the other side say there is no 
tax cut in the budget resolution; what are you talking about? Some 
Members tried to point out there was a $170 billion item that said if 
certain things happened, we would have $170 billion available that 
could be used for a tax cut.
  On the television and on the Senate floor the fraud was perpetrated 
that that $170 billion was not specifically devoted to tax cuts. Some 
of the Members on the other side were more straightforward, including 
the Chair. He did not mess around. He put out an amendment that said if 
there is $170 billion, it shall be used for a tax cut. That at least 
was honest. He was not pretending. The Chair does believe in the tax 
cut and was straightforward about it.
  He had a good day yesterday. Not only did that $170 billion get 
locked in, he got it up to $245 billion with the help of the Members of 
the other body. This whole charade that was played out in the national 
media that the Senate Republicans were trying to fight the tax cut has 
been permanently put to rest.
  Both the other House and this body are led by folks who intend to 
deliver a tax cut, at the same time they are trying to tell the 
American people their top priority is balancing the Federal budget.
  Extreme elements have made it clear what happens to Members when they 
vote their conscience. Presidential politics has further taken a budget 
that is already thoroughly contaminated. But, there is still the 
tiniest hope.
  I urge my colleagues on the other side to consider that avenue. I 
worked on deficit reduction packages with Members of both parties, and 
the spirit and willingness to work together for a fair package is 
there. The group led by the Senator from Nebraska [Mr. Kerrey] and the 
Senator from Colorado [Mr. Brown] is one example of a bipartisan 
deficit reduction effort in which I had the chance to participate.
  And I am proud to be working with my good friend from Arizona, Mr. 
McCain, on a number of budget reforms. I know there are Members on both 
sides of the aisle who want to work together. I know there are Members 
on the Republican side who are

[[Page S8981]]

simply embarrassed to put forward an irresponsible tax cut at this 
time.
  Mr. President, I urge them to look at this again, to consider 
rejecting this agreement and forcing the body to consider, instead, a 
responsible budget.
  Mr. President, we need to pull back from this tax cut. We need to 
make a budget that is tough, that makes justifiable cuts to all areas 
of Government. Mr. President, we need a budget that gets rid of this 
unwarranted tax cut.
  I yield the floor.
  Mr. KENNEDY addressed the Chair.
  The PRESIDING OFFICER (Mr. Grams). The Senator from Massachusetts.
  Mr. KENNEDY. Mr. President, first of all, I want to commend my friend 
and colleague from Wisconsin for his excellent presentation. He has 
spoken with great eloquence about the role that we will be faced with 
here in the U.S. Senate in these next several days.
  Most importantly, he has pointed out responsible alternatives that 
can help this Nation deal with its fiscal challenges. I think all 
Members would be wise to heed the clarity of his thinking and the power 
of his persuasion.
  I thank him very much for an excellent presentation. I certainly hope 
our colleagues will pay attention to it. I
  Mr. President, as the Senator from Wisconsin has pointed out, and 
what is increasingly apparent to the Members of this body and I think 
to the American people, is that there is an ongoing process that is 
taking place in both the House of Representatives and Senate as to what 
is going to be the investment policy of the United States; how we are 
reflecting our priorities of what we are going to invest in or cut back 
in; what groups are going to benefit from these decisions and 
judgments, and who is going to pay a price for it.
  That process has been going on for a number of weeks. Now, with the 
announcement that was made last evening, the focus has become sharper 
as to the direction that the Congress will follow.
  Mr. President, the Republican budget deal announced yesterday is one 
more salvo in the Republicans' continuing war on working American 
families. In fact, it's another attack on senior citizens, children, 
families, and veterans.
  It pretends to protect Social Security, while making harsh cuts in 
Medicare. But the distinction is a false one, because Medicare is part 
of Social Security. Like Social Security, Medicare is a compact between 
the government and the people that says ``Pay into the trust fund 
during your working years, and we will guarantee good health care in 
your retirement years.''
  Any senior citizen who has been hospitalized or who suffers from a 
serious chronic illness knows full well there is no security without 
Medicare; the cost of illness is too high. A week in an intensive care 
unit can cost more than the total yearly income of most senior 
citizens.
  In fact, the Republican attack on Social Security is even more 
direct. The Medicare part B premium is deducted directly from Social 
Security checks.
  In particular, it is the low and moderate-income elderly who will 
suffer most from Medicare cuts. Eighty-three percent of all Medicare 
spending is for older Americans with annual incomes below $25,000; two-
thirds is for those with incomes below $15,000.
  The conference agreement maintains the misplaced priorities of the 
bills passed separately by each House.
  The Medicare cuts are so deep as to break America's contract with the 
elderly--even worse than the draconian cuts passed by the Senate.
  Over the life of the resolution, the average senior will have to pay 
an additional $3,200. Elderly couples will have to pay $6,400. Seniors 
with the highest health costs will pay even more.
  The authors of the resolution do not seem to understand that the 
elderly cannot afford these cuts. The average senior only has an income 
of $17,750 a year. Seniors already pay 21 percent of their income for 
health care--a greater amount than they paid before Medicare was even 
enacted. Eighty-three per cent of Medicare spending is for seniors with 
incomes of less than $25,000. Two-thirds is for seniors with incomes of 
less than $15,000.
  These cuts are so deep that they will devastate not only seniors but 
our health care system as a whole. Rural hospitals, public hospitals, 
and academic health centers will be particularly hard hit. The leaders 
of academic medicine concluded that these cuts will mean that ``Every 
American's quality of life will suffer.''
  Cutbacks in Medicare and Medicaid will shift costs to every working 
family in the form of higher health care charges and higher insurance 
premiums.
  Medicare is part of Social Security. Seniors have worked hard all 
their lives. They have earned their Medicare. They deserve it. It is 
wrong to break the promise of Medicare to pay for tax cuts for the 
wealthy. It is a false economy to shift costs from the Federal budget 
to the family budgets of senior citizens and working families.
  The Medicaid cuts are equally wrong. Five to seven million children 
will lose their coverage. One million seniors will lose coverage. 
States will face huge new fiscal burdens.
  This proposal is wrong for seniors. It is wrong for working families. 
It is wrong for children. And it is wrong for America.
  The fundamental unfairness of this proposal is plain. Because of gaps 
in Medicare, senior citizens already pay too much for the health care 
they need. Average elderly Americans pay an astounding one-fifth of 
their income to purchase health care--more than they paid before 
Medicare was enacted 30 years ago. And the reason we enacted Medicare 
was because the elderly faced a health care crisis then.
  Lower income, older seniors pay more than a fifth of their income for 
health care. Medicare does not cover prescription drugs. And its 
coverage of home health care and nursing home care is limited.
  Unlike private insurance policies, Medicare does not have a cap on 
out-of-pocket costs. It does not cover eye care or foot care or dental 
care. Yet this budget plan piles additional medical costs on every 
senior citizen--while the Republican tax bill that has already passed 
the House gives a lavish tax break to the rich.
  It is interesting to compare the generous benefits that the authors 
of this resolution enjoy under the FEHBP plan available to every member 
of Congress to the much less comprehensive benefits provided by 
Medicare. Medicare has no coverage at all for outpatient prescription 
drugs, although they are fully covered under Blue Cross-Blue Shield 
Standard, the most popular FEHBP plan. The combined deductible for 
doctor and hospital services under Blue Cross/Blue Shield is $350. For 
Medicare, the combined deductible is $816. Blue Cross/Blue Shield 
covers unlimited hospital days with no copayments. Under Medicare, 
seniors face a $179 per day copayment after 60 days and $358 after 90 
days. After 150 days, Medicare pays nothing at all.
  Medicare covers a few preventive services, but it does not cover 
screenings for heart disease, colorectal cancer, and prostate cancer--
all covered by FEHBP benefits. Dental services are covered for Members 
of Congress--but not for senior citizens. Members of Congress are 
protected against skyrocketing out-of-pocket costs by a cap on their 
total liability, but there is no cap on how much a senior citizen has 
to pay for Medicare copayments or deductibles.
  Members of Congress earn $133,600 a year. The average senior's income 
is $17,750. For the limited Medicare benefits they receive, seniors pay 
$46 a month, but for their comprehensive insurance coverage Members of 
Congress will pay a grand total of $44 a month. Senior citizens pay $2 
more out of incomes only about one-eighth as large.
  Republicans do not seem to understand that the average senior citizen 
has an income of only $17,750 a year. The Republican budget will force 
millions of elderly Americans to go without the health care they need. 
Millions more will have to choose between food on the table, heat in 
the winter, paying the rent, and paying for medical care. Any plan that 
does that is cruel and unjust.

  Senior citizens have earned their Medicare. They have paid for them, 
and they deserve them. Yet our Republican friends would deny them these 
much deserved benefits.
  How do they explain this to senior citizens? This is a budget that 
Marie Antoinette would love--``let them eat cake.'' And it is Medicare 
that is being sent to the guillotine.

[[Page S8982]]

  The Medicare cuts in this resolution harm more than senior citizens. 
These proposals will also strike a severe blow to the quality of 
American medicine--damaging hospitals and other health care 
institutions that depend heavily on Medicare.
  These institutions provide essential health care for Americans of all 
ages, not just senior citizens. Progress in medical research and 
training of health professionals depends on the financial stability of 
these institutions academic health centers, public hospitals, and rural 
hospitals will bear an especially heavy burden. As representatives of 
the academic health centers that guarantee our world-renowned 
excellence in health care said of the Republican budget, ``Every 
American's quality of life will suffer as a result.''
  In addition, these massive costs will inevitably impose a hidden tax 
on workers and businesses. They will face increased costs and higher 
insurance premiums, as physicians and hospitals shift even more costs 
to the nonelderly. Accordingly to recent statistics, Medicare now pays 
only 68 percent of what the private sector pays for comparable 
physicians' services; for hospitals care, the figure is 69 percent. The 
proposed Republican cuts will widen this already ominous gap.
  Republicans have argued that the deep cuts are needed to save 
Medicare from bankruptcy. The hypocrisy of this claim is astonishing. 
Just a few weeks ago--before they began to feel the political heat on 
Medicare cuts--the Republicans passed a tax bill in the House that took 
almost $90 billion in revenues of the Medicare hospital insurance trust 
fund over the next 10 years--and brought it that much closer to 
insolvency. We did not hear a word then about the impending bankruptcy 
of Medicare.
  We also did not hear about it when last year's Medicare trustee's 
report was issued. Republicans were too busy last year blocking health 
reform and pretending there was no health care crisis at all.
  This year's trustees report actually shows the Medicare trust fund to 
be in a stronger financial position than last year. The new-found 
Republican concern for the solvency of the Medicare trust fund is a 
sham--a convenient pretext to rob Medicare to pay for tax breaks for 
the rich. Medicare is nowhere near as bankrupt as Republican 
priorities.
  It is true that the April 3 report of the Medicare trustees projects 
that the Medicare hospital insurance trust fund will run out of money 
by 2002. But few if any Republicans would be talking about Medicare 
cuts of this magnitude, absent the need to finance their tax cuts for 
the wealthy. As the Medicare trustees themselves noted in their report, 
modest adjustments can keep Medicare solvent for an additional decade--
plenty of time to find fair solutions for the longer term.
  Similar projections of Medicare insolvency have been made numerous 
times in the past, but adjustments enacted by Congress were able to 
deal with the problem without jeopardizing beneficiaries. Now is no 
different. For example, an estimated 20 percent of all Medicare 
hospitalizations could be avoided with better preventive services and 
more timely primary and outpatient care. As much as 10 percent of all 
Medicare expenditures may be due to fraud, and could be reduced or 
eliminated by better oversight.
  Some Republicans have accused Democrats of attempting to scare 
America's senior citizens. Senior citizens do have reason to fear what 
this budget resolution will do to their Medicare benefits. But the real 
fearmongers are those who attempt to cloak their misguided budget in 
demagoguery about the bankruptcy of Medicare.
  We do not have to destroy Medicare in order to save it.
  Another false Republican argument in defense of Medicare cuts is that 
they are not really a cut, because the total amount of Medicare 
spending will continue to grow. The fact is that the Republican plan 
calls for spending far less on Medicare than the Congressional Budget 
Office says is necessary to maintain the current level of services to 
the elderly.
  Every household in America knows that if the cost of your rent, the 
cost of your utilities, and the cost of your food go up--and your 
income stays the same--you have taken a real cut in your living 
standard.
  Only in Washington could someone say with a straight face that making 
senior citizens pay hundreds of dollars a year more for their medical 
needs is not a cut in their benefits. Every senior citizen understands 
that.
  Republicans speak of a cut in defense, even though defense spending 
has stayed stable. Apparently, the same Republican logic does not apply 
to senior citizens that applies to defense. Well, I say to them--a cut 
is a cut is a cut--whether it is in Medicare or Social Security or 
national defense.
  The third specious Republican argument is that Medicare costs can be 
cut by encouraging senior citizens to join managed care. True, such 
care may help bring Medicare costs under control--in the long run. 
Enrollment by senior citizens in managed care is already increasing 
rapidly. It is up 75 percent since 1990. But no serious analyst 
believes that increased enrollment in managed care will substantially 
reduce Medicare expenditures in the timeframe of the proposed 
Republican cuts.

  In fact, according to the General Accounting Office, Medicare now 
actually loses money on managed care, because the healthiest senior 
citizens tend to enroll in managed care and the payment formula is too 
generous. This kind of problem can easily be worked out, and will help 
to restore the fiscal stability of the program. But the only way to 
save serious money in the short term on managed care is to penalize 
those who refuse to join. This harsh option has already been suggested 
by the Republican health task force in the House of Representatives.
  I say to my Republican colleagues--it is wrong to force senior 
citizens to give up their freedom to choose their own doctors and 
hospitals. It is wrong to penalize them financially if they refuse to 
enroll in managed care.
  The American people will never accept a policy that tells senior 
citizens they have a right to go to the hospital and doctor of their 
choice, or that puts unfair financial pressure on senior citizens to 
give up that right.
  A further Republican argument is that deep cuts in Medicare are 
necessary to balance the budget. That argument refutes itself. It is 
nothing of the kind. All it proves is that Republican priorities are 
wrong. There is a right way to balance the budget, and a far-right way. 
And unfortunately, the Republicans have picked the latter.
  It is true that we need to bring health care spending under control. 
But that applies to all health spending, not just Medicare. As 
President Clinton told the White House Conference on Aging last month, 
40 percent of the projected increase in Federal spending in coming 
years will be caused by escalating health costs.
  But what this Republican budget fails to recognize is that the 
current growth in Medicare spending is a symptom of the underlying 
problems in the entire health care system--not a defect in Medicare 
alone.
  In fact, Medicare has done a better job than the private sector in 
restraining costs in recent years. Since 1984, Medicare costs have 
risen at an annual rate that is 24 percent lower than comparable 
private sector health spending. As a result, Medicare now pays only 68 
percent of what the private sector charges for comparable physicians' 
services; for hospital care, the figure is 69 percent.
  Slashing Medicare unilaterally is no way to balance the budget. It 
will simply shift costs from the budget of the Federal Government to 
the budgets of senior citizens, their children, and their 
grandchildren. That's not a real saving.
  Moreover, senior citizens will also face greater discrimination from 
physicians and hospitals less willing to accept them as patients, 
because Medicare reimbursements are already much lower than the 
reimbursements available under private insurance. Previous cuts in 
Medicare have already led to serious cost shifting, as a physicians and 
hospitals seek to make up their reduced income from Medicare patients 
by charging higher fees to other patients. The result has been higher 
health costs and health insurance premiums for everyone, as cost 
shifting becomes a significant hidden tax on individuals and 
businesses.
  The right way to slow rising Medicare costs is in the context of 
broader

[[Page S8983]]

health reforms that will slow health cost inflation in the system as a 
whole. That is the way to bring Federal health costs under control, 
without cutting benefits or shifting costs to working families. In the 
context of broader reform, the needs of academic health centers, rural 
hospitals, and inner city hospitals can also be met. Unilateral 
Medicare cuts alone, by contrast, will reduce the availability and 
quality of care for young and old alike.
  The cuts in Medicaid proposed in the Republican budget are equally 
unfair--a total of $175 billion over 7 years. The double whammy of huge 
Medicare cuts and huge Medicaid cuts will hit hospitals and other 
health care providers even harder than Medicare cuts alone. Struggling 
State governments and State and local taxpayers will also face heavy 
burdens. Massachusetts would lose billions of dollars in Federal 
matching funds over the next 7 years. By the year 2002, we would need 
to increase State spending by 26 percent to maintain current program 
levels. Other States with higher Federal matching rates would be hit 
even harder.
  States cannot afford these huge increases. And the impact of these 
arbitrary cuts on working American families is even more disturbing. 
Medicaid is a key part of the safety net for senior citizens, the 
disabled, and children. Two-thirds of all Medicaid spending is for 
senior citizens and the disabled. If an elderly American becomes sick 
enough to need long-term nursing home care, Medicaid is the only source 
of funding after personal savings are exhausted. Cuts in Medicaid will 
mean that needed care for senior citizens is denied. Heavy additional 
burdens will be imposed on their children and grandchildren.
  At a hearing in the last Congress by the Labor and Human Resources 
Committee in Quincy, MA, one of the witnesses was a retired veteran 
named Clifford Towne, who lived with his wife Marie in South Dartmouth.
  Clifford Towne is a veteran who fought in World War II. He worked 
hard all his life in the textile business. When he retired, he had over 
$100,000 in the bank. He owned his own home, and he had a good pension 
from Social Security. But both he and his wife developed serious 
medical problems. High medical costs that Medicare did not cover well 
enough--especially prescription drugs--had wiped out his savings. He 
had to run up large debts. As he told our committee, he tried to 
qualify for Medicaid, but his Social Security income was too high. 
``They told me,'' he said, ``that the only way I could get help for my 
wife was to leave her. But after 48 years, I just couldn't do that. I'd 
rather kick the bucket than be forced to get a divorce. So my wife and 
I talked it over and decided that when we couldn't pay for the drugs 
any more, we just would have to stop taking the prescription drugs. 
We'd rather pass away together--or at least as close together as we 
can. About 3 or 4 months ago, I already cut down on drugs for my blood 
pressure. I don't want my wife to have to cut down on her medications 
until we have no other choice.''
  Children depend on Medicaid as well. Eighteen million children--more 
than a quarter of all children in our country--receive health care 
under Medicaid. More than half of these children are members of working 
families. Their parents work hard--most of them 8 hours a day, 40 hours 
a week, 52 weeks a year. Without Medicaid's help, all their hard work 
will not buy their children the health care they need.
  We often hear that the reason to balance the budget is for America's 
children. A budget that denies health care to millions of children is 
the wrong way to express concern for their future.
  Not only does the Republican budget slash health benefits for low-
income children, it cashes out the investments we have made in the 
Nation's youth by cutting education programs severely over the next 7 
years.
  And for what purpose? To ``ensure a better future for our children?'' 
To provide them with ``more and better opportunities than we now 
enjoy?'' Nothing could be further from the truth.
  Every parent knows that education is the foundation of a better life 
for their children. Deep Republican cuts in education betray the hopes 
and dreams of parents for their children and undermine the Nation's 
future strength. As America moves into the high-technology world of the 
21st century, our schools and colleges and students need more help, not 
less.
  The Senate budget contained the largest education cuts in U.S. 
history--over one-third of the investment in education by the year 
2002, and $30 billion in cuts in financial aid to college students.
  This budget conference agreement makes these completely unacceptable 
cuts worse. During floor debate on the Senate budget resolution, we 
passed a bipartisan amendment by a vote of 67 to 42 to restore $9.4 
billion to student loan accounts so that students would not face 
increases in personal indebtedness of up to 50 percent. Republicans and 
Democrats in both the House and the Senate wrote to the conferees to 
urge them to adopt the Senate number on student loans. Fourteen Senate 
Republicans signed a ``Dear Colleague'' letter to the conferees 
reinforcing this point.
  And what does this budget agreement do? It requires $10 billion to be 
taken from students in the form of increased fees and interest rates on 
student loans; 88 percent of the cuts in student aid contained in this 
budget fall on families earning $75,000 or less. The Republicans claim 
to balance the budget to protect the next generation. But they are more 
than willing to bury this generation of students in debt. And for what? 
To pay for tax cuts for the wealthy.
  The following is a summary of the consequence of the conference 
education cuts:
  Overall: Largest education cuts in U.S. history; eliminates 33 
percent of the Federal investment in education by year 2002 based on 
Congressional Budget Office estimates.
  College aid: Cuts $30 billion in Federal aid to college students over 
the next 7 years. Half of all college students receive Federal 
financial aid; 75 percent of all student aid comes from the Federal 
Government.
  Increases personal debt for students with subsidized loans by 20 to 
48 percent by eliminating the in-school interest subsidy. Affects up to 
4 million students a year; undergraduate students who borrow the 
maximum of $17,125 will pay an extra $4,920.
  Reduces Pell grants for individual students by 40 percent by the year 
2002, or terminates Pell grants altogether for over 1 million students 
per year, even assuming a freeze at 1995 funding levels.
  Could increase up-front student loan fees by 25 percent, raise 
interest rates on student loans, or eliminate grace period for students 
to defer payment on loans after graduation.
  School aid: Elementary and Secondary Education Act--Cuts funding for 
improving math and reading skills to 2 million children; reduces 
funding for 60,000 schools.
  Safe and drug free schools--Cuts over $1 billion in antidrug and 
antiviolence programs serving 39 million students in 94 percent of the 
Nation's school districts.
  Head Start: Denies preschool education to between 350,000 and 550,000 
children.
  Special education: Eliminates $5 billion in Federal support for 
special education services for 5.5 million students with disabilities.
  Goals 2000: Denies assistance to 47 States and more than 3,000 school 
districts helping students to achieve higher education standards.
  School-to-work: Cuts $5.3 billion from initiatives to improve job 
skills for up to 12 million students through local partnerships of 
businesses, schools and community colleges.
  Technology: Eliminates Federal initiatives to develop and provide 
educational technology for the classroom through collaboration with 
private funders.
  In the last Congress, Republicans and Democrats stood together as the 
education Congress. In the last Congress, we voted 98 to 1 to expand 
Head Start to make preschool available to more children. Yet the 
Republican budget eliminates hundreds of thousands of eligible children 
from Head Start over the next 7 years.
  In the last Congress, we voted 77 to 20 to improve the way the 
Federal Government supports elementary and secondary education. We 
strengthened our commitment, through title I, to help children improve 
their basic reading

[[Page S8984]]

and math skills. The Republican budget denies those services to 
millions of children and reduces funding for tens of thousands of 
schools. These damaging cuts would affect virtually every public school 
in the country, and many parochial and private schools as well.
  In the last Congress, we enacted Goals 2000--again with a bipartisan 
vote--to support States in their efforts to develop high standards for 
students. The Republican budget denies assistance to States and 
thousands of school districts, drastically reducing Federal support for 
these essential reform efforts.
  In the last Congress, we joined together to create school-to-work 
initiatives that provide seed money to every State to design and 
implement systems that will provide more effective connections for 
young people between classroom learning and real job opportunities in 
local communities. The Republican budget repeals this highly successful 
legislation. Additionally, it cuts billions of dollars over 7 years 
from a number of education and work preparation initiatives designed to 
improve the job skills for students.
  In the last Congress, we launched the National and Community Service 
Program--another bipartisan effort--to support local efforts throughout 
the Nation that encourage young people to serve in their communities. 
Under the Republican budget, AmeriCorps and service learning are 
eliminated, denying funds for the 40,000 students planning to devote 
themselves to a year of full-time service in 1996 and the 550,000 
students in American schools who could take advantage of service 
learning opportunities in and out of the classroom.
  And what about the Nation's students and working families struggling 
to pay for college? In the last Congress we enacted the Student Loan 
Reform Act, which is saving the Nation's students over $2 billion in 
loan fees, lower interest rates, and more favorable repayment terms.
  The Republican budget cuts Federal support for student financial aid 
by billions of dollars over the next 7 years. And this is not an area 
where States will pick up the slack; 75 percent of all student aid 
comes from the Federal Government, and one-half of the Nation's 
students receive Federal aid.
  Under the Republican budget, no aspect of student aid would remain 
untouched. For 30 years, the Federal Government has paid the interest 
on federally subsidized Stafford loans while students are in college, 
so that the interest does not build up before students graduate and can 
begin paying back their loans. Under this Republican budget, that vital 
support would be denied.
  Something has to give, and apparently the Republicans have decided 
that it is the Nation's students who must give.
  And it is not only student loans that will be slashed by the 
Republican budget. Over the next 7 years, Pell grants will drop 
steeply. This decline in buying power comes at a time when the cost of 
attending State universities is rising by an average of 5 percent per 
year.
  Three other major sources of Federal student aid--supplemental 
educational opportunity grants, State student incentive grants, and 
Perkins loans--would also be drastically cut by this budget.
  This is not sharing the pain. This is a full-scale assault on the 
Nation's students and working families.
  Thousands of students from across the country have written to me by 
mail and on the Internet to describe in personal terms what these cuts 
in student aid would mean to them. They speak of the sacrifices their 
parents are making, the extra jobs they are holding down, and the value 
of every dollar in financial aid making it possible for them to pursue 
their education.
  Let me share with you a few examples of the moving testimony I have 
received from students across the country.
  A student attending medical school in Massachusetts writes:

       I am a 24-year-old African-American woman, born and raised 
     in St. Louis, Missouri. I come from a poor, working class, 
     two-parent household. I am proud to say that I was the first 
     African-American valedictorian at my high school. I went on 
     to college at a private institution. I received very much 
     needed financial aid while there, including loans and 
     scholarships. My parents helped as much as they could, but 
     with two other children, they could only help a little . . . 
     Without the Stafford and Perkins loans that I received, I 
     would not have been able to continue my education. After 
     graduating from college I was accepted to an Ivy League 
     medical school where I am still very much dependent on 
     federal financial aid. I hope to practice primary care 
     pediatrics in an indigent community. I am close to finishing 
     school and may not be affected by such harsh cutbacks, but I 
     am very concerned for the future generation of students.

  Under the Republican budget a student following this course of study 
could well face over $40,000 in additional interest payments at the end 
of her medical training.
  A student from New York writes:

       My mother just got laid off today. I only have one year 
     left before I receive my bachelor's degree. I don't want my 
     opportunity and those of others to be cut short.
  Everyone in the White House, on Capitol Hill, and in the State 
governments had their opportunity. Why are you taking away ours?

  A college graduate from Colorado writes:

       I am not a student, but I'm raising my voice in support of 
     government backing for student loans. If it were not for 
     student loans, I would not have been able to attend college. 
     My mother was supporting two kids and we lived in government 
     subsidized housing--the projects. There was simply no way she 
     could have paid for a college education for us, so we applied 
     for loans and more loans. I received some grants and a great 
     deal of loan assistance, and still I worked at McDonald's. I 
     am now a consulting writer and I never have to look for work 
     . . . it looks for me. This is a most wonderful life and I 
     wouldn't have had any chance at all of attaining it without 
     those student loans and grants. Please do whatever it takes 
     to ensure that others get this chance . . . it is what 
     allowed me to become who I am today, and I thank you all.

  Another student, from Maine, summed up the situation: ``If you think 
education is expensive--try ignorance.''
  The Republican budget turns its back on investing in our future--our 
children's education. It is the wrong priority for the Nation, and that 
makes no sense.
  Children will also suffer because the Republican budget cuts back on 
the earned income tax credit. The earned income tax credit gives 
families with incomes of up to $28,000 a year the incentive to enter 
the work force and become self-sufficient. It makes work pay by 
providing a tax credit up to 40 cents for every dollar a low-income 
worker earns. The average credit is $1,400 a year. It offers major 
assistance to working families to raise their standard of living and 
climb out of poverty.
  The Senate Republican budget slashes billions of dollars from the 
earned income tax credit over the next 7 years. That's an unacceptable 
tax increase of $1,400 for 12 million working American families and 
their children.
  Tax increases for the working poor--and tax cuts for the rich. What a 
shameful commentary on Republican priorities and the Republican budget. 
No wonder the country is turning against the Republican Congress.
  Republicans claim that they are interested in moving welfare 
recipients into work. But slashing the earned income tax credit, along 
with the other punitive proposals in the Republican welfare reform 
bill, makes a mockery of that claim. These cuts will encourage 
dependence, not independence. They will weaken the safety net that 
protects working families and children from falling into poverty.
  The earned income tax credit has always had bipartisan support in the 
past. President Reagan called it ``the best anti-poverty, the best pro-
family, the best job creation measure to come out of Congress.'' It is 
shocking that the Republicans are proposing to cut this tax credit for 
low-income workers to pay for tax breaks for the rich.
  During the budget debate last month, Democrats offered amendments to 
use the $170 billion tax cut fund not only to restore the earned income 
tax credit for working families, but protect Medicare and Medicaid as 
well as reverse the cuts in the student loan program. On amendment 
after amendment, the Republican majority voted to protect only one 
thing--their tax breaks for the rich and the special interests, instead 
of helping working families and their children.
  One of the worst examples of Republican misplaced priorities is their 
blatant attempt vote to keep the tax loophole open for billionaires who 
renounce

[[Page S8985]]

their American citizenship in order to avoid paying taxes on 
the massive wealth they've accumulated in America. These unpatriotic 
bums get a tax loophole--and hard-working low-income Americans get a 
tax increase. Does anyone in America seriously agree with those 
shameful Republican priorities?

  The Joint Committee on Taxation recently completed its long-awaited 
study on the billionaires' tax loophole, and the report was a further 
blatant attempt to save the loophole, rather than close it.
  According to earlier revenue estimates, closing the loophole would 
raise $3.6 billion over the next 10 years. Clearly, substantial 
revenues are at stake.
  At least the Finance Committee tried to close this flagrant loophole.
  But it reappeared in the bill in conference with the House, 
supposedly because a few so-called technical issues needed to be 
addressed.
  It turns out that the only serious technical issue was how to keep 
the loophole open. Well, our Republican friends studied the issue as 
hard as they could, and a few days ago, they came up with a way to save 
as much of the billionaires' loophole as possible.
  It took a bit of work. But the Ways and Means Committee has finally 
found the ways and means to keep the loophole open. Earlier this month, 
they reported out a bill to do it. They have even given the bill an 
appropriate number: H.R. 1812. What a perfect number for a tax loophole 
bill--1812. That is about the year their thinking on tax reform 
stopped. Well, I think we will just try to bring their 1812 bill into 
the 20th century when it gets to the Senate--and close that loophole 
the way it ought to be closed--closed tight on those unpatriotic 
billionaires.
  I just wish our Republican friends would put as much time and effort 
into closing tax loopholes and reducing corporate welfare as they put 
into keeping these loopholes open. We would save tens of billions of 
dollars, and be able to balance the budget fairly, instead of balancing 
it on the backs of Medicare and education and low-income working 
families.
  The chairman of the Ways and Means Committee proposed to tinker with 
the existing law--and in a way which does not address the fundamental 
problems of this tax loophole.
  First, the proposal allows expatriates to pay no U.S. tax on their 
gains if they are willing to wait 10 years before they sell their 
assets. This part of the loophole already exists in current law, and 
has been repeatedly pointed out. There is no logical reason to leave it 
open.
  Second, one of the major problems of current law is the fact that 
gains from foreign assets built up during U.S. citizenship are not 
subject to U.S. tax after expatriation. Yet, some of the most flagrant 
cases of expatriate tax abuse involve individuals who avoided taxes on 
foreign income.
  Any serious proposal to address these issues must tax the gains on 
the expatriate's worldwide assets, and this tax must be imposed at the 
time of expatriation.
  Third, expatriates will continue to use tax planning gimmicks to 
avoid taxes on gains from domestic assets by shifting income from the 
domestic to the foreign side of the ledger. As long as the Tax Code 
exempts foreign assets from taxes upon expatriation, taxpayers will 
find new ways to shift their assets and avoid their taxes.
  Fourth, the proposal allows billionaires to avoid the expatriation 
tax by taking up residence in certain countries with which the United 
States has a tax treaty that prevents taxation of former citizens. An 
expatriate and their lawyer can easily find tax havens with such tax 
treaties, and we ought to reject that easy means of tax avoidance.
  Fifth, the so-called reform cannot be effectively enforced. 
Expatriates can leave U.S. tax jurisdiction without paying a tax or 
posting security. Expatriates will merely fill out a form at the time 
of expatriation, and the IRS will be left holding the bag.
  At the very time when Republicans in Congress are cutting Medicare, 
education, and other essential programs in order to pay for tax cuts 
for the rich, they are also maneuvering to salvage this unjustified 
loophole for the super wealthy. I say, this loophole should be closed 
now and closed tight--no ifs, ands, or buts. I intend to do all I can 
to see that it is.
  Working families have been asked to shoulder too much of the burden 
of deficit reduction in the Republican budget. The cuts in important 
health, education, and income assistance programs will diminish the 
opportunities of millions of Americans to improve their lives and their 
future. I urge the Senate to reject this unconscionable budget.
  All Members urge our colleagues and the American people to take the 
time to focus on exactly what the alternatives are that are being 
recommended by the Republican leadership in the House of 
Representatives and in the Senate of the United States.
  The reason that we urge this very careful attention over these next 
few days is because of the enormous consequences that it is going to 
have on them, on their children, and on their parents.
  No judgment will have been made in recent times that will be more 
decisive as to the impact on American families than the outcome of 
these budget considerations.
  The actions that we took here in the last Congress that saw the 
changes in the Head Start Program to reach younger children and improve 
the quality of its services, in the title I education program for 
disadvantaged children, in Goals 2000, in the School-to-Work Program, 
in the direct loan program--all are reflective of Republican and 
Democratic efforts to protect the priorities of working families in 
this country, that education is important. With this budget, that 
effort is significantly undermined. And it is undermined not just in 
this Congress but it is undermined for the next 7 years. That is what 
we are talking about. That is why this whole debate and discussion is 
of such importance.

  We are not just talking about what is going to be appropriated in 1 
particular year. We are deciding a glidepath for the next 7 years and 
we are making judgments about what is going to be invested in the 
children of this country over the next 7 years. What we are talking 
about is what is going to be the increase in out-of-pocket payments for 
our seniors over the period of the next 7 years. And what we are 
talking about, which is the most unconscionable item, is what is going 
to be going into the pockets of the wealthiest individuals and 
corporations over the period of the next 7 years.
  That is the issue that is before this country. That is the issue of 
importance for every American family to take note of. We are urging 
their focus and attention on this issue today and over the period of 
these next several weeks.
  Mr. SARBANES. Will the Senator yield?
  Mr. KENNEDY. I will be glad to yield.
  Mr. SARBANES. This 7-year blueprint which the Republican budget plan 
is laying out for the country, is it not correct that the cuts in the 
investments in the future--cuts in education, in college opportunities, 
in work training programs, all of the things that build a stronger 
economy--that those cuts intensify in each of the subsequent years as 
you move through the 7-year period?
  So that people need to understand. I think the Senator is making an 
extremely important point. This is not just the plan for next year. It 
is the plan for 7 years. Furthermore, the way this plan is structured, 
as I understand it, the impact will intensify as we move through the 
time period so what people will experience in the first year of the 
plan, which I submit will be very draconian, will worsen as the time 
passes through the 7-year period. Is that correct?
  Mr. KENNEDY. The Senator is absolutely right and is focused on what 
might be considered a subtlety because it is not talked about and is 
deemphasized by those who are supporting this program. But in reality 
the Republican budget is going to adversely impact our seniors and our 
children over the next 7 years, in a cumulative way, which I believe 
will do serious damage to the next generation as well as older 
generations as well.
  Mr. SARBANES. Will the Senator yield? Do the tax cuts for the wealthy 
that are provided in this plan--in other words, what the plan is doing 
is sharply curtailing opportunities for working

[[Page S8986]]

people, taking the money that is realized from that, and then using it, 
as I understand it, to give a tax cut to the very wealthy. Do those tax 
cuts occur in the beginning or in the front of this 7-year period? Or 
do they occur at the end of the 7-year period?
  As I understand it, with the changes made in the budget conference 
the tax cuts now will be part of the reconciliation and therefore will 
become applicable at once, or in the near future, for the benefit of 
the very wealthy while the rest of the population will begin to bear 
these cuts and then bear them throughout the 7-year period, is that 
correct?
  Mr. KENNEDY. The Senator is absolutely correct. Not only do you have 
the imbalance of the cuts on working families, on their children, and 
on senior citizens, but you also have this enormous benefit to the 
wealthiest individuals through this tax break.
  I would just ask my friend and colleague, if these cuts went in as 
incentives to improve our economy and create more jobs, you might be 
able to find some justification. But the nature of these cuts--it is 
like taking billions of dollars and throwing them off the Capitol. Some 
people will pick them up and buy tee shirts and hotdogs, but the 
benefits will go in the most extraordinary way to the wealthiest 
individuals without having the real, positive impact in terms of 
encouraging investment in our society.
  Would the Senator agree with that?
  Mr. SARBANES. I think the Senator is absolutely right. People have to 
understand, because people say we want to eliminate the deficit, then 
they say we ought to cut spending, but with this plan, a good part of 
the cut in spending is not to eliminate the deficit but to provide a 
pool of money which can then be given as tax cuts for the people at the 
very top of the income scale. In effect, what this budget plan is doing 
is, it says to people on Medicare, our senior citizens: You are going 
to take a reduction in your Medicare services. It says to young people 
who want to go to college, it is going to become much more costly for 
you to go to college. And the reason this is happening, a good part of 
the reason this is happening, is to create a pot of money with which to 
give these tax cuts.
  I submit, anyone weighing the equities of this and the desirability 
of this in terms of investing in the future would conclude it would be 
better to keep open the opportunities for college, not to subject our 
senior citizens to higher risks with respect to medical treatment and 
medical care, not to impact on child nutrition and feeding programs, 
school lunches, and so forth --not to hit those programs so heavy and 
to give up on the notion of giving a large tax cut to very wealthy 
people.
  I do not understand the rationale for doing that, in terms of the 
priorities of the country, I say to my distinguished colleague.
  Mr. KENNEDY. The Senator has stated it well. I think it is important 
for all Americans who are going to pay attention to this debate to 
understand who are really being adversely impacted--working families 
and their children.
  First of all, for the very young members of their families, they are 
going to be adversely impacted by the cutbacks in terms of the support 
for education reform in the schools across this Nation. If they have 
children that qualify for the Head Start Program, there will be 500,000 
fewer children who will participate in this program. If they were 
dependent upon any kind of help and assistance in the Summer Job 
Program, that opportunity will be cut back. Their smaller children will 
be adversely impacted with the reduction in support for the public 
schools of this country.
  Second, they are going to be adversely impacted if they have sons and 
daughters who go on to the fine schools and colleges in this country. 
One of the great phenomena that has taken place since the end of World 
War II is how American universities have dominated the world. Of the 
140 great universities, 127 of them are in the United States of 
America. That is because of the policies which provide help and 
assistance to children; why we have a research program, and how those 
universities now are working with the private sector. They have been 
absolutely a phenomenal success to the benefit of our young people, the 
sons and daughters of working families. And 75 percent of all the 
funding for help and assistance to those children comes from the 
Stafford Loan Program and the other Federal support programs. Seventy 
percent of the children in the State of Massachusetts are dependent for 
that help and assistance. This is going to mean a $30 billion reduction 
in this program over the next 7 years--$30 billion in the education 
support programs for the young men and women.

  Now let me just mention that not only will we see a reduction in the 
support for the education programs for children, we will see an 
increase of what their parents are going to have to pay as well. This 
is not just a family that is out somewhere in Main Street America. If 
they were working on the lowest level of the economic ladder, they 
would have qualified for the earned income tax credit that would help 
keep them off welfare and in jobs. We see the $20 billion earned income 
tax credit expansion being effectively taken off the plate as to not 
benefit those working families.
  What we are saying to the Medicare recipients, two-thirds of which 
are only making $17,000 a year, is that they will have an average 
increase of $3,200 over the next 7 years.
  So we see the damage that is being done to the children of working 
families. We see the damage which is being done to the seniors who have 
paid into the Medicare Program and are entitled to that benefit. We see 
the reduction in the support of individuals that are going to those 
schools. And we see the slashing of the EITC Program for working 
families. The leadership in the Congress is opposed to an increase in 
the minimum wage, and is trying to bring a reduction under Davis-Bacon 
to diminish working families' income, which averages $27,000. You have 
to ask yourself, what have working families done to deserve this?
  Does the Senator from Maryland agree that this is not a wholesale 
assault on the working families of this country?
  Mr. SARBANES. That is right. What is happening is there is a massive 
effort to shift the economic benefits to a small group at the top of 
the income scale, a trend that has already been going on over the last 
decade and a half.
  I ask the Senator from Massachusetts, does the provision from the 
conference committee drop the forgiveness of paying interest on your 
student loans while you are in school?
  Mr. KENNEDY. The Senator is correct. If I could just mention in 
responding to that, does the Senator remember when this body, 
Republicans and Democrats alike, saw a restoration of billions of 
dollars to the Student Loan Program? I think it was an amendment of the 
Senator from Maine, Olympia Snowe, cosponsored by the Senator from 
Illinois. And after all the speeches that were made in support of that 
program, all the speeches of individuals who went on record to increase 
our investment in education, the ink was not even dry before the 
Republican conferees dropped it in conference.
  I mean, does the Senator from Maryland find that is a way in which we 
attempt to reflect our commitment to higher education? And second, 
going back to the increase in interest payments on borrowing while the 
student is in school and college, mark this, every young person in 
America: You will pay an additional 30 percent in student loans as a 
result. And, as the Senator from Maryland said, why? To give $245 
billion to the wealthiest individuals. The young people of this country 
will say: All right. We are prepared to tighten our belts if everyone 
else is doing it. We are prepared to try to deal with the national 
challenge and a national need.
  But are you prepared to support a program that says you are going to 
put that on the backs of the young people under the phony argument that 
we are doing this in order to get the country out of debt? Young 
Americans will be in debt for years and years to come as a result of 
this.
  Does the Senator from Maryland think that makes any sense?
  Mr. SARBANES. Absolutely not. People have to understand that under 
the existing program, which is now about to be changed, young people 
and their families take out loans in order to finance their college 
education. That is tough because it means they come out of school with 
a burden hanging over them which they then have to

[[Page S8987]]

pay off as they go through their working lives. Not to compound that 
problem, under the current system, the interest on those loans is 
abated or forgiven while they are in school, so you are not in this 
situation where you took out a loan and then you have to pay interest 
on the loan while you are in school. I think that is reasonable. That 
is sensible.
  It is bad enough that you are taking on this heavy burden of paying 
off in the future. At least, do not compound the financial problem 
which these families confront at the very time they are trying to get a 
college education for their young men and women.
  This proposal, as I understand it, will drop that provision, so they 
will be confronted then with the task of an additional burden added 
onto their loan responsibility in order to get a college education. It 
is tough enough now. I have talked with these families. They come to 
see me. They are desperate to find a way for their young son or 
daughter to get through college. The young people themselves are 
desperate. Sometimes they go out there holding three or four jobs at 
the same time to try to get enough money. They are committed to getting 
through college. Many families have never sent children to college 
before. It represents a breakthrough. They are out on an uncharted 
path.
  Mark this: Other industrialized countries do not put their young 
people under this kind of stress and strain in terms of furthering 
their higher education. They make it possible for their young people 
with talent and ability to get a higher education. Why do they do that? 
Because they recognize that the benefit of further education is not 
only to the individual who gets it. That is an obvious benefit. But it 
is a benefit to society. They build a stronger society by making it 
possible for their young people to get an education. Here we are 
retreating from that challenge.
  Mr. KENNEDY. The Senator has stated it accurately. But it is even 
worse than that. Last year, we moved in a very gradual way toward a 
direct loan program to permit young people to borrow at the same level 
at which the Federal Government borrows. That would mean lower interest 
rates, allowing an additional $2 billion to be available for education 
to try to get a handle on the ever-increasing escalation of costs for 
tuition.
  Effectively, with the action of the Budget Committee, that very 
modest but important step that can save kids anywhere from $1,000 to 
$2,000 over the period when they are going to school is effectively 
wiped out. Here we had a bipartisan effort to do it.
  Beyond this, the Senator from Maryland is familiar with the 
President's program that says in this area of education, he had a small 
tax deduction as well. His program in terms of the reduction in taxes 
is focused on education. The Republicans are going to make it more 
difficult for the students of this country to be able to afford to get 
an education. And what was on the other side? What we ought to be 
debating out here on the floor of the U.S. Senate is what the President 
suggested, and that is the following: That families with incomes up to 
$100,000 would be able to deduct up to $10,000 in tuition from their 
taxes to make it more affordable. Second, that they would be able to 
deduct the interest that they are paying on their debt.
  Why does it make any sense when we permit deductions on interest on 
homes for wealthy individuals and we permit the deduction of other 
expenses for industry, why should we say education is of less 
importance?
  That is what this President was fighting for. That is what we ought 
to be debating. If there is anything out here, any resources that could 
be used for tax cuts, would the Senator not agree with me that it makes 
a great deal more sense than taking the kinds of cuts in Medicare, in 
education, in slashing wages for working families and using it for the 
wealthiest individuals?
  Mr. SARBANES. May I ask the Senator a question. Does the budget 
resolution cut back the earned-income tax credit program which was 
established to help working families get above the poverty line? This 
helps families, I think, with incomes up to $27,000 or $28,000.
  Mr. KENNEDY. The Senator is correct. We have some 84,000 families, 
and we have about 300,000 individuals in my own State of Massachusetts.
  Mr. SARBANES. Just in the Senator's State alone.
  Mr. KENNEDY. In my State alone. And this was targeted, as the Senator 
understands. It had strong support from President Reagan and other 
Republicans. It had bipartisan support as well. And as the Senator 
understands, the reason for that is because of the increasing 
obligation that these families have in terms of paying the increase in 
Social Security and other tax programs just when they were moving off 
that bottom rung to the second rung of the ladder.
  Mr. President, $26,000 a year is not a lot to pay a mortgage, put 
food on the table, clothe your kids, and try to give them at least some 
limited relief.
  As the Senator knows, in that budget there is a continuation of about 
$4 trillion over the next 7 years of what we call tax expenditures 
which are available to wealthy corporations and companies.
  At the same time they kept these tax breaks for the rich, they 
targeted the earned income tax credit. They took that away. They 
effectively raised the taxes on the lowest income people.
  I would just finally ask, does the Senator not find it somewhat 
extraordinary they have eliminated the EITC, the earned income tax 
credit, without addressing the billionaire's tax loophole?
  We found those economic forces working their way in that conference 
committee after our Finance Committee and the Senate went on record to 
close that tax loophole that says to Americans, become modern Benedict 
Arnolds; renounce your citizenship; take your money and go overseas and 
do not pay any taxes.
  We have been out here trying to get that closed. They need some 
additional money. Why are they closing that loophole? Oh, yes, there is 
quietness about it, no explanation.
  It does not take a lot to figure out how that ought to be closed. 
However, they found all different ways of cutting back on children, the 
smallest children, the most vulnerable, cutting back on education, 
targeting our senior citizens. But they refuse to close the biggest and 
most unjustified loophole of all.
  I just wonder if the Senator does not feel that that is something 
which the American people ought to begin to wonder about. They have 
read about it. They have heard about it months ago. They should be 
wondering why is it that we cannot have that loophole closed as well.
  Mr. SARBANES. The Senator is absolutely right. It is very important 
for the public to understand that a tax measure built into the law 
before, which would have allowed working families to get an earned 
income tax credit in order to improve their position to support their 
family--these are people making up to $27,000 a year--that is being cut 
back, that is being cut back at the same time that it is proposed to 
give tax breaks to people making hundreds of thousands of dollars a 
year.
  Where is the fairness or the equity in that? If you were not giving a 
tax break, then you would have an argument about where the cuts should 
come, and there I think this program is draconian, but at least it 
would be in that context. But what is happening is you are cutting a 
tax provision to benefit working families in order to give a tax break 
to people making six-figure incomes, and to compound the bizarre nature 
of this, they are unwilling to close the billionaire's expatriate tax 
loophole on which the Senate has gone on record, I think unanimously or 
almost unanimously----
  Mr. KENNEDY. No, two votes on that side of the aisle.
  Mr. SARBANES. All right--to do away with it. And these are people, 
extremely wealthy people, literally billionaires we are talking about, 
who renounce their American citizenship in order to avoid paying 
American taxes. And the Treasury has worked out a proposal whereby they 
will not be able to get away with that. The conference was unwilling to 
encompass that proposal and to include it in the report.
  So you have these tremendously wealthy people in effect walking scot-
free from paying reasonable taxes. When you talk about this, the other 
side says, well, there you are; it is class warfare.

[[Page S8988]]

  The class warfare is coming from the people at the top who are 
pulling in these benefits. That is the real class warfare that is 
happening here. Those who have much want more, more, more, and they 
throw the burden on those who have little, those who are struggling to 
make it through the day, struggling to educate their children, senior 
citizens who are struggling to meet their medical need problems, young 
families that are worried about how they are going to provide for their 
parents, worried about how they are going to provide for their 
children.
  They cut back on the very programs designed to address those 
problems--Medicare, college loans, child nutrition programs, earned-
income tax credit for working families--they cut back on those programs 
and at the same time that they are cutting back on those programs, they 
are giving large tax breaks to people with six-figure incomes, well 
above $100,000 a year.
  Now, what is the sense of that? Where is the equity in that? Where is 
the wisdom in that in terms of investing in America's future? Those 
making those large incomes ought to be concerned about what is 
happening to working families and their children because you cannot 
reside at the top of the house with any sense of security and comfort 
when the foundations down below are not solid. And those foundations 
need to be solid. We have to break out of this mentality of trickle-
down economics: You put it all in at the top, and somehow it is going 
to trickle its way down to ordinary people. We need percolate-up 
economics where you create prosperity in the great base of American 
society. The people at the top will benefit from that, as will 
everybody else. But it will work its way up; it will come up from the 
grassroots; it will come up from working people; we will have a strong 
middle class, which was always the hallmark of a strong American 
economy and which we are losing. This budget resolution is a classic 
example of how to intensify those negative trends.
  Mr. KENNEDY. Let me just review with the Senator from Maryland one 
other major impact that this has. Let us take the State of 
Massachusetts. This kind of reduction on the budget is going to mean 
$1.2 billion less in scholarship assistance for students in the next 7 
years. We can say, well, maybe the States are going to make up that 
difference. Just ask what has happened in Massachusetts over the last 5 
and 7 years in terms of tuition.
  The States have not been making it up. The States have not been 
making that contribution. And that has been true in every State of the 
country.
  In my State of Massachusetts, with this Republican budget, it is 
going to mean a loss of $9.8 billion in Medicare and $4.6 billion in 
Medicaid over the next 7 years to the elderly and to the neediest 
people in our State, as well as to education. I do not know what it is 
in the State of Maryland, but the cuts in Medicare and Medicaid will 
likely be equally harsh.
  Who are the ones getting the help and assistance of Medicaid? Sixty-
seven percent of the Medicaid money is spent for long-term care for the 
elderly poor and the rest for the disabled. And the rest are going to 
be the 5 to 7 million American children that are the poorest children 
in this country that are going to be off the list. Where are the States 
going to be coming up with that kind of money?
  Who is going to pick that up? What has been the record of the States 
over the last 15 years in terms of the poorest children? It has been 
unacceptable. They say, ``Look, we can do this here, we will just shift 
all of this back to the States.'' I know in Massachusetts, those kinds 
of offsets are not indicated in the Governor's budget, and I have not 
found any Governors across this country that have said they are 
prepared to make up the difference.
  So what is going to happen? Here it is, long-term care, frail elderly 
who have no other resources, have qualified for the Medicaid; and the 
disabled, with all of the attendant costs and needs that families have 
when they have a disabled child--the emotion of that--the Medicaid 
program just providing enough to get along and provide some of those 
essential services are being told that they are going to have a $175 
billion cutback.
  If you are talking about the Medicare, which our seniors have paid 
into, if you are talking about the Medicaid, which serves the most 
vulnerable people in our society, if you are talking about the children 
of working families and you do not qualify for these Stafford loans or 
Pell grants. The Pell grants, in terms of purchasing, are alone going 
to decrease 40 percent in value over the next 7 years. You have to be 
needy in order to qualify for those grants. We are talking about men 
and women, workers in America, playing by the rules, working 45 hours a 
week, 52 weeks out of the year, paying taxes and trying to bring up 
families, and this is going to hit every aspect of their life.
  I am just wondering whether the Senator feels that the States, as 
former chairman of the Joint Economic Committee, are going to be in an 
position to be able to make all of this up?
  Mr. SARBANES. If the Senator will yield, most of the Governors have 
been very clear that they cannot make it up. They are just not in a 
position to do so. Now what that means, because you talk about these 
cuts and you talk about numbers, you have to talk about services and 
people.
  And what it means, as the Senator from Massachusetts so eloquently 
pointed out, is the frail elderly who are now benefiting from the 
Medicaid program in terms of long-term care in nursing homes and so 
forth and so on. What is going to happen to those people? What is going 
to happen to them and to their families? Some families are stretched 
beyond the limits trying to handle the problem of their aged parents--
beyond the limits.
  Is it not enough of a burden to face the emotional and the 
psychological stress and strain which goes with that kind of problem? 
Talk to a young couple, with a parent who has Alzheimer's and is in a 
nursing home, about what they are up against, just emotionally what 
they are up against, the stress in their lives. Then you are going to 
add to it an intense financial and economic stress.
  Why are we doing this? Why are we subjecting so many of our people to 
this incredible pressure? We have to cut so we can give big tax breaks, 
that is one reason. We will not reform the medical care system, which 
might well help us to deal with these problems; we are unwilling to do 
that.
  So we leave this incredible pressure and burden on ordinary families 
all across America to face what for many of them are desperate 
problems. It is the same thing with educating their children. Any young 
couple will tell you that is one of the prime worries in their mind, 
how they are going to educate their young children.
  We tried to put together a system. We had the Pell grants, which is a 
grant, not a loan. It has diminished in impact because we say we cannot 
afford it, so we shift it over to loans. We said, ``All right, you take 
a loan, you will enhance your earning capacity, you will pay it back 
over your working career.'' Now the loan is going to be compounded 
because we are not going to forgive the interest charge. So this is 
what has happened.
  Mr. KENNEDY. I ask the Senator just to draw his attention to the 
issue of fairness with regard to Medicare. I think the Senator from 
Maryland is familiar with what happened at the start of this year about 
whatever laws we apply and pass here we ought to make applicable to the 
Congress and to the Senate. That is a principle with which I agree. We 
could have done it last year. We had resistance from our Republican 
friends. Now we have passed it.
  But there is an interesting flip side to that issue, which is about 
the benefits that we get. Should we not make sure that the people 
across the country are going to get the benefits that we get?
  The Senate and the House of Representatives have resoundingly said no 
when it comes to health care reform. You have that little blue form, 
any Member of Congress or the Senate does not have to fill it out in 
order to participate in the Federal employees program. I do not know of 
any Senator who has filled that out. They are all taking advantage of 
it. So we see what happens under the program that is being put forward.
  The annual incomes of Members of Congress is $133,000; for seniors, 
$17,750.
  The monthly premiums, $44; the seniors, $46.

[[Page S8989]]

  Deductible, $350; for the seniors, $816.
  On the hospital care, we have unlimited care and theirs is defined 
and limited.
  We have prescription drugs covered; not covered for our seniors. That 
is a key area we had included in President Clinton's program last year.
  On the dental care, we are covered; our seniors are not covered.
  And then a whole range of preventive services which are included, and 
they have some benefits but not nearly as extensive.
  Then we take care of our out-of-pocket limit of $3,700 and there is 
no out-of-pocket limit for the senior citizens.
  It seems to me if you have that $245 billion out there in the 
Republican budget, that we ought to be able to look out after our 
senior citizens and try to at least make these more equitable, some of 
these more fair, some of these that are important lifelines for our 
senior citizens to live in some peace and some dignity.
  These are the issues, Mr. President. We are talking essentially about 
who is going to bear the burden of these economic cuts. Make no mistake 
about it, it is going to be the youngest people in this country who are 
going to find it more difficult, more expensive to go on to the schools 
and colleges. It is going to be the reduction of services that working 
families are going to need. It is going to be the concern of working 
families in recognizing that their parents are going to have to pay 
much more out of their pockets for the Medicare coverage which they are 
receiving now.
  It is basically unfair to put that kind of burden on working families 
and to have the benefits for the wealthiest individuals.
  So, Mr. President, these are the issues which we are going to have a 
chance to debate as we move on through. This debate is enormously 
important and of great consequence. It is going to have a direct impact 
on every family in this country, not just for this year, but over the 
period of the next 7 years. It is going to affect every parent and 
every child. That is what is going to be before this Senate and before 
the House in these days and weeks to come. We urge them to give it 
their attention, and let their Members of Congress know where they 
stand.

  Do they think we ought to have these kinds of cuts in education and 
in the quality of life of our seniors in order to have a tax benefit 
for the wealthiest individuals? I say ``no.'' That will be an issue we 
should debate, and we ought to hear from the American people as to what 
they believe.
  I yield the floor.

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