[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.

                          ____________________