[Congressional Record Volume 141, Number 157 (Wednesday, October 11, 1995)]
[House]
[Pages H9865-H9866]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
MEDICARE PRESERVATION ACT
The SPEAKER pro tempore. Under a previous order of the House, the
gentleman from Minnesota [Mr Ramstad] is recognized for 5 minutes.
Mr. RAMSTAD. Mr. Speaker, today our House Committee on Ways and Means
passed the Medicare Preservation Act to save Medicare, to keep the
Medicare system solvent until the year 2010 and to let seniors have
more choices in health care plans.
Our legislation keeps Medicare solvent, as I said, and lets seniors
stay in the current fee-for-service system or choose a HMO, a preferred
provider network or a medical savings account.
Why should seniors not have the same choices in health care that
every other American has?
Mr. Speaker, also it is important to point out that this legislation
increases Medicare spending about 6.5 percent a year, which means the
average Medicare beneficiary will receive $4,800 this year and $6,700
in the year 2002.
The point I want to make tonight, Mr. Speaker, is that this
legislation guarantees, guarantees that none of the Medicare savings
will go for tax cuts. They will go into a lockbox to be used only to
maintain the long-term solvency of Medicare.
Mr. Speaker, I ask that this article, this opinion piece by the well-
respected economist, Robert Samuelson, which was published in today's
Washington Post, be made part of the Record.
Economist Samuelson points out in this piece in today's Post, and I
am quoting now, ``Democrats cast Republicans as cutting everything from
Medicare to college loans to pay for a tax cut for the rich. That is
untrue.'' That is Mr. Samuelson's words.
To continue ``To listen to the Democrats, you would think that every
spending cut is needed to provide a tax cut for the rich. They say that
Medicare is being cut to help the wealthy, to provide a tax cut for the
rich.'' Mr. Samuelson goes on to say, ``Perhaps this makes good
rhetoric, but it flunks first-grade arithmetic.''
Let me continue reading from this column: ``In the Republican budget,
spending is cut $900 billion over the next 7 years. This is in the
total budget. That is nearly 4 times the size of the tax cuts.'' Mr.
Samuelson goes on to say: ``The Democrats are double, triple, and
quadruple counting spending cuts as an offset to the tax reduction.
Even a 1-to-1 count, that is, $250 billion in spending cuts for $245
billion in tax cuts, is a stretch,'' and then Mr. Samuelson goes on to
explain in an academic, analytical, truthful way what we are doing.
{time} 1930
He explains that under the congressional budget resolution, the
Republicans cannot enact a tax cut until the Congressional Budget
Office certifies that our plan would balance the budget by the year
2002. Once that happens, the CBO assumes that interest rates will drop
and economic growth will increase. In turn, these changes improve the
budget balance by $170 billion between now and the year 2002.
So from the balanced budget that we are putting forth here in
Congress, interest rates will drop, economic growth will increase to
the tune of $170 billion, and in these extra savings will the tax cut
be paid.
At least 70 percent of it will be paid from growth in the economy. So
I think, Mr. Speaker, it is important that we get to the facts and the
truth in talking about what we are doing with respect to Medicare.
Nobody is cutting Medicare to provide any tax breaks whatsoever. What
we are doing is balancing the budget in a responsible way. We have
already provided for the tax cuts in today's legislation. To preserve
Medicare is a big step forward, not only for the seniors of this
country, but for future generations as well.
Mr. Speaker, I include for the Record the article quoted from.
[From the Washington Post, October 11, 1995]
Budgetary Bombast
(By Robert J. Samuelson)
The tax debate is a triumph of political rhetoric over
common sense. Republicans and Democrats alike portray the
Republicans' proposed tax cuts--$245 billion between 1996 and
2002--as bigger and more important than they are. Each side
has its reasons. Republicans say they're providing major tax
relief for most ordinary Americans. Not true. Democrats cast
Republicans as savagely cutting everything from Medicare to
college loans to pay for ``a tax cut for the rich.'' That,
too, is untrue.
Just for the record, reject both the Republican tax cuts
and the Democrats' critique. Lower taxes, in my view,
shouldn't come until the budget is balanced. People should
feel the price of government: taxes paid for services
received. When the two are split, government becomes lax,
because the price of more government is falsely seen as zero.
But we are far beyond such a principled debate. Even
Democrats advocate tax cuts, arguing that their plan is
fairer. The debate gushes partisan cliches.
Start with Republican myths. The $245 billion sounds like a
huge tax cut. It isn't. Recall that it occurs over seven
years. In this period, the Congressional Budget Office
estimates that federal taxes (before the cut) will total
$12.8 trillion. The $245 billion cut is about 1.9 percent of
that. Of course, some people will get more. The plan's
centerpiece is a $500 tax credit for every dependent child. A
family with moderate income (up to say $40,000 to $50,000)
and two children would receive a noticeable tax cut.
But about half of families have no children, and nearly 30
percent of households are singles. Even for higher-income
families with children, the effect of the child tax credit
would fade. (In 1994 a two-parent family with two children
and $75,000 of income paid about $15,000 to $16,000 in
federal taxes.) And the rest of the tax cut--Congress is
still working on details--is splintered among many, highly
symbolic reductions.
Consider the most controversial proposal: a capital gains
tax cut. Capital gains are profits from the sale of stocks,
bonds and other assets. Now, these profits are taxed at a
maximum of 28 percent. The House Republicans would reduce
that to 19.8 percent, arguing that a lower rate would spur
investment and risk-taking. Gee, there's already an
investment boom, with ample risk-taking. The present capital
gains tax isn't a major obstacle. A reduction would mostly
benefit wealthier Americans by increasing their profits from
the sale of existing stocks and bonds.
Although the Republican myths are outrageous, the
Democratic myths are worse. To listen to Democrats, you'd
think that every spending cut is needed to provide a ``tax
cut for the rich.'' Medicare is being cut to help the
wealthy: so are Medicaid, the school lunch program and
welfare. The litany is endless. Perhaps this makes good
rhetoric, but it flunks first-grade arithmetic.
In the Republican budget, spending is cut about $900
billion between 1996 and 2002 from the levels under present
law. That's about 6.2 percent of what the CBO reckons would
be spent and nearly four times the size of the tax cut. The
Democrats are double, triple and quadruple counting spending
cuts as an offset to the tax reduction. Even a one-for-one
count ($245 billion of spending cuts for $245 billion of tax
cuts) is a stretch. Here's why.
Under the congressional budget resolution, the Republicans
can't enact a tax cut until the CBO certifies that their plan
would balance the budget by 2002. Once that happens, the CBO
assumes that interest rates will drop and economic growth
will increase. In turn, these changes further improve the
budget balance by about $170 billion between now and 2002. It
is these extra savings that, in theory, mainly finance the
Republican tax cut. They account for about 70 percent of the
total.
The point is that--without a huge tax increases, that
almost no one favors--the Republican spending cuts are needed
simply to balance the budget. If the Democrats don't want to
balance the budget, they should say so. If they have $900
billion of other spending cuts, they should say so. But their
endless carping about the ``tax cut for the rich'' merely
disguises their own unwillingness to confront the budget
deficits. Republicans have made some unpopular choices about
government; Democrats have not.
It is not that Republican choices are beyond criticism.
Their plan to curb the Earned Income Tax Credit, which
provides tax relief for the working poor, is mean and would
shrink the net tax cut substantially. But the tax cut is not
mainly a giveaway to the rich. Its effects are spread along
the income distribution. Even if it were approved, the well-
to-do would continue to pay most federal taxes. In 1994 the
richest fifth of Americans (a group that begins at about
$75,000 of family income) paid 59 percent of federal taxes.
The trouble with the Republican plan is that it has warped
the budget debate. Democrats have succeeded, temporarily at
least, in turning it into an old-fashioned argument about
class, when it ought to be about redefining the role of
government. There are legitimate disagreements here, and they
ought to be aired. But it is not true--as Democrats imply--
that the whole process is being driven by a crass desire to
aid the wealthy.
Ideally, Republicans would postpone tax cuts. Congress
should discipline itself and
[[Page H 9866]]
see if a projected balanced budget actually occurs. The prospect of
future tax cuts would also dampen the temptation to undo some
spending cuts. But the Republicans aren't likely to delay the
tax cut, in part because they fear that doing so would
trigger a voter backlash. This could be true, despite polls
showing that tax cuts rank behind deficit reduction in
popularity. Americans are so cynical about politics that
they'll seize almost any reason to vindicate their cynicism.
But there is a next-best policy: strip the tax cut to its
bare political minimum, the child tax credit. The cost would
drop sharply (to about $163 billion over seven years, which
is almost exactly the size of CBO's expected ``dividend''
from balancing the budget). And it would be much harder to
attack as a giveaway to the rich. The result would be to
refocus the budget debate where it belongs: on what
government should--and shouldn't--do.
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